As has been previously discussed, a person can become a life tenant in many situations, whether it be in the form of homestead rights, through a conveyance document, or through inheritance under a will. However, after someone becomes a life tenant, they owe certain duties and responsibilities to those who will have an interest in the property once the life estate ends. In this blog post we will discuss some of the rights and duties that a life tenant owes to the remainderman who will obtain an interest the real property once the life tenancy ends.
What is a Life Estate?
A life estate is an interest in real property that generally entitles the life estate owner the right to possess the property, use the property, get profits from the property, and sometimes the right to sell the life estate interest. A life estate only lasts during the life or lives of one or more persons in being. Financial Freedom Sr. Funding Corp. v. Horrocks, 294 S.W.3d 749, 755 (Tex. App.-Houston [14th Dist.] 2009, no pet.). Upon the life estate terminating, the property reverts to the remaindermen, who is the person or entity who holds a future interest in the property when the life estate is established.
What Rights Does a Life Tenant have?
As stated above, a life tenant has the right to occupy and use the property during their lifetime or alternatively until the life estate is terminated by the life tenant. A life tenant can also sell their interest, but they cannot sell any greater interest than that which ceases upon the life tenant’s life. A life tenant is also entitled to all income and profits earned from the life estate, such as rent, and does not have to share or allocate those profits with the remainderman.
What are the Duties of a Life Tenant?
A life estate owner is responsible for the upkeep and repair of the property. While the expense for the care and preservation of the property is solely that of the life tenant, this does not mean that the life tenant must go beyond ordinary maintenance or make unnecessary repairs. This also does not mean that the life tenant is bound to keep the property insured. In the alternative, if the life estate owner does insure the property, the remainderman would not be entitled to insurance proceeds should the property be destroyed.
A life tenant is also responsible to pay any mortgage insurance on the property. However, a life tenant who pays off the principal sum or debt in order to preserve the estate is entitled to reimbursement or contribution from the remaindermen. Brokaw v. Richardson, 255 S.W. 685, 688 (Tex. Civ. App.- Fort Worth 1923, no writ). This means that if there is a mortgage on the property, that the life tenant would be under no obligation to pay it. Only the holder of the promissory note has a responsibility for making mortgage principal payments.
A life tenant is generally also held to be responsible for paying ordinary taxes on the property and can take no action to impair the interest of the remainderman, which would include taking any fraudulent actions to defeat the rights of the remainderman. For example, if a life tenant failed to pay property taxes, and then purchased the property at a tax foreclosure sale, this would not eliminate the life estate, and would be impairing the rights of the remainderman.
While having a life estate does come with significant rights, the duties of a life tenant are numerous, and determining what duty is owed to the remainderman in certain circumstances can be a difficult task. Legal guidance and awareness of Texas laws can significantly aid when determining if a duty or responsibility is owed or being violated.
All information provided on Silblawfirm.com (hereinafter "website") is provided for informational purposes only, and is not intended to be used for legal advice. Users of this website should not take any actions or refrain from taking any actions based upon content or information on this website. Users of this site should contact a licensed Texas attorney for a full and complete review of their legal issues.