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w w w . C A N A D I A N L a w y e r m a g . c o m F E B R U A R Y 2 0 1 6 23 death, default, and being on title by put- ting together a shareholders agreement, much like one that might be used when two or more people purchase a commer- cial or multi-residential building together. "You need to contemplate how to get out of the deal," says Tony Spagnuolo of Spa- gnuolo & Co. in Coquitlam, B.C. But even if all the possibilities are addressed in an agreement, the big ques- tion really is: What is the lending family member going to do about it? "The real complication is how to deal with prob- lems," says Spagnuolo. "How are you going to enforce these things against your son or daughter. . . . Are you really going to take steps to go after your child if there's a default?" The complexity and diversity of family structures can have an impact on a large proportion of real estate transactions, warns Lawyers' Professional Indemnity Co. policy analyst Nora Rock. What can be beneficial for a lawyer is to communi- cate clearly to the client about the limits of the real estate lawyer's retainer. Those who require assistance with issues out- side of that retainer should seek guidance from a lawyer practising in the area in which they need help. And other parties who have a stake in the transaction, even if they're related, should be advised to seek independent legal advice. "The core of all of that is the issue of conflict of interest," says Rock. Two members of the same family could have differing and possibly competing inter- ests. "If there's not crystal clarity with that then you face problems down the road" and a lawyer could be held liable. But unless the lawyer asks the right questions, the potential for future problems may not become apparent. A will can act as the great equalizer. Any amount outstanding for one child, be it a gift or an unpaid loan, can be deducted from his or her share of the parents' estate if the other children didn't receive the same. Any contributions, gifts, or loans can also be acknowledged in the will. And if the parents appear on the title of the child's home, that needs to be addressed, particularly if there are other siblings. In the case of a forgivable loan, the will might specify that the child assumes title upon the death of the parents. That would avoid any unintended consequences, like the sib- lings ending up becoming co-owners of the house. "The rubber hits the road with the will. It can be a great way to privately address the loan," says Toronto estates law- yer Ian Hull, of Hull and Hull LLP. But even then, acknowledgement of the gift in life can eliminate questions that may arise upon death. "What I'll say to the par- ents is: 'Let's document the gift through a deed of gift,'" adds Hull. "It is seldom used but it is incredibly effective." He describes it as the most effective legal method to document a gift but it is underutilized. The deed of gift is a sealed precision tool that is enforceable and makes the intent clear: The money was a gift and needs no further acknowledgement and will eliminate any dispute between siblings. The absence of clear intent could force others, many years later, to come to their own determination, no matter how tough the situation. In Lee, Dunphy concluded: "There have been no winners in a case such as this, regardless of the outcome." Commercial or Residential. We've got you covered. FCT has been leading the charge in the Canadian title insurance industry for 25 years and still knows it best. Choose a partner that will stand the test of time. Choose FCT. ® Registered Trademark of First American Financial Corporation. ™Trademark of First American Financial Corporation. u FCT.ca I 1.800.307.0370 15-314 RS CS combined ad_v5.indd 1 2016-01-13 4:25 PM

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