2.1 Estates, Ownership Forms, Rights, and Interests

Ownership questions reward students who can sort estates by duration and co-ownership forms by survivorship. Roughly one in eight national questions touches these definitions, so precision pays.

The Bundle of Rights

Full ownership is a bundle of rights — five legal "sticks" the law lets an owner exercise:

• Possession — the right to occupy.
• Control — the right to use the property within the law.
• Enjoyment — the right to use it free of nuisance.
• Exclusion — the right to keep others out.
• Disposition — the right to sell, gift, lease, or will it.

An easement removes the stick of exclusion; a lease hands the possession stick to a tenant; a mortgage pledges the disposition stick as security. None of these destroys the bundle; they only redistribute sticks.

Estates in Land

An estate describes the degree, quantity, and duration of an ownership interest. Estates divide into freehold (ownership of uncertain duration) and leasehold (possession for a set period).

Freehold Estates

• Fee simple absolute — the maximum estate, inheritable and of indefinite duration. Treat this as the default unless a question says otherwise.
• Fee simple defeasible — ownership that can be lost if a stated condition is broken.
  • Determinable ends automatically the instant the condition fails (watch for words like "so long as" or "while").
  • Condition subsequent lets the grantor re-enter and reclaim, but the estate continues until that action (watch for "but if" or "provided that").
• Life estate — measured by someone's lifetime. On the measuring life's death, title passes to a remainderman (a named third party) or, if none was named, reverts to the grantor or the grantor's heirs.

Worked example: Maria deeds her cabin "to my brother Luis for life, then to Maria's daughter." Luis holds a life estate; the daughter holds a remainder. Luis may live there and rent it out, but he cannot will it — at his death the daughter owns it in fee simple automatically. A life tenant must avoid waste (damage or neglect) and ordinarily pays taxes, insurance, and routine upkeep.

Forms of Ownership

Severalty is sole ownership by one person or entity. When two or more people share title, the law uses concurrent (co-ownership) forms.

Joint tenancy needs the four unities — owners take time (same instant), title (same document), interest (equal shares), and possession (equal right to the whole). Break any unity and the share converts to a tenancy in common. The classic break: one joint tenant sells. If three joint tenants each own a third and one sells, the buyer is a tenant in common holding one-third while the other two remain joint tenants (with survivorship) of their combined two-thirds.

Exam trap: "Right of survivorship" points to joint tenancy or tenancy by the entirety. "Undivided interest, can be unequal" points to tenancy in common.

Co-Owner Disputes and Partition

When co-owners deadlock, any one of them may file a partition action. Partition in kind physically divides the land; partition by sale (more common, because most parcels cannot be split evenly) forces a sale and splits the proceeds by ownership share.

Leasehold Estates

A leasehold gives the tenant possession, not ownership. Rank the four by certainty of term:

• Estate for years — fixed start and end date; ends automatically with no notice (a one-year lease).
• Periodic estate — renews period to period (month-to-month) until proper notice is given.
• Estate at will — no fixed term; either party may end it, often with statutory notice.
• Estate at sufferance — a holdover tenant who stays after the lease ends without permission; the weakest possessory interest.

Lease Cost Structures

Percentage-lease math: Base rent is $3,000/month and the lease adds 6% of gross sales over a $40,000 monthly breakpoint. In a month with $90,000 sales, the overage is $90,000 − $40,000 = $50,000; the percentage rent is $50,000 × 0.06 = $3,000, so total rent is $6,000.

Liens and Lien Priority

A lien is a money claim against property that secures a debt. Liens are voluntary (the owner agrees — a mortgage or deed of trust) or involuntary (imposed by law — tax liens, judgment liens, mechanic's liens).

The baseline rule is first in time, first in right: liens are paid in the order they were recorded. Two big wrinkles override that order:

• Property (ad valorem) tax and special-assessment liens take first priority no matter when they were recorded. A government's tax claim always sits ahead of private lenders.
• Mechanic's liens may "relate back" to the date work or materials began, letting a later-recorded lien outrank a mortgage recorded after the project started.

Subordination is a voluntary agreement in which a senior lienholder agrees to step behind a junior one — common when a developer asks a land seller to subordinate so a construction lender can take first position.

Priority example: A first mortgage records Jan 10, a second mortgage Mar 3, a judgment lien Jun 1, and the current-year property tax lien attaches. At foreclosure the order of payment is: property tax → first mortgage → second mortgage → judgment lien.

Air, Surface, and Subsurface Rights

The bundle can be sliced vertically. An owner may sell mineral (subsurface) rights while keeping the surface, or transfer air rights to a developer building above a rail yard or highway. Each layer can be owned and conveyed separately.

Exam trap: Selling mineral rights does not transfer the surface, and selling air rights does not give the buyer the ground. Read which layer the question describes.