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Tuesday, August 25, 2015

B.C. judge rules man has a right to half of $1.2-million Vancouver home he hasn’t lived in for 44 years

Way back in 1968, David and Sharon Johnston bought a house in Vancouver for about $37,000. They held the title to the property as tenants-in-common, each owning half. Within a few years, the marriage was in trouble and David moved out. The Johnstons never divorced, and they didn't take David's name off the title. Later, Sharon became involved with Ezra Lucas, who moved into the house with her and together they raised a son, Philip Lucas.

In 2009, Sharon passed away. By that time, the house was worth $1.2 million. Philip inherited Sharon's half of the house. In 2012, David petitioned the court for an order to sell the house, with the money to be divided between himself and Philip. Philip fought against the petition, saying that there had been a verbal agreement that David would drop all claim to the property if Sharon did not ask him for spousal support.

The judge ruled that David's claim was still valid and that the house must be sold. The judge said that the sale proceeds would be divided equally, except that Philip would get a credit for the mortgage payments his mother made after she and David separated.

This case is currently the subject of a story in the National Post, which you can read here. Anyone who would like to read the entire judgment of the court can read that here.

The headline of the National Post story is revealing. It says "B.C. judge rules man has a right to half of $1.2-million Vancouver home he hasn’t lived in for 44 years". To me, the wording of the headline seems to suggest that there is something outrageous about still having a right to a property you haven't lived in for a long time. However, let's not forget that during that 44 years, there were unlimited opportunities for a discussion about changing the title, but it was never done.

Nothing about this judgment surprises me. It's a really good illustration of the tendency of many people to simply ignore the law in favour of what's convenient or easy at the time, then to be surprised and possibly miffed when the law doesn't support what they want. In this case, the parties did not get divorced, even though they clearly did not intend to get back together. They didn't split up their matrimonial property.That's their own omission, but hardly unusual these days.

There was no separation agreement, either. As with a divorce, getting a separation agreement would have involved addressing how to divide their property. They both knew David's name was on the house, but nobody did anything about that. Your ownership of real estate doesn't disappear just because you don't live there. There was a suggestion that there had been a verbal agreement with respect to the title, but the court said there was no evidence of it. And as any lawyer could have told them, agreements with respect to the title to land must be in writing in any event.

Sharon and her second partner, Ezra Lucas, may have believed that their co-habitation created some right for Ezra to ownership of the house. That wasn't clear to me from reading the article. People in general are very misinformed about the rights of common-law spouses, so it's possible they thought they had it covered. However, Sharon didn't even make a will, so it appears that she was not particularly pro-active in dealing with legal matters.

It seems to me that when there is an asset worth $1.2 million dollars at stake, it's worth a few hundred dollars to talk to a lawyer about how to deal with that asset. Why leave such an important matter to chance? Ignoring the facts and simply hoping the law will go your way hasn't worked for very many people. It certainly didn't work for Sandra Johnson's estate, and her son paid the price.

The attached photo of the Johnston's house at 8286 Elliott Street accompanied the National Post article and is credited to Google Maps.

3 comments:

  1. This particular transaction will certainly come with a hefty capital gains tax as the property would not be considered David's primary residence I imagine.

    ReplyDelete
  2. "Primary residence" is a term from something other than capital gains tax.

    "Principal residence" is whatever property has appreciated most that was actually lived in for some of the year, or when possibly available.

    If David was disabled and unable to live there, there are some considerations for that, but if he was able-bodied, not so much.

    ReplyDelete
    Replies
    1. The term "primary residence" is much more complex than people think; that's the whole point of my post. I always recommend that people talk to an accountant, rather than a lawyer, about this topic, since we lawyers have only a basic knowledge of the topic and the accountants are those who know it in-depth.

      Lynne

      Delete

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