BC Parental Loans and Debts Alert.
Our BC parental loans and debts lawyers see more than spouses fighting in court after a marriage breaks down. Our BC Family Law Act cases can involve more than the two spouses when parents of one of the spouses are involved with advancing money to the couple. BC Parental Loans and Debts can become very messy if everything is done on a handshake or mere discussions. Call our BC parental loans and debts lawyers across BC at 1-877-602-9900 to meet with us in Vancouver, Kelowna, Surrey and Fort St John.
How To Avoid A Big Mistake
Parents get involved in the couple’s post separation property disputes most commonly when they have advanced money to help spouses buy a home, to pay off debt or to help them during hard times. Often after a marriage breaks down there is a difference of opinion on whether the in-laws of one spouse have either lent or gifted money to one or both of the spouses. If you advance money as a loan make sure you make it clear with a properly executed security document. If you don’t, what you may have thought was a BC parental loans and debts issue becomes one of a dispute centred on whether it was a loan to be repaid or a joint gift.
We have written a number of articles on how courts decide whether money advanced is a loan or a gift as well as what happens when money is advanced without any paperwork. In this article we will assume you had the good sense to have had the advance of funds clearly defined as a loan by having a properly executed documentation that is valid and binding. If you let things slide and don’t paper the real deal then BC parental loans and debts become a nightmare to deal with and they may be found to be gifts to both spouses.
If It Is A Loan From Parent to Child Put It In Writing to Save Headaches – Oh and Remember There Are Time Limits
If the money advanced really is a loan there needs to be proper security for it. A registered mortgage or a promissory note can clarify the terms on which money is advanced and prevent a whole lot of anguish and legal fees years after.
Danger Time Limits Apply!
- If you have a promissory note signed before June 1, 2013 you only have 6 years from the date it was signed to have your loan repaid or failing that to sue within 6 years or you will be statute barred under the old BC Limitation Act.The BCCA Court of Appeal decision in Kong V Saunders 2014 BCCA 508 held against parents who sued 14 years after then lent money on a promissory note concluding they had only 6 years from the date the note was signed to be repaid:
The claim is statute barred. As the loan was payable on demand, the limitation period began to run when the loan was made 14 years ago and expired ( the court held the Act mandated they had only 6 years to sue from the date it was signed) before the action was commenced. There was no agreement that demand would not be made prior to the sale of the house, and a unilateral understanding to that effect by the respondents is not sufficient to prevent the running of the limitation period.
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BUT-If you signed your promissory note with your in–laws or children AFTER June 1, 2013 then new rules apply. Under the new rule the loan limitation period to pay or sue is no longer 6 years from when you made the loan but 2 years from WHEN you demand repayment. The new BC Limitation Act effective June 2013 section 14, provides that “a claim for a demand obligation is discovered on the first day that there is a failure to perform the obligation after a demand for performance has been made”.
If You Don’t Paper It Blame Only Yourself For The Consequences
The new Family Law Act decisions regarding advances of money to spouses is in flux but one line says any monies advanced without security are presumed to be a joint gift to both spouses. Be smart and make things clear at the beginning and then be sure are repaid on the strict terms of that written security document.
Our BC parental loans and debts lawyers are a mere phone call away so before you lend, gift or borrow or take money or the transfer of property make sure everyone knows what the deal really is. Call us across BC at 1-877-602-9900 to meet with us in Vancouver, Kelowna, Surrey and Fort St John.
