I replaced my mother-in-law’s roof without a contract — but then she stiffed me for nearly $20K. What are my options?

Jason, a licensed builder, agreed to replace his mother-in-law’s roof for $20,000, after it was damaged in a serious storm. But he didn’t bother to draw up any paperwork to formalize the job. After all, this was family.

Moreover, he knew she had filed an insurance claim that would cover most of the bill. But when the work was done, she decided to keep the money — and Jason was left unpaid, with nothing more than a verbal promise to back him up.

This hypothetical scenario isn’t just about shingles and invoices. It’s about trust and the painful reality that when money and family mix, the fallout can be both financial and emotional. Unlike loaning a few hundred dollars, this was a major financial undertaking, one that left Jason carrying the financial loss and the relationship carrying the scars of betrayal.

Why mixing money and family is risky

Financial experts often warn of the consequences of loaning money to our loved ones. Dave Ramsey even goes so far as to say it can create a “slave and master” relationship (1).

Lending or working for relatives feels safer than dealing with strangers, but it’s often riskier. Many people assume contracts are unnecessary when dealing with loved ones. But legal experts and financial planners stress the opposite: clear agreements are even more important when family is involved.

One of the most common mistakes when lending money or services to family or friends is failing to put the terms in writing. That’s because when disputes arise, it becomes a matter of one person’s word against another’s. And unlike a defaulting friend, a family member can’t be easily cut out of your life. The emotional damage lingers long after the money is gone.

The do’s and don’ts here are simple but tough to follow. Do set clear boundaries up front, even if it feels awkward.

Don’t lend or invest more than you can afford to lose. And don’t skip paperwork just because you share a last name.

Sponsored

Smart investing starts here

Build your own investment portfolio with CIBC Investor’s Edge online and mobile trading platform. Enjoy low commissions on trades and special pricing for active traders, students and young investors.

Get started today

What he could have done — and what you can do

The $20,000 roof job should have come with a written contract outlining the work to be carried out, a payment schedule and what happens if the homeowner receives an insurance payout. A contract protects both sides and gives the worker legal recourse if the agreement is broken.

Without paperwork, there’s still a chance of getting paid what you’re owed, but it becomes much more difficult. In all provinces and territories, a verbal contract for work can still be legally binding. However, this only works when there’s evidence that the work was completed and the terms were agreed to. That may mean texts, emails or even testimony from neighbours who saw the project underway.

Small claims court could be an option if the amount falls under each province or territory’s threshold, which can range from $15,000 to $100,000. For larger amounts, pursuing civil court with an attorney may be necessary.

Filing a construction lien —which is a legal claim against the property held until payment is made — could also be an option.

If no other legal avenues work, you can file an unjust enrichment claim. These claims apply when one party receives a benefit and doesn’t fairly compensate the other party who provided it. They aren’t tied to contracts and, if successful, can result in the claimant receiving any money owed.

The lesson is painful but clear: no matter how close the relationship, treat family transactions with the same seriousness as business ones.

How to avoid family money disasters in the future

If you’re ever tempted to help a relative with a major financial favour, here are some ways to do it without jeopardizing your wallet or the relationship:

Put it in writing: Even a short, plain-language contract signed by both parties can save heartache later.

Set boundaries: If the request stretches you beyond your comfort zone, say no. Guilt shouldn’t push you into financial precarity.

Think like a lender: Would you give this money or service to a stranger under the same terms? If not, rethink.

Protect your credit: Never cosign loans or take on debt you can’t cover yourself if the relative defaults.

Article sources

We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.

Dave Ramsey on TikTok (1)