Property Being Sold with a Life Tenancy in place

TheSheriff

Anyone familiar with what a "life tenancy" is?

Just curious.....

https://www.myhome.ie/residential/brochure/2-whitworth-place-drumcondra-dublin-3/4431454

Graham

The current occupier can remain until they're taken out feet-first.

Taylor365

Graham wrote: »

The current occupier can remain until they're taken out feet-first.

Dropkick the estate agent?

c.p.w.g.w

Taylor365 wrote: »

Dropkick the estate agent?

So if you by the house, you have to rent it out until the current tenant dies???

TheSheriff

c.p.w.g.w wrote: »

So if you by the house, you have to rent it out until the current tenant dies???

Its an interesting one, also says "rent free" in the add, so not sure if that's part of the legal agreement.

Good location tough.

retalivity

TheSheriff wrote: »

Its an interesting one, also says "rent free" in the add, so not sure if that's part of the legal agreement.

Good location tough.

It reads like you can buy it now, collect no rent or evict the tenant until they die. So youre investing 200k into a 2bed house in drumcondra you may not use for 2-20 years...

errlloyd

retalivity wrote: »

It reads like you can buy it now, collect no rent or evict the tenant until they die. So youre investing 200k into a 2bed house in drumcondra you may not use for 2-20 years...

Man there is something very morbid about that.

I guess it is nice that the Tennant's home is protected. You'd be doing a decent thing....

Claw Hammer

the legal documents are not online for that property yet. By definition, if there is a tenancy there should be rent payable. There could be a righr of residence for life with no rent payable which would be a different thing. No bank will give a mortgage on it either way so a cash purchaser will have to buy it and resolve the tenancy.

Claw Hammer

The legal documents are not online for that property yet. By definition, if there is a tenancy there should be rent payable. There could be a right of residence for life with no rent payable which would be a different thing. No bank will give a mortgage on it either way so a cash purchaser will have to buy it and resolve the tenancy.

ELM327

Claw Hammer wrote: »

the legal documents are not online for that property yet. By definition, if there is a tenancy there should be rent payable. There could be a righr of residence for life with no rent payable which would be a different thing. No bank will give a mortgage on it either way so a cash purchaser will have to buy it and resolve the tenancy.

"The vendor has advised no rent is being received and the property is sold subject to a life tenancy"



This does not mean, necessarily, that no rent is due. Just that it's not being paid.
It's a heads up to a legal battle to evict. Or a warning that a "for life right to remain" exists. Do your legal background checks before purchasing. Could be a good one for a cash buyer if you have a further 20-40k for a legal battle inbuilt into the price of TCO.

Graham

You're assuming the current occupier has no legal basis for their life tenancy.

Graham

Mod Note

Thread split

Gaillimh1976

Used to be common in inheritance cases

My Dad inherited his parents house, but his sister has a life tenancy

She gets to live in the house rent free but he owns it

JohnnyChimpo

retalivity wrote: »

It reads like you can buy it now, collect no rent or evict the tenant until they die. So youre investing 200k into a 2bed house in drumcondra you may not use for 2-20 years...

Reminds me of the lawyer in Paris who bought an apartment from a 90yo woman through the viager system - where they have to wait until tenant dies to assume ownership.

Unfortunately for him that woman was Jeanne Calment - the so-called "world's oldest woman" who died at a purported age of 122 - she lived for another 32 years and ended up outliving the lawyer by 2 years :pac: . As the kids would say: owned.

https://www.bbc.com/news/magazine-33326787

Graham

Thanks JC, I've been trying to remember the name of the French system all morning.

emeldc

Gaillimh1976 wrote: »

Used to be common in inheritance cases

My Dad inherited his parents house, but his sister has a life tenancy

She gets to live in the house rent free but he owns it

Without wanting to derail, who pays for upkeep, repairs, insurance, property tax etc. if it’s your dad, jeez, who’d want a house like that. He may never get any benefit from it.

Rodney Bathgate

emeldc wrote: »

Without wanting to derail, who pays for upkeep, repairs, insurance, property tax etc. if it’s your dad, jeez, who’d want a house like that. He may never get any benefit from it.

Was the sister the favourite child by any chance?

Guy:Incognito

Rodney Bathgate wrote: »

Was the sister the favourite child by any chance?

Surely shed have been given the house it that was the case?

emeldc

Guy:Incognito wrote: »

Surely shed have been given the house it that was the case?

Unless it was a punishment for her brother :pac:

Hannibal_Smith

A life tenancy doesn't mean a tenancy in the usual sense. It's an equitable interest the life tenant has in the property that ends when they die. You would have to review the legal documents to see the terms of the agreement and to see if there was any payment agreed. Usually there isnt.

They cannot assign the life interest to anyone else and they cannot gift it to anyone in a will. When they die the life interest terminates.

Peregrinus

Gaillimh1976 wrote: »

Used to be common in inheritance cases

My Dad inherited his parents house, but his sister has a life tenancy

She gets to live in the house rent free but he owns it

This.

A "life tenancy" has nothing to do with any landlord and tenant relationship, lease, rental agreement or anything like that. The life tenant of a property has the right to occupy it (or to let out out, or leave it vacant, or . . .) for as long as they live. On their death the property will pass to the "reversioner" or "remainderman" - these terms mean the same thing.

The life tenant is said to have a "life interest" in the property. The reversioner's interest in the property is called the "reversion".

emeldc wrote: »

Without wanting to derail, who pays for upkeep, repairs, insurance, property tax etc. if it’s your dad, jeez, who’d want a house like that. He may never get any benefit from it.

The life tenant is supposed to maintain the property in the condition it was in when he acquired his life interest, and to insure it, and pay the usual outgoings, so that it handed on in the same condition and with no liablities to the reversioner when the time comes.

In practice, though, the life tenant has a limited interest in maintaining the property - he doesn't suffer if it declines in value, so his interest lies in doing as little as possible to it to keep it habitable for himself. He certainly doesn't want to invest in any kind of upgrade like a new roof or windows, rewiring, moderning kitchen or bathroom, etc. Plus, life tenancies are very often created by Will for a dependent who doesn't have great earning capacity and couldn't house themselves, so they may not have a lot of money to spend on maintenance, etc. So houses held on a life tenancy tend to get tattier and tattier.

In this case, it's the reversion in the house that's for sale. That has a a very uncertain value, because you don't know how long the life tenant might live, or what kind of deterioriation in the property might occur over that time.

ztoical

If you look at the company that is advertising it, they are for property investors not people looking for a family home. They've a bunch of properties on their website with tenants in place and a estimates on how much you can max the rent out to.

the legal docs are on their website but you have to register for an account to view them:

https://bidx1.com/en/en-ie/auction/property/42657

Thud

bbc story on viager

https://www.bbc.com/news/magazine-33326787

the_syco

Peregrinus wrote: »

This.

A "life tenancy" has nothing to do with any landlord and tenant relationship, lease, rental agreement or anything like that. The life tenant of a property has the right to occupy it (or to let out out, or leave it vacant, or . . .) for as long as they live. On their death the property will pass to the "reversioner" or "remainderman" - these terms mean the same thing.

The life tenant is said to have a "life interest" in the property. The reversioner's interest in the property is called the "reversion".

It sounds like the seller is giving up on the property, and just wants some cash for their investment?

Graham

Or the vendor would like to see the proceeds of an inheritance.

At least you don't have to pay the occupant to stay like the Viager system.

Hannibal_Smith

the_syco wrote: »

It sounds like the seller is giving up on the property, and just wants some cash for their investment?

Bid x 1 are usually used by a vendor selling in bulk, so a bank selling repossessed properties that they couldn't shift any other way. In this case they couldn't shift it because of the life estate. That's my experience with them anyhow.

It could be there's a mortgage created by the owner and the bank consented to the life estate, either being created simultaneously or remaining on the title if it already existed. Things took a turn and the bank ended up taking it in and are now trying to sell it on.

Mrs OBumble

emeldc wrote: »

Without wanting to derail, who pays for upkeep, repairs, insurance, property tax etc. if it’s your dad, jeez, who’d want a house like that. He may never get any benefit from it.

There was a situation in my extended family where one sibling inherited the house and the other one the entire contents. I don't know how the distinction between house / contents is made fully eg is the hot water tank and piping one or the other.

It worked out because the were both unmarried and still living there. But I believe it had some messy legal consequences further down the track.

Dolbhad

Life tenancy means the person who benefits from the tenancy can stay in the property rent free until they die. Usually you see this with family homes where for example the house may be left to one child but may be subject to a life tenancy of the surviving spouse or sibling. Usually the person who has the life tenancy can agree to it being removed from title. But if it’s subject to this, I doubt they are agreeing to it or the bank are not inclined to offer money to that person for the value of the life tenancy.


A person would be mad to buy a house subject to a life tenancy. You can’t do anything with the house until they die and you don’t receive any rent from the property. And equally no bank would lend you the funds to buy it if there was a life tenancy.

Graham

Best viewed as a long-term investment of unknown duration to be funded by cash.

Not in itself a daft proposition if it's priced accordingly and you're certain you won't need to cash-out any time soon.

Peregrinus

It's a very speculative investment.

While the life tenant lives you get nothing - nothing like rent, or dividends on shares, or interest on bonds; nothing at all. And you're at risk that, while the tenant lives, he may fail e.g. to keep up the house insurance, exposing you to the chance of futher loss.

When the tenant dies you get the property with vacant possession, but (a) you have no idea when the tenant dies; (b) you have no idea what condition the property will be in when the tenant dies; and (c) you have no idea how the market may have moved by the time the tenant dies.

So, basically, this would have to be priced very, very competitively before any rational investor would be interested. Plus, it has to be an investor with ready cash or other assets to mortgage; no bank will advance very much at all on the security of a mortgage of the reversion in this property.

My guess would be that the seller is selling because he has a pressing need for cash, and this is his only way to realise his interest in the property.

touts

Sounds like you are buying someone else's problems. If you have 195k to spare then it may be a long term investment. But be prepared to not see a cent of return for 20+ years. Even if they go into a nursing home for years their right to live there may not be extinguished. Plus you would have to foot the bill for any property taxes, repairs, maintenance etc.

Wouldn't touch it myself.

arctictree

This arrangement would work great in a country like France where there is a history of it and the rules are well respected. Its basically like buying an annuity. You get X amount per month as the tenant until you die. Like a pension.

In Ireland, you'd find out that the tenant had moved in their family just before they died or something like that. Long legal battle then to follow with no guarantee of outcome...

Graham

arctictree wrote: »

In Ireland, you'd find out that the tenant had moved in their family just before they died or something like that. Long legal battle then to follow with no guarantee of outcome...

I'd be interested in seeing some of the cases where that's happened.

cml387

Does not the fact that there is no rent being paid suggest a squatter?

Graham

Don't you need to be in possession without permission to claim adverse possession?

I can't see how that could be claimed if someone has permission by nature of a lifetime tenancy.

Peregrinus

arctictree wrote: »

This arrangement would work great in a country like France where there is a history of it and the rules are well respected. Its basically like buying an annuity. You get X amount per month as the tenant until you die. Like a pension.

In Ireland, you'd find out that the tenant had moved in their family just before they died or something like that. Long legal battle then to follow with no guarantee of outcome...

The viager system works the other way around. Someone who owns a house outright, and lives in it, sells the house to a purchaser on terms that it won't be handed over until the seller dies or leaves, and in the meantime the seller can stay there. The purchaser either pays a lump sum up front, or a monthly annuity for the life of the seller, or both - that's a matter for negotiation. By this method a (usually elderly) person can unlock the value of their home to provide either a capital sum or an income stream, while still having somewhere to live. The downside is that they cannot then leave their property to family or dependents.

This is pretty much the opposite of the life tenancy as we know it in Ireland, where somebody who has no interest in a property to beging with is granted a life interest, usually by way of gift or inheritance, and without any commercial transaction being involved.

It has the same uncertainty for the purchaser - he doesn't know how long he may have to wait before taking possession of the property - and therefore the amount which he will be prepared to pay for the property is generally very limited. Which means, from the vendor's point of view, the amount of capital or income which he gets is generally considerably less than what he could get by selling the house outright.

In general the purchaser will be a financial institution. They buy signficant numbers of houses on this system. When you have a pool of life tenants living in a pool of properties the average time you will have to wait before taking possession is much less uncertain that the particular time you will have to wait if you only have one life tenant. So essentially this works like a reverse mortgage, and of course we have reverse mortgages in Ireland and, despite your gloomy fears, they work quite well.

Muahahaha

Its an interesting proposition but without knowing the age and health of the tenant it cant really be assessed and is a complete punt in the dark. The tenant could be a spritely 21 year old for all we know. But if they're elderly and near life expectancy someone could buy it for 200k, take ownership a year or two later and flip it for more than double the cost.

I wonder what brought around the scenario that they want to sell with the tenancy in situ as theres the Fair Deal scheme that would pay their nursing home costs against the value of the asset. Sounds like they want to realise some cash, maybe to help a son or daughter buy their own property while they themselves still have somewhere to live.

Peregrinus

Muahahaha wrote: »

Its an interesting proposition but without knowing the age and health of the tenant it cant really be assessed and is a complete punt in the dark. The tenant could be a spritely 21 year old for all we know. But if they're elderly and near life expectancy someone could buy it for 200k, take ownership a year or two later and flip it for more than double the cost.

I wonder what brought around the scenario that they want to sell with the tenancy in situ as theres the Fair Deal scheme that would pay their nursing home costs against the value of the asset. Sounds like they want to realise some cash, maybe to help a son or daughter buy their own property while they themselves still have somewhere to live.

The life tenant is not selling their interest in the property; it's the reversioner, who doesn't live there, who is selling their interest. Presumably they have a preference for a modest amount of cash now rather than a larger amount of cash at an undetermined future date.

You are correct that anyone buying this property will work out what they are prepared to pay based on the age and sex of the life tenant, but this gives a very uncertain result. With a population of, say, a thousand people you can use life expectancy tables to compute with a useful degree of reliability the pattern of deaths that will ensue, but you have no idea which of them will die first, which will die close to the "average" age and which 5% or so will live for many years more. When you're looking at (say) an individual woman aged 65, it's no help to know that the average woman aged 65 has a life expectancy of 20.6 years; this particular woman could die tomorrow, or she could live to be 105, and looking at a life expectancy table will tell you precisely nothing about whether she will do either of these things.

Price this property on the basis of life expectancy tables isn't an investment; it's a bet.

farmerval

A nasty one within this is the person with the life tenancy entitled to the benefit of the tenancy, e.g. if they move to a nursing home, can they rent the house to gain the benefit of a tenancy?

Peregrinus

farmerval wrote: »

A nasty one within this is the person with the life tenancy entitled to the benefit of the tenancy, e.g. if they move to a nursing home, can they rent the house to gain the benefit of a tenancy?

Yes they can, generally. Or, while still living there they can take in a lodger. But what they can't do is grant a lease or licence for a term that continues for longer than their own life, because they cannot give what they do not own.

The life tenant and the reversioner could together grant a lease for a fixed term of, e.g. five years. The rent would be payable to the life tenant for as long as he lived but, if he died within the 5 years, the lesse could still occupy the premises for the rest of the term, but paying the rent to the reversioner.

And, in general, a lot can be done with the property if the life tenant and the reversionar co-operate. It's when they are at odds that things head south fairly quickly.

Claw Hammer

The legal docs are now available. The occupant of the property bought it in 1993. In 2007 he sold an interest in it to a solicitor. The occupant retains a life interest in the property and the owner is obliged to maintain the exterior and pay building insurance. No rent is payable.
The occupant appears to have been born in 1937.

ELM327

Claw Hammer wrote: »

The legal docs are now available. The occupant of the property bought it in 1993. In 2007 he sold an interest in it to a solicitor. The occupant retains a life interest in the property and the owner is obliged to maintain the exterior and pay building insurance. No rent is payable.
The occupant appears to have been born in 1937.

For someone in my age bracket >30yrs to retirement, this would make it a good long term pension investment. If your pension fund had the readies in it to buy.

Claw Hammer

ELM327 wrote: »

For someone in my age bracket >30yrs to retirement, this would make it a good long term pension investment. If your pension fund had the readies in it to buy.

A solicitor told me years ago that if you want to live a long life, become a protected tenant. They live forever.

Murt10

It's a 2 bed house.

Can you move yourself or another tenant into the main bedroom and move the life term tenant into the boxroom. Can you also let out the living room to someone else, and the lounge to someone else so that effectively the life term tenant has effectively a bedroom and nothing else?

Also chimney needs attention. I wonder what it looks like inside.

Wouldn't touch it myself. Might think about it for a hugely reduced asking price.

L1011

Murt10 wrote: »

Can you move yourself or another tenant into the main bedroom and move the life term tenant into the boxroom. Can you also let out the living room to someone else, and the lounge to someone else so that effectively the life term tenant has effectively a bedroom and nothing else?

Absolutely not.

Peregrinus

Murt10 wrote: »

It's a 2 bed house.

Can you move yourself or another tenant into the main bedroom and move the life term tenant into the boxroom. Can you also let out the living room to someone else, and the lounge to someone else so that effectively the life term tenant has effectively a bedroom and nothing else?

Nope. The life tenant is entitled to undisturbed occupation of the entire property. The only person who has any right to allow others to reside in the property, or even to enter it, is the life tenant.

As the reversioner, your position is similar to someone who expects to inherit a property under the will of someone who hasn't died yet. Until they die, you got nothin'.

ELM327

Peregrinus wrote: »

Nope. The life tenant is entitled to undisturbed occupation of the entire property. The only person who has any right to allow others to reside in the property, or even to enter it, is the life tenant.

As the reversioner, your position is similar to someone who expects to inherit a property under the will of someone who hasn't died yet. Until they die, you got nothin'.

Thats a good way of looking at it, you're buying a guaranteed inheritance

JohnnyChimpo

The morbid thought is whether an interested party could request a COVID antibody test upfront. If the 83yo occupant tested negative then it becomes a more appealing prospect to a bidder.

(Please note this is just speculation in a moral vacuum, and I'm personally opposed even to the idea of private property in a Marxist sense, so this wouldn't be me in this scenario)

Peregrinus

Well, he can request, but I'd be fairly confident that the life tenant would tell him where he can stick his request.

Claw Hammer

It seems that what is on sale is a remainder rather than a reversion. It is the balance of an 800 year lease from 1947 subject to the life interest of the current occupant. The current occupant seems to have done well since he only paid about €50K for the place and got €250 tax free a few years later for the remainder.

hoodie6029

There was a house in Blackrock for sale with a situation like this about 15 years ago. The lady lived on the ground floor and left the upstairs and basement flats as life tenancies to the tenants. She died in about 1988 and the ground floor was vacant until about 2005 when the estate could finally sell the upper two floors as a house. You had to the buy the basement as well but wait out the other tenancy.
Probably went mental money in the Boom.
It got a good bit of coverage in the papers at the time. Ring a bell with anyone?