Sunday, June 23, 2013

MBE Fast Fact: Life Tenants

The rights and obligations of a life tenant (in regards to that owed to a future interest holder such as a remainderman), is a commonly tested area with Real Property questions.

In regards to rights, it's very straight-forward. A life tenant is entitled to ordinary uses and profits of the land. The obligations that a life tenant has to a remainderman is a bit more complicated, but a general rule to keep in mind is that a life tenant cannot do anything that might injure someone holding a remainder. More specifically, a life tenant may not exploit the land (for example, by removing natural resources) unless doing so is necessary for repair or maintenance of the land, the land is suitable only for such use, or doing so has been expressly or impliedly allowed by the grantor. The "open mines doctrine" states that if mining was done on the property prior to the life tenant taking possession, then that life tenant can continue to mine but is limited to the mines already open.

In addition, a life tenant must keep the land in a reasonable state of repair, pay interest on mortgages (but need not pay the principal on those mortgages,) and pay ordinary taxes on the land. Note that a life tenant is not obligated to insure the property for the benefit of the remaindermen, and if a third party tortfeasor were to damage the property (for example a trespasser), the life tenant would not be responsible for that damage.

Even if the life tenant were to improve the property (known as ameliorative waste), the change was actionable at common law. Today, a life tenant may commit ameliorative waste if the market value of the future interest is not diminished, or if either the remainderman does not object to the change, or a substantial and permanent change in the neighborhood conditions has deprived the property in its current form of reasonable productivity or usefulness, necessitating the change.

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