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An estate in land defines the degree, quantity, nature, and extent of an owner's interest in real property. Many types of estates exist, but not all interests in real estate are estates. To be an estate in land, an interest must allow possession, meaning the holding and enjoyment of the property either now or in the future, and must be measured according to time. Historically, estates in land have been classified primarily by their length of time of possession.

A freehold estate lasts for an indeterminable length of time, such as for a lifetime or forever. A freehold estate can be a fee simple estate that continues for an indefinite period and may be passed along to the owner's heirs. The forms a fee simple estate may take are shown in  Fee Simple Estate. A freehold estate can also be a life estate that is held only for the lifetime of a person (who may not be the holder of the life estate) and ends when that individual dies. The forms of life estates are shown in  Life Estate. Both types of freehold estates are discussed in the next section.

A nonfreehold estate is one for which the length of time of the property's use can be determined. A nonfreehold estate is commonly referred to as a leasehold estate.

Fee simple estate

A fee simple estate, or fee simple absolute, is the highest interest in real estate recognized by law. Fee simple absolute ownership is ownership in which the holder is entitled to all rights to the property by law. This estate is intended to run forever. Upon the death of the owner of a fee simple estate, the property interest passes to

• the decedent's co-owner, if there is one and the co-ownership was accompanied by a right of survivorship;

• the person or persons specified in the decedent's will (the devisees); or

• if the decedent has left no will, to the person or persons designated by the state's law of intestate succession.

The right to use a fee simple estate is limited only by public and private restrictions, such as zoning laws and restrictive covenants.

Fee simple defeasible

A fee simple defeasible estate is a qualified fee estate that is subject to the occurrence or nonoccurrence of some specified event. There are two categories of defeasible estate: fee simple determinable and fee simple subject to a condition subsequent.

A fee simple determinable is a fee simple defeasible estate that may be inherited. This estate is qualified by a special limitation (which is an occurrence or event). The language used to distinguish a special limitation—words such as so long as or while or during—is the key to creating this special limitation. The former owner retains a possibility of reverter, which is an interest that can be transferred to someone else. If the limitation is violated, the holder of the possibility of reverter (or heir or successor) can reacquire full ownership with no need to bring a legal action in court. The title is automatically transferred to the person who holds the possibility of reverter.

In Practice

When an owner gives land to a church, so long as the land is used for only religious purposes, it is known as a fee simple determinable. The church has the full bundle of rights possessed by a property owner, but one of the "sticks" in the bundle has a special feature. If the church ever decides to use the land for a nonreligious purpose, the holder of the possibility of reverter obtains title without going to court.

With a fee simple subject to a condition subsequent, an owner gives real estate on condition of ownership, which means there is a difference in the way the estate will terminate if there is a violation of the condition. With a fee simple subject to a condition subsequent, the estate does not automatically terminate upon violation of the condition of ownership. The owner (or the owner's heir or successor) has the right of reentry but must bring a legal action in court to assert this right.

In Practice

Land given on the condition that there be no consumption of alcohol on the premises is a fee simple subject to a condition subsequent. If alcohol is consumed on the property, the former owner (or the owner's heir or successor) has the right to reacquire full ownership. It will be necessary for that person to go to court to assert that right.

In the defeasible fee estates, the possibility of reverter (fee simple determinable) or right of entry (fee simple subject to a condition subsequent) will only be possible at some time in the future, and may never take effect. Each of those rights thus is considered a future interest.

Life estate

A life estate is a freehold estate limited in duration to either the life of the holder of the estate or the life of some other designated person or persons.  Life Estate shows the forms a life estate may take.

Unlike other freehold estates, a life estate based on the life of the holder of the estate is not inheritable. It passes to the future owner according to the provisions by which the life estate was created.

The holder of a life estate is called a life tenant. A life tenant is not a renter like a tenant associated with a lease. A life tenant is entitled to the rights of ownership and can benefit from both possession and ordinary use, and profits arising from ownership, just as if the individual were a fee simple owner. The life tenant's ownership may be sold, mortgaged, or leased, but it is always subject to the finite limitation of the life estate.

Pur autre vie

A life estate may also be based on the lifetime of a person other than the life tenant. Although a life estate is not considered an estate of inheritance, a life estate pur autre vie (for the life of another) provides for inheritance of the property right by the life tenant's heirs, but the right exists only until the death of the identified person or persons. A life estate pur autre vie is often created for people who are physically or mentally incapacitated in the hope of providing incentive for someone to care for them. More than one person could be identified as the measuring life; for instance, a life estate could be granted to a surviving brother by a deceased property owner for the life of the surviving brother's children. As long as one of the children survives, the life estate is in control of the life tenant or the life tenant's successor.

Remainder and reversion

The fee simple owner who creates a life estate must plan for its future ownership. When the life estate ends, it is replaced by a fee simple estate. The future owner of the fee simple estate may be designated in one of two ways:

• Remainder interest—The creator of the life estate may name a remainderman as the person to whom the property will pass when the life estate ends.

• Reversionary interest—The creator of the life estate may choose not to name a remainderman. In that case, ownership returns to the original owner upon the end of the life estate.

In Practice

To ensure that a surviving spouse would be adequately housed, a married couple with no other heirs drafted wills providing that, on the death of the first spouse, the family house would be held by the surviving spouse in a life estate, with the remainder interest to go to a charitable foundation.

Legal life estate

A legal life estate is not created by a property owner, but rather is established by state law. It becomes effective automatically when certain events occur. Dower, curtesy, and homestead are the legal life estates currently used in some states.

Dower and curtesy provide a nonowning spouse with a means of support after the death of the owning spouse. Dower historically was the life estate of a wife in the real estate of her deceased husband. Curtesy was a life estate of a husband in the real estate of his deceased wife. (In some states, the terms are used interchangeably.)

States that recognize dower and curtesy typically provide that the nonowning spouse has a lifetime right to a one-half or one-third interest in the real estate, even if the owning spouse wills the estate to others. The surviving spouse benefits because the property cannot be conveyed with clear title until the life estate interest is released; the surviving spouse may release the claim to the property when the value of the interest is paid. Because a nonowning spouse might claim an interest in the future, both spouses should sign the proper documents when real estate is conveyed. The signature of the nonowning spouse would be needed to release any potential interest in the property being transferred.

Most states have abolished the common law concepts of dower and curtesy in favor of the Uniform Probate Code (UPC). The UPC gives a surviving spouse the right to an elective share on the death of the other spouse, if the surviving spouse is not satisfied with the decedent's disposition of the property by will. Community property states do not use dower and curtesy.

A homestead is a legal life estate in real estate occupied as the family home. In effect, the home (or at least some part of it) is protected from most creditors during the occupant's lifetime. In states that have homestead exemption laws, a portion of the land or value of the property occupied as the family home is exempt from certain judgments for debts, such as charge accounts and personal loans, but not a mortgage for the purchase or improvement of the property. If a debt is secured by the property, including funds advanced under a home equity line of credit, the property cannot be exempt from a judgment on that debt. The homestead also is not protected from real estate taxes billed against the property.

In some states, all that is required to establish a homestead is for the head of a household (who may be a single person) to own or lease the premises occupied by the family as a residence. In other states, the family is required by statute to record a notice of homestead rights. A family can have only one homestead at a time.

How does the homestead exemption actually work? In most states, the homestead exemption merely reserves a certain amount of money for the family in the event of a court sale. In a few states, however, the entire homestead is protected. Once a sale occurs (where permitted), any debts secured by the home (a mortgage, unpaid taxes, or mechanics' liens, for instance) will be paid from the proceeds. Then the family will receive the amount reserved by the homestead exemption. Finally, whatever remains will be applied to the family's unsecured debts.

More information on estates in land can be found at the site of Cornell University Law School's Legal Information Institute, www.law.cornell.edu/lii/get_the_law, by entering "real property" in the search engine at the top of the page.

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