DUTIES OF REMAINDERMEN: SOMETIMES BENEFICIARIES HAVE DUTIES, TOO!
Court Allows Claim for Establishment and Foreclosure of Equitable Lien
My practice is frequently faced with inquiries regarding the rights of remaindermen. A remainderman is a person who inherits or is entitled under the law to inherit property upon the termination of the estate of the former owner. Usually, this occurs due to the death or termination of the former owner’s life estate, but this can also occur due to a specific notation in a trust passing ownership from one person to another.
For example, if the owner of property makes a grant of that property “to John for life, and then to Jane,” Jane is entitled to a future interest, called a remainder, and is termed a remainderman.
As is often the case, the remaindermen and the life estate owner don’t always get along. Sometimes, the friction is caused by what the remaindermen perceive as the life estate owner’s waste of the property.
What are the duties of the life tenant?
First, it is important to recognize that the life tenant and remaindermen can always enter into an agreement altering the general duties of a life tenant, however, assuming that no agreement exists, the law generally recognizes that a life tenant is usually required to make “ordinary” repairs to the property and keep it properly maintained and preserved so as to prevent waste and decay to the property. This is the most common complaint by remaindermen and the source of most of the claims of this type that are filed by my law firm. It’s also widely recognized that the life tenant cannot recover compensation from the remaindermen for the cost of any repairs voluntarily made to the property.
A recent case from the Fourth District Court of Appeals provides a good example of the issues that arise in disputes between life tenants and remaindermen in the context of real property inherited through a probate estate. Vaughn v. Boerckel, 34 Fla.L.Weekly D2168 (Fla.4th DCA October 21, 2009) involved a decedent who devised the residue of his estate to a trust. The plaintiffs were three remaindermen who were each given a remainder interest in separate real estate properties by the trust. Each of the properties produces rental income to the trust. The Plaintiffs sued the decedent’s widow, who was also the life tenant of the real estate properties (and the trustee of the trust) for an injunction and an accounting.
According to the plaintiffs in Vaughn, each of the properties was being wasted by the widow due to her failure to keep the real estate taxes current and failing to keep the property in good repair by allowing code enforcement violations to occur. Also, there were allegations that the widow had failed to pay the homeowners association monthly maintenance charges due.
The Fourth District Court of Appeals, in ruling on the trial court’s dismissal of some of the Plaintiff’s claims, issued an opinion holding that among the remedies that could be pursued by the remaindermen was the right to sue the life tenant individually for money damages. According to the Fourth District, the remaindermen should be permitted to seek and foreclose on an equitable lien against the real property. The Court reached this conclusion because “a life tenant who commits an unreasonable act which results in damage to the corpus of the property or the remaindermen may be liable for damages.”
This ruling is consistent with the well-settled law in Florida holding that other persons and entities that hold the property for the benefit of future interest holders may be personally liable for their defalcations in handling the property (i.e. trustees can be personally liable under certain circumstances for breach of trust).