Property Ownership

1. Estates in Land: Freehold vs. Leasehold

An estate in land defines the nature, degree, and duration of a person's ownership interest in real property. The real estate exam expects you to distinguish between two broad categories: freehold estates (ownership interests of indefinite duration) and leasehold estates (possessory interests of limited duration).

Freehold Estates

Fee Simple Absolute is the highest and most complete form of ownership recognized by law. The owner has the entire bundle of rights — possession, control, enjoyment, exclusion, and disposition — for an unlimited duration. This estate is freely transferable during life and passes to heirs upon death. When you see "fee simple" on the exam, think: maximum ownership with no conditions.

Fee Simple Defeasible (also called qualified fee) is ownership that may be terminated upon the occurrence or non-occurrence of a specified event. There are two subtypes: Fee Simple Determinable (created with durational language like "so long as" or "while" — automatically reverts to the grantor if the condition is violated) and Fee Simple Subject to a Condition Subsequent (created with conditional language like "provided that" or "on condition that" — the grantor has the right of re-entry but must take affirmative action to reclaim the property).

A Life Estate grants ownership for the duration of a person's life (usually the life tenant). After the measuring life ends, the property passes to a remainderman (if the future interest is held by a third party) or reverts to the grantor (called a reversion). Life tenants must not commit waste — they cannot damage or diminish the value of the property for the future interest holder.

Leasehold Estates

Estate for Years (also called tenancy for years) has a definite beginning and ending date. Despite the name, it can be for any fixed term — days, months, or years. No notice is required to terminate because the end date is predetermined.

Periodic Tenancy (estate from period to period) automatically renews for successive periods (month-to-month, year-to-year) until proper notice is given by either party. Tenancy at Will can be terminated by either party at any time without notice. Tenancy at Sufferance occurs when a tenant remains in possession after the lease has expired — technically a holdover tenant, not a trespasser, until the landlord takes action to evict.

2. Forms of Co-Ownership

Tenancy in Common is the default form of co-ownership when two or more people own property together. Each tenant holds an undivided fractional interest that can be unequal. The key feature: there is no right of survivorship — when a co-tenant dies, their interest passes to their heirs or devisees, not to the surviving co-tenants. Each co-tenant can sell, mortgage, or transfer their interest independently.

Joint Tenancy requires four unities (PITT): Possession (equal right to possess the whole property), Interest (equal ownership shares), Time (all acquire title at the same time), and Title (all acquire title through the same deed or document). The distinguishing feature is the right of survivorship — when a joint tenant dies, their interest automatically passes to the surviving joint tenants, bypassing probate.

Tenancy by the Entirety is a special form of joint tenancy available only to married couples in some states. It includes the four unities of joint tenancy plus a fifth unity of marriage. Neither spouse can unilaterally sever the tenancy or transfer their interest without the other's consent.

Community Property (recognized in AZ, CA, ID, LA, NM, NV, TX, WA, and WI) treats property acquired during marriage as equally owned by both spouses. Property acquired before marriage or by gift/inheritance remains separate property.

3. Liens and Encumbrances

An encumbrance is any claim, lien, charge, or liability attached to and binding upon real property that may diminish its value or obstruct its use. Liens are a specific type of encumbrance that serves as security for a debt.

Other encumbrances that are not liens include easements (right to use another's land for a specific purpose), encroachments (unauthorized intrusion of a structure onto another's property), deed restrictions (private limitations on property use), and leases.

4. Legal Descriptions of Property

Real property must be described with sufficient legal certainty. Three primary methods are used in the United States:

Metes and Bounds describes property by reference to physical features, distances (metes), and boundaries (bounds). It typically starts at a point of beginning (POB) and traces the perimeter back to that same point. This is the oldest system and relies heavily on monuments — both natural (trees, rivers) and artificial (stakes, markers).

Rectangular Survey System (Government Survey System) divides land using a grid of principal meridians (north-south lines) and base lines (east-west lines). Townships are 6-mile squares, each divided into 36 sections of 1 square mile (640 acres). A section is further divided into quarter-sections (160 acres), quarter-quarter sections (40 acres), and so on. Key fact: Section 16 in each township was traditionally reserved for public schools.

Lot and Block (recorded plat) is the most common method in urban and suburban areas. A developer files a plat map with the county recorder showing lots and blocks within a subdivision. Each lot is identified by its lot number, block number, and subdivision name.

5. Bundle of Rights and Limitations

Real property ownership is often described as a "bundle of rights" that includes: possession (right to occupy), control (right to use as the owner sees fit, within legal limits), enjoyment (right to use without interference), exclusion (right to keep others out), and disposition (right to sell, lease, or transfer).

These rights are limited by the government's police power, eminent domain, taxation, and escheat (PETE). Police power allows government to regulate for public health, safety, and welfare (zoning, building codes). Eminent domain is the right to take private property for public use with just compensation. Taxation is the power to levy property taxes. Escheat returns property to the state when an owner dies intestate with no heirs.