A lot of the talk around granny flats these days is to do with either, the move toward minimalist living, whether it’s a good investment or the recent trend of young singles living on their own. Funnily, the origin of the granny flat is almost forgotten. A “granny flat agreement” is an informal arrangement where a parent invests in a granny flat on the child’s property, in exchange, the parent can live in the granny flat.

(Obviously, these kinds of agreements often take place when a parent is, well, a ‘granny’)

The story usually goes something like this: Granny is living alone and finding it expensive to have a place all on her own, she would also love to have a little more company than she currently does. Instead of investing in a retirement village, she offers to build a granny flat on her child’s land. The child adds value to their home and granny gets to live more affordably and closer to community & family. 

A lot of these arrangements work out really well: Granny gets to enjoy the kids and grandkids and vice versa, and both benefit financially.

Most who enter into this kind of informal agreement believe everything will go smoothly, unfortunately, this isn’t always the case. If the relationship between the parent and child breaks down, or the child’s spouse and the said parent-in-law (and let’s be real, if you’ve ever lived with an inlaw, you know how hard it can be!) then the parent is in a very vulnerable position

Granny Flats And The Law

When these kinds of relationship breakdowns occur, they can become very messy because so often these arrangements are not in writing. It makes sense, in a way, why these agreements don’t get put in writing: it can seem like an insult, or an expression of distrust, to involve the law in what should feel like a mutually beneficial exchange between people that love each other. 

But things do go wrong, and when they do, the lack of written agreements can make for some very messy and destructive situations. The Legal Aid website gives a story of one such relationship breakdown (as well as some great advice to people thinking of entering into one of these agreements). Most of us like to think we are impervious to these kinds of dramas, but the truth is, they can happen to anyone.

The law can make children repay the parent’s contribution, but because of the nature of the agreement (which is often considered a ‘gift’) the court cases can take up a lot of resources and time. This requires money, of which Granny likely doesn’t have much left, and can take a very stressful role on everyone involved – the very opposite of what the arrangement was designed to do.

It Never Hurts, In The Long-run, To Clarify

Somehow, clarifying money issues in intimate relationships can seem extraordinarily difficult. But, if you are a parent thinking about entering into a ‘Granny flat agreement’ with your child, you should know that the law isn’t exactly on your side in this situation. But there’s another, more positive, way to think about this. 

Clarifying in writing won’t only protect you, but it may well be the best thing for your relationship with your children. Instead of thinking about getting your agreement in writing as a violation of trust, you can think of it as an opportunity to have some open and honest communication with who you are going to be in close relationship with.

Other than protecting yourself financially, a written agreement can be a chance to voice living expectations as well. If you are able to find the courage to clarify these kinds of things before building a granny flat, not only will things be smoother if things do go wrong, but you’ll probably find the chances of things going pear-shaped will be significantly less. 

Indeed, you may well find that building a granny flat for “Granny” is one of the most rewarding decisions you’ll ever make.