A husband and wife were searching for a new property to live in. They found a property which had a main house and a poorly maintained granny flat on it. The husband and wife were shown on the property title as owners. The husband’s mother, who was 62 and seeking to downsize, proposed to contribute $147,000.00 to the purchase, and a further $20,000.00 for renovations to the granny flat. There was a spoken agreement that the mother would be able to live in the granny flat for as long as she liked, and the son and his wife would not have to repay any part of her contributions.
There was a serious falling out between the mother, and the husband and wife. The result of this was that the husband and wife evicted the mother from the property. With little money of her own and reliant on a pension, the mother was forced to live with friends, effectively homeless.
The mother sued the husband and wife, arguing that the money she gave for the property and renovations was not a gift without any conditions, but rather was to be a gift on her death subject to two conditions: (i) she could live in the property for as long as she liked; and (ii) upon death half of the mother’s share in the property would be paid to the husband’s sister.
The Court agreed, and the mother moved back into the granny flat against the wishes of the property-owning children.
This case demonstrates the importance of fully considering the situation before pushing ahead with a granny flat arrangement. More importantly, it underscores the importance of careful drafting of documents and independent legal advice, all of which could have avoided this dispute.