A Gold Coast house at the centre of a complicated legal dispute has gone under the hammer for $2.66 million.

Four registered bidders competed for the Mermaid Beach property at an auction on Friday.

It sold for more than double the previous sale price, which was the subject of a five-year court battle.

Jess and Jackie Morecroft bought the Francis Street house for $1.265 million in 2018 at a mortgagee auction, but later found they never actually owned it.

In February, the Supreme Court found the property still belonged to the previous owner, Hind Issa, because the title was never transferred into their names.

The transfer was blocked when the pair tried to move it over.

Ms Issa alleged the house had been used as security for a loan by a relative who had forged her signature then later defaulted.

The Morecrofts were forced to move out of the house after the legal battle.

The court ruled they were entitled to recover $2.7 million from the state government because they had been deprived of the property due to the mortgage fraud.

But they were ordered to pay a third of Ms Issa's and the state government's legal costs.

Once the legal dispute was finalised, Ms Issa put the beachside property on the market.

The state government has appealed the compensation order.