It's important to get things in writing if you're taking title in a property with family members.
By: Mark Weisleder
Family members often decide to take title to properties together for various reasons, sometimes for estate planning purposes, but primarily when one family member alone cannot qualify for a mortgage. However, if there is no written agreement regarding ownership and who is making the payments, it can become very expensive to change the title later. A continuing legal dispute in B.C. is an example of when things went wrong:
In 1990, Yuk Chun Suen, known as Albert Suen, moved to Vancouver from Hong Kong with his wife, two daughters and son, Andy. He bought a home with his wife, sold it and bought a new home on Pender St. in Richmond B.C.
Andy graduated from University in 1998 and started contributing $1,000 per month to the family expenses. In 2000, Andy’s girlfriend Angela, later his wife, moved into the home on Pender St. and cared for her mother-in-law, until her death in 2001. Thereafter, Albert became the sole owner of the Pender St. property. Based on evidence presented during a civil suit, Albert could not control his spending and started going into debt.
In 2002, again based on evidence presented during the suit, Albert agreed to transfer half of the Pender St. house to his son in exchange for Andy looking after the expenses. The agreement was not put in writing and Andy was never registered on the title. The Pender St. property was sold and a new home was purchased on Captain’s Way in Richmond, partly with the proceeds of the sale of Pender St., and partly with Andy’s money. Title to this property was registered in both Albert and Andy’s names.
Then problems arose after Albert continued piling up debt, according to evidence presented at trial. It was Andy’s position that since he had made the payments on the Pender St. property as well as the Captain’s Way home, his father Albert’s portion of the Captain’s Way house was really held in trust for his benefit. Albert’s view was that he was entitled to a 50 per cent ownership until his death, when the property would go to Andy.
Albert sued Andy to confirm that he owned 50 per cent of the property and Andy countersued claiming 100 per cent, based on his financial contributions. At the trial in 2012, judge Peter Rogers of the B.C. Supreme Court ruled that Andy became the beneficial owner of 100 per cent of the property as a result of the 2002 agreement, based on all the evidence that he heard. A key piece was an alleged statement by Albert that “the house is yours if you agree to come back and live with me and pay my debts.”
Judge Rogers concluded that Albert did not contribute to the purchase of the Captain’s Way property and was not expected to pay for its upkeep.
The case was appealed to the BC Court of Appeal. In her June 28, 2013 decision, Madame Justice Daphne Smith had issues with the fact that the supposed 2002 agreement was not written down and may have just been gratuitous promises that were not binding on Albert. She did, however, leave open the possibility that Albert may have been unjustly enriched by remaining the 50 per cent owner without contributing his share of the upkeep. She sent the case back for another trial to determine if Andy should recover more than his 50 per cent ownership based on his contributions to the property.
It is hard to imagine the legal fees involved in both the initial trial and appeal, as well as what may become a second trial. All of this could have been avoided if a clear written agreement had been entered into at the time title was taken in the first place.
When family members take title, and it is intended that only one member will pay all expenses and effectively be entitled to 100 per cent ownership, it is important that all of this be carefully documented right at the beginning. This will avoid arguments among the remaining family members later on if disputes arise.