On a number of occasions, I have seen the following scenario (or a slight variation of the scenario) “PLAY OUT”. John Doe has bad credit but he is desirous of owning a property. He is aware that he will not be approved by the Bank and/or Mortgage Company if he applies for financing in his name. John has consulted a mortgage agent who has determined that he is able to “carry” the mortgage and the associated carrying costs of owning a property that fits his specifications. John believes that his credit can be repaired within two years or so but he cannot wait that long as his fiancé is scheduled to move from overseas within six months to start their new life. Of course, John wants to impress his fiancé that he is living the Canadian “DREAM”.
John. In addition, the Trust Agreement stipulates that John (and not Jane) is responsible for all mortgage payments and all related carrying costs of the town-house. More importantly, the Trust Agreement states that, at any given time John requests, Jane agrees to transfer title to the town-house to John. John moves into the town-house in preparation for the arrival of his fiancé. Jane never moved into the town-house. Unfortunately for John, the relationship with his fiancé deteriorated, his fiancé never moved from overseas and the parties went their separate ways.
John then commences the search for someone who has good credit and is willing to hold the property he intends to buy in their name for a while. John’s cousin, Jane Doe, has good credit and agrees to help John with his present dilemma.
Two years later, John is still single and realized he does not really need the larger space that a town-house provides – a one-bedroom condo could suffice.
John “buys” his “dream” home – a three-bedroom town-house in a nice neighbourhood. At the time of John’s “purchase” he enters into a Trust Agreement with Jane.
John contacts Jane about his plan to“down-size”. Unknown to John, Jane has been monitoring the significant increase in property prices in John’s neighbourhood.
In a nutshell, the Trust Agreement stipulates that even though Jane is the registered owner of the town-house, John is the beneficial owner and further, that Jane is holding the property “in trust” for John. The Trust Agreement further confirms that save for the mortgage funds obtained from the Bank and/or Mortgage Company, the down-payment and all other closing costs for the purchase of the town-house was provided by
John was on the verge of a heart-attack when he received a phone call back from Jane wherein Jane advised him that the town-house belonged to her and she had no plans of selling. She even told John that it is her words against his as there were no witnesses to his “so-called” Trust Agreement.
THE BANK DOES NOT CARE …BUT THE COURTS DO
