Many years ago, when I became licensed I had my "first" sale. It was a life estate. The concept of life estate was the only thing I actually retained from real estate school. Glad I remembered, because it came in handy. Although I didn't draft the legal document, I was able to consult with the elderly seller and suggest this to her. I marketed the property FOR SALE as a "Life Estate."
A life estate is an estate which is limited to the life of the individual, current owner of the property. It's a legal arrangement where the holder of the life estate sells the property and becomes a "life tenant" retaining the right of use and possession of the property for the duration.
The life estate arrangement can be beneficial to anyone who wants to remain in their home, but cash out. An example might be: an elderly person who might have a progressive illness and doesn't want to move from their home into a nursing facility. If they are medically able to remain in their home, a life estate is a wonderful alternative, and life choice.
To many people, living in their home is a comfort and a security that can be leveraged if they can sell under a life estate.
As I mentioned, my first deal was a life estate and it benefited the elderly woman who was in her 90's suffering with Parkinson's disease. We sold the property under a life estate and she remained in her home of 45 years for almost 2 years after recording.
Life estates can be a great "reverse mortgage" alternative. Competent legal counsel, familiar with life estates, should be retained for the proper legal drafts and recordation.
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