Does anyone know the correct legal answer for this question?

Your mother willingly gifted you money to do this.
There is no legal case here at all. It is a shame that all this information was ever passed around to family.

Essentially your mother gifted this tiny house to you, with the intent to live in it; then she chose not to and has moved on. You are three years in. If in California where lookback on gifting is 2 1/2 years, you are home free, if in other states in two years mom's gift will not count against her for any Medicaid care should she require that. Hopefully she has funds enough to sustain herself that long.

As to brother, what leads him to think he can sue for someone ELSE? He can sue for HIMSELF as is the case for all of us. And he has no case here. Only your mother would have one.

If you are worried, do see an attorney; that will relieve you mind.
Meanwhile let bro know you won't be discussing anything with him as regards any of this any more every again, and he should do what he likes. He will likely not be paying the big bucks to sue anyone.

Your brother can't sue you for money Mom gave you for the house unless she is incompetent. I am with Igloo. You must do an accounting. She may have supplied the materials, but you built it. Your time is worth something. You also gave her a lot to build on, that is worth something. This was all done with no mortgage? Who is on the deed to the house? Did you have to sub-divide to have the house built. She's on the deed, her house, her taxes, her utilities. If your paying you can't deduct that from what she spent.

MLee, went thru your old posts, yeah, your mom is quite the handful. A bitter contrary contentious woman. Personally in my not-an-attorney viewpoint, I think you need to be proactive & do a detailed accounting of all costs & time related to the period of time from the month mom moved out of her old place to where you & your boyfriend live for every month she was there. If you & him moved her back to wherever she now lives, then that period of time as well. All - ALL! - the costs: of the build, all utilities, of any outside improvements done to enable her to be there (eg gravel to create driveway, or walking path out in for that 250’ from ADU to the main house where you & bf live), if cable or WiFi for her to the ADU, any furnishings bought, etc. Go thru your calendar to do a timeline of all appointments you took her too, or errands you did strictly for her. Really truly go back past 3+ years.

I think this will be helpful for you to refer to should others say you took advantage of mom. And be a resource for you should to your brother do something legally to you (a civil lawsuit). This way you are absolutely ready to take all your detailed paperwork to an attorney that does civil, if need be.

What you are doing is a forensic accounting to establish that there was no benefit to you that was egregious. If mom flat just insisted on controlling the costs of the building materials, and she insisted on what building materials were, etc. that is why it was done this way. You’re in very rural WY, it’s not like you built this ADU to become a fancy ski chalet AirBnB.

You want to do whatever you can to have your bases covered to show that what you did was in the best interest of your mom to have her live safely and independently but with 2 adults on call for her to rely on. It is what she chose to do. That’s your story and the paperwork supports it. Comprende?

All this actually could be costing you. I imagine have additional property taxes and some utilities cost on something specifically built for her that she has walked away from and now sits there vacant? If your taxes & utilities have increased due to the ADU, if you wanted to be petty, you could bring up to your brother those cost$ you are now saddled with due to moms flip flop to live there after everything was built… just sayin’.

Also, another big reason to do this…… if mom ends up having to go into a NH and doesn’t have the $, then she will file for LTC Medicaid. And Medicaid will want her past 5 years finances. 5 years back from the date of her application filing date. The $ she spent on the ADU will be considered “gifting” to you as the ADU was built on land owned by you so it is your legal asset. It’s gifting and it will be in her bank statements, it will surface. She will be ineligible. So someone will have to private pay for her, if she is to reside there. Your brother will more than likely do whatever he can to make her ineligiblity and her NH bill to be your problem to deal with. All that forensic accounting work you did will come in handy for an elder law attorney to use. The attorney will likely take the approach that Frebrowser aptly posted. Transfer penalty issues are very much experienced in WY. Medicaid elder law attorney work.

It might be relevant to examine the amount of money involved and compare it to how much rent she would have paid at market rate for similar accommodations.

For example:
Materials=36,000
Rent on similar unit=900/month times 36 months
Plus Annual portion of taxes & insurance=1,200 times three (tenants don’t pay taxes and insurance so we’ll count it as more rent.
”rent” over 3 year=36,000

Would seem that you are about even.

But if she paid 200,000, you’d owe her.

Medicaid rules are something else. And I’m not addressing income tax, depreciation, depreciation recapture, or tax basis in calculating capital gains when you eventually sell.

Save all receipts and consult appropriate professionals when necessary.

I believe this is a question for a good lawyer in your area and not a bunch of strangers on the internet, as we are from all over the US, Canada and even overseas.