2.1 Estates, Ownership Forms, Rights, and Interests
Key Takeaways
- A freehold estate (fee simple, defeasible fee, life estate) carries ownership; a leasehold estate carries possession for a term only.
- Fee simple absolute is the most complete ownership; defeasible fees can be lost if a condition is broken or a stated use ends.
- Concurrent ownership forms differ on the four unities, survivorship, and creditor exposure: tenancy in common has no survivorship; joint tenancy and tenancy by the entirety do.
- A life estate measured by another person's life is a life estate pur autre vie; the remainderman or reversion holds the future interest.
- Condominiums convey a deeded unit plus undivided common elements; cooperatives convey stock plus a proprietary lease.
The bundle of rights
Real property ownership is taught as a bundle of rights: possession, control, enjoyment, exclusion, and disposition. An owner can give away one stick (lease the right of possession, grant an easement of use) while keeping the rest. The exam loves this model because almost every ownership question is really asking which sticks does this person hold?
A quick memory hook is PCEED: Possession, Control, Enjoyment, Exclusion, Disposition. A tenant under a lease holds possession and limited enjoyment but not disposition of the fee; an easement holder holds a narrow control/use right but no possession.
Freehold vs. leasehold estates
An estate is the degree, quantity, and duration of a person's interest in land. The first split is freehold vs. leasehold.
- Freehold estates last an indefinite (uncertain) duration and carry ownership: fee simple, defeasible fee, and life estate.
- Leasehold (less-than-freehold) estates carry possession for a determinable term: estate for years, periodic, at will, at sufferance.
Fee simple and defeasible fees
Fee simple absolute is the highest, most complete ownership — inheritable, no conditions. Defeasible fees are ownership with a string attached:
| Estate | Trigger | What happens |
|---|---|---|
| Fee simple determinable | "so long as," "while," "during" | Title ends automatically; grantor holds a possibility of reverter |
| Fee simple subject to condition subsequent | "but if," "on condition that" | Grantor may re-enter and terminate (right of re-entry); not automatic |
Trap: determinable language ends the estate automatically; condition-subsequent language requires the grantor to act to reclaim. Examiners test the difference by the verbs in the deed.
Life estates and future interests
A life estate lasts for the life of a named person. "To Anna for life" gives Anna a life estate measured by her own life. "To Anna for the life of Ben" is a life estate pur autre vie — measured by Ben's life. When the measuring life ends, title passes to:
- a remainderman (a named third party), or
- back to the grantor as a reversion (when no remainderman is named).
A life tenant may use and profit from the property but commits waste if she damages the future interest (e.g., demolishing the house or stripping timber).
Exam math hook: a life estate has no fixed end date, so it cannot be assigned a number of years and cannot be willed by the life tenant — at death the interest simply ends and the remainder/reversion takes over. A common distractor calls a life estate a "leasehold for life"; it is a freehold because its duration is uncertain.
Leasehold estates at a glance
Leaseholds give possession without ownership. The four types differ by how they begin and end:
| Leasehold | Duration | Termination |
|---|---|---|
| Estate for years | Fixed start and end date | Ends automatically; no notice |
| Periodic (e.g., month-to-month) | Renews each period | Notice required to end |
| Estate at will | Indefinite, with consent | Either party, with notice |
| Estate at sufferance | Tenant holds over wrongfully | Landlord may evict |
Trap: an estate for years does not have to last years — a 30-day lease with a fixed end date is still an estate for years because the term is definite.
A deed reads: "To the City, so long as the land is used as a public park." The City later builds a parking garage. What is the grantor's interest, and what happens to title?
Concurrent (co-) ownership
When two or more people own the same property at once, the form determines survivorship rights, transferability, and creditor exposure. The classic test is the four unities — PITT: Possession, Interest, Time, Title.
| Form | Unities required | Survivorship? | Shares | Notes |
|---|---|---|---|---|
| Tenancy in common (TIC) | Possession only | No | May be unequal | Default for unrelated co-owners; each share is devisable/inheritable |
| Joint tenancy | All four (PITT) | Yes | Equal | Survivor takes the deceased's share; severed by a sale of one share |
| Tenancy by the entirety | All four + marriage | Yes | Equal | Spouses only; neither can convey alone; strong creditor protection |
| Community property | State-specific | Varies | Equal halves | Marital property in community-property states |
Worked numerics: fractional shares
Three investors hold a building as tenants in common: Maria owns 50%, Lee owns 30%, Pat owns 20%. There is no survivorship. When Pat dies, Pat's 20% passes by will or intestacy to Pat's heirs — not to Maria and Lee. Ownership becomes Maria 50%, Lee 30%, Pat's estate 20%.
Contrast a joint tenancy of three equal owners (each 1/3). If one dies, the survivors split the deceased's share equally: each surviving owner now holds 1/2. The decedent's heirs receive nothing — survivorship beats the will.
Severance trap: if a joint tenant sells her interest, that buyer takes as a tenant in common with the remaining joint tenants. With three original joint tenants, after one sells, the buyer is a TIC for 1/3 while the other two remain joint tenants for the other 2/3 between them.
Common-interest ownership
- Condominium: owner receives a deeded fee interest in the individual unit plus an undivided interest in common elements; taxed separately; governed by the association and CC&Rs.
- Cooperative: owner receives shares of stock in the corporation plus a proprietary lease to occupy a unit — personal property, not a deeded fee; the corporation holds title and one blanket mortgage.
- Timeshare: a time-limited right to use, which may be a deeded interval (fee) or a right-to-use contract.
Trap: a co-op resident owns stock and a lease, not real property title; this affects financing, taxation, and how the interest is conveyed. Examiners contrast the deeded condo unit against the share-and-lease co-op repeatedly.
Three siblings own a lake house as joint tenants with right of survivorship, each holding an equal share. One sibling sells her interest to an outside buyer. Immediately after the sale, how is title held?