Family Help With House Purchase Can Backfire

Posted in: FAMILY LAW- Apr 20, 2018 Comments Off on Family Help With House Purchase Can Backfire

Sky-high house prices in parts of B.C. mean young couples sometimes need help from the “bank of mom and dad” to buy a house. The parents may want to assist financially. But to save legal fees, they too often do this by an informal family arrangement that’s not thought out or written down, which different family members see differently. This can backfire badly, with the two generations at loggerheads, ending up in court, and spending way more legal dollars. A recent court case offers an example.

Here, the mom wanted to help out her daughter and son-in-law. The young couple bought a house in 2005, with a basement suite for the aging mom and her husband to move into and live in. The mom contributed $150,000 (about 29%) of the purchase price. The step-dad, who had a long- standing alcohol problem, passed away several years later, and the mom continued to live in the basement suite alone. She also chipped in for house-related expenses over the years.

In March, 2014, her son (who had a criminal record) moved in with mom. Initially this was intended to be for just a short time. But it ended up continuing for many months, to the distress of the young house-owning couple. By year end, they had a major falling-out with the mom over this. When asked once again in November when he would leave, her son felt insulted and moved out. The mom also took offence and decided to move out in early 2015.

Result? A court case in which the two sides made wildly different claims. The daughter and son-in-law said the initial $150,000 from mom was prepayment of rent for the basement suite for 10 years. Mom, who never went on title or documented anything about the arrangement, said she was entitled to 29% of the house, which had gone up in value by 2017 when this went to court.

The trial court had to try and figure out what the arrangement really was to begin with. It then had to see if complex legal concepts like the “presumption of resulting trust” or “unjust enrichment” allowed the mother to get back some of her financial contribution. (Apart from the initial $150,000, she’d also paid some $28,500 toward house insurance, taxes and utilities). The court decided she could only recover the $28,500. She couldn’t get an ownership interest in the house (since she’d gotten the benefit of living in the basement suite for free for nine years, until she moved out).

The mom felt this decision was wrong and appealed. The appeal court agreed that in the particular circumstances, she should get additional compensation based on a complicated formula, though not an ownership interest in the house. The compensation amount was to be determined by the trial court if the parties couldn’t agree on it.

To avoid this kind of unhappy (and expensive) situation, best get legal help up front with any planned family financial arrangement.

This column has been written by Janice Mucalov LL.B as part of “You And The Law”. It provides information only and must not be relied on for legal advice. Names of the parties in reported cases have been changed or removed to protect their identity. Lawyer Janice Mucalov is an award-winning legal writer.

Life Thrown Off Track By Pain From Car Accident

Posted in: ICBC / INJURY- Apr 20, 2018 Comments Off on Life Thrown Off Track By Pain From Car Accident

A car crash may change a young person’s path in life. Accident injuries may lead to pain, depression and other psychological consequences that become deeply rooted, leaving the victim’s future under a dark cloud.

The BC Supreme Court was faced with such a case recently. A key question was whether the accident injuries, and their consequences, were responsible for the downward spiral in Carla’s life.

Carla (name changed), 19, was hurt in a 2010 car accident. She was a passenger when her boyfriend lost control of his vehicle on a highway early one morning. His car flipped over and landed in a ditch (the court concluded the accident was his fault).

Though wearing her seatbelt, Carla suffered serious injuries, including spinal compression fractures, soft tissue neck and back injuries, and bruising to her head, face and upper body. She also suffered a mild traumatic brain injury or concussion. Her injuries left her in pain, depressed and anxious about her future.

Unfortunately, the pain from her accident injuries over time became chronic, and fuelled her anxiety disorder and depression.

Before the accident, Carla’s dream was to become a nurse, and she still forged ahead toward that goal in the years after. She took a care-aide course and, later, a college nursing degree program. But due to the pain and emotional, cognitive and psychological problems stemming from the accident, she had to withdraw from these physically demanding programs.

Working toward her goals had given her some purpose and hope that she could still have the life she’d aspired to. But having to quit her nursing program in her second term, and giving up that hope, was a devastating psychological setback that sent her spiralling downward.

Carla was seen, evaluated and treated extensively by a number of medical professionals in the years after the accident. To help manage her pain, she was prescribed various medications, some of them addictive. Unfortunately, by the time of trial in 2017, her life was on a downward treadmill, and her prospects for improvement poor. Though she had tried working at other jobs in the years after the accident, it was doubtful whether she would be able to hold a job for very long in future.

The court decided her debilitating pain, depression and anxiety disorder – which aggravated each other in a “vicious cycle” – would not have happened but for the car accident. Said the court: “As a young person moving into adulthood, her life was seriously thrown off-track.” She’d become addicted to narcotic pain medication, yet her pain was still uncontrolled at the time of the court hearing. She was unemployed (and possibly unemployable). And she was socially isolated.

Carla was awarded $200,000 for her loss of life enjoyment as a result of the car accident. In addition, the court awarded over $1,000,000 for loss of past and future earning capacity and cost of future care.

This column has been written by Janice Mucalov LL.B as part of “You And The Law”. It provides information only and must not be relied on for legal advice. Names of the parties in reported cases have been changed or removed to protect their identity. Lawyer Janice Mucalov is an award-winning legal writer.

Better Offer: Can You Side-Step The First Deal?

Posted in: Real Estate- Apr 20, 2018 Comments Off on Better Offer: Can You Side-Step The First Deal?

What if you get a better house offer after you’ve (sort of) accepted the first offer?

Say you got the house in your divorce and list it for sale in a rising market. You receive an offer of $5.8 million and a deposit of $260,000. You’re not experienced in business matters, so your agent adds a subject condition for your benefit, stating the contract is subject to your legal representative/lawyer’s approval of its terms. With this, the purchase contract is agreed on Saturday, and your agent arranges for you to meet with a lawyer the following Monday.

Meantime, another potential buyer also views your house that Saturday and again Sunday. He makes an offer Monday morning for almost $170,000 more than the price you agreed to in the earlier contract; the deposit is higher too, at $400,000.

Later that Monday, you meet with the lawyer. You show him your earlier contract and the later offer. He goes over and compares some of their key terms for you. Both documents are on the printed standard form used in B.C. for residential deals, so the main differences involve some specifics of the two deals (like the obviously higher price and deposit of the later offer, and that for both, you might end up with just the deposit if the deal collapses).

Shortly after, you counter the second offer for a somewhat higher price. After the second buyer accepts your counter-offer, your agent notifies your first buyer that you won’t be removing the subject condition in the earlier contract.

Now things get nasty. Your first buyer doesn’t accept the cancellation, puts a notice on the title to your house so you can’t complete the later contract, and sues. He wants “specific performance” (i.e. a court order that you must go through with your earlier deal with him). You object, saying you didn’t waive the “lawyer approval” condition put into the contract.

Can you escape the earlier deal?

The BC Supreme Court pointed out that when a real estate contract is made subject to the approval of a third party (e.g., a lawyer), you have to act in good faith, and take reasonable steps to complete the contract; good faith is a general “organizing principle” in the performance of any contract. (For example, a buyer can’t just cancel and walk away from a purchase contract that’s subject to their lawyer’s approval, without even going to see a lawyer.)

Here, there was nothing legally wrong with or invalid about the first purchase contract. The subject condition in that contract was only about the terms and conditions of that contract – the seller didn’t even know a second offer would be coming. Her decision to try and cancel the first contract (after waiting for the later offer to be accepted) wasn’t really about her lawyer’s advice, but rather about getting more money.

So the court decided she couldn’t walk away from the earlier contract and had to go through with it.

This column has been written by Janice Mucalov LL.B as part of “You And The Law”. It provides information only and must not be relied on for legal advice. Names of the parties in reported cases have been changed or removed to protect their identity. Lawyer Janice Mucalov is an award-winning legal writer.