Joint ownership of property is increasingly a source of family disputes. Older people commonly put assets into joint ownership with their children hoping to minimize probate fees or other taxes. A recent decision of the Ontario Superior Court, Schwartz v. Fuss, shows just how much trouble joint ownership can cause if it's not properly documented and implemented. In the Schwartz case, siblings argued over the sale of a Florida property that had been transferred into joint ownership between an elderly women ("Mom") and an adult daughter ("RS"). RS wanted a dwindling line of credit to be increased to cover Mom's care costs while her siblings felt the Florida property should be sold. The Ontario Judge established that firstly he had authority to issue a judgment on a property in Florida and secondly, that the Pecore and Madsen Estate decisions would be applicable in this case. The law presumed that RS held title to the condo subject to a "resulting trust" for her mother. RS was unable to "rebut" that presumption, so the Judge ordered that she did not own the condo, and therefore could either buy it from her mother at the price he set or co-operate with a sale to a third party. The Judge also had to sort through a claim from RS's brother and sister that RS should have to pay "occupation rent" for her exclusive use of Mom's Florida condo over a period of years, and a claim from RS for reimbursement of renovation and carrying costs that she had paid on her mother's behalf. The Judge resolved these complaints, ordering that the occupation rent was offset by the carrying costs paid by RS and that RS was entitled to be reimbursed for only some of the renovation costs. The Judge also awarded costs of $70,000 to RS's brother and sister.
Important lessons from this case include:
- Approach joint ownership carefully, otherwise it can result in expensive trouble.
- When a person transfers an asset into joint ownership he should carefully and fully document what he intends, e.g. if he really intends the joint owner to be a full owner this should be documented with a lawyer's assistance.
- With joint ownership of real property it is equally important to document who is responsible for the ongoing costs of repair and ownership.