Property Being Sold with a Life Tenancy in place

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...

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

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 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 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 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.

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.

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'.

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)

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.

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

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.

Claw Hammer wrote: »

The occupant appears to have been born in 1937.

What document do you see their age in?

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 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.