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Volume 3 - Opinions of Counsel SBEA No. 44

Opinions of Counsel index

Nonprofit organizations exemption (religious) (life estate in church property reserved to individual) - Real Property Tax Law, § 421:

Property conveyed to a church with a life estate reserved to an individual does not meet the requirements of section 421 and is subject to taxation since a life tenant in possession is considered the owner of the real property for purposes of real property taxation.

Our opinion has been requested as to whether certain real property owned by a church is subject to taxation. This property was conveyed to the church with a life estate reserved to an individual.

The exemption to which church-owned property may be entitled is that set forth in section 421 of the Real Property Tax Law, and one of the requirements therein is that the property must be owned by an organization or association organized exclusively for religious purposes. A life tenant in possession holds as trustee for the remaindermen and, ordinarily, is entitled to all the customary uses and profits of the property although he may not lawfully commit any act which would harm the interest of the remaindermen or the reversioner, and if such acts are committed the life tenant is liable to an action for waste (Matter of Hamlin, 141 App. Div. 318, 126 N.Y.S. 396; Real Property Actions and Proceedings Law, § 801).

The law is well settled that a person who has the use of real property for his or her life has a “freehold estate” and is considered, during his or her lifetime, the owner thereof and must pay taxes thereon (Deraismes v. Deraismes, 72 N.Y. 154; In re Detmold’s Estate, 52 Hun 142, 4 N.Y.S. 903; Ackerman v. State, 199 Misc. 76, 102 N.Y.S.2d 536).

As stated in the case of In re McCarty’s Estate, 158 Misc. 287, 285 N.Y.S. 641 (at p. 642):

It is familiar law that during his life the life tenant is the exclusive owner of the land so held by him, with the exclusive right to its possession, control, and enjoyment, subject only to certain well-defined limitations or duties; the owner of the reversion or remainder in fee has no present right of enjoyment, no tangible and physical ownership of the land, but has a future incorporeal interest or estate in the land which will ripen into ownership of the land itself on the death of the life tenant.

It has been, and continues to be, our opinion, therefore, that a life tenant in possession should be considered the owner of the real property for purposes of real property taxation and as such would be entitled to the benefits of any exemption for which he may be qualified.

It therefore follows that the property in question does not satisfy the ownership requirement of section 421 and should be made subject to taxation.

In addition, church-owned property must also be used exclusively for one or more of the purposes set forth in section 421. Use of the property by a private individual would not be considered to be a religious use, and real property which is not being used for any of the purposes enumerated in section 421 would not satisfy the exclusive use requirement (In re Syracuse University, 214 App. Div. 375, 212 N.Y.S. 253). Therefore, for this additional reason, the property in question is subject to taxation.

August 3, 1973