Opinion
331708.
Decided December 13, 2004.
This is a miscellaneous proceeding by petitioner Joseph Siegel pursuant to Sections 1901, 1902(7), 1904(1) and 1918 of the Surrogate's Court Procedure Act for an order authorizing a sale of the decedent's Sea Cliff residence. The application is opposed by respondent Patricia Kle.
Kathryn H. Strohe died on December 31, 2003. Her Will dated January 30, 1992 was admitted to probate on June 17, 2004. Letters testamentary were issued to Gilbert W. McGill.
Article FOURTH of the Will provides as follows:
"FOURTH: If at the time of my death I am the owner of any real property occupied by me as a residence, I devise and bequeath such real property, and the contents thereof excluding artifacts to DR. JOSEPH SIEGEL, to have and hold for his life, and upon his death, or should he sooner waive the life estate herein created, I devise the said real property and contents to PATRICIA KLE, to be hers absolutely and forever.
I direct that DR. JOSEPH SIEGEL shall not be required to furnish any bond or other security for the safekeeping of the property so devised and bequeathed to him. However, he shall be required to pay the taxes and assessments of all kinds levied or to be levied thereon, to pay the interest and amortization of principal on any mortgage against such premises, keep the property lien free, and shall keep the buildings thereon in repair and pay all carrying charges and other necessary expenses connected therewith and appertaining thereto, whether for the preservation thereof or otherwise."
Petitioner was the decedent's companion for thirty years. Pursuant to Article FIFTH of the Will, petitioner is also the beneficiary of sixty percent of the residuary estate. Respondent is the remainder beneficiary and daughter of the decedent's neighbor.
The decedent died owning a residence in Sea Cliff, New York. Petitioner seeks an order (1) authorizing the sale of the residence; (2) allowing him to engage a real estate agent to handle the sale; and (3) allowing distribution in accordance with the Internal Revenue Service actuarial tables for the month in which the sale is concluded. Petitioner is currently 83 years of age and is residing in an assisted living facility. In support of his application, petitioner argues that it will be a burden for him to live at and maintain the residence given his advanced age. A sale would allow petitioner to use his share of the proceeds to pay for the cost of the assisted living facility. Petitioner argues that if a sale is not authorized, he will have no choice but to become an absentee landlord. According to petitioner, a sale would be beneficial since it would allow both petitioner and respondent to take advantage of a strong real estate market. In addition, respondent will receive a benefit now as opposed to having to wait until petitioner's death. Respondent opposes petitioner's application on various grounds. Although respondent does not dispute that petitioner has a life estate in the premises, she argues that petitioner's life estate is merely a right of occupancy which is conditioned upon the performance of certain obligations imposed by the Will. Respondent further argues that petitioner, by reason of his failure to perform the conditions, has forfeited his life estate. The respondent also has interposed a counterclaim which alleges that petitioner's actions evidence his intention to waive his life estate.
The executor has not taken a position with respect to the application other than to assert that, if petitioner's application is granted, he has the authority to sell the property pursuant to the power of sale given to him under the terms of the Will and the provisions of EPTL 11-1.1.
The parties do not dispute that petitioner has a life estate in the property since the Will specifically refers to petitioner's interest as a "life estate." The parties disagree, however, on the legal meaning of a life estate. Respondent claims that a life estate simply means a right to occupy the premises. Petitioner argues, on the other hand, that a life estate is more than just a right to occupancy and gives the holder "use" of the premises from which flows certain rights and obligations.
The law is clear that a life estate and a right to occupancy are not the same ( Matter of Gaffers, 254 App Div 448; Matter of Fisher, 169 Misc 2d 412; Matter of Cimino, NYLJ, Jan. 11, 1995 at 31, col. 3). A life estate is more than a right to occupancy ( Matter of Heinlin, NYLJ, May 21, 1996 at 35). In fact, "[a] life tenant is tantamount to the owner of the property and is entitled to all of the benefits and burden of such ownership although not a fee ownership, so long as the remainder interest is not affected" ( Matter of Fisher, 169 Misc 2d 412, 413; see, Matter of Gaffers, 254 App Div 448; Thorn v. Stephens, 169 Misc 2d 832). A life tenant can exclude others from possession during lifetime ( Matter of Carey, 249 AD2d 542). A life tenant can lease property to a tenant, subject to his life estate, and collect rents ( Matter of O'Donnell, 240 NY 99; Boyar v. Goodman, 202 AD2d 541 ; Matter of Fisher, 169 Misc 2d 412). This court has also held that the holder of a life estate may, under certain circumstances, be able to force the sale of real property and collect the value of his life estate over the objections of the remaindermen ( Matter of Sauer, 194 Misc 2d 634). Traditionally, the words conferring a life tenancy are "use and occupation" ( Matter of Sauer, 194 Misc 2d 634; Matter of Stokes, NYLJ, Dec. 29, 1995 at 31, col. 5). The distinction is critical since a right of occupancy is a personal privilege only ( Matter of Cimino, NYLJ, Aug. 2, 1995 at 25, col 6) and does not carry with it the added rights and responsibilities of a life tenancy ( Matter of Stokes, NYLJ, Dec. 29, 1995 at 31, col 5).
In the instant case, although the decedent did not use the words "use" and "occupancy," she specifically referred to petitioner's interest as a life estate. In addition, the Will obligates petitioner to pay taxes and other expenses which are generally the obligations of a life tenant whether or not the governing instrument specifically imposes them ( Matter of Gaffers, 254 App Div 448). Thus, the court finds that the decedent intended to give petitioner a life estate which, contrary to respondent's contention, is not limited simply to a right to occupy the residence but also is a right to the use of the residence.
The next question is whether petitioner has forfeited his life estate by failing to satisfy the responsibilities set forth under the Will. Respondent alleges that petitioner has failed to pay real estate taxes and carrying charges and has failed to maintain the premises. Respondent claims that these obligations are conditions, and that by failing to perform these acts petitioner has forfeited his life estate.
A determination of whether petitioner's alleged failure to satisfy his obligations acts to defease him of his life estate turns on whether the obligations imposed are to be construed as covenants or conditions subsequent ( Matter of Gaffers, 254 App Div 448; Matter of Beyer, NYLJ, Feb. 23, 1995 at 31). In Matter of Gaffers ( 254 App Div 448), the court noted that a life tenant is required to make necessary repairs, pay taxes and prevent waste whether or not the governing instrument specifically imposes such obligations on the life tenant. The court held that the appropriate recourse for a remainderman who has expended funds for such expenses because of the failure of the life tenant to do so is an action for reimbursement ( Matter of Gaffers, 254 App Div 448; Matter of Beyer, NYLJ, Feb. 23, 1995 at 31). A failure to perform such obligations will not operate as a defeasance of the life estate unless the obligations are construed as a condition subsequent ( Matter of Gaffers, 254 App Div 448; Matter of Beyer, NYLJ, Feb. 23, 1995 at 31). An obligation will be construed as a condition subsequent only if it is clearly and definitely expressed that the life estate is to depend on the contingency and that a reversion will follow a breach ( Matter of Gaffers, 254 App Div 448; 7B Warren's Heaton on Surrogate's Courts, § 96.5, 6th ed rev'd). Thus, the question is essentially one of intention ( Matter of Gaffers, 254 App Div 448; Matter of Danziger, 259 App Div 748). Generally, all doubts are resolved against finding a condition subsequent since forfeitures are not favored under the law ( Matter of Gaffers, 254 App Div 448; see Matter of Danziger, 259 App Div 748; Matter of Beyer, NYLJ, Feb. 23, 1995 at 31). Although a gift over may be some indica of intention, it is not controlling as to whether the language constitutes a covenant or a condition subsequent (see e.g. Matter of Beyer, NYLJ, Feb. 23, 1995 at 31; Matter of Howland, 44 Misc 2d 624; 13 Warren's Heaton on Surrogate's Practice, § 206.01[3], 6th ed rev'd).
The Will, in the instant case, imposes upon petitioner those obligations which under the law are generally attributable to a life tenant ( Matter of Gaffers, 254 App Div 448). There is no language, however, which expressly provides that petitioner's failure to perform these obligations will result in a forfeiture of his life estate, nor can such a result be inferred from the language of the Will. It is apparent from the Will that the decedent's primary intent was to provide her companion of thirty years with a place to reside for the remainder of his life. In fact, the Will does not give petitioner a life estate specifically in the Sea Cliff residence, but instead gives him a life estate in any residence in which the decedent was residing at the time of her death. Her concern, as evidenced by the gift of the life estate and the residuary clause of the Will, was to provide for petitioner. The notion that the decedent intended that a failure by petitioner to perform these obligations would allow the remainderman to remove petitioner from the residence cannot be reconciled with her overall purpose of providing for her longtime companion. Nevertheless, petitioner did have an obligation to pay the expenses of the real estate taxes and insurance. If respondent did, in fact, pay these expenses, she has a right to reimbursement.
Although petitioner's failure to satisfy these obligations does not operate as an defeasement of his life estate, the question becomes whether petitioner's failure to perform these obligations, together with his failure to occupy the premises, constitutes a waiver of his life estate. The Will provides that petitioner's life estate will terminate upon petitioner's death or should petitioner "sooner waive the life estate herein created." Respondent has interposed a counterclaim that petitioner waived his life estate by deliberately abandoning the premises to live in an assisted living facility, refusing to pay the expenses, and abandoning the decedent's animals on the premises.
Although denominated as a counterclaim, respondent's contention that petitioner waived his life estate is essentially an objection as to why petitioner's prayer for relief should not be granted. Accordingly, the issue of whether petitioner has waived his life estate will be addressed. A waiver is a legal term and will be afforded its legal meaning ( Matter of Everett, 200 Misc 637). "Technical or legal words employed in a Will are presumed to have been used in their settled legal meaning unless the contrary intent is manifest and it will be presumed that the testator used words in the meaning which the law attaches to them" ( Matter of Everett, 200 Misc 637, 638). Moreover, if the Will was drawn by a lawyer, it is presumed that the language was used in its definite and technical meaning ( Matter of Everett, 200 Misc 637; Matter of Myers, 98 Misc 108). A waiver is an intentional relinquishment of a known right and should not be lightly presumed ( Gilbert Frank Corp. v. Federal Ins. Co., 70 NY2d 966; Ess Vec Acoustical Lathing Contractors, Inc. v. Prato Verde, Inc., 268 AD2d 332; Warhoftig v. Allstate Ins. Co., 199 AD2d 258). Knowledge and intent are essential elements of a waiver ( People v. Cox, 71 AD2d 798). Waiver "is essentially a matter of intention that must be proved" ( Matter of Bonanno, 6 Misc 2d 888, 891 aff'd 6 AD2d 825). A waiver will not be inferred from doubtful or equivocal acts or language ( Matter of Bonanno, 6 Misc 2d 888 aff'd 6 AD2d 825). An intention to waive may be unexpressed, but it must be clear in order to be inferred from circumstances ( Kiernan v. Dutchess County Mut. Ins. Co., 150 NY 190).
The respondent does not claim that petitioner has waived his life estate by formally renouncing his interest ( see, Matter of Thomson, 226 AD2d 647). Instead, respondent asserts that petitioner's actions taken together indicate an intention on his part to waive his life estate. The court disagrees for the following reasons. First, there is no requirement under the Will that petitioner must occupy the premises, nor does the law require that a life tenant must occupy the premises in order to maintain his life estate. A life estate confers both "use" and "occupancy" ( Matter of Fisher, 169 Misc 2d 412). In Matter of Beyer (NYLJ, Feb. 23, 1995 at 31), this court held that employment of the word "use" in connection with a devise does not impose a condition that the beneficiary occupy the premises. Similarly, where a Will required the beneficiaries to take possession of the premises within sixty days of the testator's death and did not provide that the devise would be defeated for a failure on the devisees' part to continue to occupy the premises, continued actual occupancy was not necessary ( Matter of Danzinger, 259 App Div 748). Thus, since occupancy is not required, a waiver cannot be inferred from a failure to occupy.
Additionally, petitioner's failure to pay the expenses does not unequivocally demonstrate an intention to surrender his rights to the property. Petitioner asserts that the failure to pay was merely an oversight since he was not residing at the residence and was not able to review the bills on a timely basis. Nor does the court find the claim that petitioner abandoned the decedent's animals as evidence of a waiver since the animals were specifically bequeathed under Article "THIRD" of the Will.
Since the court finds that petitioner has not forfeited or waived his life estate, the court must determine whether petitioner may force a sale of the residence over the objection of the respondent. The petitioner's authority to request permission to sell is based upon Section 1904 of the Surrogate's Court Procedure Act and Section 1602 of the Real Property Actions and Proceedings Law ( Matter of Sauer, 194 Misc 2d 634).
Pursuant to SCPA 1904(1), a proceeding may be instituted by any person interested. A life tenant is an interested person ( Matter of Bolton, 79 Misc 2d 895). SCPA 1902(7) provides that real property may be disposed of "for any other purpose the court deems necessary." Under SCPA 1918 where a party to a proceeding commenced under Article 19 of the SCPA has a life estate, the "court must determine whether the interests of all the parties will be better protected or a more advantageous disposition can be made of the real property by including the disposition of such right or interest . . ." (SCPA 1918).
The court will exercise its discretion under SCPA 1902(7) if an estate purpose is served by the sale ( Matter of Bolton, 79 Misc 2d 895 ; Matter of Perkins, 55 Misc 2d 834). The action must serve to carry out the provisions of the Will or be of benefit to those interested in the estate ( Matter of Bolton, 79 Misc 2d 895 ; Matter of Perkins, 55 Misc 2d 834).
In Matter of Bolton ( 79 Misc 2d 895), the court found that the language of the Will indicated that the decedent was primarily concerned with the welfare of the life tenant. The court concluded that a proposed sale of the property to the life tenant would serve a proper estate purpose such as the allocation of proceeds between the life tenant and remaindermen.
Under Real Property Actions and Proceedings Law § 1602, the life tenant must show that the proposed sale is expedient ( Matter of Gaffers, 254 AD2d 448). Expediency is characterized by suitability, practicality and efficiency in achieving a particular end which is proper or advantageous under the circumstances ( Matter of Sauer, 194 Misc 2d 634). In Matter of Gaffers ( 254 App Div 448), the petition was granted as expedient as (1) the purchase price was in excess of the appraised value, (2) the rent was insufficient to pay taxes, (3) the house was unoccupied, and (4) the life tenant would have to expend a considerable sum of money for taxes, insurance and maintenance.
This court in Matter of Sauer ( 194 Misc 2d 634) addressed the question of whether a life tenant can sell the residence over the objection of remaindermen. The court concluded that the life tenant could do so based upon a finding that the application was both expedient and would carry out the provisions of the Will.
In the instant proceeding, the life tenant's purported reasons for selling the property are that the real estate market is strong, the upkeep of the property will be a burden to him, he is currently living in an assisted living facility and desires to remain there, the proceeds of sale could be used towards the cost of the assisted living facility and he does not wish to undertake the responsibilities of an absentee landlord. The decedent's primary intention as gleaned from the Will was to provide the petitioner with a place to reside for the remainder of his life. Respondent claims the decedent named her as a remainderman because the Sea Cliff residence is of great sentimental value to her since it is next door to respondent's parents. This argument is unsupported as respondent is named as the remainderman of any residence in which the decedent resided at the time of her death. Petitioner is also the beneficiary of sixty percent of the residuary estate. The Will evidences an overall intention to benefit the petitioner and provide him with a suitable residence for his lifetime. A sale would allow the petitioner to pay the expenses of the assisted living facility, thereby carrying out the provisions of the Will and benefitting the petitioner. Granting the application is also expedient, as well as suitable, practical and efficient in reaching the decedent's purpose which was to provide her companion of thirty years with a place to reside for his lifetime.
The remaining issues are who shall be permitted to select the broker, what value shall be given to the life estate, and in what form does petitioner take his share of the proceeds.
The executor argues that if the application is approved, he be permitted to act in the event of a sale pursuant to EPTL 11-1.1 and the provisions of the Will which give him the authority to sell real property. EPTL 11-1.1(b)(5) provides, however, that the fiduciary's power to sell does not apply where the property is specifically devised. The Will contains a specific devise of the residence subject to a life estate. Accordingly, the executor has no authority to act with respect to a sale of specifically devised property without approval of the court (EPTL 11-1.1[E]).
Petitioner has asked that the present value of his life estate be calculated in accordance with the Internal Revenue Service actuarial tables, rather than by the New York Commissioner of Insurance at the rate of four percent (4%), the method applied in Matter of Sauer ( 195 Misc 2d 232). Additionally, petitioner seeks the value of his life estate in gross sum rather than receiving earnings from the total sum. SCPA 1918(2) sets forth the following: "the provisions of law in relation to the right of . . . estates for life . . . so far as the same may be applicable, shall govern and control the distribution of moneys realized on such disposition . . ."
Real Property Actions and Proceedings Law § 967 provides that anyone who is a "tenant for life or for years, in or of an undivided share of the property sold . . . is entitled to have a proportion of the proceeds of the sale invested, secured or paid over, in such manner as the court deems calculated to protect the rights and interests of the parties". Real Property Actions and Proceedings Law § 968 provides that the "power to determine whether the owner of the particular estate shall receive, in satisfaction of his estate or interest, a sum in gross or shall receive the earnings, as they accrue, of a sum invested for his benefit in permanent securities at interest, rests in the discretion of the court . . . The application of the owner of any such particular estate for the award of a sum in gross shall be granted unless the court finds that unreasonable hardship is likely to be caused thereby to the owner of some other interest in the affected real property."
Respondent has not addressed the issues of who shall select the real estate broker, how petitioner's life estate should be valued or whether petitioner is entitled to the amount of the value in gross claiming that such questions are not ripe until such time as the court authorizes a sale. Since these issues have not been fully addressed by respondent, respondent is directed to file memorandum of law in support of his position on these issues by January 10, 2005. In addition, counsel are directed to appear before the court at a conference on January 13, 2005 at 9:30 a.m. to discuss the manner in which the sale shall be conducted, including who shall be responsible for the sale, and whether respondent is interested in purchasing the property.
The application is granted insofar as a sale of the property is authorized.
This constitutes the decision of the court.