Our Vancouver Calgary Family Gifts Loans Dispute Lawyers know all parents try to help their children have the best future possible. Our Vancouver Calgary Family Gifts Loans Dispute Lawyers also know this often means parents may lend or even gift their children money or a home. Sometimes they may lend or gift a downpayment to their child and maybe even their son-in-law or daughter in law. Our top ranked* Vancouver Calgary Family Gifts Loans Dispute Lawyers know this presents few problems if their child’s relationship remains stable and there is no relationship breakdown. Our Vancouver Calgary Family Gifts Loans Dispute Lawyers are fluent in Mandarin, Cantonese, Punjabi, Hindi, German, Polish, Spanish and French as well as English. Click here to meet with us at any of our 6 offices. Call us toll free at 1-877-602-9900.
We also have Vancouver’s largest Mandarin Chinese team of Vancouver Calgary Family Gifts Loans Dispute Lawyers. With new purchasers of high end homes being represented more frequently by Mandarin Chinese investors comes unfamiliarity with how BC’s family law regime affected gifts or loans made to children or couples who later separate or divorce. Given the value of homes in Vancouver and Calgary a dispute on whether something is a loan or a gift can easily involve millions of dollars.
Lorne N. MacLean, QC, founder of our Vancouver Calgary Family Gifts Loans Dispute Lawyers warns that unless the loan or gift is properly documented as a gift or loan and exactly who is the donee (the person getting the gift) or lendee (the person obtaining the loan), at the time it is made likely means an expensive family law court dispute is certain to arise.
Vancouver Calgary Family Gifts Loans Dispute Lawyers Explain Test For Family Loan Versus Family Gift
Our crack team of Vancouver Calgary Family Gifts Loans Dispute Lawyers reviewed the recent decision of BC’s highest court of Hsieh v. Lui and in today’s blog Lorne N. MacLean QC, founder of three time winner of our Top Choice Awards Best Family Law Firm extracts the salient legal points on this issue:
Did the judge err in finding the Mortgage was valid?
[52] Mr. Hsieh submits the judge erred in finding the Mortgage was valid because, he says, a mortgage charge cannot exist where, as here, it does not secure a debt. He also submits that the Hornby Street Property could not be transformed into an “encumbered gift” in June 1996, as the judge held, because it had previously been fully gifted to Ms. Lui. In support of his submission, he emphasizes the constituent elements of a mortgage and a gift and relates them to the evidence. He further emphasizes errors on the evidence the judge made and relied upon in finding the Mortgage valid. For example, she stated that a mortgage was always maintained on the Hornby Street Property, which is inaccurate, and suggested that the participation of Mr. Lui Sr.’s estate in the litigation evidenced an obligation on Ms. Lui’s part under the Mortgage, which it does not (paras. 96, 99).
[53] In my view, Mr. Hsieh is correct.
[54] A mortgage is an interest in property conferred by a borrower on a lender to provide a fall-back if repayment obligations are not met: Bruce Ziff, Principles of Property Law, 6th ed. (Toronto: Carswell, 2014) at 437; see also Duncalm Resort Inc. v. Rendezvous Lodge Ltd. (1998), 52 B.C.L.R. (3d) 64 (C.A.); Chan v. Chan, [1993] B.C.J. No. 442 (S.C.). In Walter M. Traub, Falconbridge on Mortgages, 5th ed. (Toronto: Thomson Reuters Canada Limited, 2003) (loose-leaf updated 2016, release 22) at para. 1:40, a mortgage is described as:
… a conveyance of land as a security for the payment of a debt or the discharge of some other obligation for which it is given, the security being redeemable on the payment or discharge of such debt or obligation.
[55] Modern mortgages do not usually take effect by way of a land conveyance. Rather, they operate by way of security as a charge against title: Zeligs Estate v. Janes, 2016 BCCA 280 at 58; Land Title Act, R.S.B.C. 1995, c. 250, s. 231.
[56] A gift is a gratuitous transfer of property for which the donor expects no remuneration. By its nature, once a gift is given it cannot be revoked by the donor: V.J.F. v. S.K.W., 2016 BCCA 186 at para. 49. The key factor for consideration in identifying a gift is the actual intention of the donor when the interest in the property is transferred: Beaverstock v. Beaverstock, 2011 BCCA 413 at para. 9, citing Pecore v. Pecore, 2007 SCC 17. A note signed after a gift was given cannot convert that which was a gift into a loan or another form of disposition: Phillips v. Phillips, 2008 BCSC 1233 at para. 35, per Savage J., as he then was, citing Locke v. Locke, 2000 BCSC 1300 at para. 25; Cabezas v. Maxim, 2016 BCCA 82 at paras 34, 41.
[57] Ms. Lui’s unequivocal testimony was that Mr. Lui Sr. did not loan any money to her between 1993, when the Hornby Street Property was purchased, and May 2, 1996, when the institutional mortgage was discharged. In other words, despite the reference to “historical advances” in the signed acknowledgment, in fact, there were none. Nor did Mr. Lui Sr. advance any money to Ms. Lui in relation to the Mortgage after it was executed or require her to make any Mortgage payments. Although the judge considered it “conceivable” that Ms. Lui granted the Mortgage to Mr. Lui Sr. in exchange for his previously repayment of the institutional mortgage (para. 99), she made no finding in this regard and there was no such evidence. The judge did not make a finding as to Mr. Lui Sr.’s actual intention when he acquired the Hornby Street Property and registered title in Ms. Lui’s name or when he cleared title by repaying the institutional mortgage on April 1, 1996.
[58] According to Ms. Lui’s brother, Mr. Lui Sr. asked Ms. Lui to grant the Mortgage on June 25, 1996 because he was “not comfortable” with her holding clear title given her impending marriage, not because the Mortgage secured repayment of a debt or other obligation. In addition, after she granted the Mortgage, it was Ms. Lui, not her father, who either received the rental income or lived in the Hornby Street Property. Further, Mr. Lui Sr.’s estate was added as a party to the litigation because the Mortgage was being challenged, not as evidence of its validity.
[59] Given all of the foregoing, in my view the judge’s implicit finding that the Mortgage secured repayment of a debt or obligation was based on a misapprehension of the evidence. It was plain on the uncontroverted evidence that it did not do so. Accordingly, the judge erred in finding that the Mortgage was a valid charge on the Hornby Street Property. As it did not secure repayment of a debt or obligation, it was not a valid mortgage.
[60] In addition, although the judge did not expressly find that Mr. Lui Sr. intended to transfer the beneficial interest in the Hornby Street Property to Ms. Lui gratuitously, she did refer to the property as a “gift”, albeit later encumbered by a Mortgage. To the extent the judge implicitly concluded that Mr. Lui Sr. intended to gift the equity in the Hornby Street Property to Ms. Lui when he repaid the institutional mortgage, I consider her statement at para. 102 to the effect that the “gift changed to an encumbered gift” to be an error in law. Once he gave it to Ms. Lui, Mr. Lui Sr. could not revoke his gift of unencumbered title.
Vancouver Calgary Family Gifts Loans Dispute Lawyers
Here no money was ever lent and title was put in the daughter’s name alone. Given there was clear evidence of a gift as opposed to a resulting trust arrangement, the BC Court of Appeal had an easy time determining the intent of the father. Putting a mortgage on after the transfer and not AT the time of the transfer made the result even more plain.
If you want to make a loan as opposed to a gift then ensue proper documents are executed that identify the loan and who owes it and what the terms of repayment are. Under our new Family Law Act it is also crucial when making a gift to specify if it is to only one of a committed couple as opposed to both. Things also get complicated on limitation periods to enforce repayment.
