For many young couples, having parents who are able to help with the purchase of a first home can be an extremely helpful way to start their journey together as a family. However, it’s important to remember that there are details in such arrangements that are important to address. In a recent decision issued by the Ontario Superior Court of Justice, one father’s failure to leave a will in place left his intentions about land given to his son up in the air.

The land

The husband and wife were married on January 8, 1983. They separated on March 1, 2011. By this point, the only issue still not resolved was whether they had any interest in a property they had lived on for decades but was not legally theirs.

In 1987 the father purchased 15 acres of land in Ontario. He purchased it with the intention of eventually subdividing it and building homes for resale. Prior to attempting to do so, he allowed his son to take a portion of the land and build a home on it. While the father purchased the land, the son and his wife financed the construction on the home in 1989.

Later that year, the father discovered that his application to sever the lot had been denied, meaning they could not subdivide the land and built additional homes for it. At the same time, the husband and wife had run out of money to finish construction. The father mortgaged his own home to lend them $80,000 to finish construction.

Both father and son were devastated by the news that they would not be able to build additional homes on the land. However, the son said that his father said not to worry, as all the land would eventually be his.

The father dies without a will

The father died without a will in 2004, which meant that his intention to provide his son with the land was not formalized. The husband and wife claimed they have a beneficial interest in the property through an unjust enrichment claim. However the estate claims that an agreement between the husband and his father has no been made out on the facts or the law, and that any claim for a propriety interest in the property is too late to make.

Is there unjust enrichment?

The court first determined that it was not too late to bring a claim for unjust enrichment. The court looked at the work the husband and wife did to the home, including replacing the roof, installing an HVAC system, and paying the property tax on the house and the land. The court wrote,  

“It is reasonable for the Husband and Wife to expect to receive some benefit for their ongoing improvement and upkeep of the Property. It is true that they were able to live on the Property at a lower cost than if they had purchased the Property themselves. However, the Husband and Wife were both clear that they would have never expended the time and money that they did on the Property had they believed they would not receive an interest in it.”

While the court was not able to determine if there had ever been a promise to give the husband the land, there was no doubt that the estate benefited from the work they did to it. The land and home were ordered to be sold, with 75% of the money going to the husband and wife to divide, and the remaining 25% to go to the estate.

Contact NULaw in Toronto to obtain proactive legal advice and plan your intergenerational wealth retention strategy. We provide unparalleled personal guidance for all your estate planning needs. Understand your options, minimize your legal and financial risks, and protect your loved ones. Contact us online or at 416-481-5604 to book a consultation today with estate planning lawyer Lex Arbesman.