Renting property to family can get awkward quickly, but things could get even messier for your heirs unless you’ve documented the arrangement.
Pick an estate disputes at random from the cases currently being heard in Ontario courts and there’s a good chance you’ll find an argument over the use of the deceased’s property.
That’s because surviving beneficiaries are often not as willing to honour the friendly favours and family discounts offered by the deceased, especially if the dynamic is complicated by any of the tensions that often accompany in-law relationships or multigenerational living.
At least some of those factors were at play in a recent Ontario case concerning an elderly woman who claimed her deceased son had promised she could remain in his condo rent-free for life.
According to the decision, the son did not leave a will, so his entire estate went to his own toddler, while ownership of the condo passed through survivorship to his ex – the mother of the young child.
The deceased’s ex could not afford to carry the cost of the condo mortgage on her own, so she asked the court to order her former mother-in-law to pay occupation rent.
In the end, the judge sided largely with the younger woman, finding that there was no corroboration for the mother’s informal rent-free agreement with the deceased.
As a result, the older woman was ordered to vacate the unit within three months and pay monthly occupation rent, backdated to the point – eight months after her son’s death – when his ex made her objection to the rent-free deal known. The judge set the monthly rent at $2,200 based on an assessment of the local rental market.
The deceased mother still has an outstanding claim for dependant’s relief under Ontario’s Succession Law Reform Act, which allows dependants of the deceased to make a claim against the estate if they are inadequately provided for in the will. Under normal circumstances, these cases are brought by a spouse who was left out of the will, but the law also makes room for claims by other relatives of the deceased, as long as they can prove that they were receiving support from the testator immediately before their death.
This case and others like it are a reminder of how important it is to clarify your relationships, detail your intentions regarding your property and formalize any agreements in place with friends or relatives as part of your estate plan.
Whatever your individual circumstances, it’s important to find an experienced professional who can ask the right questions about your spousal and family situation, and ensure that everyone who needs to be is accounted for in the will.
Disclaimer: The content on this website is provided for general information purposes only and does not constitute legal or other professional advice or an opinion of any kind. Users of this website are advised to seek specific legal advice by contacting members of Laredo Law (or their own legal counsel) regarding any specific legal issues.
