Sheryll Young discovered the council was planning to buy her home only when she tried to put it up for sale.

And lawyers say a loophole has left several other Sydney families living in a similar purgatory with "blighted" houses they cannot sell.

It was 2008 and Mrs Young's family was seeking to sell their Gordon house to lessen the blow of the global financial crisis, five years after remortgaging to renovate their century-old timber cottage she has called home for two decades.

Then the real estate agent hired to sell the house saw draft zoning plans that marked the house for compulsory acquisition to make way for a new road.

"He just said: 'fat chance'," she recalls of the proposed sale.