What is proprietary estoppel?
Proprietary estoppel is a legal remedy that may be used in some circumstances to prevent a land owner who made a promise or statement to someone that part of all of the property would be transferred to them in the future, from later reneging on that promise.
This remedy is an exception to the general legal principle that a promise made by someone to another person is not legally enforceable unless it meets the requirements of a contract. A promise to give something to someone at a point in the future often does not meet these requirements.
In some circumstances, however, a court may decide that someone should be required to keep a promise about transferring property to another person, even if that promise would not otherwise be legally enforceable. In making that decision, the court may use a legal doctrine called proprietary estoppel.
In what situations does proprietary estoppel apply?
The purpose of proprietary estoppel is to prevent unfairness where someone relies on another person’s promise in making decisions. Examples might include when someone decides to provide care for an ageing friend or relative who tells the caregiver they will be added to the title of the property, or where someone works on a farm based on their belief that they will inherit it.
One of the situations where proprietary estoppel is relevant is where a person makes a promise about the division of their estate but does not follow through with that promise. This might be because they take steps before their death to transfer the property to someone else, they change their will to give the property to someone else, or they neglect to change their will to give the property to the person they promised to give it to.
What are the requirements of a successful proprietary estoppel claim?
In order for proprietary estoppel to apply, the claimant must prove three different elements.
First, they must prove that a promise or representation was made on the basis of which they expect to be granted some benefit or right over real property (that is, land and anything that is attached to land, as opposed to moveable personal property). This might include part or all of the property being transferred to them, being added to the property title, or inheriting the property when the person who made the promise dies.
Second, they must show that they relied on that promise by doing something or refraining from doing something and that relying on the promise was reasonable in light of the circumstances. Examples of reliance might include working for a business, giving up an alternative career or life goal, or living with and providing care to someone.
Third, they must show that as a result of relying on the promise they have suffered a detriment or harm such that it would be unfair or unjust for the person who made the promise or representation to go back on their word. For example, the claimant might have chosen to live and work on the property instead of doing something else, or have given up an alternative career or source of income.
What types of promises does proprietary estoppel apply to?
Often the situation involves a promise to transfer property or a portion of the interest in the property. However, proprietary estoppel also applies in other situations where the claimant expects to enjoy some benefit or right over real property. These include adding the claimant to the title of the property as a joint tenant or tenant in common. Proprietary estoppel may also apply to granting a mortgage, easement, option to purchase, or another right or benefit related to the property.
What is the difference between proprietary estoppel and a gift?
There is a difference in the law between gifts and the situations where proprietary estoppel applies. A gift is a voluntary transfer of property. Three conditions must be met for a transfer of property to be considered a gift:
- The person giving the gift must show unambiguous intent that they intend to make a gift of property;
- The person receiving the gift must clearly accept the gifted property; and
- Delivery must be carried out. That is, the person receiving the gift must assume effective possession of the property for the transfer to be complete.
The main difference between proprietary estoppel and a gift is that in the case of a gift, delivery of the property has already taken place whereas proprietary estoppel usually involves a promise to transfer the property or grant a right or benefit over the property to someone at a point in the future.
Proprietary estoppel is usually only necessary if the person has not followed through with transferring the property interest or granting the right or benefit they promised. If the requirements of a gift have been met, then there is usually no need to rely on proprietary estoppel.
Remedies in proprietary estoppel cases
Once the court has decided that proprietary estoppel applies, the next step is to determine what orders the court should make to remedy the unfairness to the claimant. In our next post, we will discuss the issue of proportionality between the detriment suffered and the order the claimant is seeking, and compare two cases where the court found that the requirements for proprietary estoppel were met but differed on what the appropriate remedy should be.
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