Saturday, September 8, 2012

MBE Fast Fact: Obligations of a Life Tenant

There are certain duties that a life tenant is required to perform for the benefit of the future interest holder. (A life tenancy is, by its nature, temporary, so there will always be someone who holds a future interest). First, note that a life tenant is under no duty to insure the estate. A life tenant is, however, under a duty to pay interest on indebtedness that constitutes a lien on the property and to pay ordinary taxes on the property as they accrue. This includes property taxes that come due while the life tenant holds possession of the property.

However (and this has been tested), a life tenant is liable to the holder of the future interest for property taxes only to the extent of rents received, or the fair market value of the property if the life tenant is occupying the property. In other words, if the life tenant is not occupying the property, and not renting the property, then the future interest holder upon coming into present possession of the property will be unable to sue the former life tenant for unpaid taxes on the property .

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