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Toronto High Net Worth Family Lawyers

Vancouver Family Debts and Parental Loans. Are they really loans? How Does the Vancouver division of family debts work? So your parents advanced to you half a million dollars after your marriage to help you with the down payment of your dream house; now you are separating from your spouse, and your parents are saying that money was a loan and asking for repayment from you and your ex-spouse, threatening with litigation, and your ex says it has nothing to do with her. What do you do? Is that transfer truly a loan, or a gift? And if it’s a loan, how should it be divided under BC family law? Our Vancouver Family Debts and Parental Loans can help you understand how it works and how to avoid costly mistakes in this area. Jian Kang of our Vancouver office guides you in today’s blog.

That scenario is surprisingly common in B.C. family law. Family lawyers at MacLean Law regularly deal with issues of Vancouver Family Debts and Parental Loans, which is one of the most common and important – but misconceived – issues in BC family law.

In this blog, our Mandarin-speaking divorce lawyer Jian Kang answers the above questions by analyzing a recent case of the B.C. Supreme Court – L.C.N. v H.C.M, 2018 BCSC 2058, where the Court listed 7 factors to help with the analysis of how to treat Vancouver Family Debts and Parental Loans.

Vancouver Family Debts and Parental Loans -The Issue 1 877 602 9900

In LCN, the parties began their common-law relationship in 2000 and separated in January 2016.

They purchased a family home in 2003. Throughout the relationship, the husband’s parents advanced to him about $210,000.00 to pay the down payment of the house and its mortgage payments, after he stopped working following suffering a major head injury in 2009, 

In 2012, the husband’s parents commenced a legal action to recover the money claiming it was a case of Vancouver Family Debts and Parental Loans. The wife says it was the first time she learned that the parents treated the money as a loan. The parents sought to register mortgage of that amount against both parties’ interest in the house but, because the wife did not consent, they ended up registering against their son’s share only.

The main issue the court had to decide on was whether the money received from the husband’s parents was a family debt to be set-off against the proceeds in some way and, if there is a set-off, should the debt be divided equally or unequally?

The wife says the money is not a family debt, and even if it was, she should not be held responsible for any of it (namely, she was seeking a 100% unequal division of the debt in her favour). The husband says it was a family debt and the wife knew it, and it must be divided equally.

Vancouver Parental Loands and Family Debt
Jian Kang, Family Property and Debt Division Lawyer, MacLean Law

Vancouver Family Debts and Parental Loans – The Answer

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The Court “answered” the above questions by firstly setting out the relevant sections in the Family Law Act.

[33]        Under s. 81 of the FLAspouses are both entitled to family property and they are both responsible for family debt. Further, on separation, each spouse has a right to an undivided half interest in all family property as a tenant in common and is equally responsible for family debt. This is subject to an “agreement or order that provides otherwise”, as sought by the claimant here and discussed below (and subject to exceptions in the FLAnot applicable here). In addition, under s. 86(a), family debt includes all financial obligations incurred by a spouse during the relationship.

In that case, the wife’s evidence is that they had an agreement to keep their finances separate. The husband disputed it, but his evidence was found unreliable by the court.

Although the Court generally accepted the wife’s evidence that there was some degree of separation of their finances during the relationship, it held that it in no way conclusive. It confirmed the long-standing proposition that “where the advance was gratuitous, the onus is on the party claiming a gift to demonstrate that fact” and that the determination of that issue “requires a review of evidence.”

It then went on to analyze the evidence based on the seven factors listed in a leading authority, which are:

1.   whether there were any contemporaneous documents evidencing a loan;

2.   whether the manner for repayment is specified;

3.   whether there is security held for the loan;

4.   whether there are advances to one child and not others, or advances of unequal amounts to various children;

5.   whether there has been any demand for payment before the separation of the parties;

6.   whether there has been any partial repayment; and

7.   whether there was any expectation, or likelihood, of repayment.

Ultimately, the court held that the money was a loan, not a gift. It primarily relied on the fact that in 2012 – four years before the parties’ separation – the parents registered a mortgage on their son’s interest and sued the parties for repayment. The evidence on all other factors was lacking, but it did not prevent the court from reaching that conclusion.

Unequal Division of the Family Debts

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The court then went on to consider whether to divide the debt equally and decided not to: it ordered the husband to shoulder 75% of the debt and the wife 25%.

That conclusion was primarily based on the husband’s non-payment of child support and financial non-disclosure, which had caused the wife to independently raise their two children by her modest income in the previous –and likely the coming–years.

Note that these factors make this fact pattern rather unique – be sure to consult us on how the law applies to your case.

Best Vancouver Division of Family Debts Lawyers

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MacLean Law has been named Vancouver’s top family law firm for the past 6 years, threebestrated Vancouver and Surrey family lawyers award winners repeatedly, Consumer Choice top Vancouver and Surrey family law firms, and leading Canadian lawyers by Doyle’s Guide. We can help you when you have a Vancouver Family Debts and Parental Loans dispute you need help with. We can explain how the Vancouver division of family debts works.

MacLean Law continues to provide top-notch legal service to you during the COVID-19 crisis, through remote video and phone. Call us toll-free 1 877-602-9900 to see how we can best protect you on parental loan issues. Our multi-cultured legal team offers services in Mandarin, Cantonese, Punjabi, Farsi, and other languages – ask us if we can serve you in your native language. If you have a question concerning the Vancouver division of family debts, call us early to avoid negative consequences.