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Life Estate and giving house as security for a loan?

  • 21-11-2014 4:28pm
    #1
    leavingcert212
    Closed Accounts Posts: 4 ✭


    Hi trying to study for a property law question and cannot find an exact answer for this so a steer in the right direction would be great!
    Basically if a life estate in a property is conveyed to someone (Lets call him A) while the fee simple remainder is to A's children, surely A can't use the deeds of the property as security for a loan?

    A life estate only grants that person a right to possession during that person's lifetime, so if A were unable to pay their debts the bank could not sell the house as it is to go to the A's children when A dies?

    Surely the most A could use as security would be his own life estate so that if he cannot pay his debts, the bank could only take over the house for his lifetime and not sell it? Meaning that when A dies the bank would have to give the house to A's children> Thanks in advance, very confused here
    Tagged:


Comments

  • #2
    Mr. Incognito
    Registered Users, Registered Users 2 Posts: 9,798 ✭✭✭Mr. Incognito


    A life estate is not a mortgagable interest. It is personal and non tranferable. It can be extinguished on consent if they are bought out but no, they cannot raise security on it. Its akin to a licence


  • #3
    cobhguy28
    Registered Users, Registered Users 2 Posts: 301 ✭✭cobhguy28


    Mr. Incognito wrote: »
    A life estate is not a mortgagable interest. It is personal and non tranferable. It can be extinguished on consent if they are bought out but no, they cannot raise security on it. Its akin to a licence

    I believe you are incorrect, a life estate is transferable and so can be mortgaged. Who would take it as security is a different story. I think you are thinking of a right to occupy for life which is non transferable and which is more of a license.


  • #4
    MarkAnthony
    Closed Accounts Posts: 6,934 ✭✭✭MarkAnthony


    OP (who I notice has closed their account) you may need to look at the implications of the LCLRA 2009 and the fact that life estates are now (IIRC) dealt with under the law of Trusts.


  • #5
    Addle
    Registered Users, Registered Users 2 Posts: 4,812 ✭✭✭Addle


    leavingcert212 wrote: »
    surely A can't use the deeds of the property as security for a loan?

    I think A could with the consent of their children, the remainder people.


  • #6
    Peregrinus
    Registered Users, Registered Users 2 Posts: 26,989 ✭✭✭✭Peregrinus


    Addle wrote: »
    I think A could with the consent of their children, the remainder people.
    Assuming they are all of full age, etc. And the children would need to be independently advised to exclude the possiblity of undue influence.

    I still think that, in practice, a bank would be reluctant to accept the security in those circumstances.


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