A recent B.C. Supreme Court battle should serve as a caveat for relatives thinking of jointly buying property.
This one pitted a daughter against her mother in connection with a home purchase where they did not put their agreement in writing.
In a July 18, 2014, ruling, Justice Barry Davies reminded us about the pitfalls of “undocumented or under-documented inter-generational ventures entered into amongst family members”.
As Davies observed in his reasons for judgment: “All too often…the best of intentions result in sorrow.”
In the case filed by Catherine Ann Cerenzie and her husband against the woman’s mother, Mary Teresa Duff, “what is lost by all involved…is far more than money.”
“The real loss,” Davies wrote, “is the love and trust which gave rise to the venture in the first place and which likely will never be regained.”
Wading through conflicting testimonies, Davies was able to piece together a narrative around the purchase and eventual sale of 1064 Buoy Drive in Port Coquitlam.
The property was purchased by Duff and her daughter in 2008 out of the younger woman’s desire to have a stable home for her three children. When mortgage financing of $464,000 was first approved, it was contemplated that both Duff and Cerenzie were to be the mortgagors.
“It was only later, after Mrs. Duff advised Mrs. Cerenzie that she would eventually qualify for lower property taxes, that the Buoy Drive Home was conveyed only to Mrs. Duff rather than jointly to her and Mrs. Cerenzie, with Mrs. Cerenzie then becoming a guarantor rather than a co-borrower on the mortgage obtained for its purchase,” Davies recalled.
Duff made a $137,000 down payment, and the Cerenzies contributed $5,000. The Cerenzie family occupied the upstairs of the house, while Duff moved into a suite on the lower floor.
Although there is “insufficient evidence of the specifics of the arrangements”, Davies noted that there was “general agreement” between the parties on buying a suitable home that they could all “collectively afford”.
One aspect of this agreement was that Duff would contribute $500 monthly toward paying off the mortgage and the Cerenzies would shoulder the balance of mortgage payments.
In the spring of 2012, Duff “began to assert sole ownership rights by unilaterally determining to sell the Buoy Drive Home”, Davies wrote.
Davies didn’t go into why there was a falling-out. He noted that there had already been “sufficient discord and recrimination in this litigation to likely irreparably poison the once good relationship between the parties”.
The Cerenzie family was evicted, and Duff sold the house.
During the trial, Duff testified that the Cerenzie family was her tenant, an assertion that the judge rejected. Davies agreed with the plaintiffs’ claim: “In this case, Mr. and Mrs. Cerenzie submit that evidence establishes that they are entitled to a share of the Sale Proceeds both by imposition of a resulting trust or by application of the equitable principle of unjust enrichment.”
The judge determined that the Cerenzies contributed a total of $83,913.86 toward the purchase of the house: their down payment of $5,000 and mortgage payments totalling $78,913.86.
Duff contributed $155,510.66, which is the sum of her down payment of $137,000 and her monthly mortgage payments.
Although Davies agreed that the Cerenzies are entitled to a share of the sale proceeds of $192,682.45, he denied their suggestion that the amount be divided on a pro rata basis or in proportion to overall contributions.
One reason is that Duff made a bigger initial investment to acquire the home, and that should “accordingly entitle her to a greater share of the Sale Proceeds”.
After some adjustments, Davies ruled that Duff is entitled to $136,800, and the Cerenzies, $55,882.45.
Davies also dismissed Duff’s counterclaim that the plaintiffs owe her for damage to the home and loans made by her to Mr. Cerenzie.
As in many cases similar to this, Davies noted, when courts are called to sort out issues, the “result will never be totally satisfactory to the parties”.