Deidre at risk following daughter’s divorce

When an older person moves into a son or daughter’s house and pays to build a granny flat the older person may develop an interest in the property. When things go wrong, this sort of interest can be very difficult to prove, particularly where no written agreement exists. Putting things in writing while everyone involved agrees can help make everyone’s expectations, understanding and legal position clear from the beginning.  

Deidre had spent her life savings of $250,000 to build a granny flat on her daughter and son-in-law’s property following the death of her husband. She expected to be able to live in the granny flat for the rest of her life and receive care from her daughter and son-in-law if necessary. 

Several years after Deidre moved in, her daughter and son-in-law divorced. As they worked through the financial settlement following their divorce, Deidre’s son-in-law offered Deidre $85,000 – the reported ‘market value’ of the granny flat – in exchange for her share of the property. 

Deidre was alarmed at the prospect of having the relatively small sum of $85,000 to cover her housing costs for the rest of her life. She feared she may become homeless. 

Without a written agreement the older person may need to see a lawyer, and take urgent legal action to prove that they have an unregistered interest in a property. Delaying seeking advice can be very harmful as action may need to be taken within a certain time frame.  

Deidre sought help from Caxton Legal Centre’s Seniors Legal and Support Service.  

The SLASS lawyer provided Deidre with advice about her ‘equitable interest’  in the property due to her financial contribution. SLASS explained Deidre’s legal options to her so that she could make an informed decision. Deidre’s goal was to be able to live with her daughter in the property as intended, once her son-in-law’s share was paid out. 

Negotiations between Deidre’s daughter and son-in-law were difficult and prolonged with lawyers used on both sides. The SLASS lawyer advocated for Deidre and established that Deidre held an equitable interest in the property worth far more than the ‘market value’ of $85,000.  

After seeking legal advice, mediation is often the best first step to resolving matters and can be very useful. If court action is needed, it will be beneficial if there is a good record of transactions, conversations, agreements and other details of the arrangement and the dispute, so documents need to be kept in a safe place and keeping a diary may be valuable too. 

After negotiations failed, Deidre’s daughter’s lawyer filed an application at court.  The SLASS lawyer represented Deidre and successfully argued that she should be ‘joined’ as a party to the Family Court proceedings.   

SLASS then provided Deidre with legal representation at a joint mediation, where an agreement was finally reached.  Deidre and her daughter were able to keep the property with Deidre continuing to live in her granny flat. Deidre was enormously relieved by the outcome and grateful that SLASS had helped her avoid the loss of her home and life savings. 

In order to ensure Deidre’s long-term interests were protected, SLASS helped Deidre gain legal recognition of her contributions to the property in a binding financial agreement. 

“I never imagined that my daughter’s divorce would put me at risk of homelessness. I don’t know where I’d be without the help I got from SLASS and I’m so very thankful for the help they gave me.” 

Questions to ask yourself when considering living with family or friends 

  • Have I considered a written agreement?
  • What if we do not get along?  
  • What if my needs change? 
  • If I need to go into a nursing home, where will the money for the accommodation charge come from? • How will my pension be affected? 
  • Should I speak to a Centrelink financial services officer? 
  • Should we get assistance from a solicitor, mediator or counsellor to help us make the agreement? 
  • Have I had independent legal and financial advice? 
  • Has the agreement been put into writing? 
  • Am I sure that this is the best thing for me now and into the future? 
  • What if my family member’s or friend’s circumstances change? How would their divorce, partnering or relocation affect me? 
  • Will I have security (e.g. my name on the certificate of title)? 

Centrelink Matters 

If an aged pensioner contributes money to someone else’s property for renovations of the building the pensioner will live in, Centrelink may consider them to have a ‘granny flat interest’ in the property. If Deidre is an aged pensioner, she may be considered to have a ‘granny flat interest’ in her daughter’s property. This may affect Deidre’s pension. Alternatively, Deidre may be able to convince Centrelink to treat her granny flat interest as an unrealisable asset. 

Read more about how the Seniors Legal and Support Service can help at