Life estate

Key Takeaways

• A life estate is an ownership interest measured by a person's lifetime rather than by a term of years.
• The measuring life does not have to be the life tenant's own; when it is another person's life, the interest is a life estate pur autre vie.
• When the measuring life ends the property goes to the holder of the future interest, either back to the grantor as a reversion or on to a third party as a remainder.
• A life tenant may use, lease, sell, or mortgage the life interest, but in Washington a life tenant who commits waste can be sued for treble damages or fifty dollars, whichever is greater (RCW 64.12.020).

What It Means

A life estate is an ownership interest measured by someone's lifetime instead of by a calendar term. The person holding it, called the life tenant, has full use and possession of the property while the measuring life continues. The life tenant can live there, rent it out, keep the income, and even sell or mortgage what they hold, but they can never transfer more than they own, so everything they grant ends when the measuring life ends.

The measuring life is usually the life tenant's own. When the interest is measured by somebody else's life instead, it is a Life Estate Pur Autre Vie, which is French for "for the life of another." Either way, the future owner is fixed on the day the life estate is created. If the property returns to the grantor, the grantor holds an Estate In Reversion. If it passes on to a third party, that party holds an Estate In Remainder and is called the remainderman.

A life estate is a Freehold Estate because nobody can know in advance what date it will end. It is not inheritable. When the life tenant dies the property does not travel through their estate to their children, it goes straight to whoever already holds the future interest, and that person's ownership begins the moment the measuring life ends.

How It Works in Washington

In Washington, a life tenant's freedom stops at waste. RCW 64.12.020 lets any person injured by waste committed by a tenant for life bring an action for damages, and if the plaintiff prevails the judgment is for treble damages, or fifty dollars, whichever is greater, plus a reasonable attorney fee. The court may also decree forfeiture of the estate of the party committing the waste and eviction from the property, although the statute reserves forfeiture for cases where the injury to the estate in reversion equals the value of the tenant's estate or was done or suffered in malice. A life tenant who lets the roof fail or strips the timber is the fact pattern the statute was written for.

Selling the whole property takes every signature. RCW 64.04.010 requires every conveyance of real estate, or any interest in it, to be by deed, so a buyer who wants a fee simple needs a deed executed by the life tenant and by each holder of a remainder or a reversion. A deed from the life tenant alone conveys only an interest that dies when the measuring life does. If the life tenant is married and the interest is community property, RCW 26.16.030 also requires the spouse to join in the deed and to acknowledge it.

Example

Ellen, age 78, deeds her Spokane house to her son Ray but reserves a life estate for herself. Ellen is the life tenant and Ray holds the remainder. Two years later a developer offers $410,000 for the property in fee simple. Ellen cannot deliver that on her own, because a deed signed only by her would give the buyer an interest that ends at her death.

So Ellen and Ray both sign the deed. They divide the $410,000 by agreement, $120,000 to Ellen for her life interest and $290,000 to Ray for the remainder. Closing costs of $8,200 come off the top, leaving $401,800 to split between them. Had Ellen died before the closing date, her life estate would have ended, Ray would already have owned the property outright, and he would have signed alone and taken the whole price.

Common Mistakes and Exam Traps

• A life estate is a freehold estate but it is not inheritable. The property passes to the remainderman or reverts to the grantor, never to the life tenant's heirs.
• A reversion returns the property to the grantor and a remainder sends it to a third party. Both future interests are created at the same moment as the life estate itself.
• The measuring life is not always the life tenant. An interest measured by a third party's life is a life estate pur autre vie, and it ends when that third party dies even if the tenant is still living.
• A life tenant can sell, lease, and mortgage the life interest, so answers claiming a life tenant may convey nothing at all are wrong. What the life tenant cannot do is convey more than the measuring life.