What Happens When You Help a Spouse Buy Property but Your Name is Not on the Deed?
The Ontario Court of Appeal drafted two recent decisions that provide some clarity on this issue.
The first decision is Junker v. Hughes, 2016 ONCA 81 (CanLII). You can read it here.
In that case, the parties lived in a house purchased in 2000 for $272 000.00. The Wife made a down payment of $147 000.00 and the house was in her name only. The remainder of the purchase price was done via a mortgage in the Wife’s name only in the amount of $125,000. The house was sold in 2010 for $445,000.
The monthly mortgage payments were $1,604.45. The Husband was a contractor. He finished the basement and added a patio. The Husband paid off a loan to his Wife in the amount of $55 000.00, made periodic payments for household expenses and paid $550.00 per month. There was nothing in writing about the purpose of these payments, although it is clear that the Wife could not afford the house on her own.
The Ontario Court of Appeal upheld the trial judge’s decision that the purchase of the house was a joint family venture. Specifically it was a “common venture in which they expected to share the benefits flowing from the wealth that they jointly created”.
The Court of Appeal held that it would have been better if:
- The Husband had receipts and more details about the value of his financial contribution;
- There were legal documents explicitly stating the intentions of the parties regarding payment and ownership of the home;
- They had documents proving the value of the Home at the date of cohabitation and the date of separation.
The Court of Appeal upheld the trail judge’s decision that the Husband was entitled to:
- ½ of the accumulated equity in the house less the down payment of $147 000.00 or
- $86500.00, the estimated value of the Husband’s contributions.
Whichever was less.
The second case is Farkas v. Bedic, 2016 ONCA 82 (CanLII). You can read it here.
The Husband purchased a Motel five years before meeting his common law Wife. The Wife gave the Husband two loans totaling $125 000.00 to pay off the Motel’s mortgage. In exchange of for the loans, the Husband added the Wife’s name on title.
The trial judge held that the Wife was an owner of the Motel and she was entitled to ½ of the equity accumulated during the relationship.
The Husband argued that the Wife was not a ½ beneficial owner, but a trustee of the share with the Husband as beneficiary. The intention was that the Wife’s name would be removed from title once the loans were repaid.
The Court of Appeal disagreed with the argument that the Wife as a trustee. Usually, property is given to another person without compensation. The receiver is to hold the property for the benefit of the giver. In other words, the receiver is the caretaker of the property. In this case, however, the Husband received financial compensation (the loans) in exchange for the ½ interest. Also, the Husband actively engaged in the financial affairs of the Motel. This suggests that the Wife was not expected to be caretaker for ½ of the interest in the Motel.
The Court of Appeal looked at whether the purchase of a Hotel was a joint family venture. They examined the four factors used in making this decision.
- Mutual effort. This factor asks whether the parties worked collaboratively toward common goals. Did they pool their efforts?
- Economic integration. This factor asks whether the parties’ economic interests were intertwined. Was there mutuality and interdependence in their economic relationship – for example, through the use of joint accounts – that prevailed over their individual interests?
- Actual intent. The parties’ intent may be expressed or inferred.
- Priority of the family.
Once the claimant has established his or her contribution to a joint family venture, and a link between that contribution and the accumulation of wealth, the respective contributions of the parties are taken into account in determining the claimant’s proportionate share.