CHILDREN SUING THEIR OWN MOTHER OVER A BEACH HOUSE SHE GAVE THEM? YOU CAN'T MAKE THIS STUFF UP!

The facts of this case are fascinating and can be found in Davis v. Davis, 2015 NCBC 95.

This case caught my eye because I was trying to figure out how the language of a life estate was an issue that was heard in the NC Business Court, but once I started reading, I got much more than what I bargained for.  This case was in front of the NC Business Court because it involved issues dealing with the functions and operations of an LLC.

But, who cares about that?  That's definitely not the interesting part. 

In 2013, Plaintiffs Melvin L. Davis, Jr. and J. Rex Davis filed suit against their mother, Dorothy Davis, over a beach house at the Outer Banks.  Dorothy Davis and her husband, now deceased, purchased the beach house years ago.  From time to time, they would rent the home when they needed extra cash.  Mr. and Mrs. Davis decided they wanted to gift the home to their four children, but in order to satisfy certain other financial obligations, they gifted the home to MKR, LLC.    Plaintiffs, along with their sister Kaye, are the sole members and managers of MKR.  Davis v. Davis., 2015 NCBC 95, paragraph 11.  Plaintiffs hired an attorney to prepare the documents related to the deed from Mr. and Mrs. Davis to MKR.  The deed includes the following language:

    "The Grantors hereby reserve unto themselves, a life estate in the Property, said life estate to be         personal to the use of the Grantors, thereof, and may not be utilized by any other person, nor             may it be reduced to a cash value for the benefit for the Grantors, or the survivor thereof, but             must remain always during the lifetime of said Grantors, or the survivor thereof, available for             their individual and personal use without interference from either the remainder men or any             other person." Davis, paragraph 13. 

The attorney who drafted the deed testified that he drafted this language with the intention that it would prohibit Mr. and Mrs. Davis from renting out the Property during their lifetime.  He testified that he went over the documents with Mr. and Mrs. Davis and that they understood.  When Mr. Davis died, Mrs. Davis entered into a rental agreement with Outer Banks Blue, LLC, giving Outer Banks Blue, LLC authority to rent the property.  Once Mrs. Davis entered into this contract, the Plaintiffs filed suit and alleged that Mrs. Davis is precluded from renting the property based on the language of the deed.  Davis, paragraphs 15, 22, 23.

I mean, who wants renters ruining everything??

The Court cited several cases that reminded the parties of the purpose of creating life estates and the general policies that follow.  "An unlimited restraint on alienation of a life estate is against public policy, and therefore, void."  Davis, paragraph 27, citing Brinkley v. Day, 88 N.C. App. 101 (1987).  The Court agreed that there are certain limited restraints on alienation of life estates, such as indirect restraints on conveyance of a fee subject to a possibility of reverter or a condition subsequent.  Davis, paragraph 29, but in this case, there is nothing limited about the restraint on Mrs. Davis' life estate.  The Court ruled in Mrs. Davis' favor and found that the provisions in the deed are void.  Davis, paragraph 34. 

I think the Court definitely got it right this time.  If Mom gifts her children a beach house, it would seem contrary to public policy and fairness in general to allow the children to stop Mom from renting her property during her lifetime.