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Definition
An interest in real estate is ownership of any combination of the bundle of rights to real property, including the rights to:
possess
use
transfer
encumber
exclude |
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| An undivided interest is an owner’s interest in a property in which two or more parties share ownership. The terms “undivided” and “indivisible” signify that the owner’s interest is in a fractional part of the entire estate, not in a physical portion of the real property itself. If two co-owners have an undivided equal interest, one owner may not lay claim to the northern half of the property for their exclusive use. |
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| Interests are principally distinguished by whether they include possession. If the interest holder enjoys the right of possession, the party is considered to have an estate in land, or familiarly, an estate |
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| If a private interest holder does not have the right to possess, the interest is an |
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| If the interest holder is not private, such as a government entity, and does not have the right to possess, the interest is some form of public interest. |
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| right of the local or county government to zone |
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is the right of the government to take private property for a necessary public use, with just compensation paid to the owner
When the owner and the government cannot negotiate a satisfactory voluntary acquisition of the property, the government can institute the process of condemnation to take a property by eminent domain. When this happens, the process is called a “taking.” |
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| Escheat provides another example of the state’s interest in real property. Since property cannot be without an owner, if an owner dies without a will and without heirs, the property reverts to the state |
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| the duration of the owner’s rights cannot be determined: The rights may endure for a lifetime, for less than a lifetime, or for generations beyond the owner’s lifetime. |
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| is distinguished by its specific duration, as represented by the lease term |
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| true or false: Both leasehold and freehold estates are referred to as tenancies. The owner of the freehold estate is the freehold tenant, and the renter, or lessee, is the leasehold tenant. |
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| Discuss how the right of possession determines what kind of estate or interest a party has in real estate. |
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| If the interest-holder enjoys the right of possession, the estate is an estate in land. If the interest holder does not have the right of possession, the interest is an encumbrance in the case of a private interest holder, or some form of public interest in the case of a non-private (i.e., governmental) interest holder. |
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| A freehold estate of potentially unlimited duration is a |
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| An estate limited to the life of the owner is a |
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| The fee simple freehold estate is the highest form of ownership interest one can acquire in real estate. It includes the complete bundle of rights, and the tenancy is unlimited, with certain exceptions indicated below. The fee simple interest is also called the “fee interest,” or simply, the “fee.” The owner of the fee simple interest is called the fee tenant. |
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Term
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Definition
The fee simple absolute estate is a perpetual estate that is not conditioned by stipulated or restricted uses. It may also be freely passed on to heirs. For these reasons, the fee simple absolute estate is the most desirable estate that can be obtained in residential real estate. It is also the most common. The bundle of rights attached to the fee simple absolute estate includes:
Right of quiet enjoyment.
Right to give away.
Right to sell by deed.
Right to will.
Right to exclude.
Right to control within what is allowed by law. |
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| Some deeds create what starts out as a fee simple, but attach some sort of condition or limitation. These are called fee simple defeasible (or conditional) estates. In defeasible estates, ownership can continue indefinitely, provided the use of the property conforms to certain stated conditions. |
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| determinable fee simple defeasible |
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Definition
| The deed to the determinable estate states usage limitations. If the restrictions are violated, the estate automatically reverts to the grantor or heirs. |
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| fee simple defeasible condition subsequent |
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Definition
| If any condition is violated, the previous owner may repossess the property. However, reversion of the estate is not automatic; the grantor must retake physical possession within a certain time frame. |
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| true or false: Fee simple on condition subsequent differs from fee simple determinable in that the reversion of the estate to the original grantor is not automatic. |
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Definition
| A life estate is a freehold estate that is limited in duration to the life of the owner or other named person. Upon the death of the owner or other named individual, the estate passes to the original owner or another named party. The holder of a life estate is called the life tenant. The life tenant does not have the right to pass ownership to their heirs. |
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Definition
If a life estate names a third party to receive title to the property upon termination of the life estate, the party enjoys a future interest, called a remainder interest or a remainder estate.
For example, Mr. Jones leaves his home to his second wife with the provision that, after her death, it will pass to his daughter Sara from his first marriage. During Mrs. Jones’s lifetime, Sara holds a remainder interest and is called a remainderman. |
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If no remainder estate is established, the estate reverts to the original owner, or the owner’s heirs. In this situation, the original owner retains a reversionary interest or estate.
If no remainder estate is established, the estate reverts to the original owner or the owner’s heirs. For example, Mr. Smith gives his home to his ill cousin Jim with the stipulation that when Jim dies, the home will revert to Mr. Smith or his heirs. In this situation, Mr. Smith owns a reversionary interest. |
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| A conventional life estate is created by grant from a fee simple property owner to the grantee, the life tenant. Following the termination of the estate, rights pass to a remainderman, or revert to the previous owner. |
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| ordinary conventional life estate |
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Definition
An ordinary life estate ends with the death of the life estate owner and may pass back to the original owners or their heirs (reversion) or to a named third party (remainder).
For example, John King grants a life estate in a property to Mary Brown, to endure over Mary’s lifetime. John establishes that when Mary dies, the property will revert to him. |
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| pur autre vie conventional life estate |
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Definition
A pur autre vie life estate endures over the lifetime of a third person, after which the property passes from the tenant holder to the original grantor (reversion) or a third party (remainderman).
For example, Yvonne grants a life estate to Ryan, to endure over the lifetime of Yvonne’s husband Steve. Upon Steve’s death, Yvonne establishes that her mother, Rose, will receive the property. |
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| legal life estate (marital rights) |
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Definition
| a legal life estate makes it impossible for one partner to sell the property without the consent of the other partner, or to own property in one name only. |
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Term
true or false: A homestead is one’s principal residence. Homestead laws generally provide that:
All or portions of one’s homestead are exempt from a forced sale executed for the collection of general debts (judgment liens). The various states place different limits on this exemption.
Tax debts, seller financing debt, debts for home improvement, and mortgage debt are not exempt. |
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| Dower and Curtesy (legal life estate) |
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Definition
| Dower is a wife’s life estate interest in the husband’s property. When the husband dies, the wife can make a claim to portions of the decedent’s property. Curtesy is the identical right enjoyed by the husband in a deceased wife’s property. Property acquired under dower laws is owned by the surviving spouse for the duration of their lifetime. |
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| Elective Share (legal life estate) |
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Definition
Elective share is a state-level statute enabling a surviving spouse to make a minimum claim to the deceased spouse’s real and personal property in place of the provisions for such property in the decedent’s will.
For example, if a husband’s will excludes the wife from any property inheritance, the wife may, upon the husband’s death, make the elective share claim. |
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| Community property is a form of ownership that distinguishes property into categories of separate (owned by one party) and community (owned equally by both parties). Community property requires the consent of both parties to transfer or encumber. On |
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| true or false: In theory, a life tenant could sell the property, mortgage it (if they could find a lender who would agree to it) or even give it away, but title would always end at the time of the life tenant’s death—no matter who was in possession of the property at that time. |
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| But a life tenant has the responsibility to protect the property for the remainderman or the revisionary interest. They may not do injury to the property in any way. If the life tenant damages or misuses the property, it is known as an act of waste. |
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| Summary of Freehold Estates |
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Definition
Fee Simple
-Absolute
-Defeasible
--Determinable
--Condition Subsequent
Life (reversionary or remainder)
Conventional
-Ordinary
-Pur autre vie
Legal
-Homestead
-Dower and curtesy
-Elective share/community property |
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Term
| What is the highest form of ownership interest you can acquire in real estate and why? |
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Definition
| Fee simple estate. It includes the complete bundle of rights and the tenancy is unlimited. |
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| What are the essential characteristics of fee simple defeasible estates? |
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Definition
The property must be used for a certain purpose or under certain conditions.
If the use changes or if prohibited conditions are present, the estate reverts to the previous grantor of the estate. |
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| How is a life estate different from a fee simple estate? |
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Definition
| A life estate is limited in duration to the life of the owner or other named person. When the life tenant dies, the estate passes to the original owner or another named party. The life tenant does not have the right to pass ownership to their heirs. |
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Term
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Definition
| A leasehold estate, or leasehold, arises from the execution of a lease by a fee owner—the lessor, or landlord—to a lessee, or tenant. Since tenants do not own the fee interest, a leasehold estate is technically an item of personal property for the tenant |
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Term
| leasehold estate for years |
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Definition
The estate for years is a leasehold estate for a definite period of time, with a beginning date and an ending date. The estate for years may endure for any length of term. At the end of the term, the estate automatically terminates, without any requirement of notice.
For example, a landlord grants a tenant a three-year lease. After the three years, the leasehold terminates and the landlord may repossess the premises, renew the lease, or lease to someone else. |
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Term
| leasehold estate from period to period |
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Definition
In an estate from period to period, also called a periodic tenancy, the tenancy period automatically renews for an indefinite period of time, subject to timely payment of rent. At the end of a tenancy period, if the landlord accepts another regular payment of rent, the leasehold is considered to be renewed for another period.
For example, a two-year lease expires and the landlord grants a six-month lease that is automatically renewable, provided the monthly rent is received on time. At the end of the six months, the tenant pays, and the landlord accepts another monthly rent payment. The acceptance of the rent automatically extends the leasehold for another six months.
The most common form of periodic tenancy is the month-to-month lease, which may exist without any written agreement. |
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Definition
The estate at will, also called a tenancy at will, has no definite expiration date and hence no “renewal” cycle. The landlord and tenant agree that the tenancy will have no specified termination date, provided rent is paid on time and other lease conditions are met.
For example, a son leases a house to his father and mother “forever” or until they want to move.
The estate at will is terminated by proper notice, or by the death of either party. |
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| leasehold estate at sufferance |
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Definition
In an estate at sufferance, a tenant occupies the premises without consent of the landlord or other legal agreement with the landlord. Usually such an estate involves a tenant who fails to vacate at the expiration of the lease, continuing occupancy without any right to do so.
For example, a tenant violates the provisions of a lease and is evicted. The tenant protests and refuses to leave despite the eviction order.
Summary of features:
Holdover tenant is in unlawful possession of the property.
The landlord must evict tenant through the courts; they cannot lock the tenant out, turn off utilities, or forcibly remove the tenant. |
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Term
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Definition
A lease conveys a leasehold interest or estate that grants the tenant the following rights during the lease term:
Exclusive possession and occupancy
Exclusive use
Quiet enjoyment
Profits from use |
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Definition
In conveying the leasehold estate, the landlord acquires a leased fee estate, which entails the rights to:
Receive rent.
Repossess the property following the lease term.
Monitor the tenant’s obligations to maintain the premises. |
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Term
| Conveyance of Leased Property |
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Definition
| The landlord may sell, assign, or mortgage the leased fee interest. However, transferring and encumbering the leased property do not extinguish the obligations and covenants of a lease. |
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| What is the primary distinction between a freehold estate and a leasehold estate? |
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Definition
| Duration of the owner’s rights. A leasehold is temporary, even if there is no specific term, while a freehold has an indeterminate duration. |
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| The fee simple freehold estate is called the highest form of ownership interest, even though a fee simple defeasible carries some restriction on usage. Why are other estates less desirable? |
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Definition
| With all other estates in land—life, leasehold—the holder of the estate cannot control what happens to the estate in the future. The life estate reverts or is remaindered; the leasehold terminates when the lease expires. |
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| A life estate is classified as which of the following? |
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| States that do not have dower and curtesy usually have either community property laws or |
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