In 2018 we received an enquiry from an elderly woman looking for assistance in relation to granny flat arrangements. The client was in her 70s and required assistance around her home. She spoke to her son who proposed that she sell her property and pay $400,000 towards a granny flat being built on his property. The client could live in the property and the son would provide her with reasonable care.
The client agreed to this proposal, a granny flat agreement was drafted by the son’s solicitor and both parties signed the agreement. There were no provisions in the agreement that addressed termination of the agreement and/or what happens if there is a falling out or one of the parties dies.
The granny flat was built, and the client moved in. As time went on, the client found that her health was deteriorating and that she required more care than anticipated. She was looking after herself most of the time while the son was not present or went away on holidays. When the son was home, the care consisted of him providing her with takeaway food. This was the extent of the care provided and it is quite evident that this would not be considered reasonable. The client’s daughter became aware of her mother’s living situation, moved the client in to live with her, and the daughter took over the care.
The client sought advice in relation to recovery of the $400,000. There was also concern that the son would sell the property to go live overseas.
There is great concern surrounding these types of arrangements. There is an option for a caveat to be placed on the son’s property to protect the consideration paid, and there is legal recourse to try and recovery the monies. However, this can result in expensive and lengthy court proceedings. Further, if the monies are not recovered and the client passes, such interest will not necessarily form part of the client’s estate as it is disposed of.
While granny flat arrangement like this with family members might seem a good idea at the time, it is not advisable. Granny flat arrangements are not regulated and can cause a lot of issues if the agreements are not well drafted.
Our team can assist you by providing expert advice and legal support regarding your options. Contact us today.