EAGLESTAR.NET LAND AND PROPERTY REVIEW
http://www.eaglestar.net
Issue #18
May 27, 2008

IN THIS ISSUE:
Property of the Week
Real Estate Roundup: Estates in Real Property
Sponsor's Corner
Buyer's List Update
Auction News
Landterms.com Term of the Week: Run forever

"A lawyer is a gentleman that rescues your estate from your enemies and then
keeps it to himself."
- Lord Henry P. Brougham


PROPERTY OF THE WEEK
Alberta, Canada: 630+/- Acres Farm Land For Sale
One complete section of land, all in one block, fenced and cross-fenced;
dugouts with lots of water on each quarter-section. Pasture and hay land for
200 cow/calf pairs. Barn, cattle shed, big storage bin, double car garage,
well house, newer corrals, cattle-loading facilities, crowding tub, 4 waterers,
one well and a dugout. 1 hour from Edmonton, 2 hours from Calgary. Yearly gas
revenue is $15,000 for section. Available with or without revenue-producing
rights. Contact information and property photographs at
http://www.eaglestar.net/jcarmody.html.


REAL ESTATE ROUNDUP: ESTATES IN REAL PROPERTY
This week we continue our series on title, estates, tenancies, and deeds. Each
installment of the series provides a general overview of a particular topic.
Please contact us if you would like to request a more in-depth discussion
and/or further examples of any of the terms or concepts presented. If you are
knowledgeable on these topics already, we invite you to contribute to the
conversation. Our email address: newsletter@eaglestar.net.

Title to real property was covered in issues 14-16 of Volume 1 of the Land and
Property Review, available online at http://www.eaglestar.net/newsletter.

Title and Estates
Q: What is an estate in real property, and how is it different from title to
real property?
A: Along with "tenancy", the terms "title" and "estate" are often used
interchangeably, and rightfully so, since they often have complex and
overlapping definitions. Technically, title when used in real estate refers to
ownership of real property, and also to evidence of that ownership by a deed.
Another way to think about title is as the interest one holds in real property.
The type, amount, degree, and extent of the interest one holds is known as an
estate in real property (also known as "estate in land"). In order for an
interest in real property to be an estate in real property, the interest must
be possessory. In other words, one must have the right to possess the land,
not merely to use it. An easement is an example of an interest in real
property that is not possessory, and therefore not an estate.

Estates in real property differ between common law and civil law countries;
this discussion is limited to estates that occur in common law countries, which
includes the U.S., England, and most of Canada. Even though all states of the
U.S. use the common law system, land laws, regulations, and even the methods
used to physically survey land can be quite different from region to region,
and even more so from state to state. Estates in real property can be divided
into two general categories: freehold and leasehold (also known as
"less-than-freehold" estates). An interest in a leasehold estate may be held
in different ways, resulting in different types of tenancies, which we will
examine in a later issue. There are different types of both freehold and
leasehold common law estates that represent the different types and quantities
of possessory interest that can legally be held in real property.

Q: What does the term freehold mean?
A: In English feudal law, the term freehold signified an estate held by a free
man - the highest form of land tenure available at the time to commoners, or
those without royal blood. In contemporary common law countries, a freehold
estate is one that is free of other interests and can best be described as full
ownership, although certain conditions or limitations may apply. The two kinds
of freehold estates are those with a right of inheritance, and those without.
Freehold estates with a right of inheritance include "estates in fee simple
absolute" and "estates in fee simple defeasible". Freehold estates without a
right of inheritance include legal life estates, conventional life estates, and
estates pur autre vie.


Freehold Estates with a Right of Inheritance
Q: What is fee simple absolute?
A: An estate in fee simple absolute (also known as "fee simple", "fee",
"estate of inheritance", or "fee ownership") is the highest and most complete
form of land ownership under the common law system. Fee simple estates are
limited only by the governmental rights of taxation, eminent domain, escheat,
and police power. Holders of fee simple estates may transfer, gift, sell,
will, or otherwise dispose of real property in any way they wish, within the
confines of the law. Fee simple estates may be held indefinitely; in legal
parlance, they are said to run forever.

For descriptions of eminent domain, police power, and escheat, see the Real
Estate Roundup section of Vol. 1, Iss. 15 of the Land and Property Review at
http://www.eaglestar.net/newsletter/index.cgi?ID=15.

Q: What is fee simple defeasible?
A: An estate in fee simple defeasible is a less-than-absolute interest in real
property and is subject to certain conditions or contingencies, such as the
occurrence (or non-occurrence, as the case may be) of certain specified events.
There are two types of fee simple defeasible estates: qualified fee
conditional (or "subject to a condition subsequent") and qualified fee
determinable. Defeasible estates allow for recovery of fee simple ownership of
the property by a former owner (the "grantor") if the new owner (the "grantee")
either commits certain acts (qualified fee conditional), or fails to comply
with a special limitation (qualified fee determinable). Estates in fee simple
defeasible are of unlimited duration, provided that the conditions or special
limitations specified by the grantor are not violated or are continually met.
An estate in fee simple defeasible differs from one in fee simple absolute in
that it has a clearly defined potential endpoint.

Q: What is meant by an estate that is qualified fee conditional or subject to
condition subsequent?
A: An estate in qualified fee subject to condition subsequent is an estate in
which the former owner (in fee simple) has specified that the new owners, as
well as his or her heirs or assigns, cannot violate a stipulated condition. If
they do, the former owner retains the "right of re-entry", which allows him or
her to re-enter the land to make sure the condition has not been violated. The
right of re-entry is also the legal mechanism through which the current estate
ends and the former owner can recover fee simple ownership (a process known as
"reversion"). Generally, the right of re-entry can be exercised only if an
action is performed that has specifically been prohibited. Whether or not to
take legal action to recover fee ownership of the property is at the sole
discretion of the grantor.

For example, Mr. Smith owns land in fee simple absolute, which he sells to Mr.
Jones under the condition that the land not be used for industrial purposes,
even though industrial land use is permissible according to local zoning
regulations. If Mr. Jones constructs a factory on the property, or develops
the land for any other industrial purpose, the estate ends and Mr. Smith (or
his heirs) can regain ownership of the land. In order to recover the estate,
Mr. Smith or his heirs must petition a court with jurisdiction over real estate
matters.

Q: What is a qualified fee determinable estate?
A: An estate in qualified fee determinable is one that has been qualified with
a special limitation. If the new owner fails to comply with the special
limitation, the former owner has the right to recover ownership of the property
if the special limitation is not met. The grantor of a qualified fee
determinable estate retains the "possibility of reverter", which allows for
automatic reacquisition of ownership. In most cases, qualified fee
determinable estates end if a special limitation is not complied with or met.
Qualified fee determinable estates differ from those in qualified fee
conditional in that reversion is automatic and no court action is required.

For example, assume that Mr. Smith from the example above decides to sell his
land to Mr. Jones with the contingency that it can ONLY be used for industrial
purposes. In this case, if Mr. Jones uses the land for any purpose other than
industrial, Mr. Smith has the right to recover ownership.

Another example of an estate in qualified fee determinable is an age
requirement before ownership may be assumed - if the grantor specifies that the
grantee or his or her heirs must be 21 years old, and no such person exists,
then reversion occurs and the grantor, or his or her heirs, can recover the
former interest in the property - namely, an estate in fee simple absolute.

Q: Can fee simple defeasible estates (qualified fee determinable and qualified
fee conditional) be sold or transferred?
A: In most cases, yes. All subsequent owners must abide by the conditions or
special limitations stipulated by the grantor in order to avoid the possibility
of reversion.


Freehold Estates without a Right of Inheritance
Q: What is a life estate?
A: A life estate is a freehold estate in which the interest in the property is
held until the death of the owner or some other person specified by the grantor
of the estate. Unlike other freehold estates, life estates cannot be
inherited. Transfer of property ownership following the end of a life estate
occurs according to the provisions stipulated by the grantor. There are three
types of life estates: legal life estates, conventional life estates, and
estates pur autre vie.

Q: What is a legal life estate?
A: A legal life estate is involuntarily created through operation of law
following the occurrence of certain events. In some states a property owner
must file a notice that a qualifying event has occurred in order for a legal
life estate to be created. This is usually the only action necessary on the
part of the owner to form a legal life estate. In other states, no action is
necessary and the estate is created automatically. The three types of legal
life estates are homestead, dower, and curtesy.

Q: What is a homestead?
A: A homestead, also known as a "homestead exemption", is a legal life estate
that is created when a family (or single person) occupies a home that they own.
It is intended to protect the home (or in some states its equity) from
creditors and judgments. Usually the entire home, or at least a portion of it,
is protected. The purpose of a homestead exemption is to provide a place to
live for the life of the owner(s) even if he or she incurs large debts or court
judgments. In reality, most homes may be sold to satisfy debts or judgments,
even if the owner has a homestead exemption. The exemption reserves a certain
amount of money from the sale of the property for the owner, and the debts and
judgments must be satisfied with the remaining funds from the sale. The amount
of the exemption differs by state.

A homestead ends when the owner dies or transfers interest in the property to
another. A homestead estate does not exempt one from real estate taxes,
mortgages, or any other charge or lien which is secured by the real property
itself. Not all states allow homestead exemptions, and they differ in their
filing requirements. A homeowner may have only one homestead at a time, even
though he or she may own multiple homes.

Q: What are dower and curtesy?
A: Dower and curtesy are legal life estates that are created upon the death of
a spouse who owned real estate. Dower is the life estate that a wife acquires
in the real property of her deceased husband, while curtesy is the estate a
husband holds in real property owned by his wife following her death. Dower
and curtesy entitle the surviving spouse to a portion (usually one-third to
one-half) of the interest in the real property owned by the deceased spouse,
even if that property was willed to someone else. Dower and curtesy are forms
of "tenancy by the entirety", and are only used in states that practice that
system of common law. Tenancy by the entirety is contrasted with another
common law system used by other states, known as "community property".

Q: What is tenancy by the entirety?
A: Tenancy by the entirety is a form of property ownership reserved for a
married couple. It essentially means that the husband and wife together are
viewed as one legal person, with each possessing an equal, undivided interest
in the property. Generally, property owned in this manner cannot be divided,
and neither spouse can sell a portion of the property interest - it is "all or
nothing" under this system of common law. Upon the death of one spouse, the
other takes sole ownership and possession of the real property. Tenancy by the
entirety is not allowed in all states, and is never used in community property
states.

Q: What is a conventional life estate?
A: A conventional life estate is a legal life estate that is intentionally and
voluntarily created by an owner of real estate, either by deed if the owner is
alive or through a will if he or she is deceased. The estate is conveyed to a
"life tenant", who holds the estate until his or her death. During the life of
the life tenant, he or she enjoys all the rights and privileges of property
ownership, except that he or she is prohibited from laying or committing waste
to or upon the property (damaging the property or causing its value to
diminish). A conventional life estate ends upon the death of the life tenant.
Ownership of the property passes to another or reverts to the original owner or
his heirs, depending on the provisions of the life estate.

Q: What is an estate pur autre vie?
A: "Pur autre vie" is a French legal phrase that literally means "for
another's life". An estate pur autre vie is essentially the same as a
conventional life estate, except that the duration of the estate is not
measured against the life of the life tenant, but against the life of someone
else. An estate pur autre vie is the only life estate that has limited rights
of inheritance: during the life of this other person against whose lifespan the
duration of the estate depends, the life tenant's heirs may inherit the
property. Once the "other person" is deceased, this right of inheritance ends.

Q: What happens when a conventional life estate or an estate pur autre vie
ends?
A: Creation of either a conventional life estate or an estate pur autre vie
always results in the automatic creation of an additional estate. Depending on
the wishes of the grantor, this second estate may be reversionary, or it may
consist of a remainder. The process of "reversion" occurs if the grantor has
designated that ownership reverts to the grantor (or his or her heirs) upon the
death of the life tenant, or the death of the other specified person in the
case of an estate pur autre vie. If ownership passes to another following the
end of the life estate, then the second estate consists of a "remainder". The
person who receives this interest in the property is known as a "remainderman",
even if she is a woman. Successive life estates may be created by a grantor,
as when a husband creates a life estate for his wife, with the remainder to his
son, the remainder after his son's death to his son's children, and so on.

Rights of reversion are known as "future interests", because if the former
owner has occasion to exercise these rights and chooses to do so, it will be at
some time in the future. An interesting point about rights of reversion,
including the possibility of reverter and the right of re-entry that accompany
fee simple defeasible estates, is that these rights are considered property in
and of themselves, and may be sold transferred, or disposed of just like
physical property. Rights and interests that exist legally but not physically
are known as "incorporeal" or "intangible" property.

Estates in real property is a very complex topic, and often difficult to
explain thoroughly yet concisely. If this discussion has raised more questions
than it answered, or if it failed to answer all your questions adequately,
please contact us with your questions, suggestions, or comments and we will
include them in a future issue.


SPONSOR'S CORNER
The Land and Property Review wishes to thank this week's sponsor, Smile4u Inc.
Owners Char and Mark and their staff specialize in selling undeveloped land at
low prices in the western United States while occasionally offering great deals
in other states. Browse Smile4u's Eaglestar.net property listings at
http://www.eaglestar.net/Properties/Multiple_Listings/Smile4U__inc_/index.html.


BUYER'S LIST UPDATE
http://www.eaglestar.net/Land_Buyers_List/index.html

Lafayette, Louisiana area: St. Martin or Lafayette Parish. Looking for 5 -10
acres of wooded, undeveloped land.
Please refer to buyer #17208.

Mexico, Central or South America: Land wanted, up to 100,000 acres in one tract
or tracts in close proximity to each other. Preferably arid areas of Mexico,
other areas may also be considered. Please refer to buyer #20680.

Northwestern Montana (Flathead, Lincoln, Glacier, or Mineral Counties).
Looking for remote mountain acreage in Montana - far, far away from town. Must
be surrounded by national forest. Power is nice but not necessary. Remoteness
is ideal (1-2 hours from town is great!). No covenants, no zoning, very
secluded (no neighbors within 2 miles). Acreage is negotiable, the more the
better. Mining claims, old homesteads, anything goes. Elevation up to 7000
feet. Please refer to buyer #20676.

Anywhere in the USA. Wanted: commercial property (including land) for sale, $5
million and up. It MUST be owned/held by a c-corporation and it must be highly
appreciated/low tax basis (e.g., owner will profit greatly from the sale.) If
the property is $1 to 5 million then the same above applies (no land) and needs
to be NNN or NN leased or if it is producing income then we will look at it.
Please refer to buyer #20646.


AUCTION NEWS
http://www.eaglestar.net/Land_Auction_Calendar/index.html

Alamosa County, Colorado: Absolute Land Auction
Saturday, May 31, 2008
Twenty 40+/- acre tracts with 8 being offered absolute. Located in the scenic
San Luis Valley. Many lots with wells, ponds, and water rights. Domestic water
supply is by well, with private septic systems for sewage disposal. Electric
service is at the lot line of each parcel and telephone, television, and
internet are available on site. Call today for more details. Photos and contact
information available at http://www.eaglestar.net/Detailed/20629.html.

Jamestown, Kentucky: Home and Land Auction, Cumberland River Area Country
Cottage on 1 Acre
Saturday, June 7, 2008
Located in the beautiful Cumberland River area, this country cottage offers
panoramic views including a neighboring lake, surrounding pasture and
woodlands, and the scenic Cumberland River Knobs. This property is
conveniently located close to Helm’s Landing, Winfrey’s Ferry, and two private
boat ramps. Brand new with thermal pane windows, a rustic wood interior with
loft, and fabulous front porch. Includes storage building and lot (1 acre+/-).
View photos and details at http://www.eaglestar.net/wrn.html.


LANDTERMS.COM TERM OF THE WEEK
http://landterms.com
Each issue we feature a real estate, forestry, natural sciences or other
land-related term from our partner site, Landterms.com.

This week's term: Run forever
A legal term that means lasting for an indefinite period of time, being without
an endpoint, or of unlimited duration.
Find more legal, real estate, survey, and forestry terms (and many more
categories!) at http://landterms.com/categories.html.


SUGGESTIONS
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Email: newsletter@eaglestar.net

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