Putting money into property you do not own? Are you protected?

Before putting money into property which you do not legally own, it is absolutely vital to take professional advice and make sure that you are properly protected. In a case which proved the point, a publican who began working behind the bar in his teens and invested over £300,000 in the premises ended up being put out on his ear.

The publican’s mother and stepfather had managed the pub for many years before he took over. His mother had been the pub’s sole owner and, by the terms of her will, she granted her husband the right to carry on managing it and taking the profit during his lifetime. Following his death, the pub was held by trustees for the benefit of the publican and his brother and sister.

The trustees sought a possession order in respect of the pub with a view to selling it and distributing the proceeds between the three siblings. In resisting the application, however, the publican pointed out that he had worked in the business man and boy and invested heavily in modernisation of the premises over the years.

However, in ruling that he had no defence to the claim, the High Court found that the trustees had never promised him that that he could remain in occupation of the pub for his lifetime, or until his investment was repaid. Even had there been such a promise, his brother and sister had never agreed to it.

The publican’s defence foundered on his failure to extract binding promises on which he could reasonably have relied before investing his time and money in the pub. His cash investment was in any event a loan to the business, not to the trustees. The Court would hear further argument on the terms of the possession order if they could not be agreed in the light of its ruling.