Volume 10 - Opinions of Counsel SBRPS No. 58
Assessment roll (designation of owner)( life estate-restrictions on alienation) - Real Property Tax Law, § 502:
A purported life estate which forbids the would-be life tenant from assigning his or her estate or renting or leasing the property is not a life estate, but is only a right of occupancy.
Our opinion has been requested concerning the eligibility of an individual [hereinafter referred to as Ms. V] for a senior citizens exemption (Real Property Tax Law, § 467). Ms. V received an executrix’s deed in which Ms. V is denominated the life tenant, while the executrix and two other people are denominated remaindermen. The deed also notes that “the Life Tenant’s rights and obligations pertaining to the occupancy of premises are set forth in the Occupancy Agreement” predating the deed and recorded simultaneously with the deed.
That agreement restates the parties’ (purported) respective interests in the property and sets forth their rights and obligations. For example, Ms. V must “make all ordinary and reasonable repairs” while the remaindermen will pay for “major” repairs costing in excess of $200. Ms. V must pay taxes and homeowner’s insurance and prove payment of same to the remaindermen. Ms. V may not act in a manner in which a lien will be placed on the property, nor may she alter, demolish or remodel the property without the consent of the remaindermen. Perhaps most significantly, Ms. V “shall not be permitted to assign her life estate, nor shall she be permitted to rent or lease said property to any other person.” The “life tenancy” will terminate if any of these provisions is violated as it also will if Ms. V fails to occupy the property for more than 30 days in any one year or if she is admitted to a medical facility and it is evident that she will not be able to return to the property.
A person who holds a legal life estate in real property is considered to be the legal owner thereof for purposes of real property taxation (RPTL, § 502), including exemption eligibility; a person who merely has a right of occupancy is not the owner and is not exemption eligible (3 Op.Counsel SBEA No. 45; 5 id. No. 12; 9 id. Nos. 41, 49). Whether an interest in real property is a life tenancy or a right of occupancy depends upon the parties’ intent as expressed in the instrument creating the interest (Real Property Law, § 240).
We contrasted life estates and rights of occupancy at considerable length in 9 Op.Counsel SBEA Nos. 41 and 49 and in 10 Op.Counsel SBRPS No. 20. Put succinctly, while a denominated life estate may include conditions, if those conditions are so numerous, onerous and fundamentally incompatible with the rights of a life tenant, in our opinion, there is no life tenancy, only a right of occupancy.
In this case, perhaps more than any other condition, the prohibition against Ms. V’s assignment of her interest or her rental or lease of the property seems to belie her purported life estate. “A life tenant has the right to sell, convey, or otherwise alienate the life estate, and may lease, or mortgage the property” (Rasch, New York Law and Practice of Real Property (2d ed.), § 6:17; In re Fitzpatrick’s Will, 252 N.Y. 121, 169 N.E. 110 (1929); Re Chapman’s Will, 94 N.Y.S.2d 325 (Surr.Ct., Broome Co., 1950); Warren’s Weed, New York Real Property, “Life Estates,” §§ 5.01, 6.01, 7.01; 56 NY Jur 2d, Estates, Powers, etc., §§ 247-49).
While it is the assessor’s decision in the first instance to determine if a legal life estate or a mere right of occupancy is present, in our opinion, the facts in this case indicate only a right of occupancy in Ms. V. Accordingly, not being a property owner, the property in which she resides cannot receive a senior citizens exemption.
March 21, 1996
