COUNCIL bosses have failed in their bid to force the family of a frail pensioner to sell her home.
East Lothian council hoped to take a share of a property 94-year-old Mary Cunningham had gifted to her great grandson to recoup care home fees.
Instead a senior judge ruled they could not force the sale.
Pensioners rights groups today welcomed the decision.
But legal experts warned the ruling could have implications for all elderly homeowners who may require residential care.
Scots pensioners with assets worth more than £23,500 must cover the cost of their care themselves.
Councils can either force them to sell up to meet the costs.
Mrs Cunningham, from Tranent, bough the former council property under the right-to-buy scheme in June 2003.
She handed responsibility for the mortgage payments to her great grandson, Ian Black, and a contract was drawn up giving her “life rent right” to stay in the property.
It was also agreed that Mr Black would assume ownership three years after the date of purchase, or if Mrs Cunningham was unable to live there.
Mrs Cunningham was admitted to a care home in February 2006, suffering from dementia.
East Lothiancouncil said she was liable for the £375-a-week care fees because the value of the property was above the assets threshold.
They later said that as she was not selling the house immediately a “charging order” would be imposed.
This would allow creditors to claim back money owed when the house was sold and, in some cases, can lead to repossession.
When Mrs Cunningham took the case to court, Lord Pentland ruled council bosses had incorrectly calculated the market value of the property in light of the decision to sign it over to Mr Black.
He said potential buyers would be put off buying the house because of the ownership dispute and ordered the council to reconsider.
It’s feared the ruling could open the floodgates for pensioners to hand their properties over to family members to avoid residential care costs in the future.
Lesley Hurst, of law firm TC Young, said: “ Each case needs to be decided on its merit depending on the pensioners circumstances.
“However this case sets out some boundaries and guidelines for what should be done to safeguard a pensioner’s position.
“This woman had a contract with her grandson and that can’t be overruled.”
Christine Graham, an SNP MSP and former solicitor, said: “Lawyers could look to cite this judgement.
“There appears to have been a very specific contractual arrangement and lawyers will be keen to see why it has proven to be watertight.
A spokesman for Age Scotland said older people would be “watching the case closely” as it could have an impact on how they pay for their care.
John Swinburne, leader of the All Scotland Pensioners’ Party, added: “I’m hopeful this case will mean that in the future children who inherit homes from parents will no longer face the threat of the council stealing them to pay care home fees.”
East Lothian Council’s leader, Paul McLennan, said they were “currently considering” the judgement.
A Scottish Government spokesman added: “The current guidance is clear but it allows councils the flexibility to take full account of people’s different circumstances.”