Family as Tenants or What?

Question:


I have a client who is on title to a home with her husband that they purchased 5 years ago. 

Her adult son and his wife (either common law or married, not sure and don’t think it makes any difference?) has been living there since the purchase, with the son’s wife making the mortgage payments and tax payments to my client who owns the property by depositing it into my clients bank account, followed by the mortgage company pulling the funds out. 

Owners have paid for all improvements.

The son’s wife is now wanting to leave the home. My client doesn’t feel her son will be able to make payments. Question is is the DIL legally entitled to anything?

My client feels that she is morally, because she made all the payments, but the question is legally. Or are they both tenants? 

Answer:

This is a real life question and obviously a little more complicated than a theoretical exam question.

First, it does make a difference as to whether or not the couple were married.

Second, this is not strictly speaking a real estate question that can be answered by real estate agents. It was never, ever covered in any of the real estate courses or material. So be careful about offering a response.

Quite correctly, many have commented that there is a lack of a contractual agreement. That certainly seems to be the case, but that’s not the full answer here. Real estate ownership, tenancy, and mortgage rules do not appear to apply.

But, that isn’t the end of this. The daughter-in-law was paying some money monthly. What was the deal here? There was nothing written down, so the non-existent paperwork is certainly of no help. However, clearly there was a deal of some sort!

The parents are asking the question “morally” because they think that there might be something “legally”. This concerns me, and would form the basis of a claim. I just don’t know what the relevant facts happen to be.

Separate and distinct from the “law of contracts” is the “law of restitution”. It is an entire body of law, similar but somewhat different from the law of contracts. The key element there is that things don’t necessarily have to be in writing nor does an “agreement” have to be reached. If they are, then it’s naturally easier to prove. Under the law of restitution, proof is always a real challenge.

So, provided that she sues under the law of restitution, what does she get for her money: 1) just a monthly occupancy, or 2) an interest in the increased value of the property?

Assuming that she’s legally married, and assuming that she is separating, and assuming that this arrangement is simply a lease, she is entitled to an equal right of possession under the Family Law Act in addition to any rights she may have under the law of restitution for unjust enrichment. However, she has already indicated that she doesn’t want to live there. So, that’s not much help to her!

Brian Madigan LL.B., Broker

www.OntarioRealEstateSource.com

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