I want to first start out by saying that we probably need to go back and forth a few times to make sure I cover all your points because I'm not entirely clear on every single question. So let's approach this like a conversation.
The first issue that is easy to deal with is that with your mother. Your mother is not common law married to your step father because she is still married to your father.
The next issue is does Bill have a case. If Albert was of sound mind when he transferred the house to Peter and Alberts will calls for Peter to have the house and for the four other children to split any money left (technically referred to as the "remainder"), then Albert is legally entitled to do this. That being said, if Bill wants to challenge it, there are several ways that he can do that, but presumably he would use an undue influence challenge.
Undue influence exists where a contract
has been entered as a result of pressure which falls short of amounting to duress, the party subject to the pressure may have a cause of action in equity to have the contract set aside on the grounds of undue influence. Undue influence operates where there exists a relationship between the parties which has been exploited by one party to gain an unfair advantage. Undue influence is divided into actual undue influence and presumed undue influence. Where a contract is found to be entered into as a result of undue influence, this will render the contract voidable. This will enable the person influenced to have the contract set aside as against a party who subjected the other to such influence. In addition, in some instances the party influenced may be able to have a contract set aside as against a party who was not the person inflicting the influence or pressure.
Actual undue influence, as the name suggests, requires proof that the contract was entered into as a result of actual influence exerted. The claimant must plead and prove the acts which they assert amounted to undue influence.
This may include such acts as threats to end a relationship, continuing to badger the party where they have refused consent until they eventually give in. There is no precise definition of undue influence. Lord Nicholls, in RBS v Etridge described the concept as:
"Undue influence is one of the grounds of relief developed by the courts of equity as a court of conscience. The objective is to ensure that the influence of one person over another is not abused. In everyday life people constantly seek to influence the decisions of others. They seek to persuade those with whom they are dealing to enter into transactions, whether great or small. The law has set limits to the means properly employable for this purpose. The law will investigate the manner in which the intention to enter into the transaction was secured: If the intention was produced by an unacceptable means, the law will not permit the transaction to stand. The means used is regarded as an exercise of improper or 'undue' influence, and hence unacceptable, whenever the consent thus procured ought not fairly to be treated as the expression of a person's free will. It is impossible to be more precise or definitive. The circumstances in which one person acquires influence over another, and the manner in which influence may be exercised, vary too widely to permit of any more specific criterion."
Presumed undue influence
Establishing the presumption
Under class 2a there is no requirement to prove that improper influence was actually exerted. Instead it must be established:
1. There was a relationship which as a matter of law gives rise to a presumption of undue influence
2. The transaction is one which can not readily be explained by the relationship of the parties.
1. Relationships capable of giving rise to an automatic presumption of undue influence are those of a fiduciary nature and include:
Religious advisor: disciple
In this case Bill could challenge the transfer of the house based on a presumed undue influence. All that would be required would be testimony
form Albert that shows that he was of sound mind. The party accused of exercising undue influence may rebut the presumption by demonstrating that the vulnerable party exercised free will in entering the transaction. This is most commonly established by demonstrating that they were fully aware of the risks involved and had received legal advice before agreeing to the transaction.
If this can be established, which it sounds like it can, then Bill can spend all the money he wants, he can't change the law and the law allows Albert to give his house to Peter.
Finally, does this affect your mom? The short answer is no. Your mom is not legally liable for Peter's actions and since they are not married, her assets are not at risk should there be some sort of judgment against Peter.
I look forward to hearing back from you.