Property Ownership: Present and Future Estates
Two or more people may share ownership of the same property at the same time. Two or more people also may own the same property at different times, with one person owning the right to possess for a time, then another person having the right to possess, and so on.
Ownership of property may be divided up over time. The duration of a person’s ownership is called an estate. In other words, an estate is ownership of property for a period of time. A present estate is an estate that entitles the owner to possession in the present. A future estate, on the other hand, is an estate that entitles the owner to take possession sometime in the future.
States today generally recognize three types of present estates:
Fee simple: The fee simple is the estate that continues indefinitely. Even when the owner of the fee simple dies, the estate doesn’t end; it passes to her devisees by will or to her heirs by intestate succession.
Life estate: The life estate is a present estate that lasts only until the owner of the estate — or someone else specified in the instrument creating the life estate — dies. If the life estate is for the life of the owner of the life estate, then her estate ends at her death, and she obviously has no more estate to give away by will when she dies.
Leasehold: The leasehold is a present estate that lasts for a definite period of time, for recurring periods, or until either the landlord or the tenant chooses to terminate it.
When a life estate or leasehold ends, someone else owns the right to take possession of the property. Because that person owns the right to possess in the future, her right is called a future estate.
If the grantor of the life estate or leasehold retains for herself the right to take possession when the life estate or leasehold ends, the grantor’s future estate is called a reversion. If instead the grant gives the future estate to someone else, the future estate that follows the life estate or leasehold is called a remainder.
Any of these present estates may be further limited in time by imposing conditions that will terminate the estate. For example, a grant may give property to person A as long as she uses the property for residential purposes. When such conditions limit the duration of an estate, the estate is called defeasible. An estate may be defeasible in the following three ways:
Determinable: If the estate lasts only as long as a certain condition doesn’t happen and then automatically goes back to the grantor if it does occur, the estate is determinable. The grantor’s future estate — that is, the right to possession if and when the condition occurs — is called a possibility of reverter.
On condition subsequent: Similarly, an estate on condition subsequent is an estate that the grantor may terminate if the specified condition occurs. Unlike a determinable estate, the estate doesn’t automatically end when the condition occurs. The grantor (or her successors) has a right of entry or power of termination, which is the right to choose to take the property back.
Subject to executory limitation: An estate subject to executory limitation ends automatically when the condition occurs, but instead of reverting to the grantor, the right of possession goes to someone else. The future estate of the third party who has the subsequent right of possession is called an executory interest.