Family Home Loan Or Gift Lawyers deal with cases where parents have advanced money to their child and son or daughter-in-law to buy a family home. When marriages or relationships break down Family Home Loan Or Gift Lawyers need to help sort out whether the money advanced was supposed to be repaid and on what terms and when or whether it does not need to be repaid at all because it was a gift.
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Is a down payment from a family member towards your primary residence a gift or a loan? In today’s blog, Gurdeep Randhawa of our downtown Vancouver office explains the test.
Our senior Family Home Loan Or Gift Lawyers note that In Wade v. Wade, 2019 BCSC 920, the B.C. Supreme Court discussed how an $84,000.00 down payment by a former spouse’s mother towards the purchase of the Family Home should be treated.
The parties purchased the former family residence in December 2013. The parties agreed that it is a family asset, that it should be split evenly and that the valuation to use is $740,000. The dispute was over how the down payment provided by the Respondent’s mother to enable the parties to purchase the home should be treated.
The Respondent’s mother provided the down payment of $84,000.00 towards the purchase of the Family Home. The Respondent alone applied for the mortgage as the Claimant had significant outstanding student loans. The Respondent was put on the title alone for the same reason.
The Respondent argued that the down payment should be excluded. The Claimant took the position that the down payment was a gift from the Respondent’s mother to both of them so she is entitled to half. The down payment was $84,000 making this a dispute over $42,000.
Family Home Loan Or Gift Lawyers Call 1 877 602 9900
Family Home Loan Or Gift Lawyers know intention at the time of the transaction is key. The Court found that the down payment was not a gift to the parties—it was a loan. It was provided to the parties for a down payment on the condition that it would be repaid when the house was sold. As such, the Court found that the down payment does not form part of the Claimant’s interest in the Family Home.
The Court considered the intention of the transferor at the time of the transfer of funds in Yang v. Zhang, 2017 BCSC 524:
 Whether a transfer is a gift depends on the intention of the transferor when the transfer was made: Pecore at paras. 5 and 24; Beaverstock v. Beaverstock, 2011 BCCA 413 at para. 9. The court must attempt to ascertain, on a balance of probabilities, the transferor’s actual intention. The presumption of resulting trust will only determine the result where there is insufficient evidence for the court to conclude that the transferor actually intended the transaction to be a gift: Pecore at para. 44; Beaverstock at para. 11. Thus, the presumption operates only in doubtful cases: Mawdsley v. Meshen, 2010 BCSC 1099 at paras. 283-90, aff’d 2012 BCCA 91, leave to appeal ref’d  S.C.C.A. No. 182.
In considering the intention of the Respondent’s mother at the time of the transfer of the funds, the Court relied on the circumstances in which the down payment was made:
In order to approve the Respondent’s mortgage application, the bank required the Respondent’s mother to complete a gift letter. It is addressed to the bank in question and is a standard form with blanks to fill in. The body of the letter reads as follows with the underlined portions being the blanks filled in by the mother:
This is to confirm that a financial gift in the amount of $84,000.00 has been made to Aaron Wade and NA to assist in the purchase of a home. These funds are being provided as a gift and will never have to be repaid.
We further confirm that we are an immediate relative of Aaron Wade and NA and that no part of the financial gift is being provided by any third party having any interest, direct or indirect, in the sale or purchase of the property being mortgaged.
The Respondent’s mother testified that she understood that the gift letter was to be made out to the respondent only as he alone was applying for the mortgage. It was clear from the evidence from all of the witnesses that the gift letter was filled out solely because it was required by the bank.
The Court stated that the gift letter and the mortgage being in the respondent’s name alone do not assist in the determination of the character of the money advanced. As such, the Court put no weight on the statements contained therein, namely that the money was a gift to the respondent or that the money did not have to be repaid.
The Respondent’s mother testified that at around the same time that she provided the down payment, she was helping all of her children buy houses. She further testified that in doing so she had discussed with all of her children that the deposit was to be paid back to her when they sold their homes.
She made clear throughout her testimony that she specifically wanted the down payment to be for her son alone and that she had had reservations about his relationship with the Claimant.
Court Accepts Mother’s Evidence It Was A loan Not a Gift Call 1 877 602 9900
The Court stated that it accepted the Respondent’s evidence that she gave the parties the down payment on the condition that it would be repaid if the house was sold. Her evidence regarding the further assistance she provided corroborates that. She testified that she continued to assist the parties financially after they purchased the property to make sure that they could pay their mortgage and their debts in order to “protect her investment”. She stated that she “felt that she had a large quantity of her money involved” and that she felt that she had an “interest in this property” and wanted to safeguard it.
The Court ordered that:
 Having regard to all of the evidence I am satisfied that the down payment provided by [the Respondent’s mother] was not a gift to the parties – it was a loan. It was provided to the parties for a down payment on the condition that it would be repaid when the house was sold.