LAW 601 Lecture Notes - Lecture 7: Life Estate, Fee Simple, Equity Sharing
19 Feb 2017
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LAW 603 – ADVANCED BUSINESS
Lecture 7
Chapter 15 – Real Property: Interests & Leases
PARTS OF THIS CHAPTER:
1. Types of interests on land
2. Essential elements of lease agreements
This section focuses on Real Property: land and anything attached to that land. Historically real property
included the air above, up to the heavens and the ground till the center of the earth (“Giant Carrot”
theory). But now it’s limited e.g. you can’t control a plane that flies above your house but you can control
a crane.
INTERESTS IN LAND
• Is the right a person can enforce with respect to a particular piece of land (rights to a property)
• Your rights are good against the whole world, unlike a contract which you can only enforce your
rights against the parties involved
• Types of Interests on land:
a. Estates in Land
b. Non-Possessory Interests in Land
Estates in Land: An exclusive right to possess land for a period of time
1. Fee Simple – largest package of rights that a person can hold in land BUT doesn’t mean absolute
ownership
• Rights are for an indefinite time period
• You can sell it, lease it, give it away
• You can keep it till you die
• Or even abuse the property
Limitations
a. You must avoid committing torts such as occupier’s liability, nuisance and the rule of
Rylands v Fletcher
b. Subject to laws and regulations of that jurisdiction (e.g. environmental laws, zoning reg.)
c. Subject to Expropriation i.e. the government has the right to take your property, you will
be entitled to compensation (is this ethical?)
2. Life Estate – gives a person exclusive possession of a property for the duration of a particular life
• You can have possession till your life ends, or maybe till the life of someone else’s
• What remains of the life estate after stated life ends is that a future estate exists
• Reversion is when the property returns to whoever has the fee simple
• Remainder is when the property goes to a third party named by the person who held fee
simple
• E.g. Bob transfers Lot 3 to Karen for as long as Karen lives, and then Lot 3 is
transferred to George
find more resources at oneclass.com
find more resources at oneclass.com
LAW 603 – ADVANCED BUSINESS
Package of Rights of Life Estate
• Entitled to profits of the property
• Exclusive possession and use
• Lease (but cannot exceed life estate do if estate holder dies, lease becomes void)
• But cannot commit waste aka change the property in a way that significantly affects the
value (e.g. digging pits and cutting down trees)
• If you commit waste you can be held liable to the person who hold the reversion or
remainder; however, you are not required to spend money to keep the building in good
condition
3. Leasehold Estate – occurs when a person has rights to a property for a specific period of time
o A person with a lease can only have the property for only a specific block of time
o Right of exclusive possession
At this point we’ve assumed that an estate is only owned by one person. However, ownership
can be shared amongst several people:
a. Joint Ownership: occurs when two or more people share exactly the same interest in a
property. For this type of ownership right of survivorship applies. Meaning upon the death of a
member the share of that member gets distributed to the other members.
• Can avoid survivorship through the process of severance
• Severance is when a joint tenant handles the prop in a way that is inconsistent with joint
ownership
Severance may occur:
• One jt. tenant sells/transfers his/her interest to another person; creates a co-tenant b/c you
acquired the rights after initial owners (note: you can transfer/sell the property to yourself to
break the right of survivorship)
• One jt. tenant becomes bankrupt
• Partition (of prop or $) by court order; partition is when there is a separation of either property
or its sale proceeds??
b. Co-ownership: Two or more persons share some undivided interest in a property; don’t
have to have equal share. There is no right of survivorship, you can assign your share to your
brother upon your death.
Condominiums: exists when several people share ownership of some parts of a building while
individually owning other parts. Sets of rights in a condo:
1. Individual ownership of unit
2. Shared ownership of common elements/areas; this is called tenants in common
3. Condos are like small communities and requires condominium corporations to manage the
complex and make decisions/enforce regulations (condo corp. is non-profit)
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Chapter 15 real property: interests & leases. Parts of this chapter: types of interests on land, essential elements of lease agreements. This section focuses on real property: land and anything attached to that land. Historically real property included the air above, up to the heavens and the ground till the center of the earth ( giant carrot theory). But now it"s limited e. g. you can"t control a plane that flies above your house but you can control a crane. Limitations: you must avoid committing torts such as occupier"s liability, nuisance and the rule of. Bob transfers lot 3 to karen for as long as karen lives, and then lot 3 is transferred to george. At this point we"ve assumed that an estate is only owned by one person. However, ownership: joint ownership: occurs when two or more people share exactly the same interest in a can be shared amongst several people: property.
