Life Estate vs. Licence to Occupy

Courts are occasionally asked for direction on whether a term in a will creates a life estate or a licence to occupy real property. This often results from imprecise drafting in the will, which creates ambiguity.

A life estate grants the holder the right to immediate possession of the property and to its use as the owner, subject to some restrictions to protect the rights of the person entitled to the property at the end of the life estate. Rights to use and transfer the property are restricted by the terms of the grant and the common law doctrine of waste. Ordinarily, the holder of a life estate is responsible for current expenses and routine maintenance.

A licence with respect to real property is a privilege to go on premises for a certain purpose, but does not operate to confirm on, or vest in, the licencee any title or estate in such property.

No particular words are required to create a life estate. Cases have held that to grant a “use” of property can create a life estate. However, the court must determine the testamentary intention of the deceased. The court must read the entire will, and consider it in light of the surrounding circumstances. This means that depending upon the circumstances, similar wording may create a licence or a life estate. The courts have held that since the meaning of words in wills can differ so much according to the context and circumstances in which they are used, it seldom happens that the words of one instrument are a safe guide in the construction of another.

In the recent B.C. Supreme Court decision of Swift v. Nazaroff 2023 BCSC 1602, the Deceased’s will provided that if her daughter had not obtained her real property by right of survivorship (which the Court held she did not), then the daughter was to receive all right, title and interest in the property:

for her use absolutely and forever, subject however, to the right of my son …, to occupy the premises in such circumstances and for such time as may be required when he has no other permanent residence, provided, however, that my son, …, shall be responsible for all expenses, including taxes, utilities and upkeep (maintenance) while he resides on the property.

The issue was whether this created a life estate or a licence to occupy.

The Court held that this created a life estate in the circumstances. This was consistent with the deceased’s testamentary intention to ensure that her son would always, having regard to his recognized challenges (including mental health issues requiring repeated hospitalization), have a place to reside during his lifetime. The deceased was aware of this, and would not have wanted her son to forego seeking medical assistance (including hospitalization) at risk of losing his right to occupy the property. Also, if the deceased had intended to transfer the property to her daughter free from her son’s life estate interest, she would have done so.