PS 01615.017 Indiana
A. PS 00-344 Indiana-Oral Life Estate For Pearl S. P~, SSN: ~
DATE: July 2, 1997
Under Indiana law, an oral agreement between an individual and his/her child (who purchased the individual's property) granting the individual a life estate in his/her former home is only voidable by the child who purchased the property. Even though the individual lives on the property rent free, he/she alleges paying for all of his/her own expenses and utilities. This, along with the individual's possession of the property, appears to be sufficient to recognize the individual's life estate in the property for purposes of determining entitlement to SSI.
This is with reference to your request for an opinion as to whether Pearl S. P~ (hereinafter "P~"), a Supplemental Security Income (SSI) claimant, has a valid oral life estate in real property at which she resides. P~ lives in the home that she sold to her son, Delbert P~, on October 25, 1994 with the understanding that she would retain a life estate in the residence. P~ informed social security representatives that she had a life estate in the property and that she paid her utility bills and expenses. Her son, however, farmed the property and paid the taxes. Delbert P~ signed a letter witnessed by two persons dated January 17, 1997 stating that it was his intent that the claimant have a life estate in the property and be allowed to live rent free until the time of her death.
Indiana law requires that an agreement for the sale of real property be in writing in order for an action to be brought to enforce the agreement. Ind. Code Ann. § 32-2-1-1 (1979). This is known as the "statute of frauds" requirement. However, it is well-established that "oral contracts for the conveyance of real estate are not void, but voidable. Summerlot v. Summerlot, 408 N.E. 2d 820, 828 (Ind. App. 1980). Furthermore, it "is well-settled . . . that only parties and privies have the right to plead the statute of frauds defense." Pioneer Lumber & Supply Co. v. First-Merchants National Bank, 349 N.E.2d 219, 223 (Ind. App. 1976). Thus, under Indiana law, the agreement between P~ and her son granting P~ a life estate in her former home is not void, but only voidable. Moreover, it is only voidable by her son, or his privies in contract. Thus, it would appear that P~ presently has a valid oral life estate in the property.
However, in considering the enforceability of the oral agreement against the party granting the life estate, it should be noted that an oral contract for the sale of land may be removed from the operation of the statute of frauds by the doctrine of part performance. Summerlot v . Summerlot, supra. Circumstances generally held sufficient to invoke the doctrine of part performance are some combination of the following: 1) payment, 2) possession, and 3) lasting and valuable improvements on the land. Luson v. Mitchell, 939 F.2d 493, 497 (7th Cir. 1991); Summerlot, 408 N.E. at 828-29; Dubois v. Blessinger, 274 N.E. 2d 279 (Ind. App. 1971). In the present case, the information submitted to our office does not indicate whether or not P~ made any lasting or valuable improvements to the land. It is clear, however, that she has satisfied the element of possession. Although her son farms the property, pays the taxes, and does not require rental payments from P~, she allegedly pays all of her own expenses and utilities. Additional evidence of payment, such as paying for repairs and paying insurance, would provide P~ with stronger evidence of ownership. However, plaintiff's payment of utilities and expenses may be sufficient, along with her possession of the property, to allow an Indiana court to find sufficient performance on her part to remove the oral agreement from the statute of frauds, despite the lack of evidence on improvement.
Therefore, it is not entirely clear from the evidence submitted whether P~ has, in fact, rendered part performance in order to activate the exception to the statute of frauds which would result in an enforceable life estate in the home in which she resides. It does appear, however, that claimant has a present valid life estate interest in her home, subject only to the possibility that her son or his privies at some future time may successfully argue that the life estate is unenforceable. The foregoing should be sufficient to allow recognition of the claimant's life estate for purposes of determining entitlement to SSI benefits.