Mother in law is “renting” our house and sending us bankrupt – what can we do?

okay so long story short, my mother in law is terrible with money.

She could no longer pay her mortgage so my husband and I purchased it from her, and fixed all her outstanding bills and debts (there were a lot).

The agreement was that we would purchase the house and give her $100,000 to build a granny flat on the property so she could continue to live there (keeping in mind she is only in her 50's so isn't exactly a "granny")

Any way, a few years went buy, she made zero attempts to build the granny flat and she had continued living with us in the house.

Tensions were building and due to my husband starting his own business and having to drive two hours each way to work we decided to rent something closer to town and leave the mother in law in the house.

Because we were wanting to just trial this arrangement we switched the house to interest only because the mother in law couldn't afford the amount in rent that would be needed to cover the mortgage so she has been paying only $300Aud a week which is very VERY cheap for the area.

How ever even when she does pay rent on time (which is rare) we still have to pay $500+ a month to make the difference.

She also keeps ignoring bills which we end up having to pay and she wont pay any maintenance costs i.e the mower broke so she just ignored it and let the gardens become over grown and are now ruined.

The house itself is in shambles also. It has a lot of potential, it's a 4bedroom two bathroom sand stone house on two acres how ever she let it become run down over the 14 years she owned it – basically let carpets get destroyed by her dog etc, she ignored a roof leak and now the bathroom roof is detroyed- needs a lot of TLC.

So now we are paying for her to live in a house that isn't being paid off.

The interest free period is about to expire so now we need to decide what we want to do long term.

My husband and I don't want to move back, we hate the area and hate the travel to get there from work we also hate the house because it's so run down.

We feel like total ass holes telling my mother in law to move out because it was never our agreed arrangement, however with her not paying bills/rent/maintenance it's sending us completely backwards as we are only in our mid 20s.

The house is valued at about $550-$600k (if we put in money to make repairs)

so what do we do?

do we- Get her to rent somewhere else and put a proper tenant in there to move into the place.

or – do we sell the house, give her the $100k for her granny flat and she goes and purchases her own place.

or- suck it up and move back into the house for a while.

We are in a total bind at the moment. She isn't a bad person and has a heart of gold but she unfortunately is stuck in this total rut where she 100% relies on my husband to care for her because she has literally no body else.

No other family, no parents, no boyfriend, no husband no other children.

Either option we take is probably going to cost money we don't have.

Please help

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