2.1 Estates, Ownership Forms, Rights, and Interests

Estates in land: how much ownership a person holds

An estate is the degree, quantity, nature, and extent of a person's interest in land. The exam first sorts estates into two families: freehold (ownership of indefinite duration) and leasehold (a non-ownership right to possess for a defined term). Confusing the two is a classic trap, because a tenant who possesses for years still holds no ownership and the property reverts to the landlord at term's end.

Freehold estates

The largest freehold is the fee simple absolute: the most complete ownership recognized by law, lasting forever, inheritable, and transferable without condition. Picture the bundle of rights it carries:

• Possession — the right to occupy.
• Control — the right to use within the law.
• Enjoyment — use without outside interference.
• Exclusion — the right to keep others out.
• Disposition — the right to sell, gift, will, or encumber.

A useful memory device is PCEED (Possession, Control, Enjoyment, Exclusion, Disposition). A sale of full title transfers the whole bundle; an easement or lease transfers only a stick or two.

Defeasible fees

A defeasible fee is ownership that can be lost if a stated condition is broken.

The key tested distinction: the determinable fee ends by itself, while the condition subsequent fee ends only if the grantor acts to reclaim it.

Life estates

A life estate lasts for the lifetime of a named person. The holder is the life tenant, who may use and profit from the land but may not commit waste (damage that harms the future holder's interest). When the measuring life ends, the property passes either to a remainderman (named third party) or back to the grantor as a reversion.

A pur autre vie life estate is measured by the life of someone other than the holder. For example, a grant "to Maria for the life of her father" ends when the father dies, not when Maria dies.

Leasehold (non-freehold) estates

Leaseholds give possession, not ownership:

• Estate for years — fixed start and end date; no notice needed to terminate.
• Periodic estate — renews automatically (month-to-month) until proper notice.
• Estate at will — continues until either party ends it; minimal certainty.
• Estate at sufferance — a holdover tenant stays past the lease without permission.

Forms of co-ownership

When two or more people hold title together, the exam tests survivorship.

Joint tenancy requires the four unities — PITT: Possession, Interest, Time, Title. Break one unity (for example, one joint tenant sells a share) and that share converts to a tenancy in common. Right of survivorship means a deceased co-owner's interest passes to the surviving joint tenants outside of probate, defeating any contrary will provision.

Tenancy by the entirety is available only to married couples and adds a creditor shield: a creditor of just one spouse generally cannot force a sale of the whole property.

Worked numeric: fractional shares and value

Three investors hold a property as tenants in common in unequal shares: Ann 50%, Ben 30%, Cole 20%. The property is worth $600,000.

• Ann's interest: 0.50 x $600,000 = $300,000
• Ben's interest: 0.30 x $600,000 = $180,000
• Cole's interest: 0.20 x $600,000 = $120,000

Ben dies. Because tenancy in common has no right of survivorship, Ben's $180,000 interest passes to his heirs or devisees by will or intestacy — not to Ann and Cole. If the same three had instead held as joint tenants (which requires equal shares, so one-third each = $200,000), Ben's death would pass his share to the survivors, giving Ann and Cole $300,000 each.

Trap: the exam may set up "unequal shares" and then ask about survivorship. Unequal shares are incompatible with joint tenancy's unity of interest, so the answer must treat the ownership as a tenancy in common.

Lesser interests and encumbrances

An encumbrance is a claim, lien, or restriction that burdens title but does not necessarily prevent ownership or transfer.

• Easement — a right to use another's land (e.g., a driveway). An easement appurtenant benefits an adjacent parcel (the dominant tenement) and burdens the servient tenement; it transfers with the land. An easement in gross benefits a person or company (e.g., a utility) and is not tied to adjacent land.
• License — revocable permission to use land; not an interest in the land.
• Encroachment — an improvement that physically intrudes onto a neighbor's parcel.
• Lien — a monetary claim (mortgage, tax lien, judgment, mechanic's lien). Liens are financial encumbrances; easements and deed restrictions are non-financial.
• Deed restriction / restrictive covenant — a private limit on use recorded in the chain of title.

Governmental powers also limit private ownership, summarized as PETE: Police power (zoning, codes), Eminent domain (taking for public use with just compensation), Taxation, and Escheat (property reverts to the state when an owner dies with no heirs and no will).