Interest in Real Property: Types of Estates

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  • 0:05 Possessory Interests
  • 0:56 Fee Simple Absolute
  • 3:35 Life Estate
  • 5:05 Leasehold
  • 7:48 Future Interest
  • 9:13 Non-Possessory Estates
  • 10:46 Lesson Summary
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Lesson Transcript
Instructor: Ashley Dugger

Ashley has a JD degree and is an attorney. She has extensive experience as a prosecutor and legal writer, and she has taught and written various law courses.

There are several different ways a party can own an interest in real property. There are possessory types of interests and non-possessory types of interests. This lesson explains the main types of real property ownership.

Possessory Interests

When we talk about ownership interests in real property, we're actually talking about many different types of ownership. Ownership interests come in various forms and, depending on the type of interest, a landowner's rights may be limited. Let's start by exploring some of the possessory interests possible when owning land. A possessory interest is the intent and right of a party to occupy or exercise control over a particular plot of land. This is the type of ownership most of us think about when we think about land ownership. There are three main types of possessory interests: fee simple absolute, life estate, and leasehold. Let's start with the greatest possible interest in land.

Fee Simple Absolute

A fee simple absolute is an ownership interest that includes all rights in the land. Just as the name suggests, this type of estate represents absolute ownership of the land. A fee simple absolute owner may do whatever he or she chooses with the land. The owner can use the land, destroy the land, give the land to someone else, and take items from the land. The landowner is limited only by zoning and building codes or other governmental restrictions.

The landowner can deed or will the entire fee simple estate to another person. This means that, should the landowner die without a will, the fee simple absolute ownership will automatically pass to the owner's heirs. Sometimes, a fee simple interest isn't absolute. There are times when a fee simple interest is granted, but the interest comes with certain conditions. These are known as conditional estates. Let's look at two examples.

A fee simple determinable is an ownership interest that automatically ends when a specified event occurs. For example, let's say that I grant my farm to a local agricultural college. My deed says that I grant my land to the university 'as long as it is used for educational purposes.' This means that, if the university stops using the land for educational purposes, the grant automatically ceases, and I own the land again. Or, if I'm deceased, my heirs will own the land.

This is similar to a fee simple subject to a condition subsequent. In this type of ownership interest, a landowner may reclaim the land if a specified event occurs. Notice that, unlike the fee simple determinable, the ownership interest doesn't automatically terminate. For example, let's say that I grant my land to the university, but specify that 'if corn ceases to be grown on the land, I can reclaim the land.' So, if the university decides not to grow corn, I can reclaim the land, or my heirs may reclaim the land if I'm deceased.

Life Estate

Let's turn to another form of possessory interest. A life estate is a land interest that expires upon the death of a specified person. For example, let's say that I grant my land as a life estate to my stepsister Susie. This means that Susie can occupy, possess, and enjoy the property during her lifetime, just as if it were a fee simple. However, Susie's ownership interest in the land will automatically stop upon her death. Rather than passing to her heirs, the land will pass back to me. Or, if I'm deceased, the land will pass to my heirs. Susie can't will the property to another person.

Life estates aren't common, but this type of interest can be helpful for estate planning purposes. Let's say that I'm married to Marvin. I want Marvin to be able to live on and enjoy my land after my death, so I grant him a life estate. However, after Marvin's death, I want my land to go to my heirs, rather than Marvin's heirs. The life estate assures that the land will revert to me, or to my heirs, upon Marvin's death. If I granted Marvin a fee simple, then the land would go to Marvin's heirs upon Marvin's death.


The last type of possessory interest is called a leasehold estate. A leasehold, or lease, is an interest in real property that grants possession for a particular duration. The lease can last for one year, can last for many years, can be week-to-week, or can be month-to-month. The duration doesn't matter, as long as it's specified in some way. A leasehold doesn't grant actual title to the land. Therefore, the lease owner can't will the property to someone else. Rather than a deed or title, the lease owner will have a lease agreement that dictates the rights and obligations of both the lease owner and the property owner. The lease will terminate and the property owner will regain all rights if one or both parties violate a term of the lease agreement.

Leases are quite common. There are four main types of leases:

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