Right to Occupy Property in a Will in NSW
A right to occupy property NSW (often referred to as a “right of residence”) is where a person who owns property (the owner) grants a second person the right to reside in a property after the owner dies. It is usually rent free and for a specific period (i.e. 12 months) or until an event occurs (i.e. the person granted the right of residence dies or remarries).
A right of residence does not give legal title to the person and the owner will retain ownership. A right of residence is different from a life interest which often provides a more formal and more flexible right of occupancy to an original specific property, and in some cases, subsequent properties.
These arrangements are most commonly created under a person’s will and come into effect after a person dies.
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What Is a Right to Occupy in a Will?
A right to occupy in a will grants a person (i.e. spouse, child, friend) the right to live in a specific property. It is a personal right and does not involve the transfer of legal title of the property. A right to occupy or right of residence is a useful estate planning NSW tool where the will-maker wants a loved one to remain living in a particular property, for a period or until a future event occurs.
How a Right to Occupy Works Under NSW Estate Law
The right to occupy or right of residence is most often created by a person’s will.
After death, the executor will be responsible for facilitating any gifts under the will, including any right or residences or life estates.
A right of residence usually ends on a set date, on the occupant’s death, or on remarriage, though other conditions can be incorporated. Once the estate is finalised, the executor will pass the responsibility for administering the right of residence to the trustee (who may or may not be the same person) and from that point forward, the trustee manages compliance and assumes responsibility for protecting the interests of the beneficiaries who will take the property once the right of residence ends.
Key Legal Considerations and Conditions
A clear and well drafted will can reduce ambiguity and disputes.
A right to reside NSW is personal to the named person and cannot be transferred. A right to reside can also be subject to conditions, including:
- The occupant must not sub-let the property.
- The occupant must pay maintenance and insurance.
- The occupant must keep the property in good order and allow access for inspection.
As a right of residence is most often created by will, an experienced wills and estate lawyer is best placed to both draft the terms and conditions, and establish and administer the right (during the probate process).
Restrictions on the Use of the Property
A right of residence may be subject to conditions prohibiting sub-letting, major renovations without trustee approval, using the home as an investment, any changes to the title or mortgages. These property rights under a will NSW are enforced by the executor or trustee who can issue notices and, if needed, approach the court for advice or to resolve disputes.
Responsibilities of the Occupant
The occupant is usually responsible for paying the day-to-day costs, for example:
- Council rates and water charges
- Utilities
- Routine maintenance and gardening
- Home and contents insurance
Uncertainty over who is liable to pay the above expenses can lead to disputes. It is important that the Will sets out who pays what and when.
Right to Occupy vs Life Interest: What is the Difference?
- Right to occupy: personal right to live in the home, non-transferable, generally no right to let or sublet the property or access capital.
- Life interest: broader control under a trust, may allow renting, and may allow sale and the rollover of the sale proceeds into a subsequent property.
Each option has advantages and disadvantages and suitability will depend on the particular circumstances. A person should obtain advice before deciding to give a right to occupy vs life estate.
Resolving Disputes Over a Right to Occupy
Vague will clauses NSW can increase the risk of disputes.
Examples of where disputes may arise include where the beneficiaries want an early sale, where the will is unclear as who pays what, and where the beneficiaries believe the person with the right of residence has breached a condition.
Resolution options include:
- Negotiations between the parties impacted
- Mediation within the NSW law framework
- Application to the Supreme Court of NSW for directions or relief.
Early legal advice can help preserve the estate value, protect the estate assets, and protect the beneficiaries.
Drafting a Right to Occupy Clause Properly
Be specific. Name the property, start date, duration, termination events, and who pays what costs. Clearly set out any terms or conditions including rental bans, inspection rights, insurance levels, and required maintenance standards. Accurate drafting by an experienced estate lawyer can help reduce risk.
Need Help With a Right to Occupy Clause or Estate Dispute in NSW?
For clear guidance on property rights under a will NSW, conditional occupancy in wills, or disputes over right to occupy, call Empower Wills and Estate Lawyers on 1300 414 844. We can provide estate planning services incorporating a right of residence or life estate, advise executors and trustees, and help resolve NSW wills and estates disputes efficiently.
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Disclaimer: the information in this article relates to NSW law as at the date it was written and is general information only. It does not constitute legal advice and should not be relied upon as legal advice. It may contain information or links to sources which are no longer current. If you have a question or legal issue, we recommend you contact a lawyer and obtain legal advice that takes into account your specific facts, circumstances, needs and objectives.
