Reports are circling that the Playboy Mansion is about to go up for sale. According to celebrity gossip site TMZ, Playboy Enterprises, who owns the mansion - will attach an asking price of nearly $200 million to the historic house. Real estate pros in the area say the famous home is not nearly worth that much. The home is apparently not in great shape, and would require either a tear down or an expensive remodel to bring it up to par with similar homes in the area. Realtor.com described the 29 bedroom home as "crumbling." The land alone, however, is estimated to be worth about $60 million dollars - just for it's location and size.
There's also one huge caveat to the sale - Hugh Hefner wants a life estate in the home. A life estate would grant him the legal right to live in the house for the duration of his life. At 84, he's already passed the life expectancy of the average male, but it would certainly be a gamble for the future owner. Realty experts in the Los Angeles area say the life estate condition would likely drag down the price of the home, as the new owners wouldn't be able to make any changes for several - or many - years to come. The future owners would also need a team of competent attorneys to ensure that should the infamous party house be further damaged they would be compensated.
I have dealt with quite a few life estates in my career as an East Bay Trust and Estate attorney, but I have never seen one quite like this. A life estate is a fairly straightforward legal agreement, which is often outlined in the deed of a home, but can be part of an Estate Plan as well. A life estate simply grants one party the right to occupy a resident until a specified time, typically the end of their life. Life estates are most often used when a parent has remarried and wishes to bequeath his/her home to children from an earlier marriage while allowing the current spouse to live in the home until their death. It's seldom a home is sold to an unknown third party while still asking the tenant be able to remain indefinitely. Perhaps with home values being as high as they are in LA and the SF Bay Area, more investors would be willing to take a gamble such as this one.
For questions about setting up a Life Estate or amending your Estate Plan to allow for a current partner to remain in your home for the duration of their lifetime, call my Walnut Creek Trust and Estate firm at 925-322-1763.