Estates Handout

7/24/2019 Estates Handout

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A Shortcut to Understanding

Estates in Land


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Welcome to the world of Estates in Land. At first glance, this world appears to be a complex

chaotic mess of jibberish. But let me assure ou!it is not. "he sstem of estates is nothingmore than a simple foreign language. As with an language, learning the #ocabular can at first

be tedious, but once ou $now the meaning of the terms and practice appling them, it will all

fall into place.

CHAPTER1: ESTATES FREEHOLDANDLEASEHOLD

Estates. "hin$ of an estate as the specific grouping of stic$s within the bundle of rights thatcomprise the possible propert rights that a person ma hold in land. %f that is too complicated,

just thin$ of an estate as the title that a person holds in land. &or example, do ou hold title that

gi#es ou full ownership in the land, or do ou hold title that gi#es ou merel a right to leasethe land'

An estate ma be either( )*+ afreehold estate,or )+ a leasehold estate.

Freehold estate( "he term -freehold deri#es from the land that was free from control of lords

who had originall owned land in England. "he landowners who recei#ed land from the lords

e#entuall came to -hold it free from the lords/ control. "oda, freehold estate means rights toland that are not a part of a lease.

Leasehold estate( %t is exactl what it sounds li$e!a lease in land. %t is also referred to as anonfreehold estate. "here/s nothing earth0shattering about this concept.

We diagram the freehold1leasehold relationship li$e this(

2$. "hat wasn/t so bad. 3ow let/s consider the tpes of freehold estates that are possible. )&or

now, we/ll postpone discussing the tpe of leasehold estates.+

Estates

&reeholdLeasehold

)3onfreehold+

*


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CHAPTER2: THETYPESOFFREEHOLDESTATES

&reehold estates ma be either( )*+ a fee simple4 )+ a life estate4 or )5+ a fee tail.

%n our diagram, these tpes of freehold estates ma be represented as follows(

Below is a description of each of the three freehold estates(

(1) The fee s!"leis the longest in duration of these three estates( it is potentiall infinite.

&or example( O gi#es Blac$acre -toA. "his means thatA owns Blac$acre for as long as

A desires, and ifA ne#er transfers Blac$acre to someone else, Blac$acre will pass to A/s

heirs whenA dies.

o 2ne thing to point out earl on( %n this example, O is the -#ra$tor or

-Tra$sferor, andA is the -#ra$tee or -Tra$sferee.

(2) The lfe estatelasts for as long as a person/s life. Someone who holds a life estate mightown land for the length of that person/s own life, or the length of another person/s life.

Example( O gi#es Blac$acre -toA for life. "his means that A owns Blac$acre for the

life ofA. WhenAdies, Blac$acre goes bac$ to O.

o A holds a lfe estate.

Lfe estate "%r a%tre &e'. Where an estate is measured b a person/s life who is notthe estate holder, it is a life estate pur autre view.

o Example( O gi#es Blac$acre -toA for the life ofB. "his means that A owns

Blac$acre for the life ofB. WhenB dies, regardless of what A ma be doing on

Blac$acre, Blac$acre goes bac$ to O.

A holds a lfe estate "%r a%tre &e.

Estates

FreeholdLeasehold

(Nonfreehold)

Fee TalLfe EstateFee S!"le


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() The fee tallasts for as long as a person/s descendents/ li#es, generation after generation.

"he magic words representing a fee tail are( -heirs of the bod. So, if Ocon#es Blac$acre to

A and the heirs of the body of A, thenA holds a fee tail. Acannot sell Blac$acre because it mustpass toA/s children, and their children, and their children, until finall there are no more children

for it to pass on to, at which point O )or O/s descendants+ gets it bac$.

Are ou di66 et' 7on/t worr. 8ou/ll be glad to $now that most states ha#e passed laws doing

awa with the fee tail. 9ost states ha#e declared that an attempt at a fee tail )through the magic

words of -heirs of the bod+ creates a fee simple. End of stor. Except, of course, if ou li#e inAr$ansas. Under Ar$ansas law, an attempt at a fee tail creates a life estate in the recipient, A,

and then the children ofAget a fee simple onceAdies.

7on/t be concerned if the fee tail gi#es ou a headache. :ust $now that if ou see the

words -heirs of the bod, that is a red flag in Ar$ansas4 it is a fee simple most

e#erwhere else. Simpl put, in Ar$ansas it meansA gets a life estate, andA/s children

get a fee simple afterA dies.

%n essence, the fee tail language )-heirs of the bod+ results in either a fee simple or a

life estate. So there are reall onl two tpe of freehold estates ou need be concerned

with( fee simple and life estate.

;i#en the inapplicabilit of the fee tail, our diagram of the estates ma thus be portraed li$ethis(

Estates

FreeholdLeasehold

(Nonfreehold)

&ee "ailLfe EstateFee S!"le

5


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CHAPTER: THETYPESOFFEES*PLEESTATES

"he fee s!"lehas four further sub0categories(

)*+ fee simple absolute4

)+ fee simple determinable4

)5+ fee simple subject to condition subse


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"here are three phrases that create a fee simple absolute when a landowner transfers land

)in this example, the ;rantee isA+(

*. -to A. &or example( O gi#es Blac$acre to A. A holds a fee simple absolute

)assuming that O also held a fee simple absolute before transferring her interest toA.+

. -toAand his heirs. &or example( Ogi#es Blac$acre toA and his heirs.

"he phrase -and his heirs does not mean that A/s heirs hold an rights in the land

beforeA dies. Acould transfer the land to a third part and the heirs would

simpl be out of luc$.

5. -toAin fee simple. &or example( Ogi#es Blac$acre toA in fee simple.

(2) Fee s!"le deter!$a+le. Where a fee simple has a durationplaced on it that ma cut shortthe fee simple in fa#or of the ;rantor, and where that fee simple automaticall re#erts bac$ to the

;rantor, the fee simple is -determinable. Simpl put, if Ogi#es Blac$acre toAso long as A

remains a student, then ifA does not remain a student, A/s interest is cut short, and Blac$acregoes bac$ to O, who granted Blac$acre to A in the first place. Ohas gi#en A a fee simple

determinable.

"hin$ of it li$e this( the ;rantor, O, is determinedto get the land bac$ e#en thoughshe ga#e it toA, the ;rantee. Oma$es it so that if something happens )or doesn/t

happen+ in the future, the land will automaticall go bac$ to her. "hat is a fee simpledeterminable.

Bu66 words of duration( -so long as4 -as long as4 -while4 -during4 -until

o -Ogi#es Blac$acre toAwhileA is wor$ing forB.

o -Ogi#es Blac$acre toAduringA/s emploment withB.

o -Ogi#es Blac$acre toAuntilA stops wor$ing forB.

o -Ogi#es Blac$acre toAso long asAbrushes his teeth e#er e#ening. %fAfails to brush his teeth, Blac$acre goes bac$ to O.

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() Fee s!"le s%+,e-t to -o$dto$ s%+se.%e$t/ Where a fee simple has a conditionplaced on

it that ma occur in the future, and where the ;rantor is gi#en the powerto re0ta$e the estate )if

the ;rantor so chooses+, the fee simple issubject to condition subsequent.

Bu66 words of condition( -pro#ided that4 -on condition that4 -if4 -but if4

-pro#ided, howe#er,.

Example @*( -Ogi#es Blac$acre toA, but if A does not remain a student, then O

ma re0enter means that ifA does not remain a student, O ma choose to re0ta$e

Blac$acre if she so desires4 it is not automatic that Owill get Blac$acre bac$. Ohas gi#enAa fee simple subject to condition subse


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"hus, the sstem of estates in land ma be represented li$e this(

so long asas long as

whileduringuntil

provided thaton condition

ifbut if

provided however

Absolute Determinable s.t. Condition Subsequent s.t. Executory Limitation

Estates

FreeholdLeasehold

(Nonfreehold)

&ee "ailLfe EstateFee S!"le

C

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