Mortgage Broker

18 | fall 2016 cmba-achc.ca CMB MAGAZINE legal advice given and/or at the time the documents were executed; n whether, though technically acting for the person, the lawyer was engaged by, and took instructions from, the person accused of exercising influence; n in a situation where the proposed transaction involves the transfer of all, or substantially all, of a person's assets, whether the lawyer was aware of that fact and discussed the financial implications with the person; n if the lawyer inquired as to whether the person discussed the proposed transaction with other family members who might otherwise have benefitted if the transaction did not take place; and n whether the lawyer discussed other options whereby the person could achieve the objective with less risk. e daughter argued that the mother had received ILA and so the presumption was rebutted. In fact, three lawyers had been involved in providing legal advice to the mother at various stages of the transactions. e first lawyer was the mother's brother- in-law. He prepared a will for the mother that appointed the daughter as the executor, gave half of the estate to the daughter, and divided the balance of the estate equally between the daughter and her two brothers. He was aware of relational difficulties between the family members. He referred the mother to a second lawyer (whom he had known for 15 years), gave the lawyer initial instructions, and advised her of some of the relational difficulties. e second lawyer prepared the transfer and trust documents that transferred the family home and investments to the daughter. e mother told the lawyer she trusted her daughter to do the right thing in this matter. e daughter was very involved in instructing this lawyer, including attending for much of the first meeting between the mother and the lawyer. e daughter and the brother-in-law provided some false information to that lawyer; the lawyer did not confirm the information with the mother. e second lawyer referred the mother to a third lawyer for ILA. e third lawyer was given the documents and not told anything about the circumstances. He reviewed the documents, explained their effect to the mother, and confirmed with the mother that the documents did what she wanted to be done. He did not discuss with the mother her reasons for, or the merits of, what she was doing. He took the signatures on the documents. e second lawyer then prepared a new will for the mother. It provided for the estate to be divided equally among the three children. e lawyer did not discuss with the mother that the earlier transfers and trust documents kept the family home and investment separate from the estate under the will; they were being transferred to the daughter outside of the will. In this case, the mother understood and/or intended the nature and consequences of the documents she signed at the material time. However, the documents did not properly reflect the mother's true will or full, free and informed thought. She had indicated to the second lawyer that she intended the three children to share her estate equally. e transfers to the daughter defeated this intention. e court found the ILA given to the mother to be inadequate in terms of rebutting the presumption that the daughter had unduly influenced the mother. e ILA was inadequate to establish that the transfers were made with the mother's full, free and informed thought. Consequences of failing to rebut the presumption e court set the transfers aside; the home and the investments were subject to being divided under the will. Takeaways (in relation to mortgage brokers) e case can inform brokers as to when and how they might use ILA. e following points are not meant to be exhaustive or amount to legal advice; they are meant as general points to be included in your consideration. You should obtain legal advice before relying upon them in particular circumstances. At least some relationships between a broker and client present potential for the broker to dominate the client such as to raise the possibility of the broker having had undue influence over the client. To rebut the presumption of undue influence by the broker over the client, the broker could require that the client provide a certificate of ILA including matters such as: n the lawyer is independent from the issues and parties at hand n the client has confirmed the lawyer is of the client's choosing n the lawyer is not relying on any information or instructions from anyone other than the client n the lawyer has met with the client alone n the lawyer has raised all relevant facts and issues occurring to the lawyer n the client has confirmed he or she has raised all relevant facts and issues with the lawyer n the lawyer has reviewed with the client the implications of signing the documents n the lawyer has reviewed with the client the alternatives (if any) to signing the documents n the client has advised, and the lawyer is satisfied the person is signing with knowledge and appreciation of the transaction and documentation n the client has advised, and the lawyer is satisfied the person is signing voluntarily and without being unduly influenced n the client has advised that the client is acting with full, free and informed thought n the lawyer is of the opinion that the client is acting with full, free and informed thought If a broker does not obtain written confirmation that adequate ILA was obtained, it can leave the broker unable to overcome a presumption of undue influence. Letting the presumption stand can cause the broker to lose the investment (where the broker was the lender) or be exposed to civil liability (if a court orders that the broker is responsible for having caused a loss to someone else). If a broker does not obtain written confirmation that adequate ILA was obtained, it can leave the broker unable to overcome a presumption of undue influence

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