2.1 Estates, Ownership Forms, Rights, and Interests
Key Takeaways
- A freehold estate has uncertain duration and includes fee simple absolute, defeasible fees, and life estates; a leasehold estate is a tenant's possessory interest for a stated term.
- Concurrent ownership types differ by whether they carry the right of survivorship: joint tenancy and tenancy by the entirety do; tenancy in common does not.
- Joint tenancy requires the four unities (possession, interest, time, title); breaking any unity severs it into a tenancy in common.
- Encumbrances such as easements, liens, and deed restrictions burden title without transferring possession; an easement appurtenant runs with the land.
- Common-interest ownership (condominium, cooperative, timeshare) divides title, possession, and association duties differently and is a frequent exam trap.
The bundle of rights
Real property ownership is taught as a bundle of rights: possession, control, enjoyment, exclusion, and disposition. An owner can keep the whole bundle or convey individual sticks. Leasing transfers possession; granting an easement transfers a limited use right; a mortgage pledges the disposition stick as security. The exam tests whether you can identify which stick moved in a fact pattern.
The quantity, duration, and nature of an owner's interest is called an estate in land. The two top-level branches are freehold (ownership of uncertain duration) and leasehold (a tenant's possessory interest for a fixed or determinable term).
Freehold estates
The largest freehold is fee simple absolute — the most complete ownership, inheritable and of indefinite duration. Defeasible fees are conditional: a fee simple determinable ends automatically on a stated event ("so long as," "until") and the grantor keeps a possibility of reverter; a fee simple subject to condition subsequent lets the grantor re-enter ("but if," "on condition that").
A life estate lasts for the lifetime of a named person. The future interest is a remainder (to a third party) or a reversion (back to the grantor). A life tenant may use and profit from the land but cannot commit waste that harms the remainderman's interest, and cannot will the property — it passes per the granting instrument.
Concurrent ownership and survivorship
When two or more people own together, the form controls what happens at death.
| Form | Survivorship? | Equal shares required? | Severable by one owner? |
|---|---|---|---|
| Tenancy in common | No | No (any fractions) | Yes — share passes by will/heirs |
| Joint tenancy | Yes | Yes (equal) | Yes — severs into TIC |
| Tenancy by the entirety | Yes | Yes (spouses only) | No — needs both spouses |
Right of survivorship means a deceased co-owner's interest passes automatically to the survivors, outside probate. In a tenancy in common (TIC), there is no survivorship — a deceased owner's fractional share passes to that owner's heirs or devisees.
Worked survivorship example
Three people, A, B, and C, hold title as joint tenants with equal shares (1/3 each). C dies. The 1/3 does not go to C's heirs; it is split among the survivors, so A and B each now own 1/2. If instead the three held as tenants in common with shares of 1/2, 1/4, and 1/4, and C (the 1/4 owner) dies, C's 1/4 passes to C's estate — A keeps 1/2 and B keeps 1/4 alongside C's heirs.
The four unities
Joint tenancy requires the four unities — remember PITT:
- Possession — equal right to possess the whole
- Interest — equal shares
- Time — acquired at the same moment
- Title — acquired in the same instrument
Break any unity and the joint tenancy is severed into a tenancy in common. The classic trap: a joint tenant sells his interest to a stranger. The buyer takes as a tenant in common with the others (no time/title unity), while any remaining original joint tenants keep survivorship between themselves.
Andre, Bianca, and Carlos own a property as joint tenants with right of survivorship, equal shares. Andre sells his interest to Dana. Carlos then dies. How is title held?
Encumbrances: rights that burden title
An encumbrance is a claim, lien, or restriction held by someone other than the owner. It burdens title but does not transfer ownership, and most encumbrances do not defeat the right to possess.
Easements
An easement is a right to use another's land for a specific purpose. An easement appurtenant benefits an adjacent parcel (the dominant tenement) and burdens the servient tenement; it runs with the land and transfers automatically on sale. An easement in gross benefits a person or company (a utility line) rather than a neighboring parcel.
An easement by prescription arises from open, notorious, continuous, hostile use for the statutory period — similar to adverse possession but it grants a use right, not title. An easement by necessity is granted when a parcel is landlocked.
Liens and other encumbrances
- Liens — monetary claims (mortgage, property tax, mechanic's lien, judgment). Property-tax liens generally take priority over all others regardless of recording date.
- Deed restrictions / restrictive covenants — private limits on use (set by a developer or HOA).
- Encroachment — an improvement (fence, eave) physically extending onto a neighbor's land; revealed by a survey.
- License — revocable personal permission to use land; not a true encumbrance because it conveys no interest.
Trap: a license is revocable and personal; an easement is an interest in land that survives a change of owner. Exam writers swap these terms.
Common-interest ownership
Many missed questions involve common-interest properties because title, possession, and association rights differ by form. Read the fact pattern for what the buyer actually receives.
| Type | What the buyer gets | Tax / financing note |
|---|---|---|
| Condominium | Fee-simple title to the unit + undivided interest in common elements | Owner gets own deed and own mortgage; pays own property tax |
| Cooperative | Shares of stock in the corporation + a proprietary lease | One blanket mortgage and tax bill on the building; owner is a shareholder/tenant |
| Timeshare | A time-limited right (deeded interval or right-to-use contract) | Use is fractional; may or may not convey title |
| PUD (planned unit development) | Fee-simple lot + membership in an HOA owning the common areas | Owner deed + HOA assessments |
The most-tested distinction: a condominium owner holds real property (a deed) and a separate mortgage; a cooperative owner holds personal property (stock) plus a lease, so the building carries a single blanket mortgage. If one co-op shareholder defaults, the others can be exposed through the blanket loan — a risk that does not exist among condo owners.
All three forms collect assessments for shared expenses, and an unpaid assessment can become a lien against the owner's interest.
A buyer wants ownership in which they receive their own deed to a specific unit and obtain an individual mortgage, separate from neighbors. Which form best matches?