Tag: occupation rent
Occupation rent is an equitable remedy available in cases of unjust enrichment. It is a rebuttable presumption that one party shall pay reasonable compensation to another for occupying a premises, which may be rebutted if there is evidence proving that no compensation was to be paid.
In the recent decision of Cormpilas v. Ioannidis, 2020 ONSC 4831, Justice Kurz ordered occupation rent to be payable by the beneficiary of an estate. In this case, Gregory and Barbara owned a home as tenants in common. When Barbara died in 2012, her half-interest in the home was transferred to her grandchildren, as the beneficiaries of her estate. At this time, John, Gregory and Barbara’s son (and the grandchildren’s uncle) moved into the home with his family to help Gregory. Gregory died in November 2017 and his half-interest in the home was transferred to John, as the beneficiary of his estate. John and his family continued living at the home until April 30, 2020.
Despite lengthy negotiations between the grandchildren and John, no agreement could be reached for John to buy out the grandchildren’s half-interest in the home, nor did John and his family move out. The Court found that John had exclusive use of the home from November, 2017 to April, 2020 and that although he paid some expenses as a co-owner, he received a far greater benefit in the exclusive, rent-free occupation of the home. Accordingly, Justice Kurz found that John was unjustly enriched at the grandchildren’s expense and that occupation rent for the period of John and his family’s occupation of the home, was an appropriate remedy in the circumstances.
Interestingly, although the Court found in the grandchildren’s favour, because there was no proper request for rent prior to the commencement of the underlying proceeding, the grandchildren were only entitled to occupation rent from February 1, 2019 to April 30, 2020.
The Court further determined that $1,500/month for the above-noted period was a reasonable award for occupation rent after considering the value of the home, John’s half-interest in the home, the term of its occupation by John and his family, the fact that John maintained the home by paying certain carrying charges (such as taxes and insurance) during the period in question, the fact that the home was not maintained in the best of conditions, and the fact that the home value increased significantly during the period of John’s sole possession.
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Cohabitation Agreements and Marriage Contracts typically operate to ensure that spouses, be they common law or married, do not benefit in the estate of the survivor other than as provided for in a Will. For example, where a Will is not made, and if the parties are married, the domestic contract will need to provide that the surviving spouse is precluded from receiving the preferential share that would otherwise pass to him or her.
Despite the best intentions of the parties to such contracts, difficulties may nonetheless arise on the death of a spouse even where the surviving spouse has every intention of abiding by the agreement.
One such example of a common problem that may arise relates to the purchase or “buy-out” of the surviving spouse’s interest in real estate in which the estate has an equal interest. The problems that the parties may encounter include:
- at what date is the value of the property to be determined? The date of death or the date of the hearing which may be many months later
- Are adjustments to be made for any reason? and
- Should the purchase priced be adjusted to account for occupation rent and, if so, how is the occupation rent calculated?
In Psarros Estate v. Cook, Justice Akbarali of the Ontario Superior Court of Justice considered these questions and, on the facts of the case, concluded:
- It was an implied term of the Marriage Contract that appraisals be carried out “within a reasonable time of the decision to sell one party’s interest to the other.” As such, the fair market value was calculated as of November, 2013 rather than 2017;
- In this case there was insufficient evidence to consider adjustments; and
- Occupation rent, if any, is offset by the estate’s share of the expenses incurred by the surviving spouse and occupant.
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