Friday, March 9, 2007

Life Estate Agreements

I have encountered something new in my real estate "real life" education course. The most recent property I signed a sales contract on is not really owned by the seller, but by her Aunt who has a "Life Estate" agreement on the property. This gives the Aunt the right to live in the property rent free for as long as she lives. Currently the Aunt lives in a nursing home so there should be no problem - right? Well, no... You see the Aunt owes the IRS $29K and the IRS has attached a lien to the property. So now, having invested $1500 in Title search, loan application fee, appraisal and legal fees, I'm not sure if I can buy the property.

A life estate looks like a nice way to avoid probate but it seems foolish to get a piece of property with a lien on it worth more than the property. Looks like I will spend some more legal dollars to see if this is salvageable.

1 comment:

Diane Cipa, The Closing Specialists® said...

Sounds like you are working with a good professional title insurer.

Imagine if you ordered title through a vendor management shop who used crappy inexperienced abstractors or better yet, used an automated search?