Posted by Henry Melair on September 01, 2009 at 16:14:36:
Ken, to the best of my understanding, a life estate is an ownership interest, not a leasehold interest, and Ron’s question revolves around a sale-leaseback.
I would not give her free rent but I would give her a favorable rent and I would give her lease that she has right to renew annually. I would not tie it to her life but to her life provided that she does not move out for more than a year (or something similar in case she ends up spending a decade in a nursing home). By charging rent her family will be more amenable to terminating the lease if she is incapable of living there.
There is more to think about than my quick thoughts but a good attorney can help you with some of the minefields.
Hello,
I have an opportunity to purchase/acquire a large four unit inner city property located in Western New York directly from the owner. The property is free and clear. It does need a good deal of work but that is not the issue. I will preface this by saying the following… The owner is an older woman who lives with her forty something nephew in one of the 4-units. She has family throughout the neighborhood and I would not enter any deal without her having the proper legal representation.
That being said, she is interested in selling the property but wants to “live there until she dies”. My idea is to purchase the property for a nominal amount with the written understanding that she can stay in the unit rent free until she passes away. She would be responsible for her own gas & electric bills though. I would do the necessary rehab work and own the eproperty. I would be able to rent the other three units and collect on them. Is this a legal arrangement? If so, does it have a name? Can anyone explain to me how exactly it works?
thanks,
Ron
Sounds good doesn’t it? It did to a good friend of mine, the poor woman only had a couple years left, that was in 1982 and she is still there.
If you want a rough estimate ask a life insurance actuary her approximate remaining life span as though she is in perfect health. Plus she can rent it out, etc for as long as she is legally alive, even if she is in a coma. So think long and hard. I have bought the remainder interest of such properties for peanuts and one of those was a woman that just wanted to stay in the home for her last few years, ha, she will outlive me, thank goodness I paid next to nothing for it.