Also known as a present possessory estate. The holder of this has the present or current right to possess the real property. This may be contrasted with a future interest which is a future right to possess. Present estates are divided into Non-Freehold Estates (in which the tenant does not hold possession - rents or leases) and Freehold Estates (in which the tenant does hold ownership). There are three kinds of Freehold Estates:
A life estate grants the holder use of the estate for the duration of a life, often that of the tenant. At the end of the life, the estate will transfer to another by a reversion (if to the grantor) or remainder (if to another). See future estates.
For example: To A for life, then to B. (A will have the land until death, then the estate will transfer to B).
Additionally, a life estate could be for the life of another. Also known as per autre vie (French for the life of another), this is the same set up, but the measuring life is another person. For example: To A for the life of B, then to C. A will have the land until B dies, then the land will pass to C.
Fee Tail Estate
The Fee Tail is an antiquated system designed to establish family dynasties which require the land to be passed to the blood heirs. This has been abolished in most jurisdictions.
Fee Simple Estates
Fee Simple Estates are the most common and grant a complete interest in land (its yours to be used without conditions or limitations). There are two kinds of Fee Simple: Absolute or Defeasible.
Absolute Fee Simple
An absolute fee simple estate is one in which the land is yours to do with as you wish, and it can not be revoked by others (note, this land would still be subject to non-property issues like taxes, or be seized for settlement of an unpaid judgment against you…)
Defeasible Fee Simple
A defeasible fee simple is a fee simple estate that could be removed for a reason established in the granting document. If an event or happening occurs, the transfer could be void. There are three kinds of defeasible fee simple estates:
- Fee Simple Determinable: The estate will be automatically terminated if the stated condition occurs. Established by durational language, fee simple determinable estates are followed by the future estates of a possibility of reverter. For example: To A for as long as the property is used for a museum. A has a fee simple determinable, and will hold the land for as long as it is a museum; the grantor holds a possibility of reverter. If the museum is shut down, the land will automatically be transferred to the grantor.
- Fee Simple Subject to Condition Subsequent: The estate is similar to a fee simple, but has a condition attached. Established by conditional language, these estates are followed by a right of entry. If the triggering event occurs, the holder must take steps to establish possession of the land. For example: To A, but if A does not use the land for a museum, then the grantor has a right of entry. A has a defeasible fee simple estate subject to a condition subsequent, and the grantor has a right of entry. If the land is not used for a museum, then the grantor must take action to recover the land. If the grantor does not take action, the land will remain with A, even after it is not being used as a museum.
- Fee Simple Subject to a Executory Limitation: A fee simple with a stated event, which if it happens, is automatically divested by an executory interest in a transferee (if the event happens, the land automatically goes to a third party). For example: To A so long as the land is used for a museum, but if used for anything else, to B. A holds a defeasible fee simple subject to an executory condition, B holds an executory interest. If the land is not used for a museum, it is automatically transferred to B.