Life Estate
A legal interest in property that gives someone the right to live in or use a property for the remainder of their lifetime, after which it passes to a designated person.
What is a Life Estate?
A life estate grants a person (the 'life tenant') the right to use and occupy a property for the rest of their natural life. When the life tenant dies, the property automatically passes to a designated person (the 'remainderman') without going through probate.
Life estates are most commonly used in New Zealand for estate planning — for example, a parent might transfer their property to their children but retain a life estate so they can continue living there. They're also used in relationship property settlements and family trusts.
The life tenant has the right to live in the property and is generally responsible for day-to-day maintenance, rates, and insurance. However, they cannot sell the property, mortgage it, or make major changes without the remainderman's consent. They must also avoid 'waste' — actions that would permanently damage the property's value.
Why It Matters for Due Diligence
If you're buying a property that is subject to a life estate, you're effectively buying a future interest — you won't have possession until the life tenant dies or voluntarily gives up the life estate. This significantly affects the property's value and your ability to get a mortgage.
Life estates are registered on the certificate of title. Your lawyer must check for these and explain the implications. In most cases, buyers will not want to purchase a property burdened by an existing life estate unless it's being surrendered as part of the sale.
How to Check
Life estates are registered as an interest on the certificate of title from LINZ. Your lawyer will identify any life estate during the standard title search. If a life estate exists, they should advise you on its practical and legal implications before you proceed.
Frequently Asked Questions
Can a life tenant sell the property?
No. A life tenant can only sell their life interest, not the property itself. Since a life interest ends when the life tenant dies (and its value is uncertain), it has very limited market value. A full sale requires agreement from both the life tenant and the remainderman.
What happens to the property when the life tenant dies?
The property automatically passes to the remainderman (the person designated to receive it). This happens outside the will and probate process. The remainderman then has full ownership and can use, sell, or deal with the property as they wish.
Related Terms
Certificate of Title
GlossaryThe official legal document registered with LINZ that proves who owns a property and records all registered interests affecting it.
Freehold
GlossaryThe most complete form of property ownership in New Zealand, giving the owner full rights to both the land and any buildings on it.
Fee Simple
GlossaryThe legal term for freehold ownership — the most complete form of property ownership available in New Zealand.
Encumbrance
GlossaryAny registered claim, charge, or restriction on a property's title that may affect the owner's ability to use or transfer the property freely.
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