Property transfers involving older adults often become the subject of litigation when questions arise about capacity, fairness, and the circumstances surrounding the transaction.
While courts generally respect agreements freely entered into by competent individuals, they will closely examine transactions involving vulnerable people, especially where the deal appears unusually one-sided.
The Saskatchewan Court of King's Bench decision in Ruszkowski v. Trust, 2025 SKKB 164 provides an important illustration of the legal risks associated with informal agreements, vulnerable landowners, and transactions that appear too good to be true.
The Background
The dispute centered on an agreement for the sale of farmland belonging to an elderly widow.
The purchaser claimed that the parties had entered into agreements providing for the sale of several parcels of farmland at a price of $100,000.
The problem was that the land was worth significantly more.
An independent appraisal placed the value of the property at approximately $705,000 at the relevant time, and its value had increased substantially by the time of trial.
After the landowner's death, the estate challenged the validity of the agreements.
The Court ultimately ruled that the contracts were unenforceable for multiple independent reasons.
Capacity Is About More Than Understanding a Signature
A common misconception is that contractual capacity only requires a person to understand that they are signing a document.
The law demands more.
To have capacity to enter into a contract, an individual must generally understand:
- The nature of the transaction;
- The consequences of the transaction;
- The value of what is being transferred;
- The effect on their financial interests; and
- The practical impact of the agreement.
In this case, the Court concluded that the landowner's cognitive decline prevented her from fully appreciating the consequences of the proposed sale.
Medical evidence, expert neuropsychological evidence, and witness observations all pointed to significant impairment.
The Importance of Fairness
Even where a contract appears valid on its face, courts may intervene when a transaction is fundamentally unfair.
The doctrine of unconscionability exists to protect vulnerable individuals from agreements that provide an excessive advantage to one party and a corresponding disadvantage to another.
Modern courts generally look for two key elements:
Inequality of Bargaining Power
This may arise where one person is:
- Elderly;
- Dependent on another;
- Socially isolated;
- Experiencing cognitive decline;
- Financially inexperienced; or
- Otherwise vulnerable.
An Improvident Bargain
A bargain may be improvident when it provides a significant and unjustified benefit to one party at the expense of another.
The larger the disparity between value and consideration, the more likely a court is to question the transaction.
Why Significant Price Disparities Matter
One of the most striking features of the case was the gap between the purchase price and the property's actual value.
While parties are generally free to negotiate their own deals, courts may become concerned when a vulnerable party transfers valuable property for a small fraction of its worth.
Such arrangements often raise questions such as:
- Was the seller aware of the property's value?
- Did the seller receive independent advice?
- Did the seller understand the consequences?
- Was there pressure exerted by the purchaser?
- Did the seller make a deliberate and informed decision?
These questions become especially important when elderly individuals are involved.
Informal Agreements Can Create Big Problems
Another important lesson from the decision is that informal land agreements frequently lead to litigation.
Real estate transactions involve significant assets and should be documented carefully.
Poorly drafted agreements may create uncertainty regarding:
- The purchase price;
- Closing dates;
- Conditions of sale;
- Occupancy rights;
- Financing arrangements; and
- The parties' intentions.
When key terms are missing or unclear, courts may conclude that no enforceable agreement was ever created.
Independent Legal Advice Matters
The decision also highlights the value of independent legal advice.
Independent advice can help demonstrate that a person:
- Understood the transaction;
- Appreciated the risks;
- Made an informed decision; and
- Was acting voluntarily.
When property transfers occur without meaningful legal advice, courts may scrutinize the transaction more closely.
This is particularly true where the purchaser plays a significant role in arranging the transaction.
Caregiving and Dependence Can Complicate Transactions
Many estate disputes involve people who provide assistance to an elderly individual.
Neighbors, friends, family members, and caregivers often help with:
- Transportation;
- Daily activities;
- Property maintenance;
- Financial matters; and
- Health-related needs.
While those relationships are often genuine and positive, they can also create circumstances where influence and dependency become important legal issues.
Courts will carefully examine whether a vulnerable person was able to make truly independent decisions.
Key Estate Planning Lessons
Document Major Transactions Properly
Significant asset transfers should be formalized through properly drafted agreements.
Obtain Independent Advice
Independent legal advice helps reduce the risk of future challenges.
Consider Capacity Issues
When an older adult is involved in a major transaction, capacity should be carefully assessed and documented.
Ensure Fair Market Value Is Considered
Large discrepancies between market value and sale prices create significant litigation risk.
Avoid Informal Arrangements
Handshake deals and homemade contracts often become costly disputes later.
The Bottom Line
Ruszkowski v. Trust demonstrates that courts will not hesitate to set aside agreements involving vulnerable individuals when concerns arise regarding capacity, fairness, or improper conduct. Real estate transactions involving elderly persons require careful planning, proper documentation, and meaningful independent advice.
The decision is a reminder that what appears to be a simple private arrangement can later become the focus of extensive and expensive litigation if the transaction cannot withstand legal scrutiny.
MerGen Law is Here to Help You
At MerGen Law, we assist clients throughout Alberta with estate litigation, capacity disputes, property transfer disputes, undue influence claims, estate administration, and estate planning. Whether you are challenging a questionable transaction or seeking to structure one properly from the outset, we are here to help.
This article is intended for informational purposes only and does not constitute legal advice. Individuals facing concerns about wills and estates should seek professional advice tailored to their specific circumstances.