It can often be the case in circumstances where a couple wish to transfer their family farm through the generations that the issue of rights of residence arise. This article considers some of the issues.
What is a right of residence?
A right of residence , as the nature of the right indicates, consists of a right to reside in a property. A right of residence normally extends to the entirety of a dwellinghouse, although, historically in older transfers or wills, provisions were made for a right to reside in a room or portion of a dwellinghouse.
A right of residence can be exclusive or non-exclusive and whether it is one or the other will depend on the wording use. Normally for an exclusive right of residence to be created the words exclusive or similar words should be used.
Rights of residence can arise in a myriad of cases. It often arises where, for tax reasons, a farming couple decide to transfer all of the lands to include their dwelilnghouse to a child. The lands normally will qualify for agricultural relief. So that the dwellinghouse may also qualify, it must be transferred with the family farmlands at the same time of transfer. In these cases, to secure their position in the family home a couple will reserve to themselves and perhaps other non-married children the right to reside in the dwellinghouse for their natural lives.
An exclusive right of residence, gives the beneficiary of the right, the right to live in the property to the exclusion of all others. It is normally registered as a burden on a folio. It is has been held that it is akin to a life interest, although there is a doubt as to whether a person holding an exclusive right of residence has the ability to sell the property in the same manner as a life tenant. For an exclusive right of residence to be created, the right must extend to all of the lands owned by the transferor. A right of residence will not be considered exclusive, if it relates only to a portion of lands transferred.
The Revenue Commissioners will permit a 10% discount on valuations of property subject to a non-exclusive right of residence and 20% discount for properties subject to an exclusive right of residence. The Revenue also provide a 20% discount rule of thumb in cases of rights of residence, support and maintenance.
For more information on this topic, contact Emmet McCann Solicitor or Colm Kelly solicitor