Mortgage Broker is the magazine of the Canadian Mortgage Brokers Association and showcases the multi-billion dollar mortgage-broking industry to all levels of government, associated organizations and other interested individuals.
Issue link: http://digital.canadawide.com/i/309414
goodintentions 42 | spring 2014 mbabc.ca MortgageBroker (the recipient) and the recipient's husband in exchange for them caring for her until her death; • e house was sold and a new house was purchased in the names of the recipient and the husband only; • Relations between the contributor and the couple soured within months of moving into the new home; • e contributor moved out and demanded money from the recipient and the husband as they were, contrary to their agreement, not caring for her to her death. e resulting, approximately year long, lawsuit was settled for $50,000; • e contributor later, in speaking with a mutual relative, could not remember the lawsuit or having lived with the recipient and the husband; • e contributor contacted the recipient and arranged for a meeting the following day. At the meeting the contributor asked why she had not heard from the recipient and the recipient indicated it was due to the lawsuit. To this the contributor nodded and wrote a cheque to the recipient for $50,000; • Several days later, the contributor consulted a lawyer who demanded the return of the cheque. e contributor could not remember: a. Why she wrote the cheque; b. When she last saw the recipient; or c. e lawsuit, which had been settled. • e recipient claimed the money was a gi and refused to return the cheque; • A week later the contributor suffered a debilitating stroke and later died. e Court found that to have no memory of the court case (an event that was financially expensive, emotionally expensive, lasted for such a long time, and was a most significant event) was likely indicative of a seriously compromised mental capacity. is was especially so since the contributor continued to quickly forget about the case even aer she was reminded of it on separate occasions by the mutual relative, the recipient, and the contributor's lawyer. Notwithstanding the limited mental capacity necessary to make a valid gi, the Court was not satisfied the contributor had that capacity. Suggestions So what should a prudent mortgage broker consider doing to best avoid issues of capacity arising? It would be unreasonable to expect a prudent mortgage broker to make the necessary final assessment as to a contributor's legal mental capacity but it would not be unreasonable for them to make an initial assessment and, where warranted, require further safeguards. In meeting the contributor to make the initial assessment, the mortgage broker should keep thorough notes as to the basis for satisfaction that capacity was not an issue at that time. Where the mortgage broker is unable or unwilling to make the initial assessment, rather than turning a blind eye to any issue of capacity it would be prudent to require the contributor to obtain independent legal advice. Where a mortgage broker has made an initial assessment as to capacity, if any concern presents itself the mortgage broker should require the contributor to obtain independent legal advice. While it would be preferable for a mortgage broker to have a medical letter confirming the capacity of the contributor to having no safeguard at all, the mortgage p38-43_Gifting.indd 42 14-05-08 2:27 PM