Freehold Estates
Freehold Estates
Fee Simple Estates
Life Estates
FREEHOLD ESTATES
Fee simple estate Life estate Conventional life estate Legal life estate
Freehold estates differ primarily according to the duration of the estate and what happens to the estate when the owner dies. A freehold estate of potentially unlimited duration is a fee simple estate: an estate limited to the life of the owner is a life estate.
Freehold Estates
Fee simple estate The fee simple freehold estate is the highest form of ownership interest one can acquire in real estate. It includes the complete bundle of rights, and the tenancy is unlimited, with certain exceptions indicated below. The fee simple interest is also called the “fee interest,” or simply, the “fee.” The owner of the fee simple interest is called the fee tenant. 164 Principles
Fee Simple
Absolute
Defeasible
Determinable
Condition Subsequent
Fee simple estates, like all estates, remain subject to government restrictions and private interests.
There are two forms of fee simple estate: absolute and defeasible.
Fee Simple Estates
Fee Simple Absolute. The fee simple absolute estate is a perpetual estate that is not conditioned by stipulated or restricted uses. It may also be freely passed on to heirs. For these reasons, the fee simple absolute estate is the most desirable estate that can be obtained in residential real estate. It is also the most common.
Fee Simple Defeasible. The defeasible fee estate is perpetual, provided the usage conforms to stated conditions. Essential characteristics are:
the property must be used for a certain purpose or under certain conditions
if the use changes or if prohibited conditions are present, the estate reverts to the previous grantor of the estate.
The two types of fee simple defeasible are determinable and condition subsequent.
Determinable. The deed to the determinable estate states usage limitations. If the restrictions are violated, the estate automatically reverts to the grantor or heirs.
Condition subsequent. If any condition is violated, the previous owner may repossess the property. However, reversion of the estate is not automatic: the grantor must re-take physical possession within a certain time frame.
Life estate A life estate is a freehold estate that is limited in duration to the life of the owner or other named person. Upon the death of the owner or other named individual, the estate passes to the original owner or another named party. The holder of a life estate is called the life tenant. Section 8: Property Rights, Estates & Tenancies 165
Life Estates
Conventional
Legal
Homestead
Dower and Curtesy
Elective Share
Ordinary
Pur Autre Vie
The distinguishing characteristics of the life estate are:
the owner enjoys full ownership rights during the estate period
holders of the future interest own either a reversionary or a remainder interest
the estate may be created by agreement between private parties, or it may be created by law under prescribed circumstances.
Remainder. If a life estate names a third party to receive title to the property upon termination of the life estate, the party enjoys a future interest called a remainder interest or a remainder estate. The holder of a remainder interest is called a remainderman.
Reversion. If no remainder estate is established, the estate reverts to the original owner or the owner’s heirs. In this situation, the original owner retains a reversionary interest or estate.
The two types of life estates are the conventional and the legal life estate.
Life Estates
Conventional
life estate A conventional life estate is created by grant from a fee simple property owner to the grantee, the life tenant. Following the termination of the estate, rights pass to a remainderman or revert to the previous owner.
During the life estate period, the owner enjoys all ownership rights, provided he or she does not infringe on the rights of the remainder or reversion interest holders, such as by damaging the property or jeopardizing its value. Should such actions occur, holders of the future interest may take legal action against the property owners.
The two types of conventional life estate are the ordinary and the pur autre vie life estate. 166 Principles of Real Estate Practice in Florida
With
reversion
With
remainder
Conventional Life Estates
Ordinary life estate. An ordinary life estate ends with the death of the life estate owner and may pass back to the original owners or their heirs (reversion) or to a named third party (remainder).
For example, John King grants a life estate in a property to Mary Brown, to endure over Mary’s lifetime. John establishes that when Mary dies, the property will revert to himself.
Pur autre vie. A pur autre vie life estate endures over the lifetime of a third person, after which the property passes from the tenant holder to the original grantor (reversion) or a third party (remainderman).
For example, Yvonne grants a life estate to Ryan, to endure over the lifetime of Yvonne’s husband Steve. Upon Steve’s death, Yvonne establishes that her mother, Rose, will receive the property.
Legal life estate A legal life estate is created by law as opposed to being created by a property owner’s agreement. The focus of a legal life estate is defining and protecting the property rights of surviving family members upon the death of the husband or wife.
The major forms of legal life estate are the homestead, dower and curtesy, and elective share.
Homestead. A homestead is one’s principal residence. Florida homestead laws protect family members against losing their homes to general creditors attempting to collect on debts.
Homestead laws provide that:
all or portions of one’s homestead are exempt from a forced sale executed for the collection of general debts (judgment liens). The various states place different limits on this exemption.
tax debts, seller financing debt, debts for home improvement, and mortgage debt are not exempt
the homestead interest cannot be conveyed by one spouse; both spouses must sign the deed conveying homestead property
the homestead exemption and restrictions endure over the life of the head of the household, and pass on to children under legal age.
homestead interests in a property are extinguished if the property is sold or abandoned
The homestead exemption from certain debts should not be confused with the homestead tax exemption, which exempts a portion of the property’s value from taxation.
Dower and curtesy. Dower is a wife’s life estate interest in the husband’s property. When the husband dies, the wife can make a claim to portions of the decedent’s property. Curtesy is the identical right enjoyed by the husband in a deceased wife’s property. Property acquired under dower laws is owned by the surviving spouse for the duration of his or her lifetime.
To transfer property within dower and curtesy states, the husband (or wife) must obtain a release of the dower interest from the other spouse in order to convey clear title to another party. If both parties sign the conveyance, the dower right is automatically extinguished.
In Florida, elective share laws have supplanted dower and curtesy, and there is no recognition of community property.
Elective share. Elective share enables a surviving spouse to make a minimum claim to the deceased spouse’s real and personal property in place of the provisions for such property in the decedent’s will.
For example, if a husband’s will excludes the wife from any property inheritance, the wife may, upon the husband’s death make the elective share claim.
Florida’s elective share law provides that:
the surviving spouse is entitled to a percent of the deceased spouse’s property, excepting homestead property and property the decedent owned exclusively
the surviving spouse must file for the elective share within a limited time period
if the spouse fails to file, the estate passes on according to the will or the state’s laws of descent
the elective share right pertains only to the surviving spouse and is not transferrable.
| Ordinary Life Estate Pur Autre Vie duration: owner’s life reverts to grantor | duration: another’s life reverts to grantor |
| duration: owner’s life reverts to another | duration: another’s life reverts to another |
