Tax Sale/Excess Proceeds – Life Tenant or Remainderman Claim?

[Morgan05]

What is the name of your state?What is the name of your state? California

I bought a life estate in a vacant lot. The life estate, which was in a will and probated, was described as “John & Mary Smith, decedent’s son and daughter-in-law, for their life, and upon their death, the remainder unto Gayle & Jennifer Smith, share and share alike, or to their heirs…, the following described real property…” That is the entirety. No responsibilities were mentioned as far as paying property taxes, etc…

No structures were on the vacant land. So, it was not bringing in any income. So, I stopped paying the property taxes. Eventually, it was sold at a county tax sale. Now, there are excess proceeds with no other liens (pretty sure considered personal property) available through the county. The original life tenants (mother & father, ages 70 & 65) are still alive.

Am I (owner of the life tenant rights) or the remainderman entitled to claim the excess proceeds? If so, how would the excess proceeds be divided? County won’t make any decisions, yet. It needs to go through a process with county counsel for the decision.

I understand “waste” may be a factor. However, the land wasn’t supporting itself as a result of no income. I couldn’t get a loan on the land as a life tenant, didn’t want to build a structure not really knowing the health of the original life tenants, etc… I understand that it may have been better to pay the taxes and try to do a partition sale, but that is a mute point now.

 

[divgradcurl]

What is the name of your state?What is the name of your state? California

I bought a life estate in a vacant lot. The life estate, which was in a will and probated, was described as “John & Mary Smith, decedent’s son and daughter-in-law, for their life, and upon their death, the remainder unto Gayle & Jennifer Smith, share and share alike, or to their heirs…, the following described real property…” That is the entirety. No responsibilities were mentioned as far as paying property taxes, etc…

No structures were on the vacant land. So, it was not bringing in any income. So, I stopped paying the property taxes. Eventually, it was sold at a county tax sale. Now, there are excess proceeds with no other liens (pretty sure considered personal property) available through the county. The original life tenants (mother & father, ages 70 & 65) are still alive.

Am I (owner of the life tenant rights) or the remainderman entitled to claim the excess proceeds? If so, how would the excess proceeds be divided? County won’t make any decisions, yet. It needs to go through a process with county counsel for the decision.

I understand “waste” may be a factor. However, the land wasn’t supporting itself as a result of no income. I couldn’t get a loan on the land as a life tenant, didn’t want to build a structure not really knowing the health of the original life tenants, etc… I understand that it may have been better to pay the taxes and try to do a partition sale, but that is a mute point now.

"Waste" is not "a" factor, it is the only relevant factor. As the owner of the life estate, you are responsible for turning over the property when the "measuring life" is terminated -- i.e., when John & Mary Smith die, you will need to turn over the property to Gayle and Jennifer Smith.

The remaindermen have no present interest in the land, so you are entitled to the excess proceeds.

Your bigger problem will occur when John and Mary die -- because then you'll be reponsible to turn over the property to the remaindermen, and if you don't have the property anymore, you'll need to pay them the fair market value of the land at the time of John & Mary's death.

So you get to keep the proceeds, but maybe you should hang on to them...