Granny Flat Agreements

This is a companion site to our main website and provides dedicated information about:

  • Granny flats/granny flat agreements
  • Disputes about granny flat arrangements

Pensioners

Granny flat agreements/Family care/accommodation agreements involving pensioners

It is absolutely critical that financial advice is obtained from an appropriate expert (or the Centrelink Financial Information Service – a free advice service).

The Centrelink rules are designed to facilitate these arrangements being entered into, in the sense that they ameliorate the gifting/deprivation rules which can otherwise have adverse effects upon pension entitlements. However, the rules are quite complicated and if an arrangement is entered into without proper consideration of these rules, it is likely to be very difficult to undo damage that might be done.

In short, monies can be advanced by a parent to, say, a child to enable the parent to live in the home of the child, without that advance being regarded as a gift for Centrelink purposes. In general, and the detail of the rules must be carefully looked at in each particular case, the advance of monies for this purpose by the parent will not affect the pension as long as the advance is not greater than required to properly create the “granny flat” accommodation. Anything in excess of what is required for the granny flat itself can be regarded as deprivation/gifting, and the pension entitlement can be adversely affected. This is a simplification of the rules.

The other important aspect of the Centrelink “granny flat” rules is that a “granny flat interest” must be created. This means that an agreement must be reached, say, with a child, that in exchange for the advance of money by the parent that parent must be given either a life interest in the property or a right to accommodation for life. This does not mean that the child cannot sell the home, but it does, strictly, mean that alternative accommodation must be provided so that the arrangement can continue.

This emphasises the fact, if nothing else, that such arrangements must be very carefully considered and a long-term view taken of them. Unfortunately these family agreements/granny flat agreements have sometimes ended up in the courts and this is usually due to the participants not adequately considering all of the consequences at the start.

These arrangements should be the subject of a written agreement between the parties, with, ideally, each party having separate legal (and financial) representation. Although this will involve some expense at the start, it may well prevent far greater expense (and anguish) later on.

Two other aspects of the Centrelink rules in relation to granny flats is that the person being provided with accommodation and/or care cannot have a proprietory interest in the property that they are going to reside in, and the home in which the accommodation is provided must be the person’s principal home.

Why Choose Us?
Dedicated practice

We are one of the few legal firms in Australia who advise in relation to granny flat agreements on a regular basis.

Efficiency

We make extensive use of technology to streamline document production. This significantly reduces the time we have to spend on drawing agreements.

Cost effective

Because of this experience in this area and our process efficiencies we can get matters finalised in a cost effective manner. Ask us about our fees.

Experience

The principal, Peter Gauld, has been practising in this area for fifteen years, and in relation to granny flat disputes he has had 30+ practising in dispute resolution.