Consultation Paper on Private Care Agreements Between

Older Adults and Friends or Family Members

Follow this link to view the Background Paper on Private Care Agreements between Older Adults and Friends or Family Members

British Columbia Law Institute

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The British Columbia Law Institute was created in 1997 by incorporation under the Provincial Society Act. Its mission is to:

(a) promote the clarification and simplification of the law and its adaptation to modern social needs,
(b) promote improvement of the administration of justice and respect for the rule of law, and
(c) promote and carry out scholarly legal research.

The Institute is the effective successor to the Law Reform Commission of British Columbia which ceased operations in 1997.


The members of the Institute Board are:

Thomas G. Anderson
Trudi Brown, Q.C.
Arthur L. Close, Q.C. (Executive Director)
Prof. Keith Farquhar
Sholto Hebenton, Q.C
Ravi. R. Hira, Q.C.
Prof. Hester Lessard
Prof. James MacIntyre, Q.C.(Treasurer)
Ann McLean (Vice-chair)
Douglas Robinson, Q.C.
Gregory Steele (Chair)
Etel R. Swedahl
Gordon Turriff (Secretary)
Kim Thorau


The British Columbia Law Institute gratefully acknowledges the financial
support of the Law Foundation of British Columbia in carrying out its work.


The Members of the Project Committee on Legal Issues Affecting seniors are:

Professor Emeritus Donald MacDougall, UBC Faculty of Law (Chair)
Charmaine Spencer - SFU Gerontology Centre
Marlene Scott, Q.C. - Barrister and Solicitor, McQuarrie Hunter
Gregory Steele - Barrister and Solicitor, British Columbia Law Institute
Noreen Brox - Barrister and Solicitor, McCarthy Tetrault
Pearl McKenzie - Seniors' Advocate
Gordon Turriff - Barrister and Solicitor, British Columbia Law Institute
Carol Ward-Hall - Executive Director, B.C. Coalition to Eliminate Abuse of Seniors

Reporter to the Committee is Margaret Hall


I. Introduction

II. Legal Background

III. Possible Solutions
       1. Information and education
       2. Identification of important matters to be considered in a private care agreement
       3. Legislation regarding the care agreement exchange

IV. Summary of Proposals



Mrs. Harrison's husband died last year. At age 76, she's concerned about what will happen if she becomes ill or disabled. Mrs. Harrison and her son agree the house will be put in his name, and that he will take care of his mother in the home until her death. They have gone together to see a lawyer to have the title changed.

I. Introduction

A private care agreement involves a transfer of property (usually the family home) made by an older adult to a friend or family member in exchange for a promise of "care for life." Sometimes, the senior will put the property in both names, with the survivor taking full ownership when the other dies. The agreement often contemplates that the senior and caregiver will live together in the family home (indeed, the senior may not understand that the transfer involves a "real" loss of the property at all).

In Canada, most care for life agreements are informal. By "informal" we mean that the promise is made orally and without legal advice. Partly because of this informality, we do not have hard figures about how common care agreements are, or if their use is increasing (we know they are not a new phenomenon). We do know that the consequences of unsuccessful care agreements can be devastating for seniors, making the issue an extremely serious one whatever the statistics. Some seniors are simply walking away from their homes, having received very little of the caregiving they bargained for. Others continue to live in unhappy or even abusive caregiving relationships. Seniors may not realise that they have other options, or may be discouraged from "using" the law for reasons of expense, unfamiliarity, fear of damaging relationships or sheer demoralisation (especially where the failed care agreement involves an adult son or daughter).

The British Columbia Law Institute's Project on Legal Issues Affecting Seniors is currently developing a set of proposals to deal with the problems raised by private care agreements. This Consultation Paper sets out possible strategies for protecting both sides and for preventing the kind of agreements that are most likely to cause problems. The Project is being undertaken by a Committee which includes lawyers and people who have experience working in the community with seniors. Before formulating its final recommendations, the Committee hopes to receive comments from individuals and groups with experience of or interest in care agreements and the problems they can cause. A detailed "Background Paper" on this issue is being prepared, and will be posted on the British Columbia Law Institute (BCLI) website (

II. Legal Background

A care agreement, in which the promise to "care for life" is given in exchange for property, can form the basis of a valid contract at law. This kind of promise must be distinguished from an adult child's obligation to support and maintain a dependent parent (as set out in section 90 of the Family Relations Act).1 That obligation has been considered by the court as a duty to provide financial assistance.

Where there is sufficient evidence of the care agreement's existence (which may not be the case where the agreement is informal), the ordinary common law rules of contract will apply. Because care agreements are not ordinary commercial contracts, however, the consequences of those rules are not always useful from the senior's point of view.

Consider the following example, drawn from an actual case. A mother moved in with her adult daughter and son-in-law under a care agreement (mother had transferred the family home to the younger couple; they had promised to provide mother with care and maintenance for the rest of her life). Soon after the transfer, there was a falling out and mother moved out of the house. The caregivers remained in the house, telling mother they would welcome her back to try again. As the caregivers remained ready and willing to perform their side of the bargain, the court refused to set the transfer aside (as requested by the mother); she was free to return to the house to carry out the agreement. Such an outcome might be fair in terms of the law of contract, but its practical result may well be that the senior will lose her home without getting what she bargained for or that she will persist in an unhappy living relationship. Especially where a power imbalance exists, this kind of relationship may degenerate into abuse of all kinds; certainly, it seems an unlikely basis for happiness.

Otherproblems may arise where agreements are made orally between the parties. Informality means that the property exchange may be treated as a gift. While it may be possible to set such a gift aside through application of the legal doctrines of unconscionability, undue influence or the resulting trust, or where the senior can show imperfect knowledge (that he or she did not really intend to transfer full ownership), these outcomes are by no means certain.2

Caregivers may also be vulnerable. Where the agreement is either not recognised or is inadequately valued, the caregiver's ownership may be challenged (on the basis of unconscionability, for example). These challenges are most commonly brought by the estate after the senior's death, and the result can be very unfair to caregivers who have provided years of care. The caregiver in such a situation may be compensated on the basis of unjust enrichment, but again this outcome is uncertain (especially where the agreement is an informal one) and involves the expense and stress of legal action.

To summarise, the common law may not yield appropriate or realistic outcomes in cases of care agreements. The informality of most care agreements raises additional problems of interpretation and increases uncertainty. The Committee has considered the following possible solutions to these problems. First, to make the common law work better by discouraging informal contracts and by raising the profile of care agreements and their pitfalls among seniors and among the professionals involved in effecting these property transfers. Second, to identify key matters which should be considered by individuals contemplating a private care agreement. Third, to provide legislation that would allow courts to step in and vary or set aside "care for life" agreements. The Committee invites comments and suggestions about these possible solutions.

III. Possible Solutions

1. Information and education

Even where the agreement is informal, the actual transfer of property must be accomplished formally and by a professional third person (a lawyer or notary). Most seniors do not announce at the point of transfer "I want to make a care agreement transfer" or even "I'm going to give my house to my daughter and she's going to take care of me." The senior is more likely to present the transaction as, simply, "I want to give the house to Steve." The transfer on its surface will look like a gift, and there will be no discussion of the agreement and its terms (and no formal contract). One objective of the Project is to raise consciousness about the possibility that a "care for life" agreement may lie behind an apparent gift of the family home to a friend or family member.

Questions at the point of transfer about the intentions of the parties (whether the senior expects to continue to live in the house after the transfer, for example) may uncover a care agreement beneath the apparent gift. The expectations of both senior and caregiver will have to be discussed and documented. If the parties decide to proceed, the possible consequenceswill need to be discussed and provided for. If a true gift is intended, the gift will be identified as such (thereby protecting the recipient) and no harm is done. This kind of inquiring approach may be an ethical responsibility on the part of the professional where an older adult apparently makes a gift of property.

A second objective of the Project is to raise consciousness about the implications of care agreements among seniors, many of whom are entering into these arrangements with rose-coloured glasses firmly in place and without thinking through the "what ifs." What happens if my son dies before me? What happens if he gets ill and can no longer care for me? What happens if my health deteriorates and my daughter can no longer care for me adequately at home? What happens if my daughter re-marries, or if I re-marry?

Some seniors may have chosen not to discuss the agreement with a professional (presenting the transfer as a simple gift) in order to minimise legal fees. Others, especially where family members are involved, may feel uncomfortable about formalising the relationship. Any saving in legal fees, however, is not worth the risks of an informal agreement which may result in the senior losing his or her home. Seniors need professional advice on both the tax and legal consequences of transferring property. The Committee hopes that increased awareness of the serious problems that can result from informal care agreements will enable seniors and caregivers to make informed, and safer, decisions.

2. Identification of important matters to be considered in a private care agreement

If the parties wish to proceed with a care agreement exchange, having talked through the implications and alternatives, they have the right to do so: care agreements are not illegal. A formal care contract will not in itself resolve all potential difficulties, but a formal detailed agreement can provide better protection for seniors and caregivers if the arrangement does not work out as the parties expected. A formal contract can also protect caregivers after the death of the senior, or after the senior becomes unable to make decisions about his or her own welfare because of a decline in mental capability.

The formal contract will clearly document the true nature of the exchange as a bargain not a gift, and setting out the obligations under the agreement in some detail and in written form will make it easier to determine when the contract has been breached. The process of settling the details of the agreement may also prevent misunderstandings about the range of services included in the caregiver's promise to "take care" (misunderstandings that may otherwise trigger relationship breakdowns). Is the caregiver expected to be responsible for the provision of all meals and clothing, for example? Is the caregiver also expected to provide nursing-type services? The formal, detailed care contract might include any number of matters depending on the needs and expectations of the individuals involved. There are some issues, however, that should always be documented.

The detailed contract should make provision for what will happen if one or both of the parties no longer wants to live together (for whatever reason), or if the caregiver decides to sell the house. The contract should deal specifically with the issue of the senior's needs increasing beyond the caregiver's ability to meet them, and how admission to a care facility would affect the agreement. A contract may provide that the obligation to provide physical care is to continue as long as the senior's health permits her to remain in the home, and for how that determination is to be made (by the caregiver? the senior? the senior's physician?)

Itemising and valuing services will protect the caregiver from (unfair) challenge after the senior dies or becomes incapable. The process may also reveal the true expense of those services, perhaps to the surprise of both senior and caregiver. The caregiver may decide that the exchange is not, in fact, worth it, or may scale back the range of services that he or she is obligated to provide under the agreement. It is better that this kind of readjustment be made at the outset of the agreement, rather than after the transfer has been completed and the living arrangement is underway. Itemising and valuing services will also force the parties to be clear with each other about their expectations.

The detailed contract will also explain the arrangement to family members who might otherwise challenge the transfer after the death of the senior. Family members tend to be more suspicious of an alleged oral agreement "revealed" after a parent's death or after a parent becomes incapable, than where a detailed document exists. Formal agreements also define the arrangement as a legal agreement creating rights and obligations for both parties (so that seniors, for example, will understand that walking away is not their only option if the arrangement does not work out).

The Committee wishes to make it clear that it is not encouraging seniors to enter into care agreements, with or without a formal contract. In the absence of legislation prohibiting this kind of arrangement, however, seniors are entitled to make private care agreements, and they are in fact making them. Going through the formal contract process will force seniors and caregivers to discuss and think carefully about the implications of the care agreement exchange. After doing so, it is to be expected that many will decide not to proceed with the arrangement. Those deciding to go ahead will do so with a document that provides better protection for both parties.

3. Legislation regarding the care agreement exchange

The Committee has considered whether specific legislation should allow for variation or revocation of the care agreement. We hope that the work of the Project will make "failed" care agreements less common, but it is certain that there will always be a need for consistent and fair rules where the arrangements do not work out as hoped for. Situations change, and people change, and the formal contract may not be able to provide for every eventuality to everyone's satisfaction. In any event, there will always be those people who choose not to make formal agreements.

If legislation is recommended, we will need to consider whether it should operate as a default rule where the written agreement is silent on a specific matter, or whether it should apply to all care agreements whether a formal contract exists or not.

One approach would be to allow the court to intervene and set terms as it thinks fair (similar to section 65 of the Family Relations Act, which permits "judicial reapportionment on the basis of fairness" where the division of property between spouses would be unfair).3 New Brunswick's Judicature Act (section 24) permits the Court, on "such terms as appear just," to set aside or vary any conveyance or transfer of property, the "consideration of which, in whole or in part, whether expressed in the instrument of conveyance or in a collateral agreement, is the maintenance and support of any person."4 These kinds of agreements may tend to involve older people, but the provision is transaction specific, not age (or family association) specific. One attraction of this approach is its flexibility, which can take into account the clear and agreed terms of any formal agreement.

Another approach has been taken in the Alabama State Code, which provides that "[a]ny conveyance of realty wherein a material part of the consideration is the agreement of the grantee [the caregiver] to support the grantor [the senior] during life is void at the option of the grantor [senior]."5 Caregivers are compensated for reasonable expenditures and services given where seniors have decided to undo the agreement. The Alabama provision was intended to "supplant, with a simple remedy, the principles that had previously been applied on a case-by-case basis[.]"6 The senior may exercise this personal right to revoke for any reason at all, whether or not a formal contract exists (and regardless of its terms). A personal right to revoke may raise difficult issueswhere the senior is incapable of making decisions for him or her self.

The Committee has tentatively concluded that a distinction should be drawn between actions to set aside brought during the life of the senior, and actions brought after death (by the estate). Accordingly, it is suggested that any legislated power to set the conveyance aside should die with the senior. After the senior's death, the common law rules would apply.

Another alternative would be to prohibit the "care for life" agreement on the basis of public policy. Some American states have abolishedlifecare contracts between seniors and professional care facilities as being against public policy, having determined that the problems associated with them outweigh their potential benefits. Indeed, there is common law precedent for the position that care agreement exchanges are always "improvident," or unconscionable, although this "rule" has not been applied in more recent case law.7 The persistence of informal agreements would cause difficulties if this approach were adopted (people making agreements without legal advice would presumablynot be aware of the prohibition).

IV. Summary of Proposals

1. Encourage lawyers and notaries involved in real estate transactions to be on the look out for "hidden" care agreements behind transfers for less than full market value.

2. Create educational materials for an older target audience, to heighten awareness about the consequences of informal agreements and their common pitfalls.

3. Identify important matters to be considered in private care contracts.

4. Recommend legislation about the care agreement exchange.

Optional approaches:

(1) A broad provision permitting the court to set aside or vary a conveyance given in exchange for a promise of maintenance or support (the New Brunswick approach), possibly with legislated guidelines.

(2) A provision allowing transferors of property a personal right to void conveyances during their lifetime (where transfers are given in exchange for a promise of maintenance or support), with compensation to the caregiver (the Alabama approach).

(3) Prohibitabsolutely the transfer of property in exchange for a promise of care, maintenance or support.


This Appendix is provided as background information regarding some of the legal concepts mentioned in the Consultation Paper.

1. Undue influence is sometimes called "equitable fraud" ("unconscionability," discussed below, is another form of equitable fraud). Undue influence appears to be the ground most frequently relied on by seniors and their estates to set aside a conveyance of property.

Undue influence attacks the sufficiency of consent. A person who has conveyed property where there is undue influence cannot be said to have freely and voluntarily consented to the transaction.

Undue influence may apply to set aside both gifts and contracts. For both gifts and contracts, the first test is whether the nature of the relationship between the parties has an inherent potential for domination. The second test depends on the nature (or characterisation) of the transaction:8

a) when dealing with commercial transactions a plaintiff must show in addition to such a relationship that the contract "worked unfairness in the sense that he or she was duly disadvantaged by it or that the defendant was unduly benefited by it" in "deference to the principle of freedom of contract and the inviolability of bargains."

b) when dealing with gifts and bequests, where consideration is not an issue, it is enough that the presence of a dominant relationship be established. Once the presumption of undue influence has been raised by the relationship, the onus moves to the defendant to rebut it.

It is significantly easier, therefore, to set aside a gift on the basis of undue influence than a "commercial transaction" or transfer made pursuant to a contract (and, in effect, there seems little to separate undue influence as it applies to contracts from the requirements of unconscionability, discussed below).

2. A resulting trust is an implied trust that is created when one person transfers legal title to another, but intends to retain the beneficial interest (the trust "results" back to the transferor). Where one person transfers property gratuitously to another, there is a presumption that a resulting trust was intended. That presumption can be rebutted by evidence showing that a gift was truly intended. These rules derive from the sensible expectation that people do not generally intend to give away valuable things. Sometimes they do, but because this is exceptional, it has to be proved.

Where people are related in certain ways, these rules work differently. This is the "presumption of advancement," which creates a rebuttable presumption that, where a father gives legal title to his child, a gift was intended, on the basis that it is reasonable to presume that fathers intend to gift their children (as a sort of "advance" on their bequest- hence the presumption of advancement). This special treatment of fathers seems rather outdated, but the Supreme Court of Canada has held that the presumption applies only to transfers made by a father, and not to those made by a mother.9 The continued validity of this presumption was recently questioned on the basis that older parents frequently transfer title to adult children to facilitate administration, not because they wish to give their property away. That case suggested that the presumption of advancement give way to this modern reality.10

3. Unjust Enrichment: The laws pertaining to gifts and the doctrine of the "resulting trust" may work to the benefit of the transferor who wishes to get out of a failed care agreement and recover his or her property. While this outcome may please the senior or the estate, it may also create unfairness for the caregiver, who will lose the property transferred. The doctrine of unjust enrichment may apply so as to compensate a caregiver in these circumstances.

Where there is no contract, the equitable doctrine of unjust enrichment will fairly compensate or give an interest in property to A, to prevent the "unjust enrichment" of B. The doctrine will apply where there has been (1) an enrichment; (2) a corresponding deprivation; (3) the absence of a juristic reason for the enrichment. "Enrichment" may take the form of monetary contributions, or services. Domestic services provided by family members or persons in the place of family members have been valued so as to give rise to a claim for unjust enrichment.11 Love and affection, and the familial relationship in itself, do not comprise "juristic reasons" for the enrichment. In every case, the legitimate expectations of the parties will be decisive: did the care provider confer those services as a valid gift, or in pursuance of a common law, equitable or statutory obligation owed to the defendant? Or were the services given with the expectation of compensation?

4. The court will set aside a conveyance if the transaction was unconscionable. Although the doctrine theoretically applies to gifts as well as to contracts, "unconscionability" is generally applied to "bargains."12 Freedom of contract means that older individuals, like other capable adults, are free to make their own bad bargains, and the adequacy of consideration is not generally relevant.An exception to this general rule is made where the bargain is allegedly unconscionable. This argument often arises where the agreement to provide care has been given in addition to a below market value money payment. Where the parties do not assign a money value to the promise to care, the (low) payment stands alone. This kind of mixed bargain is a fairly common form of the care agreement.

The court will set aside an unconscionable contract on the grounds that it would be inequitable to let it stand because of the abuse of power and exploitation involved (the unconscionable transaction is sometimes referred to as an "equitable fraud"). Two elements must be shown: that there was an inequality in the position of the parties arising out of the ignorance, distress or incapacity of the weaker party so as to put him or her in the power of the stronger; and that the transaction was substantially unfair (where payment is substantially inadequate). "It is the combination of inequality and improvidence which alone may invoke this jurisdiction."13

Once these elements have been established, a presumption of unconscionability is created, which the stronger party can disprove by showing that the bargain was fair, just and reasonable.14

The emphasis on relationships of power and dependency, and the inequality that can arise from illiteracy and lack of business sophistication, may be especially apposite to transactions involving seniors, and there are many cases in which seniors have sought to have transactions involving money payments set aside on this basis. It will often be possible to characterise the senior as "in the power of" his or her family member. Where the promisor is not a family member, but a friend or neighbour, equality and dependence may also be an issue, where the senior has come to rely on his neighbour for assistance, for example.


R.S.B.C. 1996, c. 128, provides that the adult child "is liable to maintain and support a parent having regard to the other responsibilities and liabilities and the reasonable needs of the child."
See Appendix.
R.S.B.C. 1996, c. 128.
But not so as to affect the title of a bona fide purchaser for value. S. 24, R.S.N.B. 1973, c. J-2. The section was first enacted as an Act to Amend the Judicature Act, Acts of the Legislative Assembly of New Brunswick, 1937, c. 20, s.1.
"...[E]xcept as to bona fide purchasers for value, lienees, and mortgagees without notice, if, during the life of the grantor, he takes proceedings to annul such conveyance" 8-9-12, Ala. Code 1975.
McAdory v. Jones, 260 Ala. 547, 71 So. 2d 526 (1954).
See McKay v. Clow, [1941] S.C.R. 643.
See Goodman v. Geffen Estate, [1991] 2 S.C.R. 353.
Edwards Estate v. Bradley, [1957] S.C.R. 599.
McLear v. McLear Estate, [2000] O.J. No. 2570 (Ont. S.C.).
See Clarkson v. McCrossen, [1995] B.C.J. No. 542 (C.A.); Wilcox v. Wilcox, [2000] B.C.J. No. 1809 (C.A.).
See Snell's Equity (29th ed. at 559).
Murphy v. Murphy, [1995] O.J. No. No. 3569 (Gen. Div.).
Morrison v. Coast Finance Ltd. et al (1965) 55 D.L.R. (2d) 710 (B.C.C.A.); Harry v. Kreutziger (1978), 9 B.C.L.R. 166 (C.A.). And see Lloyds Bank Ltd. v. Bundy, [1974] 3 All E.R. 757.