A property investor has failed in his attempt to evict his mother and three siblings after a verbal agreement went sour and has now been ordered to reimburse her.
He bought the Greensborough house in October 2002 after his parents were unable to secure a loan to purchase the property. They moved into the house the same year. In 2003, they transferred a block of land in Diamond Creek into their son’s name. They had been planning to build their dream home on the land.
The son told the Victorian Civil and Administration Tribunal (VCAT) that the transfer of the land into his name had been repayment for loans he had made to his parents. But his mother argued that the transfer had been made in exchange for the Greensborough house in which they lived. To make up the difference, she said she paid $200 per week to her son. Her son said that the $200 per week was rent, which amounted to a tenancy agreement between them.
The family stopped paying the $200 per week after a year and a half. The mother told the tribunal that her son told her “not to worry about it.” The son said he had continually asked for the rent to be paid.
The relationship soured further when renovations were made to the property and the son ceased communications with his mother in 2013. The mother says that they did not put any of their agreements in writing, although she was warned to do so, saying that she trusted her son.
VCAT member Kylea Campama took into account the family’s history of lending each other money and the son’s failure to seek any payment from his parents in more than ten years since they stopped paying the $200 per week.
“While [their] relationship has been eroded now to a point where it seems unlikely to recover, I have no doubt that they trusted and relied on one another at the time the arrangement was entered into. It is therefore not surprising that there is no written agreement or deed,” she said, finding the agreement did not have the characteristics of a residential tenancy agreement and the eviction notice to vacate had no legal basis.
For a contract to be legally binding, its terms must be clear, which often means verbal contracts were difficult to define in courts.
The basic essential elements of a legally binding contract , of any type, are:
- offer and an acceptance;
- an intention by the parties to the contract to be bound;
- capacity of the parties contracting;
- consideration moving from the parties;
- lawful objects of the contract; and
- a stipulated place where the contract is considered formed.
Needless to say, our advice is always to put any type of agreement in writing – especially between family members. It’s important to seek legal advice before entering into an agreement rather than trying to resolve a dispute once the relationship has broken down irretrievably. We are particularly experienced in property disputes.
We offer a FREE, 10-minute consultation so contact us today if you have any questions about property disputes.