Planning to Move in With the Kids? Read This First!
Posted on February 6, 2018 by David Severide in Featured, Real Estate
Given the extremely high cost of housing, there is a growing trend in the Lower Mainland for elderly parents to provide substantial amounts of money towards the purchase or renovation of a house owned by a child, on the understanding that in return for advancing the money, the child will allow the elderly parents to reside in the home owned by the child, perhaps in a separate suite. Sometimes these informal arrangements also include an expectation that some level of care and support will be provided by the child, such as meals, basic nursing care and the like.
While this appears on the face of it to be an arrangement that benefits both the child and the parents, unfortunately the consequences of such co-operative living arrangements can become quite devastating. In a recent BC court case, the parent who contributed $150,000 towards the purchase of a house by her daughter and her husband in exchange for being provided with a basement suite at no-cost, was forced to sue her own daughter for the return of her money when they had a falling out and the mother moved out.
In this case, as in most of these fact patterns, there was never any thought given to legally documenting the arrangement so that each party had some protection and a possible legal remedy should the arrangement come to an end. The mother had advanced $150,000 simply on a verbal understanding and the trust that she had in her daughter based on their family relationship.
The initial court hearing, at the trial level, went poorly for the mother and she was denied any remedy for the loss of her money, primarily on the basis that she was really only pre-paying rent for her suite and did not acquire any beneficial or legal interest in the house. The mother appealed that decision, and in the court of appeal she was able to convince the court that she was entitled to some of her money back on the basis that it would be unjust for the daughter to keep all of the money, plus enjoy the appreciation in value of the house over time, and finally to receive rental income from the basement suite!
Of course having hired a lawyer to both represent her at a trial and then at an appeal, you can imagine that there would not have been much money left over for the mother having paid her legal costs to seek what she believed to be fair.
This legal mess could have quite likely been avoided by having a proper legal contract prepared at the beginning to clearly establish what the arrangement was and what should happen if either party wanted to end the arrangement.
If you are interested to read more about this particular case, click this link: MacKinnon v. Donauer, 2017 BCCA 437