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Section 8 – Part 2
SLIDE 8 – Freehold estates
In this section we’ll look at the full scope of the degree and quality of ownership one holds in
property. We’ll look at the different types of estates and the legal rights associated with
estates.
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An estate refers to the degree, quantity, nature and extent of interest (ownership rights) a
person can have in real property.
The word "estate" is colloquially used to refer to the land and improvements on a piece of
property, often some sort of farm or homestead, or the historic home of a prominent family.
In the financial and legal sense, estate refers to everything of value that an individual owns –
real estate, art collections, antique items, investments, insurance and any other assets and
entitlements.
Sometimes estate may refer to a person's net worth, but in full legal terms, "estate" refers to
an individual's total assets minus any liabilities.
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Estates are divided into two groups:
1. Freehold estates – indefinite length
2. Leasehold estates – fixed term
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Freehold estates
Freehold estates can be either fee simple estates or life estates.
A fee simple estate means the title holder has absolute ownership with full rights of
ownership for at least his or her lifetime.
Fee simple gives the widest bundle of rights to the property owner. You may hear the terms,
fee, fee simple and fee simple absolute. They all mean the same thing.
Most titles are held in fee.
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Freehold estates
A life estate means the ownership title is only for his or her lifetime and cannot be transferred
to heirs.
Life estates are created by action of the grantor. (the owner of the estate) Often used by
husband for wife with children as remaindermen. the person (or persons) designated to
receive an estate after a life estate ends. Although life estates are considered freehold
estates, they are time dependent – the lifetime of the estate holder.
Let’s expand on the types of life estates.
