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Too Late for Mother to “Change Her Mind” After Gifting House to Daughter

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  • Too Late for Mother to “Change Her Mind” After Gifting House to Daughter

A mother signed the paperwork to transfer ownership of her home to her daughter. No money was paid by the daughter when the transfer was made. A few years later, the mother said she never intended to give the property to her daughter as a gift or otherwise. She sued her daughter to recover legal ownership of the land, but her claim failed. The evidence clearly established that the mother had agreed to transfer the property and intended it to be a gift. It was not open to the mother to undo the transfer because she had a change of heart.  

Gratuitous property transfer from parent to adult child

In Hertendy v. Gault, Marian Hertendy and her husband Carl owned a home. When Carl died in 2011, his interest in the home passed to Marian, so that she was the sole owner. On April 4, 2012 Marian transferred title to the property to her daughter, Beverley. The transfer documents were prepared by and signed in the presence of a lawyer. The transfer reserved a life interest in the home to Marian (that is, the right to remain in the home for the rest of her life). Marian continued to live at the property. Beverley paid nothing at all at the time of the transfer, but in the years that followed, Beverley and her husband paid some of the on-going expenses relating to the home, including property taxes and insurance. This arrangement continued for a few years, until Marian challenged the property transfer on a number of grounds. In her lawsuit, she said she was vulnerable, depressed after her husband’s death, unduly influenced by her daughter, and didn’t understand the document she signed—but the main thrust of the mother’s claim was based on the presumption of resulting trust.

Raising the presumption of resulting trust to “undo” a property transfer

As a general rule, the presumption of resulting trust applies to gratuitous transfers. Where a transfer is made for no consideration, the onus is on the transferee to demonstrate that a gift was intended. To rebut a presumption of resulting trust, the transferee must demonstrate at the time of the gratuitous conveyance that the transferor intended to gift the property at issue. The evidentiary standard to rebut the presumption of resulting trust is a balance of probabilities. For more on resulting trusts, see our BC estate litigation team’s earlier blog posts, including our review of the leading decision of the Supreme Court of Canada in Pecore v. Pecore, (2007) SCC 17 which clarified that the presumption of resulting trust will only determine the result where there is insufficient evidence to rebut it on a balance of probabilities.

Did the mother intend to transfer property to her daughter?

The focus in any dispute over a gratuitous transfer is the actual intention of the transferor at the time of the transfer. If the intention to gift the property is established on a balance of probabilities, there is no need to rely on the presumption. In Hertendy v. Gault, the evidence satisfied the court that Marian intended to gift the property to Beverley at the time the transfer was made, with the stipulation that she retain a life interest in the property. Marian’s 2011 Will stipulated that Beverley was to inherit the home, which provided additional evidence of Marian’s intention with respect to the house. The reason for transferring the property in 2012 before Marian’s death was to alleviate Marian’s concerns that she would not be able to afford expenses for the home after her husband’s death in 2011. Mother and daughter had had discussions about the transfer throughout the year leading up to the lawyer preparing the transfer documents. Beverley agreed to help her mother out with expenses and did so after title was transferred.

Change of heart cannot be used to “unravel” a gift

Marian later got mad at Beverley and decided to take the house back. Marian changed her Will in 2017, removing Beverley from it. It was only after she had a falling out with her daughter that the mother raised allegations of undue influence and claimed that she did not understand the effect of the transfer document. Marian’s evidence was not believable. She was noted by the court as having “a convenient memory, or lack of memory, on essential issues.” Marian’s evidence that she did not understand the legal consequences of the document she signed was undermined by the evidence of both of her daughters. The most striking evidence came from her other daughter, Lorna Greenall. In 2017 after the court case had begun, Ms. Greenall confronted her mother and said: “But you gave her the house” (meaning Marian transferred the home to Beverley). Marian’s response was: “I’ve changed my mind.” In other words, in 2012 the mother agreed to transfer her property to her daughter. She executed the documents with this purpose. In later years she changed her mind. The court concluded that it was too late and decided the case in favour of the daughter.

Bottom line on gratuitous property transfers from parent to child

As a rule, the presumption of resulting trust will apply to gratuitous transfers between a parent and an adult child. The child who receives a gratuitous transfer of property from his or her parent bears the burden of rebutting the presumption of a resulting trust by showing on a balance of probabilities that a gift was intended at the time of the transfer. If that intention is shown, then the gift is a gift and it is too late for the parent to “change their mind.”

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