The property law of every state allows ownership to be divided in time between a present possessory estate and various future interests. This law can be highly technical, but it offers approaches to managed retreat that have significant benefits for both current landowners and governments. For example, a government can purchase a remainder interest in a parcel leaving the property owner with a life estate, which will give the landowner a possessory ownership interest that will terminate at his/her death, automatically vesting full ownership at that time in the government.See footnote 1 Present possessory interests can also be structured to terminate on the occurrence of events related to climate change, such as a rise of the mean high tide line to a certain level.
In a managed retreat context, governments and other nongovernmental partners, like land trusts or nonprofits, can purchase and hold title to future interests in land. Once the future interest held by the government or nongovernmental partner becomes possessory, they will enjoy full ownership and can manage the land for conservation or related purposes.
The acquisition of future interests should be coupled with other tools like hazard mitigation buyouts, open space acquisitions (e.g., Florida Forever Land Acquisition Program), or development permits (e.g., Norfolk, Virginia). Governments with new or active Transfer of Development Rights (TDR) programs can also attain future property interests through their “banks,” in addition to current development rights to all or part of a property. With a TDR bank, developers purchase TDR credits from a government or third-party entity instead of directly from landowners. A TDR bank can make programs more predictable and manageable for both landowners and developers (for more information, see the Market-Based Tools>Transfer of Development Rights section of this toolkit).
Like with leasebacks, state and local governments can consider leaving private owners with present possessory estates like life estates to encourage participation in hazard mitigation and open space acquisition programs. Acquiring only future interests can help facilitate property acquisitions in the short term where sea-level rise and other climate impacts are projected to occur over a long-term time horizon. Moreover, acquiring only future interests can help bring along property owners who want to stay in their homes or continue using their properties for other uses like working lands for agriculture or forestry. Acquiring only a future interest will eventually give the government full fee simple ownership of the parcel, but allow a private owner substantial discretion in the use of the parcel during the possessory estate.See footnote 2 In addition, depending on the level of participation in an acquisition program, leaving private owners with present possessory interests could allow governments to better plan for and allocate funds to phase acquisitions that will not all happen at once, compared to after a post-disaster event.See footnote 3
Future interests should be acquired on a case-by-case basis where they can be justified by the physical environment, local support, funding availability, and level or ease of government administration, among other factors. Governments may avoid acquiring future interests for properties facing severe, imminent threats from sea-level rise, flooding, and erosion. Acquiring future interests may be less attractive for landowners with long-standing or significant economic, cultural, historical, or sentimental ties to their homes or where there is an expectation or desire that homes will be passed from one generation to another. Moreover, land without a “clean” title or mortgage (e.g., liens) could complicate or prevent governments from acquiring a future interest.
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When implementing life estates and future interests in a managed retreat context, decisionmakers may consider the following practice tips to address and balance different policy tradeoffs:
Endnotes:
1. Black’s Law Dictionary (11th ed. 2019) (A life estate is “An estate [i.e., The amount, degree, nature, and quality of a person's interest in land or other property; esp., a real-estate interest that may become possessory, the ownership being measured in terms of duration.] held only for the duration of a specified person's life.”). Back to contentBack to content
2. Although constrained by the common law doctrine of waste, the owner of a present possessory estate will not be subject to specific duties regarding the land that can be specified in a leaseback. Back to contentBack to content
3. One author suggests that, compared to buyouts, life estates can result in “purchase price reductions” by offering “cash-strapped jurisdictions the opportunity to accrue significant savings when budgeting for their sea level rise responses.” The article presents a cost-benefit analysis for homes purchased with and without a life estate on the property. As the author notes, these cost savings could become even more significant for governments in coastal communities with higher home values. See, e.g., Sam Gross, J.D. Candidate 2020, Va. Coastal Pol’y Ctr., Wm. & Mary Law School, Paper, Managed Retreat and the Life Estate: A Practical Path Forward for Coastal Communities 19-20 (Fall 2019), available at View Source. | Back to contentBack to content
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