Real Estate Basics – The Estates of Real Estate

Posted by admin on May 26, 2010 under Real Estate License Basics | Be the First to Comment

In this Real Estate Basics installment we will review what the many type of estates there are when studying for a real estate license. Any real estate school that you attend in the country will have real estate courses that cover these types of estates.

When we refer to estates in real estate we are referring to the private rights of a property or interest in a property. When one has ownership of a property it is known as freehold estates. One thing all types of freehold estate have in common is that there is no end date specified. Freehold estates can last for a lifetime and be passed to ones heirs through a will. Beyond that, there are four different types of freehold estate.

Fee Simple is owning the bundle of rights and is the highest degree of ownership that there is.  It is also known as Fee Simple Absolute, as in absolute ownership. A Fee Simple estate is an inheritable estate of unlimited duration and is only subject to government powers .

Fee Simple Defeasible is a Fee Simple estate with conditions placed upon it based upon an event that does or does not happen. This type of estate must clearly dictate the conditions upon the ownership and provide for a right to re-enter the property should the conditions not be met.  For example, a person that holds Fee Simple Estate to a property sells to another individual stating that the property is not to raise animals on the property. This would be a Fee Simple Defeasible and should the current owners have a litter of puppies born, the property then revert to the previous owner.

Life Estates are also referred to as estates in reversion or in remainder. There are no inheritable rights to this type of estate. With a Life Estate, an owner grants title to the life tenant who owns the property for the duration of their lifetime. Once the life tenant dies the Life Estate either reverts back to the grantor who will once again have own the complete bundle of rights, or transfers to the remainderman who will then hold the complete bundle of rights.

There is also a type of Life Estate known as Pur Autre Vie, which translates to “for another life”. This type of Life Estate is dependent upon the life of someone other than the property grantor;  once the named party dies the property transfers in reversion or remainder. A life tenant is not permitted to will the property to anyone, nor can they damage, waste or destroy the property, because they own an incomplete bundle of rights.

Legal or Involuntary Life Estates are also called marital right. This estate requires the consent of the partner in order to sell the property.  This type of Life Estate falls into three categories. Dower refers to the wife’s interest in her husband’s property while Curtesy is the husband’s interest in his wife’s property.

Fee Tail Estates are important to know for one simple reason; it is illegal in the United States. Fee Tail Estate is property that is only inheritable by the “heirs of the body”, or the monarchy. When taking for your real estate examination it is helpful to remember that Fee Tail is never the correct answer for the type of estate owned.