Life Estate Going Into Foreclosure

A method of avoiding probate issues after someone who owns a house dies isto create a Life Estate. It is its own form of estate planning that ensures that an intended heir receives the title to property that the individual intended him to receive. It allows the owner the ability to live in their propertyuntil they die and there is no legal wrangling in probate court to ensure that the property passes smoothly to the person intended to receive it.

Life Estate Definition

The concept of Life Estate is used in both common law as well as statutory law. It designates ownershipof real property until the conclusion of a person's life. Put in more legal terminology, it is an estate in real property that terminates at a person's death. The person who owns this Life Estate is referred to as the "life tenant." The person whose life concludes the Life Estate when they die is referred to as the "measuring life," and the person to whom the property reverts upon the death of the measuring life is called the "remainderman."

The life tenant enjoys all the benefits of ownership until the measuring life (who can be the same as the life tenant) passes away. This means that he/she can receive income from rent and other uses made of the property as long as they are in possession of it.

The life tenant cannot leave the property to heirs. The point of this arrangement is for thelife estateto revert, upon the death of the measuring life, into the hands of the remainderman who is named as such in the Life Estate agreement.

Though improvements to the property are allowed while the life tenant is in possession of the property, damaging and devaluing the property is not. This is referred to as the legal doctrine of "waste." This is because technically their period of ownership is temporary.

Pur Autre Vie

The definition of "Pur Autre Vie" from French means "for the life of another." In terms of Life Estate, it means that someone else has ownership of property until the death of another named individual. The person who owns an estate cannot covey a greater interest in that estate than he already possesses. In other words, a life estate owner cannot give indefinite ownership to another since the life tenant's ownership is over when the person who is the measuring life dies.

Generally the Life Estate pur autre vie is created under one of these two circumstances:

  • The ownership of property is conveyed to another person for the life-span of a third individual. In other words, A conveys his property to B for as long as C lives. If B dies prior to C, B's heirs inherit the property and will own it until C dies.
  • Should A convey the property to C for as long as C lives, C has the right to sell the Life Estate to B. Then the scenario is the same in that B and his heirs will own the property for as long as C lives.
  • In either case, C's life is the determining factor. Once C dies, ownership reverts back to A. If A has died, then his heirs will receive the property.

Life Estate and Foreclosure

Though the Life Estate guarantees ownership until the life tenant dies, it is contingent upon the mortgage being paid – either by the grantor or life tenant. If the home goes into foreclosure, then the life tenant loses possession of the property, despite all other rights granted in the Life Estate.

This is also true if there was no mortgage and a person sold the property to their children with a Life Estate so that the person could live there until his death. If his children took out a mortgage on the property they, (the simple titleholders) and the person with the Life Estate would all have to sign a security note (mortgage). If the property goes into foreclosure on this new property, the Life Estate is nullified.

Speak with an Attorney

Real estate law can be complex and confusing. Life Estates are a useful tool for many planning the future of their estates. But, in order to ensure that you arrange things correctly, you should seek an attorney who specializes in real estate.

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