2.1 Estates, Ownership Forms, Rights, and Interests

What an estate measures

An estate describes the degree, quantity, nature, and extent of a person's interest in real property. The first exam question is always duration: does the holder own the land for an indefinite time (a freehold estate) or only possess it for a fixed period (a leasehold estate)? Freehold holders have title; leasehold holders have possession under a lease.

Think of ownership as a bundle of rights: possession, control, enjoyment, exclusion, and disposition. Different estates and encumbrances pull individual sticks out of that bundle.

Freehold estates

The largest estate is fee simple absolute — complete ownership, inheritable, of indefinite duration, with no conditions attached. A defeasible fee is full ownership that can be lost if a stated condition occurs (for example, "so long as the land is used as a library"). When the condition fails, title either reverts automatically or the grantor may re-enter.

A life estate lasts only for the life of a named person (the measuring life). When that person dies, the estate ends. If a third party receives the property afterward, that party is the remainderman. If the property returns to the grantor, the grantor holds a reversion.

Worked numeric: life estate value trap

A grantor deeds property worth $300,000 "to Maria for life, then to her son Luis." Maria does not own a $300,000 fee simple; she owns a life estate, and Luis owns a vested remainder. Maria may possess, use, and even rent the property, but she cannot waste it (no destroying value) and cannot will it to anyone — at her death the full fee passes to Luis automatically, outside probate of her estate. A common exam trap asks who inherits if Maria writes a will leaving "all my real estate" to a charity: the answer is Luis, because a life estate cannot be devised.

Concurrent ownership

When two or more people own the same property at the same time, they hold a concurrent (co-) ownership estate. The form controls survivorship.

• Tenancy in common (TIC): Owners hold undivided fractional shares that need not be equal. Each share is inheritable — at death it passes by will or to heirs. No right of survivorship. This is the default when a deed does not specify.
• Joint tenancy: Equal undivided shares with the right of survivorship — when one joint tenant dies, the share passes automatically to the survivors, not to heirs. Requires the four unities, remembered as PITT: Possession, Interest, Time, Title.
• Tenancy by the entirety: Joint tenancy reserved for married couples in states that recognize it; adds protection from one spouse's individual creditors.
• Community property: In community-property states, most property acquired during marriage is owned equally by both spouses.

The survivorship trap

Three siblings own a beach house as tenants in common, 50% / 25% / 25%. The 50% owner dies leaving a will to a friend. Who gets the 50%? The friend, because TIC shares are inheritable and there is no survivorship. If the same three held as joint tenants, the 50% owner's interest would split to the two survivors (reaching 50% each), and the will would be ineffective as to that property.

Breaking any unity converts a joint tenant's share to a tenancy in common. If one joint tenant sells, the buyer becomes a tenant in common with the remaining joint tenants — who keep survivorship between themselves.

Common-interest and other ownership forms

Do not assume all multi-owner properties are the same interest:

• Condominium: Owner holds fee-simple title to the individual unit plus an undivided interest in the common elements; pays assessments to an association.
• Cooperative: Owner holds shares in a corporation and a proprietary lease of a unit — this is personal property, not real estate title.
• Timeshare: A right to use for a recurring interval; may be a deeded (fee) interest or a contractual right-to-use.
• Trust / land trust: Title is held by a trustee for the benefit of others, separating legal and beneficial ownership.

Encumbrances: claims that ride with the land

An encumbrance is a right or claim a non-owner holds against the property. It does not block ownership but limits the bundle of rights, and most encumbrances run with the land, binding future buyers.

An easement appurtenant benefits an adjacent parcel: the dominant estate enjoys the right, the servient estate bears the burden. It transfers automatically with the dominant land. An easement in gross benefits a person or company (a utility line) and does not require a neighboring parcel. A trap: a buyer who "did not know" about a recorded easement still takes the property subject to it — recording gives constructive notice.