U.S. law typically allows nearly limitless customization of the rights that can be transferred via contracts. However, real property ownership only comes in the form of a few different pre-defined types of bundles of rights (called estates). A present estate is an estate (i.e. interest in real property) representing ownership that is not dependent on anything else occurring to come into being.
There are 4 types of present estates in U.S. real estate law: fee simple absolute, fee tail (no longer used), defeasible fee, and life estate. The details of each type of present estate are organized in the table below.
| Fee Simple Absolute | Fee Tail | Defeasible Fee | Life Estate | |
| Subtypes | None | None | FSD (Fee Simple Determinable) – Fee Simple BUT automatically terminates if condition is met (and in that case, estate is automatically transferred back to the grantor) FSSCS (Fee Simple Subject to Conditions Subsequent) – The same as an FSD except that if the condition is met, the grantor has the option whether or not to take back the land. FSSEL (Fee Simple Subject to Executory Limitation) – Same as an FSD except that if the condition is met, the land is automatically transferred to a named third party rather than the grantor. | None |
| Creation Language | “To A” or “To A and his heirs” | “To A and the heirs of his body” | FSD: “To A as long as…” or “To A for so long as…” or “To A during…” or “To A until…” FSSCS: “To A, but if _____ occurs, grantor reserves the right to re-enter” FSSEL: “To A, but if _____ occurs, then to B.” | “To A for life” or “To A for the life of B” |
| Transferability 1) Devisable (can transfer by will)? 2) Descendible (does it transfer by statutes of intestacy if owner dies w/o a will) 3) Alienable (is the estate transferable intervivos, i.e. during the holder’s lifetime)? | Devisable Descendible Alienable | Only transferable to blood related descendents. | FSD: – Devisable, descendible, and alienable (but always subject to the condition) FSSCS: – Devisable, descendible, and alienable (but always subject to the condition and the grantor deciding to take back the land if the condition is met) FSSEL: – Devisable, descendible, and alienable (but always subject to the condition) | NOT Devisable NOT Descendible YES Alienable |
| Future interests involved? | None | — | FSD: – Grantor has a “possibility of Reverter” FSSCS: – Grantor has a “right of entry” FSSEL: – Third party has a “shifting executory interest” | If future interest in grantor, called a Reversion. If future interest in a third party, called a Remainder. |
| Examples | B conveys the land to A. | Bob gives land to his son Joe with the condition that Joe can never transfer the land to anyone who isn’t a blood relative of Joe. | FSD: The King of Russia conveys land to the Princess for as long as the land is not used for singing. The princess has an FSD present estate, and the King has a possibility of Reverter. “Possibility of Reverter” is a type of future interest. The Princess falls madly in love with Frank Sinatra, and she gives him the land. Frank cannot sing on the land or else it will revert back to the King. FSSCS: Joe conveys land to his son in law Sam, but if Sam ever uses drugs on the land, Joe reserves the right to take back the land. FSSEL: Joe conveys land to his son in law Sam, but if Sam ever uses drugs on the land, the land will automatically go to Joe’s cousin Ned. | Sarah transfers a house to her mother for life. Sarah’s mother holds a life estate in the property, and Sarah holds a Reversion. |
| Notes | Unconditional and lasts forever Strongest form of ownership | Obsolete (has either been abolished or was never recognized in almost all states) | Common law frowns on defeasible estates, so unless a defeasible estate is CLEARLY intended, modern courts will tend to construe against this type of estate. | An interest in land that only lasts as long as someone’s life (usually the recipient of the life estate). Connected concept: “waste”. Holders of a life estate are called life tenants. |
What is waste in the context of a life estate?
Life tenants are entitled to all ordinary uses of the land, however, they must not commit “waste” (actions which harm the future landowners).
There are three types of waste:
- Voluntary waste – Overt conduct that causes a decrease in value. For example, cannot deplete natural resources unless covered by an ORGE exception:
- Open mine doctrine – Life tenant utilizes a mine that was already open before the life tenant’s ownership
- Repairs – Life tenant consumes natural resources for repairs
- Grant – Life tenant has a written grant of permission (from the future interest holder)
- Exploitation – Applies where the natural use of the land is to exploit natural resources
- Permissive waste – Neglect, causing the property to fall into disrepair. To avoid permissive waste, the life tenant must maintain the land in reasonably good repair and must pay taxes on the land and income made using the land, or if no income is made, then pay taxes on the fair rental value of the land. Additionally, the life tenant must pay interest if the land is mortgaged.
- Ameliorative waste – Alterations that increase value, unless it is possible to know who future landowners will be AND the future landowners give consent. This is to protect future landowners who may not want alterations.