TN 17 (10-19)

PS 01805.001 Alabama

A. PS 19-105 Effect of a Corrective Warranty Deed Reserving a Life Estate – Alabama

Date: September 13, 2019

1. Syllabus

This Regional Chief Counsel (RCC) opinion examines the effect of a Corrective Warranty Deed Reserving Life Estate on a previously executed life estate warranty deed, in order to determine how the original life estate warranty deed would be valued. The RCC concludes that the Corrective Warranty Deed was not valid because the individual no longer had a life estate interest or any other ownership interest in the subject property as of the execution of the original life estate warranty deed.

2. Opinion

QUESTION

You asked whether J~ (Claimant) is the sole life estate owner in the subject property by virtue of a May XX, 2014 warranty deed executed by her mother, L~. You also asked whether a subsequent May XX, 2019, Corrective Warranty Deed Reserving Life Estate executed by Claimant’s mother was effective to create a second life estate in the subject property for Claimant’s mother. If so, you ask how Claimant’s life estate would be valued given the second life estate and the effective date of the second life estate.

OPINION

Based on the May XX, 2014, warranty deed, Claimant is the sole life estate owner in the subject property and her two children have a remainder interest in the subject property. All interest Claimant’s mother had in the subject property passed with the 2014 deed, and therefore, the May XX, 2019, corrective deed was ineffective in creating a second life estate for Claimant’s mother. Thus, Claimant’s mother does not have a life estate or any other ownership interest in the subject property.[1]

BACKGROUND

Claimant is an adult Supplemental Security Income (SSI) recipient residing in Troy, Alabama. Claimant’s mother signed a Last Will and Testament (Will) on May XX, 2014. According to the terms of the Will, upon the death of Claimant’s mother, all of her property is to go to Claimant. Also on May XX, 2014, Claimant’s mother signed a warranty deed in which she conveyed a life estate in her real property, located at XXX Street in Troy, Alabama (the subject property), to Claimant. According to a Real Estate Sales Validation Form, signed in December 2014, the assessed market value of the subject property was $64,340.00. The warranty deed, signed by Claimant’s mother created a life estate in the subject property for Claimant, with remainder interest in Claimant’s two children.

Claimant provided a letter indicating that she was not aware of the conveyance and that she had not resided on this property since 1997. In a signed statement dated May XX, 2019, Claimant’s mother stated her intent was to transfer ownership of the subject property only upon her death, as stated in her Will.

On May XX, 2019, Claimant’s mother signed a “Corrective Warranty Deed Reserving Life Estate” (corrective warranty deed). This document indicated the intent to correct “certain omissions and clerical errors” made in the May XX, 2014 warranty deed. The corrective warranty deed stated that it was the intent of the original grantor, Claimant’s mother, to reserve a life estate for herself. The corrective warranty deed named Claimant as a life estate owner with the same remainder beneficiaries listed in the original warranty deed. The corrective warranty deed purportedly conveyed two life estates in the subject property, to Claimant and her mother.

DISCUSSION

A. Federal Law

SSI is a general public assistance program for aged, blind, or disabled individuals who meet certain income and resource restrictions and other eligibility requirements. See Act §§ 1602, 1611(a); 20 C.F.R. §§ 416.110, 416.202 (2019).[2] “Resources” include cash or other liquid assets or any real or personal property that an individual owns and could convert to cash to be used for his or her support and maintenance. See Act § 1613; 20 C.F.R. § 416.1201(a); Program Operations Manual System (POMS) SI 01110.100(B)(1); POMS SI 01120.010(B). “Resources” generally exclude an individual’s home. See Act § 1613(a)(1); 20 C.F.R. §§ 416.1210(a), 416.1212(b); POMS SI 01110.210(B); POMS SI 01130.100(B). For the home exclusion to apply, however, the individual must have an ownership interest in the property and it must serve as his or her principle place of residence. See 20 C.F.R. § 416.1212(a); POMS SI 01130.100(A)(1), (B)(1)-(3).

An individual may have an ownership interest in a property if he or she has a life estate in the property. See POMS SI 01110.500(B)(3)(a). A life estate conveys ownership of limited duration. See POMS SI 01110.500(B)(3)(a); POMS SI 01110.515(A)(2)(a), (B)(1); POMS SI 01140.110(A)(6). A life estate is a form of legal ownership usually created through a legal document. See POMS SI 01110.515(A)(2)(a); POMS SI ATL01110.516(A). An individual with a life estate can sell only his or her interest, and a life estate in home property generally is an excluded resource. See POMS SI 01110.515(B)(1); POMS SI 01140.110(A)(6).

B. State Law

Under Alabama law, courts look to the clear, unambiguous language of the deed to determine the intent of the grantor. SeeBarter v. Burton Garland Revocable Trust, 124 So. 3d 152, 159 (Ala. Civ. App. 2013). In construing the terms of a deed, a court will ascertain the intention of the parties based on the entire instrument. SeeMoss v. Williams, 822 So. 2d 392, 397 (Ala. 2001). However, the granting clause in a deed determines the interest conveyed, and unless it is repugnant, obscure, or ambiguous, it prevails over other portions of the document that may be in conflict with it. Seeid.; see alsoHubbard v. Cason, 258 So. 3d 1126, 1132 (Ala. Civ. App. 2018) (holding although deed was titled as conveying ownership of real estate, the granting clause by clear and unambiguous language conveyed only an easement).

Here, the May XX, 2014, warranty deed executed by Claimant’s mother by its express terms conveyed her interest in the subject property to Claimant in the form of a life estate, with a remainder interest to Claimant’s children. Claimant’s mother retained no ownership rights in the subject property. According to the granting clause in the May XX, 2014, warranty deed:

Grantor does hereby, grant, bargain, sell and convey unto [Claimant], a life estate in the following described real estate for and during her natural life, and then upon her death, unto [her children], for and during their joint lives and upon the death of either of them, then to the survivor of them in fee simple, together with every contingent remainder and right of reversion, the following described real estate . . . .

Thus, the May XX, 2014, deed conveyed a life estate to Claimant and her mother retained no ownership interest in the subject property.

Further, the fact that Claimant did not know at the time that her mother had conveyed a life estate to her or that she did not live on the subject property does not divest her of the life estate interest in the subject property. Generally, delivery of a deed to the grantee is required for the deed to be valid as it signifies the grantor’s relinquishing of the right to revoke the deed. SeeChandler v. Chandler, 409 So. 2d 780, 781 (Ala. 1982); Culver v. Carrol, 175 Ala. 469, 472 (Ala. 1912) (stating delivery of deed signifies grantor’s intent to relinquish right to revoke deed). Here, Claimant indicated that she did not receive a copy of the warranty deed when her mother executed it in 2014, and she did not know of her ownership interest in the subject property. Nevertheless, Claimant’s mother acknowledged execution of the deed creating a life estate for Claimant and evidenced the forfeiture of her right to revoke the deed by having it recorded in the local probate court. Under such circumstances, Alabama courts will presume delivery to a third party on behalf of the grantee. SeeGulf Red Cedar Co. v. Cranshaw, 169 Ala. 606, 613 (Ala. 1910) (stating “[i]t may be regarded as settled in this state that when a paper purporting to be a deed is shown to have been signed by the grantor, to have been then acknowledged and duly certified by a proper officer, and recorded in the office of the judge of probate of the county in which the lands lie, and there is no other proof to weaken the force of these facts, this is sufficient proof of complete execution by delivery, although there is no direct proof of delivery”). Further, Claimant’s assertion that she does not live on the property and has not resided there since 1997 does not invalidate the May XX, 2014 deed conveying to her a life estate. SeeThrasher v. Thrasher, 169 So. 3d 1043, 1045-47 (Ala. Civ. App. 2014) (holding failure of life tenant to reside on the property did not forfeit her life estate).

Likewise, the May XX, 2019, statement by Claimant’s mother that her intent was to transfer ownership of the subject property only upon her death, as stated in her Will, does not change the result. In Alabama, when a court is construing the intent of an unambiguous provision in a deed, it generally only looks to the language in the instrument, and does not consider collateral statements about the intent of the parties. SeeBarter, 124 So. 3d at 158 (quoting Cole v. Minor, 518 So. 2d 61, 64 (Ala. 1987) (stating actual knowledge of the parties, oral statements of the parties, and other collateral matters are inadmissible in action to construe unambiguous document)).

Moreover, the execution of the May XX, 2019 corrective warranty deed by Claimant’s mother was not valid and not effective in creating a life estate for herself in the subject property. In Alabama, a grantor cannot use a corrective deed to unilaterally terminate or revoke an interest conveyed by the original deed. SeeGallups v. Kent, 953 So. 32d 393, 395 (Ala. 2006). Additionally, where a grantor divests herself of title, and by mistake fails to convey the title in the manner she intended, she cannot by a subsequent conveyance correct her mistake, as she has no title remaining to convey. Seeid. (quoting Kirkpatrick v. Ault, 280 P.2d 637, 641 (Kan. 1955)). Thus, under Alabama law, Claimant’s mother’s title to the subject property passed with the warranty deed she executed in May 2014. She could not thereafter execute a valid conveyance of the property with the 2019 corrective deed. Seeid.

CONCLUSION

Claimant is the sole life estate owner in the subject property and her two children have a remainder interest in the subject property. Claimant’s mother does not have a life estate interest or any other ownership interest in the subject property. Because Claimant does not reside on the subject property, the home exclusion does not apply.


Footnotes:

[1]

Because Claimant’s mother does not own a second life estate in the subject property, we do not address the question regarding valuation of Claimant’s life estate in light of a second property ownership interest.

[2]

All references to the Code of Federal Regulations are to the 2019 edition.


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PS 01805.001 - Alabama - 10/04/2019
Batch run: 10/04/2019
Rev:10/04/2019