Legendary fashion icon, André Leon Talley, is facing eviction from the New York mansion he calls home. According to reports, the legal owner of the house, former CEO of Manolo Blahnik USA, George Malkemus, has taken legal action to evict Talley from the mansion he has called home since 2004. In his defence, Talley claims that he had an agreement with Malkemus which gave him an equitable ownership interest in the house. Talley’s defence is that at the time, circumstances prevented him from purchasing the property in his own name and he entered a ‘gentleman’s agreement’ with his friend who would purchase the property and Talley would pay him off over time.
I must admit that reading about this situation made me sad. I love André Leon Talley. I love how large his personality is and how unapologetically ALT he is. I love that he patronises a Nigerian designer, Patricia Torlowei, who makes his Kaftans. I want him to win this one but I fear that unless he has good documentation about the supposed agreement giving him an equitable interest in the property he’ll be out of pocket and possibly out on the streets.
Under the supposed agreement, while Malkemus would be the legal owner of the house, Talley would be the owner in equity. What exactly does that mean? Essentially, an equitable interest is an enforceable promised right. In common law jurisdictions (Nigeria, the US, and other countries that derived their laws from England) one can rely on law or equity. Law is the body of rules that are made by legislation and enforced by the courts. Equity on the other hand is a body of rules that have been developed over time to deal with such equities and equitable interests. Equity looks to what is fair and just in given circumstances.
In real estate, an equitable owner is the one who takes the benefit of the property such as living on the property while the legal owner is the one who owns the legal title of the property. The equitable owner makes payments to the legal owner with the intention of taking over legal ownership of a property. The legal owner is the recognised owner by law until title to the property is transferred. The legal owner’s name is on the title documents for the property and bears all legal responsibility for the property. When the equitable owner fulfils the terms of the ownership agreement, legal ownership is then transferred to the equitable owner.
Usually, such arrangements are required to be in writing, with the intention that the promise to transfer ownership is enforceable. From what I have read, it does not seem like there was any written agreement to support this claim of an interest in equity. I may be wrong about that but reference to a ‘gentleman’s agreement’ gives me no confidence about the existence of a written agreement.
Here’s my take:
Lesson 1: When money is involved, be clear on the terms. Whether you are dealing with family, friends, or business relationships, the colour of money remains the same. Is it a gift? Is it a loan? Is it a payment for an equitable interest in something? Be clear.
Lesson 2: Use written agreements. A ‘gentleman’s agreement’ is insufficient for transactions in real property. Don’t do it! Write out the agreement and share the resulting document with all parties involved. Be ‘extra’ about it. Do the most! Be sure that your understanding is their understanding and you are all in agreement.
Lesson 3: Getting legal advise may seem like an unnecessary pain in the behind, but it’s more likely to save your behind from costly mistakes than not.
Lesson 4: “Where large sums of money are concerned, it is important to trust nobody.” – Agatha Christie, Endless Night.
For more reasons to use written agreements, read the article on 5 Reasons to Use Written Agreements in Business Dealings.
Yep when it comes to money have a written contract signed by all parties involved