Question:
I have been contacted to list a property.
Parent buys home, for themself and adult child to move into. Parent uses HELOC, and leaves $100,000 owing on the property. Parent is only one on title.
Adult child has access to some funds and then pays off the $100,000. Leaving $0 owing on property.
Parent is still on title only. Adult Child does not pay rent.
Parent and adult child live in home: separate levels, separate entrances.
Time goes by. Parent now wants to sell. Adult child does not want Parent to sell and tensions rise.
Adult Child offers to buy home from Parent. Parent has doubts that Adult Child will be able to, and so the home will likely go on the market against the Adult Child’s wishes.
What are the complications?
Answer:
This is somewhat problematic. You said: “Parent buys home, for themself and adult child to move into”. You mean the parent bought it for themselves alone, with the house to be occupied by both themselves and the child? It was solely in the parent’s name alone.
However, there is another interpretation. They bought it for both of them to own. For some reason, the child doesn’t go on title, perhaps too many debts etc. But, the parent takes title basically “in trust” for two beneficiaries, themselves, and the child. In what proportions? The trust arrangement would help explain the HELOC payment.
The problem is that you need more facts before moving forward. Do you have one client or two? You might need the “informed consent” of both before moving forward. Best to resolve the issues at the outset. You need all the relevant underlying facts!
They should consult a lawyer. The question is whether there was a “resulting trust” in this case. That is, a trust that arises out of the circumstances. It was “implied”. There was no “paperwork”.
Hopefully, one lawyer can resolve this for them with all the facts at hand, otherwise it’s two separate lawyers and all the consequent delays that can follow.
Brian Madigan LL.B., Broker