Hi. I hope someone will be able to help.

My friend's husband (yes, really!) died last May and has left a complicated financial mire to unpick.

The husband was in business with his sister (he made a payment to purchase a 1/2 share) but the partnership was not a formal one. I don't believe the partnership is being disputed.

The husband bought a Lotus (dream car). He sold his wife's car, which realised £6000, which was used as a down payment and the sister agreed to stand as guarantor on the loan. The husband paid the monthly instalments. This is where it gets murky. The instalments were paid from the joint business account. I understand that the husband then drew salary minus that payment.

The sister now asserts that she is the legal owner of the vehicle (although she is not the registered keeper) as she is obviously now liable for the debt (is that assumption correct?). My friend believes that as the car belonged to her husband, it is part of his estate and should pass to her, although she accepts that the loan (plus any interest) must be repaid from funds raised by selling the vehicle.

The car is worth c£37k. I don't know how much of the loan is outstanding.

My questions are basically, then, does the sister own the car because she is liable for the loan?

If the sister IS the owner, she did not make the down-payment or pay the instalments, so does this money have to be factored in somewhere?

This is one of many financial issues that my friend is trying to deal with, but I'm trying to help by dealing with each in turn.

She does have a solicitor who is dealing with probate, but they're not dealing with this issue in isolation and are being unbelievably slow.

Any advice will be very gratefully received.

Thank you

Tricky one !

I would think the Sister acting as guarantor and payments from joint business account would be the key factors here. If the friends husband had stopped paying, then his Sister would have been required to act as guarantor.

But why was the car purchased ( did it have anything to do with business ) ?

What type of loan ( important, as loan company may own car ) ?

How far into the loan period were they ?

Why were repayments made from joint business account ?

I am not sure there is any definite legal position on this, as the guarantor is usually only acting in capacity of being liable for repayments, not taking over ownership of the car. But given that a joint business account was used for payments, this might decide that it was a perk of being in business together, not a private car purchase. The Wifes car being spld to provide the husband with money is a separate issue.

Hi. Thanks for the VERY speedy reply!

I don't have all the answers to your questions (yet - I need to ask my friend) but :-

But why was the car purchased ( did it have anything to do with business ) ?

Personal use. It was a lotus and didn't even have a roof!

What type of loan ( important, as loan company may own car ) ? I will find out

How far into the loan period were they ? I will find out

Why were repayments made from joint business account ?

K was in debt and tended to use cash

If you think about what you have written. Your friends husband was in debt, but managed with his Sisters help to buy an expensive car to satisfy a dream. His Sister even offered to act as guarantor and allow payments to go through a business account, even though it appears he was not legally documented partner in the business.

Not sure of the exact legal position, but it would seem grossly unfair if the Sister who enabled purchase of the car, is not the one that retains interest in the car. As guarantor, the loan lands in her lap, in the event payments stopped.

Hi

Thanks, yes - I (and my friend)) do realise that and friend has no desire to see the sister out of pocket. However the sister is not acknowledging the £6000 down payment and instalments paid to date (not sure of the £ amount of this))

Similar to other thread. Without anything written down, this is a legal argument.

In addition to the other infornation asked for, i think you need to look at the loan agreement terms. Can the guarantor in this position take over the loan ? That might be a key bit of info.

The £6k issue is something to resolve between your friend and his Sister. Obviously the car has depreciated, so the value of any interest in the car has also reduced.

Absent any other specific arrangement or provision in a will : The car belongs to the estate of the deceased, and is treated as any other asset would be.

If the estate doesn't pay the loan instalments and the sister does : she doesn't become the car's owner: but the deceased's estate then owes her for those.

Wife's car being sold to give the deposit : irrelevant to current ownership of car (but might get factored in later at probate)

Car being paid for through business : is way more complex!

I note you say "out of salary" rather than "out of partnership profits" or "out of drawings", but the rest of your post makes it unlikely to be salary.

True 'salary" is possible for a partnership if the partnership is an LLP (there is such a thing as "Salaried Members") but this seems unlikely if there was no formal partnership agreement setting it up as one / if it wasn't registered as an LLP with Companies House.

If seems likely the partnership was an ordinary partnership (even without an agreement : it would be created when "two or more persons carry on a business with a view to making a profit.")

Hi

This pasted directly from an email from my friend in response to questions. We're VERY grateful for your advice. Thank you for taking the time.

1. K was not in debt as such, he just had a few credit cards and believed his credit rating to be poor, so asked his sister to do the paperwork with him as he thought her credit rating would be better. Therefore, in effect she was Guarantor. She did NOT pay anything out of her pocket or the company to the car.

2. The company paid the down payment, then K sold my car to repay it - so eventually my car paid for the down payment.

3. I don't actually know who or how or which account paid the monthly repayments. He may even have done it over the phone rather than a DD, I really don't know.

4. The loan was a car purchase agreement taken out in both names

5. There were two sales advice notes:

- the first named the Sister's old company (ceased trading a couple of years before K's death) as the "New Owner"

- the second superseded the first and named ONLY K as the New Owner

6. The partnership is not being disputed (don't know why the sister hasn't jumped on that one, but maybe she doesn't know that I have absolutely NO PROOF whatsoever that he was a 50/50 owner. He must be legally documented owner on paperwork like accounts etc and tax returns and VAT returns and company bank account etc. Besides there is a signed sales agreement somewhere between the other sister and Keith when he bought her out - I just can't find a signed copy!!!

7. They did NOT have a partnership agreement so, technically, by law, the partnership has automatically dissolved at his death. This seems to mean she can take over, take all profits and act as though he never existed and I can do nothing about it

8. Yes, K drew salary (cash in hand on a weekly basis, so did she) minus an amount to cover the monthly car payments. These ceased being paid the month before his death as they had missed a payment for the first time.

9. My Solicitor is agreeing that Linda owns 50% of the car due simply to the fact that she is named on the finance agreement, even though they have the sales advice.

10. My paralegal left in December and a new one took over. The new one and the actual Solicitor don't seem to have checked the case, read back the information I had already given Sophie, nor looked through the paperwork where they would have found the sales advice note.

11. Car was worth £37,000 at his death and had not depreciated as it was a track performance car converted for roads, rather than a standard Lotus.

12. Car was purely purchased for enjoyment and had nothing to do with the business and is NOT listed as an asset of the business, they just weren't particularly great business people!?!

so k is the owner, now falls to the estate.

if they did both sign the agreement

AND the car IS mentioned on the agreement.

I suspect its still own by the finance co, and if payments were to cease they could simply go take it.

need more info can you scan the agreement up please to PDF

[follow the upload

if not, tell use what type of agreement it is [HP/PCP/Bill of sale/conditional sale]

and who the finance company is.

OP appears to be wife of K.

Lotus is part of his Estate, but Finance Co can repossess if not enough of Loan has been repaid. IMO

Car will be sold and any resultant shortfall in loan outstanding can be claimed from loan Guarantor.

Pobate Solicitor should sort out the Estate asap.

agree, essentially the car is owned by the deceased BUT there is a liability to sister due from his estate that will have to be settled before anything else can be done with the assets. It may be that the simplest way of doing this is to sell the car and settle the finance and the amount due to her. If there is no will then an application should be made to the Probate Office do this but ut may be easier if his other estate is not complicated to just sell it and hand over the money to the relevant parties.

agree, essentially the car is owned by the deceased BUT there is a liability to sister due from his estate that will have to be settled before anything else can be done with the assets. It may be that the simplest way of doing this is to sell the car and settle the finance and the amount due to her. If there is no will then an application should be made to the Probate Office do this but ut may be easier if his other estate is not complicated to just sell it and hand over the money to the relevant parties.

More details pertaining to the car's potential ownership are on the OP's other thread

http://www.consumeractiongroup.co.uk/forum/showthread.php?474629-What-happens-when-business-partner-dies&p=4997935#post4997935

The original car loan may have been to a Ltd co. It isn't yet clear if the Ltd company or deceased were making the payments until the Ltd co. dissolved, and after that if the payments were from the partnership or the deceased. Complex one!.

(The car crashed, insurance has paid out, so hopefully the car loan has been paid off. If so, who is entitled to what share of any equity is still, as yet, unresolved).

Hi. The loan was definitely repaid by the insurers. The insurers then sold the car and the proceeds were paid to KR's estate. LM (KR's sister) is staking her claim directly to the solicitors doing the probate.

My friend cannot say how the loan repayments were actually made, other than confirming they were NOT made from their personal joint account. LM is resisting disclosing any accounts for "The Boutique" (which was named on the loan agreement) even though PR was company secretary, or of "The Café".