‘My daughter broke her promise to pay off my mortgage, so what can I do?’

Q: My husband and I bought our home in 1994. At the time, it was valued by the bank at $870,000 and there was $200,000 left to repay on the mortgage. Seven years ago my daughter and her husband moved in, took over the $200,000 mortgage and borrowed another $260,000 to extend onto our property.

We were happy at the time to be left with the front two bedrooms and one bathroom as it meant we could have our grandsons close by. But my husband died over three years ago and my daughter has not been kind to me and has not let me live my life, so I want out.

The title deed is in all our names, as is the mortgage. The agreement was that I pay nothing when my husband died as we all agreed if that if my daughter and her husband were to buy a block in our suburb it would cost a lot more than the $200,000 there was originally left on the mortgage.

Of course, though, there was nothing put in writing about this agreement.

I currently pay $300 a month from my account toward the mortgage. It is my equity in the home but I can’t access it. Meanwhile, my daughter and her husband have bought a new car and not paid much off the mortgage.

Sadly, the property market has slumped here in Western Australia. I’m almost 65 so starting to slow down, I want to travel and would like to access my money but don’t know how to go about it. I have said that I want out and want my own freedom in a small apartment. My son-in-law would be happy to move as long as they have no mortgage but that means I’ve lost out.

My husband would be very upset about this. Please tell me what can I do.

A: If I understand the position correctly the property is situated in WA and the legal title is registered in the joint names of yourself, your daughter and your son-in-law and is subject to a mortgage debt of approximately $460,000. The exact figures are not important but it seems that any equity there may be in the property belongs to you.

I assume that when your daughter and her husband moved in they did not pay you and your late husband for any part of the title. They simply raised a further loan of $260,000 using your and your late husband’s then-equity and they were added to the title because they were borrowers.

Usually when loans are taken out over a property all owner/borrowers are jointly and severally liable for the debt and so, unfortunately, I think you will be as liable for the extra $260,000 debt as they are.

The relevant law applicable to real property in WA is the Property Law Act, 1969. Section 126 of that Act allows the court to order a sale of a property upon the application of an interested party. This may be done notwithstanding the dissent of your daughter and her husband if it appears to the court that in the circumstances a sale would be a proper order to make.

Your daughter and her husband may be given the opportunity to purchase your interest and the court may make any other orders and directions as it sees fit.

So, there is a forceful way out of your current situation and I suggest you speak with a local solicitor to explore these options more fully. It may be possible for your daughter and son-in-law to purchase your share of the title without the need for court action but that sounds unlikely.

If the property is sold the mortgage debt must be cleared entirely and so depending on the outcome you may be unfairly out of pocket if your daughter and son-in-law are unable to repay what really is their share of the debt.