Not all property transfers are created equal. When most people think of a devise or other grant of property, they assume it is a complete and absolute transfer of that property, but this is not always the case. Most states, including Texas, allow for transfers of property that are less absolute. A common form of limited transfer is a life estate – an estate that is limited in duration by a life. Due to the limited nature of such a transfer, a life estate brings with it a number of unique rights and duties.
This article will outline the basics of creating a life estate, as well as the duties and rights of a life tenant. When considering creating a life estate, either as a gift or in a will, or if you are a life tenant and are unsure of your rights and duties, you should consult with an Austin real estate and probate lawyer to ensure that this unique grant of property is created and managed properly.
The Basics of a Life Estate in Texas
A life estate is a present possessory estate that it limited in duration by a measuring life. Most commonly, a life estate is granted for the life of the grantee. It is possible, however, for a life estate to be granted based on the life of a third party (known as a life estate pur autre vie). In either case, the grantee receives a possessory interest in the estate until the death of the measuring life. At that time, the interest reverts back to either the original grantor or to a third party, called a remainderman.
In Texas, no particular or specific words are required to create a life estate, as long as there is clear intent that a life estate be created. Common phrases indicating the creation of a life estate include “for life” or “until his/her death.” Due to the nature of a life estate, a life tenant has certain rights and duties unique to this form of ownership.
Rights of a Life Tenant
A life tenant in Texas has the following rights:
- The right to present possession of the property: While a life tenant is not the only party with an interest in the property, they have the exclusive right of possession, management, and control of the property for the duration of the measuring life.
- The right to all rents and profits during possession: If the property produces income, the life tenant has the exclusive right to it. This includes royalties from an oil and gas well if a producing well was in existence at the time the life estate was granted.
- The right of alienation: A life tenant has the right to sell, lease, mortgage, or otherwise alienate the life estate in the property. This right is still limited by the measuring life. For example, a life tenant may lease the property for the duration of the measuring life only.
- The right to invoke Texas homestead law, If applicable.
Duties of a Life Tenant
While in possession of the land, a life tenant owes the following duties to future interest holders:
- The duty to pay ordinary taxes on the land and interest on a mortgage: A life tenant has a duty to pay taxes to the extent the property produces income. A life tenant is also responsible for interest payments on the properties mortgage, but not the principle.
- The duty not to commit waste: The most significant duty of a life tenant is that they may not use the property in such a way as to decrease the value of the property. In general, this requires that a life tenant exercise the ordinary care of a prudent person to preserve and protect the estate. Specifically, a life tenant has a duty not to commit the following three types of waste:
- Affirmative waste – A life tenant may not engage in voluntary conduct that decreases the value of the property. This includes the removal of minerals such as oil and gas. In some cases, Texas recognizes the “open mines” exception to this rule, which allows a life tenant to continue the operation of a mine or oil well already in existence at the time the life estate was created.
- Permissive waste – A life tenant may not neglect a property in such a way as to cause a decrease in value.
- Ameliorative waste – A life tenant may not change the character or use of the estate, even if such a change would increase the value of the property. A life tenant may, however, take any actions to increase the productiveness of the property in its current use. For example, a life tenant may not convert a property which has been traditionally used as a farm into an apartment complex, but the life tenant may take actions to increase the productiveness of the property as a farm.
A life tenant who breaches a duty may be subject to suit by the remaindermen for damages and/or an injunction.
Contact Sheehan Law, PLLC with Your Questions
These lists are not exhaustive, but instead highlights the most important and common rights and duties of a life tenant. In addition, many of these rights can be modified by the grant itself. If you are faced with a question regarding your rights as a life tenant or remainderman, contact the attorneys at Sheehan Law, PLLC for a complete evaluation of your position. You can call us at (512) 251-4553 for an initial consultation, or fill out the contact form on our contact page with your questions.