Rights in real property - Nature and type

Learning Outcomes

After reading this article, you will be able to identify and distinguish the main types of rights in real property, including present possessory estates and future interests. You will understand the legal definitions and characteristics of fee simple, life estates, leaseholds, reversions, remainders, and executory interests, and apply these concepts to MBE-style questions.

MBE Syllabus

For MBE, you are required to understand the nature and classification of rights in real property. This includes the ability to:

• Recognize and define present possessory estates (fee simple, life estate, leasehold).
• Distinguish between defeasible and indefeasible estates.
• Identify and explain future interests (reversion, remainder, executory interest).
• Apply the rules governing the creation, transfer, and termination of these interests.
• Understand key legal terms and their application to exam scenarios.

Test Your Knowledge

Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.

1. Which of the following is an example of a defeasible fee?
   1. Fee simple absolute
   2. Life estate
   3. Fee simple determinable
   4. Tenancy at will
2. A grant "to B for life, then to C if C survives B" creates which future interest in C?
   1. Vested remainder
   2. Contingent remainder
   3. Executory interest
   4. Reversion
3. Which estate gives the holder the broadest rights in land?
   1. Fee simple absolute
   2. Fee simple subject to condition subsequent
   3. Life estate
   4. Leasehold estate

Introduction

Rights in real property are classified by the type and duration of the interest held. Understanding these classifications is essential for analyzing property questions on the MBE. This article explains the main types of present and future interests, the legal terms used to describe them, and how they may be created, transferred, or terminated.

Present Possessory Estates

A present possessory estate gives the holder the current right to possess and use the land. The main types are:

• Fee Simple Absolute: The largest estate, potentially infinite in duration, freely transferable and inheritable.
• Defeasible Fees: Fee estates that may end upon the occurrence of a specified event.
• Life Estate: Lasts for the duration of a specified person's life.
• Leasehold Estates: Non-freehold interests, such as tenancies for years, periodic tenancies, and tenancies at will.

Key Term: Fee Simple Absolute
The broadest estate in land, giving the holder full possessory rights now and in the future, with no conditions or limitations.

Key Term: Defeasible Fee
An estate that may be terminated upon the occurrence of a specified event, such as a fee simple determinable or fee simple subject to condition subsequent.

Key Term: Life Estate
An estate measured by the life of a specified person, ending automatically at that person's death.

Future Interests

A future interest is a right to possession of land that will arise in the future, upon the termination of a prior estate. The main types are:

• Reversion: Retained by the grantor when a lesser estate is created.
• Remainder: Created in a third party to take effect upon the natural expiration of the prior estate.
• Executory Interest: Future interest that cuts short a prior estate or follows a gap in possession.

Key Term: Reversion
The interest left in a grantor who transfers a lesser estate than they own, which becomes possessory when the lesser estate ends.

Key Term: Remainder
A future interest in a third party that becomes possessory upon the natural termination of the preceding estate.

Key Term: Executory Interest
A future interest in a transferee that cuts short a preceding estate or follows a gap, rather than waiting for the natural expiration.

Leasehold Estates

Leaseholds are present possessory interests of limited duration, including:

• Tenancy for Years: Fixed term.
• Periodic Tenancy: Renews automatically unless terminated.
• Tenancy at Will: May be ended at any time by either party.

Key Term: Leasehold Estate
A non-freehold possessory interest in land, typically created by contract for a definite or indefinite period.

Worked Example 1.1

A conveys land "to B for life, then to C and her heirs." What interests are created?

Answer: B has a life estate. C has a vested remainder in fee simple absolute. A retains no interest.

Worked Example 1.2

O conveys "to D, but if alcohol is ever sold on the land, then to E." What interests do D and E hold?

Answer: D has a fee simple subject to an executory interest. E has a shifting executory interest that will cut short D's estate if alcohol is sold.

Exam Warning

On the MBE, be careful to distinguish between a remainder and an executory interest. A remainder must follow the natural end of the prior estate; an executory interest cuts short a prior estate or follows a gap.

Revision Tip

When analyzing a property conveyance, always identify the present estate first, then determine if any future interests are created, and in whom.

Key Point Checklist

This article has covered the following key knowledge points:

• Rights in real property are classified as present possessory estates and future interests.
• Fee simple absolute is the broadest estate, with no conditions or limitations.
• Defeasible fees may be terminated upon the occurrence of a specified event.
• Life estates last for the life of a specified person and may create remainders or reversions.
• Future interests include reversion (in the grantor), remainder (in a third party), and executory interest (which cuts short a prior estate).
• Leasehold estates are non-freehold interests of limited duration.
• Correctly identifying the type of estate and future interest is essential for MBE questions.

Key Terms and Concepts

• Fee Simple Absolute
• Defeasible Fee
• Life Estate
• Reversion
• Remainder
• Executory Interest
• Leasehold Estate