Plaintiff has Difficult Time Proving He and Friend Had an Agreement on Condo Ownership

written on behalf of Feigenbaum Law

One thing that always comes up when we discuss matters related to contracts or estate disputes is that having a written agreement will always be helpful regardless of whether the contract relates to a business agreement or a will. While oral contracts can be enforced, it can be difficult to prove an arrangement between parties. Take for example a recent decision issued by the Ontario Superior Court of Justice in which a plaintiff argued that he and a friend had an arrangement where the friend would be the name on a mortgage for a condo, but that he would be the beneficial owner of the condo and make payments towards it. When the friend died, her estate challenged that there was an agreement between the two. Read on to find out how the court approached the matter.

Friends agree to purchase a condo together

BA told the court that by 2011 DB approached him to say he could no longer afford to make payments on the property (this was during the deposit phase and four years ahead of the closing date). BA testified that he agreed to make the final deposit as well as mortgage payments and that he would pay DB $34,000 when the property was eventually sold.

The circumstances leading to the dispute are unfortunate. The plaintiff (“BA”) and his friend (“DB”) had wanted to purchase a condo unit as an investment property. However, due to credit issues, DB was unable to secure a mortgage. Instead, his common-law partner with whom he had four children (“VW”) was able to secure a mortgage. It was purchased for $247,900. About 25% of the purchase price was required as a down payment in the months leading to the closing date, at which time a mortgage in VW’s name was issued for $190,000. BA told the court that he made at least $12,395 in deposit payments by depositing funds into VW’s bank account.

The exact arrangement between the parties cannot be confirmed because VW passed away in 2016 after a battle with cancer, and no amendments were made to the mortgage that indicated BA had an interest in the condo.

It was at this time that BA approached VW’s children to tell them that while his name was not on the mortgage for the condo, it was in fact intended to be his and that he had made significant contributions to its purchase and ongoing financing. With VW not alive to testify and no written contract in place, the court was asked to sort out whether there was an express trust which would give BA ownership of the condo.

There was no dispute that VW entered into an agreement of purchase and sale for the condo on November 23, 2010. There was also no dispute that BA made almost all of the mortgage payments on the unit from the date of closing until 2018. He made these payments by depositing money into a bank account controlled by VW.

BA’s position was that he had bought several condominiums over the years by entering similar arrangements with friends, all of which had written agreements, though this one did not.

Children of deceased say there is no record of an agreement

One of VW’s children testified at the trial that there was no direct evidence of an arrangement between her parents or her mother and BA. She told the court her understanding was that her mother owned the condo and that BA managed it in exchange for the rental income he was able to obtain. She said her mother said the condo would be left to her children after she died, and that BA would likely claim he owned it.

Further difficulty in finding the truth came about as a result of DB not testifying. DB’s relationship with his daughter as well as with BA had suffered in the years following the death of VW because of the dispute over condo ownership.

The daughter told the court she was surprised when BA contacted her to tell her the condo was his and that he was prepared to pay her $34,000 out of the proceeds of its sale. She also told the court that while it was clear BA was paying the mortgage, she understood it to be a result of the agreement he had with her mother.

Is there an express trust?

BA’s position was that there was an express agreement between the parties that VW was holding the condo in trust for him. The court stated there are three essential conditions for finding the existence of a trust. They are:

a.      The language of the settlor must be imperative;

b.      The subject matter or trust property must be certain; and

c.      The objects of the trust must be certain.

The court added that a 1993 decision from the Ontario Superior Court of Justice also required that for a trust to be valid, a clear intention to have created it must have been made.

In this case, the lack of actual evidence left the court unable to make any determination that VW intended to hold the property in trust for BA. The court noted that BA did not call DB as a witness, and with VW no longer with us, and nothing in writing, he was the only person who could have backed up BA’s version of events.

Feigenbaum Consulting in Toronto can assist you with any wills and estates related issues

While the case discussed today is not the type of situation most people will hopefully ever find themselves involved in, it does highlight the importance of estate planning and putting a will in place that aims to address in clear, direct terms, what someone wants to have happen to their estate. In addition to proactive planning, the legal team at Feigenbaum Consulting also helps clients in issues related to estate litigation for any type of issue that might arise after the death of a loved one. Feel free to reach us online or by phone at 1-877-275-4792 to see how we can help you today.