TYPES OF ESTATES IN REAL PROPERTY

By definition, an estate in real property is an interest in the property sufficient to give the owner of the estate the right to possession of the property. It is imperative to understand the difference between the right of possession and the right of use. The owner of an estate in land, firstly, has the right of possession of the land in addition to the right to use it. Secondly, an easement owner on the other side has the use of the land but not the right to possess it and therefore, the easement is a non-possessory interest in land.

Basically, the Latin translation for the word estate is defined as "status" which indicates the relationship of the estate owner with reference to rights in the property. This establishes the degree, quantity, nature, and extent of interest a person has in real property. Estates in land, in addition to this, are divided into two groups: estates of freehold and estates of less than freehold (also called leasehold estates and non-freehold estates). The two estates can exist simultaneously in land where the owner (lessor) of a property has a freehold estate. Hence, if let say the owner leases the property, the tenant (lessee) has a leasehold estate.

A. ESTATES OF INHERITANCE

Freehold is defined as an interest in land of at least a lifetime and therefore generally is identified with the concept of title or ownership. Freehold estates may be fee simple estates or life estates. Although fee simple estates are practically inheritable, however, most of the life estates are not.

I. Fee Simple Estates

The fee simple estates provide the greatest form of ownership available in real property. The typical ownership in fee simple absolute gives certain legal rights which are usually described as a bundle of rights. The owner in fee simple absolute, in this case, may convey a life estate to another; may pledge the property as security for a mortgage debt; may convey a leasehold estate to another; may grant an easement in the land to another; and may give a license to conduct some activity on the property to another.

For example, if the owner conveyed a lease or an easement to another, the owner’s remaining rights would be a fee simple subject to the lease or easement. The fee simple ownership should not be confused with the quality of title. Ownership in fee means that the grantee owns it forever, not that it is free of title defects. And of course, an owner cannot expect to live forever and therefore the ownership consists of two periods of time, which are from the receipt of title until the owner dies and the period of time after the owner dies. In any case, the owner has the rights of ownership and use during his lifetime and then the ownership shall convey to his heirs (either by will or by the law).

II. Fee Simple Subject To a Condition Subsequent

The fee simple subject to a condition subsequent can continue for an infinite period, as in the case with the fee simple absolute. The fee simple subject to a condition subsequent also can be defeated and therefore is a defeasible (revocable) title. The fee simple subject to a condition subsequent is created by the grantor (the one conveying title) who restricts the future use of the property in some way.

For example, a grantor may convey property with the condition that it can never be used as a landfill. As long as the property is never used for this purpose, the title will continue indefinitely in the name of the initial grantee or any subsequent grantee. Any use of the property for a landfill will violate the covenant (the agreement) in the deed and the original grantor or her heirs may reenter the property and take possession or go to court and sue to regain possession. By doing so, the titleholder’s estate is terminated.

Another example of fee simple subject to a condition subsequent is that a grantor may want to convey a title in the case of the landfill where the owner may be protecting the property he owns that is close to the landfill. This is similar to the case of the college where the grantor may be highly committed to education, but may not want to give up ownership of the property for any other reasons. Perhaps, you may notice that in the case of a fee simple determinable, the estate in the grantee automatically terminates in the event where the designated use of the property is not continued or a prohibited use is undertaken. This is contrasted with the fee simple subject to a condition subsequent, in which the termination is not automatic.

B. ESTATES NOT OF INHERITANCE

Estates not of inheritance are good only for the life of the tenant (freehold) and do not pass on to his heirs, but rather are disposed of by some other method. In addition to being created by an intentional conveyance, life estates also can be created by operation of law. When life estates are created by act of the parties, they are called conventional life estates whereas when they are created by operation of law, they are referred to as marital life estates.

I. Conventional Life Estates (Estate for Tenant’s Own Life)

A life estate is a non-inheritable freehold estate which is created only for the life of the named life tenant (one who holds a life estate). And, questioning what will happen to the estate at the death of the life tenant, well, if nothing else is specified in the conveyance of the life estate, it will revert to the grantor or to his heirs at the death of the life tenant. In this case, the grantor or his heirs would have a reversionary interest and alternatively, the conveyance of the life estate could specify that the estate pass on to someone other than the grantor or his heirs.

II. Marital Life Estates

A marital life estate is created in North Carolina (United States) by the intestate succession statutes governing the distribution of property of one who dies intestate that is the one who dies without leaving a valid will. This statute allows the surviving spouse to choose a life estate in one-third of the real property owned in severalty (sole ownership) by the deceased spouse at any time during the marriage under certain conditions. If let say that the surviving spouse is entitled to any property of the deceased spouse through a will or intestate succession statutes and the surviving spouse has not joined in the transfer of such property by signing the deed, the surviving spouse must forfeit any interest in the deceased spouse’s property resulting from a will or an inheritance to claim her marital estate. Because of this, only few surviving spouses elect the marital life estate option since it is seldom advantageous for them to do so.