Chapter 3 Interests and Estates Vocab Flashcards
Interest:
A right to real property. An interest in real estate is ownership of any combination of the bundle of rights to real property, including the rights to • possess • use • transfer • encumber • exclude
Undivided Interest:
An undivided interest is an owner’s interest in a property in which two or more parties share ownership. The terms “undivided” and “indivisible” signify that the owner’s interest is in a fractional part of the entire estate, not in a physical portion of the real property itself. If two co-owners have an undivided equal interest, one owner may not lay claim to the northern half of the property for his or her exclusive use.
Estate in Land:
If the interest-holder enjoys the right of possession, the party is considered to have an estate in land, or, familiarly an estate.
An estate in land is an interest that includes the right of possession.
An estate is a freehold or a leasehold estate.
Encumbrance:
An interest, right or intrusion that limits the freehold interest of an owner of real property or otherwise adversely effects the marketability of title.
If a private interest-holder does not have the right to possess, the interest is an encumbrance.
Police Power:
A state’s or local government’s legal authority to create, regulate, tax, and condemn real property in the interest of the public’s health, safety, and welfare.
Public entities may own or lease real estate, in which case they enjoy an estate in land. However, government entities also have non-possessory interests in real estate which act to control land use for the public good within the entity’s jurisdiction. The prime example of public interest is police power, or the right of the local or county government to zone.
Freehold:
An ownership estate of indeterminable duration; contrasts with a leasehold estate.
In a freehold estate, the duration of the owner’s rights cannot be determined: the rights may endure for a lifetime, for less than a lifetime, or for generations beyond the owner’s lifetime.
Ownership of a freehold estate is commonly equated with ownership of the property.
Leasehold:
An estate that entails temporary rights of use, possession, and to an extent, exclusion, but not legal ownership.
A leasehold estate is distinguished by its specific duration, as represented by the lease term.
Ownership of a leasehold estate is not so considered because the leaseholder’s rights are temporary.
Tenancy:
A freehold or leasehold estate held by a tenant.
Both leasehold and freehold estates are referred to as tenancies. The owner of the freehold estate is the freehold tenant, and the renter, or lessee, is the leasehold tenant.
Fee Simple:
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.
Fee simple estates, like all estates, remain subject to government restrictions and private interests.
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.
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.
Reversion:
A transfer of title from a life estate tenant back to the grantor.
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.
Remainder:
A future freehold interest in a life estate held by a third party remainderman named by the grantor. When the life tenant dies, the estate passes to the remainderman.
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.
Homestead:
A homestead is one’s principal residence. Homestead laws protect family members against losing their homes to general creditors attempting to collect on debts.
Dower:
A widow’s life estate interest in portions of her deceased spouse’s real property.
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.
Property acquired under dower laws is owned by the surviving spouse for the duration of his or her lifetime.
Curtesy:
A widower’s life estate claim to portions of his deceased spouse’s real property.
Curtesy is the identical right of dower 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.
