In many estates, the family home is the most valuable asset. It can also be the most costly to maintain – mortgage payments, utilities, property taxes, and insurance all have to be kept current until the house is sold. Unfortunately, selling the deceased’s house is a lot more complicated when there is someone living in it.
While the estate trustee and beneficiaries sort out when and how the occupant will leave the house, a question arises: can the estate charge the occupant rent? The answer: maybe.
In the estates context, occupation rent is an equitable remedy based on the principle of unjust enrichment – the occupant of the house has received a “benefit” (a free living space) to the detriment of the estate (who has had to pay the costs of the house). Occupation rent is meant to correct that imbalance – by charging the occupant rent, the estate is compensated for the cost of maintaining the house until it could be sold. However, occupation rent is a discretionary remedy, meaning a judge will decide whether or not it is appropriate based on all of the circumstances.
Three recent decisions help illustrate when, why, and how much occupation rent may be ordered.
Facts: the respondent, John, inherited a 50% interest in the deceased’s house, with the other 50% interest passing to four other individuals (the applicants). For the first 30 months following the deceased’s death, John refused to move out of the deceased’s home to allow it to be sold. The applicants sought an order requiring John to pay occupation rent for that period.
Held: the Court found that John had been unjustly enriched by his exclusive occupation of the property rent-free while the other beneficiaries suffered a corresponding deprivation by being excluded from the property (and more importantly, from being unable to sell it as they had planned). However, occupation rent was only awarded for a short period of time, starting from when the demand for occupation rent was first made, not the deceased’s date of death, because John had previously had explicit permission to live in the house.
The court further held that, in this case, occupation rent should be calculated based on market rent as opposed to the carrying costs of the house.
Facts: Judy and Bill were in a common law relationship for around a decade. When Judy died, her estate (including her house) passed to her two adult daughters from a prior marriage. Bill refused to move out of the house to allow it to be sold. As a result, Judy’s daughters sought an order removing Bill from the house and charging him occupation rent.
Held: Bill was required to leave the home – he did not own it and had no equitable claim to the house. However, the Court refused to exercise its discretion to order Bill to pay occupation rent: Bill was not wealthy and would need all of his funds to find a new place to live.
Facts: The deceased named her three adult children as co-estate trustees and beneficiaries of her estate. One of the deceased’s children, Antonio, had been living with her before her death and refused to move out. The children agreed to a timetable allowing Antonio to put in an offer to buy the house, failing which he would leave so it could be sold.
Held: occupation rent is an equitable remedy arising from principles of unjust enrichment. Antonio was in a conflict of interest: he received the benefit of occupying the house while also under a duty as co-estate trustee to sell the house to the benefit of all beneficiaries. Accordingly, Antonio was ordered to pay 2/3 of fair market rent from the 1st of the month following the court order until he leaves the property.