The owner of a life estate may mortgage her interests.

The owner of a life estate may mortgage her interests.

• A. False
• B. Only with court approval
• C. True
• D. Not allowed

Answer: (C)

A life estate holder can mortgage the interest they own. Since the life tenant has the right to possess and use the property for life, they may borrow money secured by that interest. The mortgage attaches only to the life estate, not to the remainder interest that will later pass to the remainderman. It creates a lien against the life estate during the life tenant’s lifetime, and the mortgage lien dies when the life estate ends at the life tenant’s death. At that point, the property passes to the remainderman, and the debt secured by the life estate no longer travels with the property. This is why the statement is true: the life estate owner may encumber their interest with a mortgage, within those limited rights.

A life estate holder can mortgage the interest they own. Since the life tenant has the right to possess and use the property for life, they may borrow money secured by that interest. The mortgage attaches only to the life estate, not to the remainder interest that will later pass to the remainderman. It creates a lien against the life estate during the life tenant’s lifetime, and the mortgage lien dies when the life estate ends at the life tenant’s death. At that point, the property passes to the remainderman, and the debt secured by the life estate no longer travels with the property. This is why the statement is true: the life estate owner may encumber their interest with a mortgage, within those limited rights.