It's a homebuyer's worst nightmare — purchasing your dream home and moving in, only to find out years later it was never really yours.
That's the situation Queensland couple Jess and Jackie Morecroft have found themselves in.
"We bought the house and we moved in and then we got sued," Mr Morecroft said.
"And it's just been this slow-moving nightmare ever since."
The family are now packing up to leave the Gold Coast property they bought at auction five years ago after the Queensland Supreme Court ruled it still belonged to the previous owner – 83-year-old Hind Issa.
The couple moved to Mermaid Beach from Victoria because one of their children suffers from a lung condition.
They hoped the condition would improve away from the cold Melbourne winter and closer to the salt air.
In March 2018, they purchased the house in Francis St at a mortgagee auction for $1.265 million.
It's now worth more than $2.7 million, according to court documents.
What the Morecrofts didn't know when they bought the property was that Ms Issa had alleged the house had been unlawfully mortgaged as security for a loan by a relative who later defaulted.
Ms Issa had placed a caveat over the property in an attempt to stop the sale because she could not afford to apply for an injunction in court.
But after negotiations with the mortgagees who sold the property, she agreed to remove it in exchange for $40,000 prior to settlement.
The Morecrofts paid for the property and it settled on June 1, 2018.
Soon after, they were unable to transfer the home into their names because the Registrar of Titles had placed a second caveat over the property after Ms Issa contacted them.
'Fraudulently mortgaged by criminals'
According to court documents, the registrar's caveat was put in place after Ms Issa wrote to the Queensland titles office, saying her home had been "fraudulently mortgaged by criminals".
She told the registrar she had made a police complaint but made no mention of the agreement to withdraw her caveat in exchange for $40,000, court documents said.
As a result, the title remained in Ms Issa's name but the Morecrofts paid for and have lived in the home since 2018.
In September 2018, Ms Issa brought legal action in the Queensland Supreme Court in an attempt to get her house back.
The Morecrofts have been fighting to keep the home since that time.
In February this year, Supreme Court Justice Lincoln Crowley found they had no legal interest in the property because the title had never been transferred into their names.
"I guess it's just shown us, you can buy a house at auction, you can settle on that house … you can pay for that house and you still might not get that house," Mr Morecroft said.
"We've lost the house after five years and we just never thought that was possible."
The court found they only had an "equitable" interest in the property and Ms Issa was still the legal owner, with the title in her name.
The court found the mortgagees who sold the property had been alerted to the allegations of fraud before the property settled.
After the property went to auction, Ms Issa made a complaint to police about the alleged fraud.
A handwriting expert gave evidence during the trial that Ms Issa's signature had been forged on the loan documents.
With Ms Issa now suffering from Alzheimer's disease, her daughter Jennifer Halik acted as her litigation guardian throughout the Supreme Court proceedings.
Ms Issa sued the mortgagees who had sold her house, listed on court documents as several different entities.
In addition to Jess and Jackie Morecroft, the Registrar of Titles, and the State of Queensland, the relative and a lawyer were named as defendants.
In February, Justice Crowley found the seven mortgagees – described in the documents as "lenders of last resort" were not entitled to exercise the power of sale over the house.
He found the mortgage entered into using the property as security was null and void.
The court accepted that Ms Issa's signature had been forged and said the mortgagees attempts to verify that Ms Issa had executed the mortgage on her home before selling her property were "wholly inadequate".
As a consequence, the mortgage against the property that led to the sale was found to be fraudulent.
'It feels very desperate at this point'
The court found the Morecrofts did not have a legal interest in the home, because they were not able to register the title but were entitled to recover $2,751,666.32 from the mortgagees who sold the house for breach of contract.
The Morecrofts now fear enforcing that judgement against several lenders will be costly and difficult to pursue in the courts.
After already spending more than $300,000 in legal fees, they want the state government to compensate them, after the court found they were also victims of fraud.
While the judgement said the "State is liable … to compensate the purchasers as they have been deprived of their equitable interest in the property … because of the fraud of another person" no orders have been made.
Documents show lawyers for the state argued against awarding compensation during the trial.
"There is an endpoint here for us, which would totally ruin us … it feels very desperate at this point," Mr Morecroft said.
His wife said she had been "living in fear" due to the stress of losing the property for the past five years.
"We're just normal people who have bought a house," Ms Morecroft said.
"Financially it's enormous to lose everything that you've worked for and the government should be there to back us up because we've done nothing wrong and they are just fighting us all the way."
During the trial, the Morecrofts argued Ms Issa should not be awarded the house because of her "conduct" in withdrawing the caveat so the settlement could be completed.
Their lawyers told the court Ms Issa's removal of the caveat was an indication "to the world" she no longer had an interest in the house.
But Justice Crowley found her conduct in removing the caveat in exchange for $40,000 was not misleading or "unmeritorious".
"She was clearly pressured by the mortgagees and their lawyers to withdraw the caveat," he said in the judgement.
He said Ms Issa was, "faced with the prospect of costly legal proceedings brought by the mortgagees to have the caveat removed" which she could not afford to defend and believed she would not succeed in.
"Whilst she did agree to the withdrawal of the caveat in consideration of the payment of $40,000 from the mortgagees … that was done on the express basis that she reserved all her rights," the judgement said.
The question of compensation by the state government will be considered when the matter returns to court on Friday.
