Philadelphia Weekly

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Occupancy distinct from ownership

Ilyce Glink
Co-written by Samuel J. Tamkin
Inman News

Q: My mom is 92 years old, very competent and is in an assisted living facility. She has a life estate. My sister and I are the remaindermen. My mom wants to sell her home to a grandson. When this house is sold, who is entitled to the money from the sale?

A: If your mother sells her interest in the home, she can sell only what she has. She has a life estate in the home. She no longer is the owner of the underlying property. She would be entitled to get and keep the money from the sale of her life estate. Her grandson would be entitled to use the property while she is alive.

At your mother's death, the grandson's interest in the home would end and you and your sister would then own the home.

A life estate is an interest in a property for the life of the person that receives it. The life estate does not transfer to another person. If your mother sells her life estate, the grandson would not get to keep the property for his life but for the rest of your mother's life.

As people age, the value of a life estate becomes less and less. If you had someone offer you the balance of a 30-year lease on an oceanfront home, you would certainly pay more if there were 29 years left on the lease rather than only one year.

While we hope your mother has many years to live, it is unlikely that buying a life estate would be a good move for her grandson. It would be easier if the grandson simply rented the property, or looked for a different home to buy.

Q: I have a 30-year-old daughter. About one year ago, she purchased a mobile home with a friend. They both signed the mortgage. Just recently her friend decided to move out. My daughter is not sure what she needs to do to remove her friend's name from this mortgage. Would a quitclaim deed take care of this?

A: Absolutely not. Don't have your daughter quitclaim anything to the friend. Her friend could quitclaim her interest in the property to your daughter, but that would transfer only her friend's ownership interest in the home to your daughter. The mortgage would still remain in both of their names until the loan is paid off, refinanced or the lender were to agree to remove the friend's name from the mortgage. Most lenders never remove the name of one of the parties from a mortgage.

You mentioned that the home is a mobile home. Does she own a home that is actually a recreational vehicle of the type that is driven around the country? For those types of homes, the friend would need to sign over the certificate of title to the vehicle and give her a bill of sale for her interest. But here again, the transfer won't release her friend from her obligations on the loan.

Assuming it's a traditional mobile home (also known as a manufactured home) that is placed permanently on a piece of land, your daughter should work with her friend to quitclaim the property into her name and refinance the loan so that the friend is off the mortgage and title.

If your daughter can't afford to refinance the mobile home on her own, then she will need to work with her friend to try to sell it or rent out the friend's bedroom to bring in enough cash to make the mortgage payments.

For more details, please consult with a real estate attorney.

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