Property Being Sold with a Life Tenancy in place

lomb · 11-06-2020 4:45am

What's to stop you creating a life tenancy on your own house making you the life tenant and then stop paying the mortgage?

Peregrinus · 11-06-2020 5:02am

lomb wrote: »

What's to stop you creating a life tenancy on your own house making you the life tenant and then stop paying the mortgage?

Nothing will stop you doing that. But if you think it will somehow magically stop the bank from enforcing its security over the premises, think again.

The mortgage is already in place. If you acquire an interest in a property that is subject to a mortgage, well, it's still subject to the mortgage. Whoever you have given the reversion in the property to will also take it subject to the mortgage.

JustAThought · 11-06-2020 7:26am

this seemed quite the practice in bygone days in rural Ireland where one son might inherit the farm but another would have the right to live on the property - often build a lean to house somewhere or put a caravan /mobile home down & live there. A friend looked at a beautiful house for sale-
with the elderly farmers brother in a caravan in the front garden with life tenancy rights to remain there - suffice to say no sale was made!

I know of a family where one sibling inherited the house and 3 others were granted life tenancies to live in it ‘for as long as they wanted’. It has turned into a hovel with none of them lifting a finger to clean, upgrade,paint or maintain the property. Far from creating a safe haven and safety net for their children the (deceased) parents have built a financial prison for all of their children - who spend their time fighting over petty costs and are entrenched in a decades long war - they are now trapped together as none will let the others partners move in, not will any move out.The beautiful house is now not far off a hovel with 3
siblings wasting their life and not able to
mive in, fighting over it.

I see from the real estate description on the OPs life tenancy that they have not even been able to
gain access to see what state the house is in or measure the rooms :0 Sounds like a total run a mile nightmare.

CrabRevolution · 11-06-2020 10:09am

lomb wrote: »

What's to stop you creating a life tenancy on your own house making you the life tenant and then stop paying the mortgage?

Unless you found someone willing to pay the mortgage while you live in the house I don't see how you'd benefit. Even if they don't pay and default on the mortgage the banks could turf you out, since as mentioned earlier in the thread they can't legally gift something to you that they don't own.

cfingers · 12-06-2020 12:04am

Claw Hammer wrote: »

The occupant appears to have been born in 1937.

What document do you see their age in?

ittakestwo · 12-06-2020 3:05am

lomb wrote: »

What's to stop you creating a life tenancy on your own house making you the life tenant and then stop paying the mortgage?

When there is a mortgage on a property the bank have the title to the property so you cant change anything without their consent.

ELM327 · 12-06-2020 9:54am

ittakestwo wrote: »

When there is a mortgage on a property the bank have the title to the property so you cant change anything without their consent.

Yes but if you have a mortgage, and you lease the property to someone else, the terms of the lease cannot be overridden if the bank reposess the property.

EG if the property is reposessed 1 year into a 2 year fixed term lease, the purchaser must buy the property at auction with the remaining tenancy in place.

Graham · 12-06-2020 10:55am

Can't the bank apply to the Courts to have the lease terminated if it was granted without their consent or if the lease was granted on less than commercial terms?

ELM327 · 12-06-2020 11:25am

Graham wrote: »

Can't the bank apply to the Courts to have the lease terminated if it was granted without their consent or if the lease was granted on less than commercial terms?

I've never heard of that happening for a residential lease.

Gael23 · 12-06-2020 11:27am

This house is unsellable
I would run a mile

Graham · 12-06-2020 11:48am

ELM327 wrote: »

I've never heard of that happening for a residential lease.

I couldn't find a huge number of examples but there are one or two. That's not to say it's a foregone conclusion....

https://www.irishtimes.com/news/crime-and-law/courts/high-court/bank-entitled-to-possession-of-dublin-4-apartment-high-court-rules-1.4239412

https://www.irishexaminer.com/breakingnews/ireland/judge-rules-that-20-residents-must-vacate-dublin-properties-by-january-966002.html

https://www.breakingnews.ie/ireland/woman-fights-bid-to-require-her-family-to-exit-6-bed-dublin-house-they-do-not-own-but-consider-the-family-home-830175.html

Graham · 12-06-2020 11:50am

Gael23 wrote: »

This house is unsellable
I would run a mile

Safe to say you're not the target market. Will be interesting to see if it does sell and if the selling price is published. I guess it will turn up in the price register at some point if it sells.

Gael23 · 12-06-2020 11:58am

Graham wrote: »

Safe to say you're not the target market. Will be interesting to see if it does sell and if the selling price is published. I guess it will turn up in the price register at some point if it sells.

Any mortgage I could get would be on the condition of vacant possession.
Too many issues regardless. Who is responsible for upkeep and if someone did but it do they have the right to live there with the life tenant in place

Graham · 12-06-2020 12:14pm

This is aimed at an individual/company with plenty of patience looking at it as a longer term investment.

If that's not you, this definitely isn't the right property for you to be looking at.

Claw Hammer · 12-06-2020 12:27pm

ELM327 wrote: »

Yes but if you have a mortgage, and you lease the property to someone else, the terms of the lease cannot be overridden if the bank reposess the property.

.

The lease is void unless the bank consents to it.People have been trying you argument in the courts without success for years. It is irrelevant in this case anyway. What is being sold is a remainder.

Claw Hammer · 12-06-2020 12:31pm

ELM327 wrote: »

I've never heard of that happening for a residential lease.

The lease is void as against the banks. The banks frequently get injunctions to get tenants out.
https://beta.courts.ie/view/judgments/9dcfb76e-b023-4b7f-9dfe-bfd8dbc6800c/716c4baa-bc8b-456e-abdf-2df949974e97/2020_IECA_54.pdf/pdf

Leprechaun77 · 12-06-2020 1:10pm

It may be the right investment for someone if they are thinking along the lines of something similar to a home reversion agreement common in the UK, whereby the owner gets a lump of cash and is allowed to stay in the house until they die.

You would need to establish the value of the house, the age of the person who has the life tenancy (and perhaps their health if possible). You could then work backwards based on life expectancy and the potential lost rent for those years.

A quick google shows that a €400k property with an 80 year old in situ would get about €70k and the equivalent of a life tenancy for the seller. (I understand that these are effectively fudged deferred loans at a higher interest rates using the home as security). If you could get the property at the right price, it may be worth a gamble as you could guarantee this notional rent through a price reduction, and perhaps it may be more tax efficient?

TheBoyConor · 12-06-2020 1:59pm

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...

That is exactly it. In this cute hurr ridden country the occupant would die then it would transpire that there is some relative coming out of the woodwork claiming adverse possession claiming that they lived there 12 years as a carer for their elderly and frail relative.

I often wonder is it something particular to ireland that relatives who wouldn't give the old person the time of day when they are alove, come out of nowhere in the aftermath of the will and start wanting to claim rights to everything when they didn' give a shít about their elderly relative when they were alive.

It reminds me of a funeral I was at where people were coming up to the deceased's family after the burial and expressing condolences. A surprising number of them also actually offered their sincerest congratulations to the son who was, presumably, inheriting the farm. Imagine that. Good old land hungry rural ireland.

TheBoyConor · 12-06-2020 2:03pm

I wonder if the tenant fell in the house, or a slate fell off the roof and injured a passerby, would the tenant be liable? Or the landlord?

TheBoyConor · 12-06-2020 2:09pm

JustAThought wrote: »

this seemed quite the practice in bygone days in rural Ireland where one son might inherit the farm but another would have the right to live on the property - often build a lean to house somewhere or put a caravan /mobile home down & live there. A friend looked at a beautiful house for sale-
with the elderly farmers brother in a caravan in the front garden with life tenancy rights to remain there - suffice to say no sale was made!

I know of a family where one sibling inherited the house and 3 others were granted life tenancies to live in it ‘for as long as they wanted’. It has turned into a hovel with none of them lifting a finger to clean, upgrade,paint or maintain the property. Far from creating a safe haven and safety net for their children the (deceased) parents have built a financial prison for all of their children - who spend their time fighting over petty costs and are entrenched in a decades long war - they are now trapped together as none will let the others partners move in, not will any move out.The beautiful house is now not far off a hovel with 3
siblings wasting their life and not able to
mive in, fighting over it.

I see from the real estate description on the OPs life tenancy that they have not even been able to
gain access to see what state the house is in or measure the rooms :0 Sounds like a total run a mile nightmare.

As they might say up my way, sure the mother died and left it to Jim but aul Joe "had his living in it".
"Joe" would ususally be an aul bachelor Padraig nally type, or a son who was a bit simple or otherwise unable or unwilling to make his own way in life.

Marcusm · 12-06-2020 4:12pm

ELM327 wrote: »

Yes but if you have a mortgage, and you lease the property to someone else, the terms of the lease cannot be overridden if the bank reposess the property.

EG if the property is reposessed 1 year into a 2 year fixed term lease, the purchaser must buy the property at auction with the remaining tenancy in place.

Not if it was bought under an owner occupied mortgage which specifically excludes the creation of other legal interests (such as leases) in the property. This is why about 8 years ago tenants of repossessed properties were summarily kicked out. Their tenancy was enforceable only against the landlord and, as a result of the standard terms of an owner occupied mortgage, not against the lender. By contrast, a buy to let mortgage would not have had the same issues. It was covered a lot on here at the time. The lender in possession was not a landlord as it had never been in receipt of rent and no legal interest in the property had been validly created as the mortgage precluded it.

Claw Hammer · 12-06-2020 4:14pm

Marcusm wrote: »

Not if it was bought under an owner occupied mortgage which specifically excludes the creation of other legal interests (such as leases) in the property. This is why about 8 years ago tenants of repossessed properties were summarily kicked out. Their tenancy was enforceable only against the landlord and, as a result of the standard terms of an owner occupied mortgage, not against the lender. By contrast, a buy to let mortgage would not have had the same issues. It was covered a lot on here at the time. The lender in possession was not a landlord as it had never been in receipt of rent and no legal interest in the property had been validly created as the mortgage precluded it.

Buy to let mortgages have exactly the same covenants. Unless the banks agrees to each tenancy in writing the tenancy is not enfoceable against the bank. The situation is different with post 2009 mortgages but so far these are relatively fw and almost none are in arrears.

Marcusm · 12-06-2020 4:15pm

Peregrinus wrote: »

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.

I would say it is a risky investment rather than a bet. A bet generally has a binary outcome (win/lose) as opposed to an uncertain temporal result.

Marcusm · 12-06-2020 4:16pm

Claw Hammer wrote: »

Buy to let mortgages have exactly the same covenants. Unless the banks agrees to each tenancy in writing the tenancy is not enfoceable against the bank. The situation is different with post 2009 mortgages but so far these are relatively fw and almost none are in arrears.

I can tell you that not all the BTLs required lender permission but will bow to your better knowledge of the vast majority of them did. Not an issue in this (hypothetical) case, though.

L1011 · 12-06-2020 4:37pm

Updated version (well, new listing actually as it pushed a new alert) adds the note that there will be no viewings. So you have zero idea of its current state as well as no idea of when you'll get vacant tenancy.

You're really buying this for site value and the vague hope there may be some house left when you do get it.

12-06-2020 10:04pm

Looking at the house on google satellite view the whole rear garden has been taken over by a large tree so doesn’t bode well that much maintenance has taken place

Claw Hammer · 13-06-2020 1:45pm

L1011 wrote: »

Updated version (well, new listing actually as it pushed a new alert) adds the note that there will be no viewings. So you have zero idea of its current state as well as no idea of when you'll get vacant tenancy.

You're really buying this for site value and the vague hope there may be some house left when you do get it.

The current occupant was born in 1937. Actuarially he is at death's door. A purchaser could double their money in a few months or have to wait years and just about break even. I would think it more likely that the present occupant will not live another 10 years.

L1011 · 13-06-2020 4:41pm

Claw Hammer wrote: »

The current occupant was born in 1937. Actuarially he is at death's door. A purchaser could double their money in a few months or have to wait years and just about break even. I would think it more likely that the present occupant will not live another 10 years.

My 102 year old great grandmother and her 105 year old sister would like to have a word about actuarial calculations there :pac:

Both of them have annuities purchased in the 1970s/early 80s that the insurance firms involved probably cry over.

Its a gamble on when you'll get the vacant possession regardless all the same.

cfingers · 13-06-2020 11:21pm

Claw Hammer wrote: »

The current occupant was born in 1937. Actuarially he is at death's door.

What document does it say that he occupant was born in 1937?

Also I thought actuarial tables give an 83 male another 6.7 years to live.

Peregrinus · 15-06-2020 2:12am

Claw Hammer wrote: »

The current occupant was born in 1937. Actuarially he is at death's door. A purchaser could double their money in a few months or have to wait years and just about break even. I would think it more likely that the present occupant will not live another 10 years.

Life expectancy for an Irish man aged 82 last birthday is 6.79 years. But of course that's just an average; he could be dead in a week or he could live 20 years.

Two thoughts: First, the fact that this property is on the market tells you that the life tenant is probably in good health for a man of his age. If he were poorly, the property would probably not be offered for sale just now. And, secondly, if tempted to bid on this property, bear in mind that the vendor probably knows more about the occupant, his state of health, and the factors that affect his life expectancy (like, at what age did his parents die?) than you do. Why? Because the vendor will have investigated all this at the time of purchasing his interest in the property.

Gael23 · 15-06-2020 12:14pm

L1011 wrote: »

Updated version (well, new listing actually as it pushed a new alert) adds the note that there will be no viewings. So you have zero idea of its current state as well as no idea of when you'll get vacant tenancy.

You're really buying this for site value and the vague hope there may be some house left when you do get it.

Even more reason not to touch it with a barge pole

The_Conductor · 15-06-2020 1:36pm

Gael23 wrote: »

Even more reason not to touch it with a barge pole

The sole reason to go near it- is the attractive price- and its up to any prospective buyer to decide whether this prices in all the unknowns or whether they decide that they'd rather walk.........

I'd love to know the current owner's situation and how/why he/she is going along with this scheme?

Claw Hammer · 15-06-2020 2:34pm

Peregrinus wrote: »

Life expectancy for an Irish man aged 82 last birthday is 6.79 years. But of course that's just an average; he could be dead in a week or he could live 20 years.

Two thoughts: First, the fact that this property is on the market tells you that the life tenant is probably in good health for a man of his age. If he were poorly, the property would probably not be offered for sale just now. And, secondly, if tempted to bid on this property, bear in mind that the vendor probably knows more about the occupant, his state of health, and the factors that affect his life expectancy (like, at what age did his parents die?) than you do. Why? Because the vendor will have investigated all this at the time of purchasing his interest in the property.

The vendor is a bank/receiver who repossessed this property. i would expect they know little and care less about the occupant and his health.

Claw Hammer · 15-06-2020 2:35pm

The_Conductor wrote: »

The sole reason to go near it- is the attractive price- and its up to any prospective buyer to decide whether this prices in all the unknowns or whether they decide that they'd rather walk.........

I'd love to know the current owner's situation and how/why he/she is going along with this scheme?

The property is a repossession. Neither the current owner nor the occupant have any say in this.

Gael23 · 15-06-2020 2:42pm

Claw Hammer wrote: »

The vendor is a bank/receiver who repossessed this property. i would expect they know little and care less about the occupant and his health.

I have no idea but my theory is that it’s some sort of family deal gone wrong.
Something like the family home was left to one sibling with the stipulation that another possibility unmarried sibling was to live their for the remainder of their life. I’m thinking a mortgage was taken out by the beneficiary and defaulted on

Claw Hammer · 15-06-2020 2:44pm

cfingers wrote: »

What document does it say that he occupant was born in 1937?

Also I thought actuarial tables give an 83 male another 6.7 years to live.

Birth cert for one, possibly driving licence , passport etc. How would you like to have another 6.7 years left?

The_Conductor · 15-06-2020 2:44pm

Anyhow- its an interesting punt for someone- don't know if its worth biting @ 250k, even given the location- its a bit too much of a gamble.........

Claw Hammer · 15-06-2020 2:47pm

Gael23 wrote: »

I have no idea but my theory is that it’s some sort of family deal gone wrong.
Something like the family home was left to one sibling with the stipulation that another possibility unmarried sibling was to live their for the remainder of their life. I’m thinking a mortgage was taken out by the beneficiary and defaulted on

There is no need for a theory. The title documents are online. It is all there in black and white. Why do people invent fantasy stories when the true facts are available?

Peregrinus · 16-06-2020 1:28am

Claw Hammer wrote: »

The vendor is a bank/receiver who repossessed this property. i would expect they know little and care less about the occupant and his health.

Claw Hammer wrote: »

The property is a repossession. Neither the current owner nor the occupant have any say in this.

The bank, or the receiver on whose behalf the bank acts, accepted the reversioner's interest in the property as security for a loan. You can bet your bottom dollar that it was valued at the time, and the valuation would certainly have included an assessment of the life tenant's life expectancy.

Peregrinus · 16-06-2020 1:34am

Gael23 wrote: »

I have no idea but my theory is that it’s some sort of family deal gone wrong.
Something like the family home was left to one sibling with the stipulation that another possibility unmarried sibling was to live their for the remainder of their life. I’m thinking a mortgage was taken out by the beneficiary and defaulted on

Earlier in the thread it is suggested that an outright owner-occupier sold the reversion in the property, reserving a life tenancy for himself.

This would be a way for someone to raise money by selling an interest in their home, while retaining the ability to occupy the home for the rest of their lives. They are selling the kids' inheritance, if you like. Which you may be very happy to do if you don't have any kids.

The purchaser would have bought the reversion as an investment. A somewhat speculative investment, no doubt, but we are told the transaction happened in 2007 and in those dear dead days beyond recall speculative property investments were all the go.

In the unhappy events which have occurred since then the purchaser has found himself in financial strife, and his "investment" is now in the hands of his creditors, who are seeking to sell it for what they can get.

cfingers · 16-06-2020 11:03pm

Claw Hammer wrote: »

Birth cert for one, possibly driving licence , passport etc.

I'm confused. None of the documents you mentioned are in the legal pack. I'm wondering how you know he was born in 1937.

Claw Hammer · 17-06-2020 9:15am

cfingers wrote: »

I'm confused. None of the documents you mentioned are in the legal pack. I'm wondering how you know he was born in 1937.

I never said the documents were in the legal pack. I wasn't asked if they were or not. There is enough information in the legal pack to work it out, however.

cfingers · 17-06-2020 9:34am

Claw Hammer wrote: »

I never said the documents were in the legal pack. I wasn't asked if they were or not. There is enough information in the legal pack to work it out, however.

Could you explain how you worked it out please? I've read it a few times and all I can find is tenants name.

Graham · 17-06-2020 9:46am

Mod Note

folks before you start sharing your Scooby Doo investigative techniques, please keep in mind there is a real person living in that house.

Claw Hammer · 17-06-2020 10:27am

cfingers wrote: »

Could you explain how you worked it out please? I've read it a few times and all I can find is tenants name.

I am not prepared to go any further. I said originally that it seems the current occupant was born in 1937. I can't go any further without giving a lot of personal information about the occupant.
The legal pack gives information from which further information may be found.The available information points to the near certainty of the age of the occupant but no warranties can be given. I would be quite happen to bet €100 at odds of 10 to 1 against me that the current occupant was born in the late 1930s.
It is a matter for everybody to do their own research and satisfy themselves.

Claw Hammer · 17-06-2020 10:29am

Graham wrote: »

Mod Note

please keep in mind there is a real person living in that house.

I would expect the purchaser hopes that situation will change very shortly after the purchase contract is made.

Rupert Pumpkin · 17-06-2020 1:26pm

It's an interesting discussion, it is a bit frightening to see some of the misinformation and speculation, but Claw Hammer is providing sound guidance. Scary that anybody might even consider bidding without understanding fully the nature of a life interest. Agree with some comments, that there is an actual person living there, speculating in public about their remaining life seems a bit unpleasant at best. Of course a prudent purchaser will use some very basic skills to privately establish that information themselves.

As regards the property, the purchaser will have to maintain the exterior, which could include the roof. No pre-auction inspection or survey is possible. It is a risky one, could be very profitable in certain circumstances, or be a real nightmare with maintenance obligations and legal battles. It's not something you'll get a mortgage for, so don't even think about signing an auction contract unless you have the funds to complete.

As a pension investment, if you had 210k in cash, and could afford to wait, it might not be a bad one, but alternatively you could buy a rental property now with the same cash and get tax free rental income, so in addition to maintenance and insurance, the property will "cost" you circa 12 to 14k a year in tax-free lost rent. Still, if you got possession within 5 years, and assuming no property collapse, it could be a really good one.
Good luck!

Claw Hammer · 17-06-2020 1:57pm

Rupert Pumpkin wrote: »

As a pension investment, if you had 210k in cash, and could afford to wait, it might not be a bad one, but alternatively you could buy a rental property now with the same cash and get tax free rental income, so in addition to maintenance and insurance, the property will "cost" you circa 12 to 14k a year in tax-free lost rent. Still, if you got possession within 5 years, and assuming no property collapse, it could be a really good one.
Good luck!

What property be bought for 210K giving tax fee rental income.

Rupert Pumpkin · 17-06-2020 2:21pm

Any property bought via your Small Self Administered Pension fund will allow the fund earn tax free rental income, tax free CGT. Subject to revenue rule on retirement obviously. But any investment properties owned via your pension generate rental income tax free.

Peregrinus · 18-06-2020 2:10am

I think Claw Hammer's point is that 210k is not likely to be enough to buy you a lettable property.

Property Being Sold with a Life Tenancy in place

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