The rights to real property in land are called “interests.” These interests provide who, at a given time, is the owner of a tract of land and has the right to possess that same tract as an insurance bad faith lawyer can share. When an interest in land is transferred, it is called a conveyance. Within the documents that constitute the conveyance, it lays out the interest(s) in that land. Similarly, the interests are also referred to as estate. For example, if someone said, “this tract of land is a part of my estate,” that person would have an interest in that land.
There are two types of interests in land – a present or a future interest. A present interest means that the person is the owner of and has the right to possess that land. A future interest means that, in the future, the person will own the land and have the right to possess that land. These interests can be further divided by the nomenclature and classification of the present and/or future interests, these are called freehold interests. There are six (6) different types of freehold estates: (1) fee simple absolute; (2) life estate; (3) fee simple durational; (4) fee simple subject to condition subsequent; (5) fee simple subject to an executory limitation; and (6) term of years.
A fee simple absolute interest is also referred to as a fee simple interest and is unlimited in duration and therefore has no future interest. This interest is fully alienable and inheritable, meaning that some or all of the interest can be given or sold away for a portion of or all time. A life estate grants the same rights as a fee simple interest in that it is fully alienable and inheritable, but the interest granting someone the full power of rights lasts only for the duration of one’s life and then passes to the future interest holder.
A fee simple determinable is differentiated from the above interests only because it is created by duration language. This means that a fee simple determinable conveyance contains the language “to X for as long as/until/while/etc.” The fee simple determinable interest terminates immediately by operation of law once the specified event occurs. A fee simple subject to condition subsequent operates similar to a fee simple determinable. A fee simple subject to condition subsequent is created by condition language. For example, the language in the conveyance of a fee simple subject to condition subsequent could be “to X provided that event A does not occur.” In this scenario, if event A occurred, X would no longer have the interest in that property. A fee simple subject to executory limitation can be created by conditional or operational language and operates in a similar manner as the fee simple determinable and fee simple subject to condition subsequent interest. The difference is that a fee simple subject to executory limitation vests a future interest into a third person. Finally, a term of years grants a present interest to an individual for specified period time regardless of any conditions. At the end of the term of years, the future interest can revert back to the grantor or remain with a third party.
Irrespective of the type of interest conveyed, the conveyance must be written in clear language. With an ambiguous conveyance, courts typically follow the language of the conveyance literally while applying the six rules for ambiguous conveyances. The six rule for ambiguous conveyances are as follows, conveyances should be interpreted to: (1) achieve the intent of the grantor; (2) favor the fee simple absolute interest; (3) to avoid partial or temporary intestacy; (4) to favor the free alienability of property; (5) favor the fee simple subject to condition subsequent over the fee simple subject to executory interest; and (6) prefer vested remainders over contingent remainders.
Property law is all about the interest, right, and possession of property. When conveying a property, the present and future interests are most important and determine what party has the right to own and possess that land. If you have questions on real estate law, contact an attorney near you.
Thanks to Eglet Adams Eglet Ham Henriod for its insight on present and future interest in land.