Legal Question in Wills and Trusts in New York
Lifetime Interest in House
I'll use summary points:
1) My mother-in-law made a $50,000 gift to her daughter who was buying a house.
2) In exchange she received a ''lifetime interest'' in the house, giving her the right to live there in perpetuity.
3) The agremment was never filed.
4) After seventeen months of living in the house expense-free the mother-in-law moved out and recategorized the ''gift'' to a $50,000 loan.
5) Monthly payments have been made against the $50k amount by her daughter (my wife).
QUESTIONS
A) Has she forfeited her interest in the house?
B) Can she in any way prevent the sale of the house?
C) Can we assess the mother-in-law rent for the 17 months she lived there?
Thank you.
2 Answers from Attorneys
Re: Lifetime Interest in House
Q. A) Has she forfeited her interest in the house? A. Yes.
Q. B) Can she in any way prevent the sale of the house? A. She can cause you problems. If she commences litigation, and depending on her cause of action, she can file a lis pendence. Ultimately, since a mortgage was not filed I do not believe that she can block the sale of the house.
Q C) Can we assess the mother-in-law rent for the 17 months she lived there?
A. The original deal was for the mother-in-law to live rent free in consideration for $50,000.00. You held up your end of the bargain. Since the original contract had nothing to do with rent, the answer would be no.
Mike.
Re: Lifetime Interest in House
A gift is a gift and some can cause lots of aggravation.
Regardless of its form and even if there is no written agreement I have to assume that a title to the house was transferred to the daughter, a deed was delivered and it was agreed that the mother retained a life estate in the residence.
Her departure does not change her rights. I think she could lease the residence to a stranger and collect rent.
Ironically, the gift of a residence with a retained life estate is not recognized as a gift for estate tax purposes, but I can't tell if that is a concern.
Mother and daughter ought to sit down and work this out, or it can get ugly.
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