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Volume 5 - Opinions of Counsel SBEA No. 12

Opinions of Counsel index

Aged exemption (ownership requirement) (right of occupancy) - Real Property Tax Law, § 467:

Where an individual, who is otherwise entitled to an aged exemption from real property taxation (Real Property Tax Law, §467), conveys the title of her property to her daughters (under sixty-five years of age), retaining in herself a right to occupy the first floor of the premises during her life, no exemption may be allowed.

Our opinion has been requested concerning the ownership requirement of the so-called “aged exemption,” section 467 of the Real Property Tax Law. The question is whether an exemption should be granted where a property owner, over sixty-five years of age, conveyed title to her two daughters (under sixty-five years of age), but reserved to herself “the right to occupy the first floor premises for and during her natural life, it being understood that the grantees shall pay for all the operating expenses in connection with said premises.”

We have stated in prior opinions that in order to qualify for this exemption an otherwise qualified applicant must hold either an estate in fee or possess a life estate in the property for which exemption is sought. An otherwise qualified elderly person who is entitled to this exemption does not lose such exemption by reserving a life estate to the property and granting a remainder interest therein to an offspring (1 Op.Counsel SBEA No. 34). Furthermore, property occupied by an otherwise qualified life tenant would qualify for an exemption notwithstanding the fact that the remaindermen may have contracted to pay the real property taxes and other operating expenses during the term of the life tenancy (1 Op.Counsel SBEA No. 59). The question presently before us is whether the right reserved to the grantor in this case constitutes a “life estate” per se or is merely a “right of occupancy.”

As was noted in McFarland v. State, 5 Misc.2d 884, 160 N.Y.S.2d 247, 249:

A life estate ... is not merely a right to occupy the property. Matter of Gaffers’ Estate, 1938, 254 App. Div. 448, 5 N.Y.S.2d 671. And although the courts seem to favor life estates it is essential to distinguish between such an estate and a mere right of occupancy.

One authority has stated that “[t]he usual descriptive words denoting life tenancy are ‘use and occupation’” (Warren’s Weed New York Real Property, Vol. 3, Life Estates, p.3). Thus, in Rizzo v. Mataranglo, 16 Misc.2d 20, 135 N.Y.S.2d 92, aff’d, 16 Misc.2d 21, 186 N.Y.S.2d 773, mot.lv.app.den., 285 App.Div. 814, 137 N.Y.S.2d 837, the court held that the omission of such words of art and the inclusion in lieu thereof of language to the effect that the grantors “may make their home in said premises as long as they live” indicated that a mere occupancy was intended. The court noted that the agreement had been drawn by an experienced lawyer.

The Rizzo case, supra, lends support to the conclusion that the grantor in the present situation only intended to reserve a right to occupy the premises; in fact, in this case, the reservation to the grantor is further limited in that the right to occupy applies only to the first floor. It is also to be noted that the deed in question was drawn by an attorney. In view of this latter point and the foregoing discussion it is our opinion that the aged individual in this case has a mere right of occupancy and not a life estate in the premises.

However, even if a “right to occupy” such as was reserved to the grantor here could be construed to be a “life estate,” such estate is limited by the terms of the deed to the first floor. In such case, the aged individual’s grantees would apparently be the owners of the rest of the premises with the exception of the first floor. Assuming that such a situation is possible (i.e., an aged individual with a life estate in one floor and her daughters, under sixty-five years of age, holding title to the remainder of the premises), no exemption could be granted since the daughters do not meet the age requirement of section 467, and there is no provision in the statute for granting an exemption only on the portion of the home owned by the mother.

Therefore, it is our opinion that no exemption may be granted in this case whether the right reserved to the grantor is construed to be a life estate or a mere right of occupancy.

June 9, 1975

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