September 2026 - Legal Update - Verbal Agreements In Land

Most people assume an agreement involving real estate must be in writing. Ontario’s Statute of Frauds generally supports the view that agreements concerning real estate are unenforceable unless they are in writing and signed by the parties. However, two recent cases illustrate why that answer is more complicated than it seems. In the 2026 Ontario case of Jeffrey v. Jeffrey, parents transferred their home to their son under an oral arrangement that allowed them to remain in the property rent-free for life. Although the agreement created an interest in land and was never put in writing, the Court enforced the agreement by looking to the equitable doctrine of past performance. The parents to their detriment by transferring ownership without receiving the actual fair market value of the property. Because they sacrificed substantial equity and occupied the property in accordance with the verbal agreement, these acts were sufficient to find that the property could not be sold by the estate without recognizing the life interest held by the parents. Equity in law means legislation like the Statute of Frauds should not operate in a way that deprives people of rights in certain circumstances. This includes agreements that are not in writing, yet parties acted as if the agreement was binding. In the 2023 case of Burbidge v. Casullo, we see that verbal agreements can create legal rights and obligations in land even when a verbal agreement is not valid under the Statute of Frauds. In this case, the owner transferred his condominium pursuant to an oral agreement that the new owners would hold the property for him and eventually transfer it back. The Court found the express oral trust agreement unenforceable because it concerned land and was not in writing. But that did not end the analysis. The Court found a resulting trust, and alternatively a constructive trust existed. A resulting trust can be found when the evidence demonstrates beneficial ownership was not intended to pass with legal title. The judge found money never changed hands at the time of the transfer. Further, the original homeowner made payments of $275,861.36 over 18 years to service the properties’ debts, and Justice Papageorgiou held that there was a constructive trust for such amounts and transferring ownership back was the best remedy. This case is important because it shows that even when a verbal agreement is unenforceable, a resulting or constructive trust is another equitable remedy that may be available. The practical lesson is that verbal arrangements involving land and ownership are risky. There is a strong possibility of a lawsuit when agreements are not followed through. The Courts will examine the nature of the alleged agreement, the parties’ conduct, any detrimental reliance, payments or other expenses incurred, and consider whether equitable remedies should be made available to enforce verbal promises. For better outcomes, speaking with a lawyer before making promises involving land is a top priority. If you have been asked to enter into a legal arrangement with your property, please reach out to Liddiard Law and call (905) 932-5437 to schedule a consultation. Michael Craig Liddiard, BA MA JD (905) 932-5437 [email protected] Liddiard Law Professional Corporation