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Parents unable to meet loan repayments on family home
A husband and wife acquired a property in 1975.
The husband, a builder, built the family home on the property.
He and his wife raised their five daughters there.
Subsequently, the husband and wife borrowed money to fund
improvements to the family home.
In 2012 the husband developed a heart condition and retired from
work. As a consequence, he and his wife could no longer meet their
loan repayments, and the bank commenced enforcement action.
Adult daughter buys family home and pays off loan
The husband and wife came up with a plan with their daughter,
for the daughter to buy the family home, enabling her parents to
repay the bank.
The daughter and her parents entered into a contract for sale of
land for a price of $1,050,000. The property had been valued by one
bank valuation at $950,000 and another at $1,050,000.
Despite the contract for sale of land, the daughter only ever
paid the parents' outstanding mortgage debt of $840,000, not
the full purchase price.
Parents continue to reside in family home after daughter moves
in
After purchasing the family home, the daughter and her family
moved in and lived on the top two floors. The parents moved to the
ground floor.
The two living areas were self-contained and had separate
access.
There was nothing in writing specifying how long this
arrangement was to continue.
Relations become hostile and daughter asks parents to move
out
Over time relations between the parents and their daughter's
family became hostile. The police were called to the house more
than once.
The daughter gave her parents a formal legal notice asking them
to vacate.
Parents commence proceedings to remain in family home for
life
The parents responded by placing a caveat on the title to the
house and commencing proceedings against their daughter in the NSW
Supreme Court.
The parents sought an order that they could remain in occupation
of part of the family home for the rest of their lives.
The daughter cross-claimed, seeking possession of the property
and eviction of her parents.
case a - The case for the parents
case b - The case for the daughter
When we met with our daughter at the family home in June 2013,
she proposed that she should purchase the property. She explicitly
promised us that if she did so, we would be able to reside there
until we died.
We built the family home with our own hands, raised our five
daughters there, and have lived there for over 30 years. When we
agreed to this arrangement with our daughter, we were in our late
sixties and one of us had a heart condition. Clearly, staying in
the family home was a top priority for us and our daughter knew
that. That's why she made the promise that she made.
Our daughter re-affirmed her promise to us in a meeting with
our conveyancer in July 2013. The conveyancer acted for both us and
our daughter, and she undertook to draw up a document to the effect
that we could stay in the home for the rest of our lives. We do not
know why she never followed through with this.
Although the promise made by our daughter was not documented in
writing, our daughter's promise amounted to a contractual
agreement which we are legally entitled to enforce.
Even if the court concludes that the promise is not contractual
in nature, our daughter's conduct in making the promise and
allowing us to live there with her for the last five years, led us
to believe that we could reside there for life. Under the law of
proprietary estoppel, our daughter is therefore estopped (or
prevented) from denying this promise to our detriment.
The court should order that we are entitled to live at the
property for the remainder of our lives.
My parents are correct that when we met in June 2013, we
discussed the family home. However, I did not propose that I should
purchase my parents' property. My father did. During that
conversation, we did explore the possibility of them residing in
the house for the rest of their lives if I purchased the property.
However, this was our first conversation on the subject and it was
exploratory in nature only.
I never made a promise to my parents, contractual or otherwise,
that they could live in the house for life. In fact, prior to
signing the contract for sale I was very explicit that I would not
agree to a lifetime arrangement. I told them we would "see how
it goes". My father had quite a chequered career as a builder,
and at the time of this transaction, I did not fully trust him. So,
I wasn't prepared to agree to him and my mother living with me
until they died, which could be many years.
Even the draft licence agreement that the conveyancer prepared
for my parents to sign made it clear that there was no lifetime
arrangement on the table. Rather, it stipulated that my parents
could reside in the home for a year and then month to month after
that.
If, nevertheless, the court concludes that I did promise my
parents a life arrangement, such a promise would not be
contractually binding, since agreements relating to land must be in
writing. There was no written agreement.
As for proprietary estoppel, even if the court concludes that I
am prevented from denying making a promise, the court has
discretion as to whether to grant relief to my parents. The court
should exercise that discretion in my favour, since to do otherwise
would perpetuate a situation that has become untenable.
My father is openly hostile to my husband and children. He
calls my husband humiliating nicknames and has broken into my
son's shed and destroyed his artwork. The police have been
called to our home on numerous occasions. Recently my father was
convicted of assault after an altercation with my husband in which
he sprayed my husband with a garden hose.
My parents also continue to take an inappropriate proprietary
interest in the property. When council required me to install
shutters for bushfire purposes, my father interfered with this,
saying that I couldn't do this on "his
property".
The court should make an order giving me possession of the
property and requiring my parents to vacate the property.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.