2.1 Estates, Ownership Forms, Rights, and Interests

What Ownership Actually Means

Real property ownership is best understood as a bundle of rights - the separate legal rights an owner holds, usually summarized as possession, control, enjoyment, exclusion, and disposition.

Each right can be reduced without ending ownership. A lease transfers possession, an easement removes part of the right of exclusion, and a lien limits free disposition. Exam questions reward you for spotting which stick in the bundle a fact pattern removes.

Freehold Estates

A freehold estate is an ownership interest of uncertain duration. The major types:

• Fee simple absolute - the largest possible estate; inheritable, lasts forever, no conditions.
• Fee simple defeasible - ownership that can be lost if a stated condition is broken.
  • A determinable estate ends automatically ("so long as used as a library").
  • A condition subsequent estate ends only if the grantor acts to retake it ("but if alcohol is sold").
• Life estate - ownership measured by someone's lifetime.

Life Estate Worked Example

A grantor deeds land "to Maria for life, then to Devon." Maria is the life tenant; Devon holds a remainder. Maria may live there and collect rent but cannot will the property, and she must avoid waste (damage or neglect). If the deed named no remainderman, the land would revert to the grantor at Maria's death.

Concurrent (Co-) Ownership

When two or more parties own one property, the form controls what happens at death and on sale.

The four unities of joint tenancy are time, title, interest, and possession - owners must take title at the same time, on the same document, in equal shares, with equal right to possess the whole. Break any unity and the estate becomes a tenancy in common.

Exam trap: "Right of survivorship" points to joint tenancy or tenancy by the entirety. "Undivided interest passing to heirs" points to tenancy in common.

Severance Example

Three siblings own as joint tenants, each a one-third interest. One sells her share to an outsider. The buyer holds a one-third interest as a tenant in common, while the remaining two siblings keep their joint tenancy (with survivorship) over their combined two-thirds. Selling severed only the seller's unity.

Partition

When co-owners cannot agree, any one may file a partition action. Courts prefer partition by sale because most parcels cannot be split physically into fair shares, then divide the proceeds by ownership percentage.

Leasehold Estates

A leasehold estate gives a tenant the right of possession, not ownership. Memorize the four types by how they end:

• Estate for years - a fixed term with a definite start and end (a 12-month lease); it ends automatically with no notice.
• Periodic estate - renews automatically period to period (month-to-month) until proper notice is given.
• Estate at will - continues indefinitely and either party may end it at any time.
• Estate at sufferance - a holdover tenant who stays after the lease ends without permission; the lowest leasehold interest.

Liens and Lien Priority

A lien is a monetary claim against property securing a debt. Voluntary liens are created by agreement (mortgage, deed of trust). Involuntary liens arise by law (tax lien, judgment lien, mechanic's lien).

General priority is first in time, first in right - the earlier-recorded lien is paid first at a forced sale. Two big exceptions: real estate tax and special assessment liens take priority over everything regardless of date, and mechanic's liens may relate back to the date work began.

Priority Worked Example

A property sells at foreclosure for $300,000. Recorded claims: property taxes $8,000; first mortgage $250,000 (recorded 2019); judgment lien $60,000 (recorded 2023). Taxes are paid first ($8,000), then the first mortgage ($250,000), leaving $42,000 toward the $60,000 judgment - which is paid only in part. Subordination can reorder this voluntarily when a lienholder agrees to a lower position.

Air, Surface, and Subsurface Rights

Ownership splits vertically. Subsurface (mineral) rights can be sold separately from the surface, and air rights above a parcel can be conveyed - the legal basis for building over rail yards. Selling minerals does not by itself transfer the surface.

Exam trap: A grantor who conveys the surface but reserves the mineral rights still controls drilling access. The surface owner cannot block reasonable extraction unless the deed says otherwise, so always read the fact pattern for which estate was retained.