With the rising cost of living, high real estate prices and the ever-increasing mortgage rates in Ontario, the option of buying a home for young families seems more remote than ever. Many young people resort to moving away from major cities to find affordable homes in remote areas of the province or are forced to continue renting if they must stay in the city for work or family reasons.
It is also not surprising that many turn to a different option – living in multi-generational homes. In these situations, parents who are typically of the baby boomer generation, and who purchased their primary residence at a time when the market was more buyer friendly, will now accommodate one or all of their children to live with them, whether for the purpose of providing personal care for an aging parent, or easing the financial burden. It is also not uncommon for the children to start their family while living under the same roof as their parents and grandparents, resulting in a four-generation home.
The reason that people choose this option can be multifaceted; however, the primary reason is often economic. While this situation often eases the financial burden of all parties involved, it may create some unforeseen legal consequences.In Sidhu v Sidhu, 2023 ONSC 4618, the court was asked to consider how the equitable remedy of unjust enrichment applies to a multi-generational family living together and sharing household expenses. The Applicant purchased the family home in 2004, following the death of her husband. Subsequently, the Applicant’s 3 adult sons moved into the house. Two of the sons got married, and their wives also moved into the same property. This living situation worked until 2015, when the relationship between the parties began to deteriorate.
Ultimately, the Applicant brought an application for partition and sale of the property. One of the
Applicant’s sons and his wife (the Respondents) brought a cross-application, claiming unjust enrichment and a 50% interest in the property. The Respondents described the arrangement as a joint family venture, where they contributed to the payment of the mortgage and household expenses and maintenance. The son argued that he acted as the “house manager”, since he managed the family bank account and ensured that all expenses were paid.
On the other hand, the Applicant argued that she was entitled to 100% interest in the property, claiming that the Respondents financial contribution was in lieu of rent.
After applying the well-established test for unjust enrichment, the court concluded that the unjust enrichment claim failed. The “family” bank account and partial financial records created difficulty for the court to properly distinguish whose funds were used to maintain the property. Furthermore, the court was unable to establish that the Respondents suffered a detriment. In fact, the court’s view was that all the parties that lived together benefited from the arrangement, as the Applicant provided childcare to her grandchildren, but she also benefited from the cooking and cleaning that the Respondents did for their family.
While a multi-generational living arrangement has many appeals, parties should approach this option with caution. In situations where one of the parents passes away and the children decide to move into the living parent’s home, the well-meaning intention can bear negative consequences in the future. It is always advisable to keep detailed financial records and establish early on the parties’ intentions and parameters of this arrangement.
Thank you for reading.
Margarita Grup.