January, 2017 | foreclosure defense, short sales, mortgage modifications, estate planning attorney services & legal advice James Cioffi Attorney

What is Life Estate?

What is a Life Estate?

A life estate is created in Florida with a deed when a party retains an interest in the property for life (life tenant) with the remainder interest to other parties. A life estate can be a traditional one or an enhanced life estate (also known as a Lady Bird life estate). With the enhanced life estate, the life tenant may sell or mortgage the property without the joinder of the remainder interests. As a result when selling the property, the parties with the remainder interest do not have to sign the listing agreement, contract or closing documents if you have the enhanced life estate. It is easy to determine which life estate you have. Examine your deed.

If it is an enhanced life estate, the following words will appear after your name as the Grantee or Second Party:

for a life estate without any liability for waste, and with full power and authority in said life tenant to sell, convey, mortgage, lease or otherwise manage and dispose of the property described herein, in fee simple, with or without consideration, without joinder of the remaindermen, and with full power and authority to retain any and all proceeds generated thereby,

By the way, the enhanced life estate deed is known as a Lady Bird Deed because it is named after our former first lady, Lady Bird Johnson, the wife of President Lyndon B. Johnson.

If your life estate is the traditional one without the language cited above, the parties with the remainder interest will have to sign the listing agreement, contract and closing documents when the property is sold. It is important to consult an attorney when drafting a life estate deed to be sure you understand the alternatives available to you. The enhanced life estate is an estate planning tool used by many attorneys to avoid probate of real property after death. It is also an alternative to a trust. As a real estate and estate planning attorney, I counsel clients regarding these matters.

James A. Cioffi is one of the most experienced attorneys in South Florida today. In fact, he writes a legal advice column under theme of “The Juris Doctor” Feel free to contact James A. Cioffi confidentially regarding your legal question and he will personally respond. He can be reached at 561-747-6000 or visit his website at https://jamescioffi.com

James A. Cioffi, Esquire

The Juris Doctor

250 Tequesta Drive, Suite 200

Jupiter, FL 33469

561-747-6000

Effective Dating

The effective date of a contract is the date on which all parties have executed and delivered the contract to the other party. If you, as a buyer, were not in the presence of the seller when you signed the contract, the effective date is the date the last person signed and initialed any changes and delivered the contract to the other party. Every contract is executed in a different manner so there are many fact scenarios to consider. I always suggest when a contract is signed that all parties communicate to confirm the effective date. In that way everyone knows the date and will be in agreement when calculating time periods. Simply circulate an e-mail so that everyone can easily confirm or voice an objection. Your real estate agent will facilitate this process.

I was recently contacted by a buyer who did not receive all the pages of the contract from the seller. Delivery of the contract, and all accompanying disclosures and riders, is a key component of the effective date. In this instance the seller had not delivered the contract to the buyer and the effective date had not yet occurred. None of the time periods which were calculated from the effective date had begun. The date for inspections and the mortgage commitment due date are dependent upon the effective date.

In another transaction, I was contacted by the listing real estate agent because the buyer’s lender requested a legible copy of the contract be circulated for signatures. It was vital for the parties to include a provision in the second contract to confirm it was a duplicate of the first and executed for legibility purposes only. Otherwise the second contract would be considered a new contract with a different effective date from the first contract. There could have been disastrous consequences if either party believed the second contract was independent from the first. It was fortunate that the listing agent had contacted me when she received the second contract.

We always want to be conscious of the execution and delivery of contracts so that the effective date is known to all parties. I call it “Effective Dating” of the contract.

Real Estate Attorney, Jupiter, FL