Q: Is it legal to write a novel based on a true story, and use the real names of the people involved?
A: Yes, but it’s probably more trouble than it’s worth. Since I’m not a lawyer, none of this is legal advice of any kind, FYI. But here’s what you’re up against:
Writing about a living person who is not a public figure may put you at risk of libel allegations. For that reason, journalists have to keep painstaking notes so that they can prove everything they put in print.
For example, I can write “Joe Lefty is a one-armed man” if I can back that up with a photo of Mr. Lefty sans limb. But if I want to write “Joe Lefty is a one-armed hit-man,” then I’d better have proof that he was convicted in some kind of murder-for-hire scheme, or I could be hearing from Lefty’s lawyers: Dewey, Cheetam & Howe.
On the other hand (sorry), you might have more leeway if Lefty is a public figure, like a politician, since the court might consider him to have given up a right to total privacy. Still, you need to be careful. Writing about a real living person is fraught with legal issues, so if you’re serious about it, check with a lawyer first.
But wait. Before you give up completely, remember that you’re a fiction writer. A novel is a fictitious work, meaning that you can write whatever you want, as long as you don’t present it as fact. Even if your story is a thinly-veiled version of the truth, you can still change the names, insist that it’s a work of fiction, and get away with… well, I don’t know about murder, but you can get away with a lot.
Hope that helps. Have fun writing!