Some of the characters in my book are based, either in part or whole, on someone I know. Do I have to let those people know they are being - for lack of a better word off the top of my head - "used" in my story? What if I change their names? If I don't (change names)? If I only use part of their name but to people who know them it's obvious who it is? (like my friend JACOB last year he made us call him DAVE and now I am the only person who still calls him DAVE and say I have a character based off him named DAVE do I have to tell him?) What might happen if I don't let them know?
if you don't let them know and get their permission and their 'characters' are easily identified by friends and family as 'them' and they don't like how you portrayed them or what you have them doing in the story, you could possibly be sued for defamation of character and/or invasion of privacy, even if it's fiction... so before you indulge this little whim, you should consult a literary attorney, to make sure you're not leaving your nether parts uncovered... however, if you're only blending certain characteristics of those you know into totally different fictional characters, it's nothing to worry about...
I don't have any legal advice but I have a few characters that have been inspired by real people. I either use a different name entirely or ask the person if they mind if I use their first name. Most people don't mind and if they do just go the different name route. Of course I write YA Fantasy so the story is never something that the person would have done unless they can control hot and cold or something else odd and they're hiding it from me.
I used to write stories all the time with people I knew from real life, but normally I just kept their first name, and changed just about everything else about them. It's not like those were things that I did much with, anyways But if you were to make it so that they were just like they were in real life, that might be different
