TYPES OF PROPERTY INTERESTS
In one of our most recent blogs, we discussed the types of warranties that different deeds convey. However, we have not discussed the different types of interests that an individual has in a property, which is also reflected in a deed. As a refresher, a deed is a legal document that states (1) the type of warranty, or the promise or assurance the grantor (usually a home seller) is conveying to the grantee (usually a home buyer) and (2) the title a person or people have with respect to a certain piece of property. Generally speaking, there are five (5) types of interests in real property that describe the type of title someone or an entity has in real property. They are:
Fee Simple: A fee simple interest is probably the most common interest in real estate. A fee simple interest means that the interest holder is entitled to the entire property with absolute power to make decisions about the property during their lifetime and can leave the property to their heirs after they pass.
Leasehold: Another common interest (although typically not reflected on a deed but worth mentioning) is a leasehold interest. A leasehold interest means real property held under a lease agreement. Consider yourself when you are renting an apartment or a house. During the entire duration of the lease, you have a leasehold interest in the real property.
Life Estate: A life interest is an interest that exists only so long as a person lives. This interest can be based on the interest-holder’s life or the life of another. For example, let’s say John holds title with a life interest in real property. After John passes, John no longer has any interest in the property so he cannot leave the property to his heirs since it terminated upon his passing.
Remainder: A remainder is a future interest that another holds after the termination of a prior interest. This type of interest usually follows a life estate. For example, John transfers title to a piece of real property to his wife for life, and then to his son. In this situations, John’s son has the remaining interest in the real property. After John’s wife passes, her interest will terminate, and John’s son will hold title to the real property in fee simple.
Reversion: A reversion is probably the least common interest a person or entity can hold. A reversion is a future interest the grantor holds after the termination of a prior interest. Consider our previous example where John, the grantor, transferred title to a piece of real property to his wife for life and nothing more. After John’s wife passes, her interest will terminate, and interest in real property will revert back to John since he did not grant any interest after his wife’s life estate.
This is a broad overview of the types of interests conveyed in real estate transactions. At J. Perez Legal P.A., we have over twenty years serving Broward County residents in their real estate transactions as both real estate attorneys and title processors. Please call (954) 450-2585 today to schedule a consultation with experienced real estate attorneys. J. Perez Legal P.A. handles a variety of cases, so call now if you have any other questions related to real estate including mortgage, foreclosure, modification, etc.
Fee Simple: A fee simple interest is probably the most common interest in real estate. A fee simple interest means that the interest holder is entitled to the entire property with absolute power to make decisions about the property during their lifetime and can leave the property to their heirs after they pass.
Leasehold: Another common interest (although typically not reflected on a deed but worth mentioning) is a leasehold interest. A leasehold interest means real property held under a lease agreement. Consider yourself when you are renting an apartment or a house. During the entire duration of the lease, you have a leasehold interest in the real property.
Life Estate: A life interest is an interest that exists only so long as a person lives. This interest can be based on the interest-holder’s life or the life of another. For example, let’s say John holds title with a life interest in real property. After John passes, John no longer has any interest in the property so he cannot leave the property to his heirs since it terminated upon his passing.
Remainder: A remainder is a future interest that another holds after the termination of a prior interest. This type of interest usually follows a life estate. For example, John transfers title to a piece of real property to his wife for life, and then to his son. In this situations, John’s son has the remaining interest in the real property. After John’s wife passes, her interest will terminate, and John’s son will hold title to the real property in fee simple.
Reversion: A reversion is probably the least common interest a person or entity can hold. A reversion is a future interest the grantor holds after the termination of a prior interest. Consider our previous example where John, the grantor, transferred title to a piece of real property to his wife for life and nothing more. After John’s wife passes, her interest will terminate, and interest in real property will revert back to John since he did not grant any interest after his wife’s life estate.
This is a broad overview of the types of interests conveyed in real estate transactions. At J. Perez Legal P.A., we have over twenty years serving Broward County residents in their real estate transactions as both real estate attorneys and title processors. Please call (954) 450-2585 today to schedule a consultation with experienced real estate attorneys. J. Perez Legal P.A. handles a variety of cases, so call now if you have any other questions related to real estate including mortgage, foreclosure, modification, etc.
JOINT TENANCY WITH RIGHT OF SURVIVORSHIP VS. TENANCY IN COMMON
Q: What is the difference between a joint tenancy with right of survivorship and a tenancy in common?
A: "A joint tenancy with right of survivorship basically means that if you have two or more people on a title or on a deed, if one of them should pass away, then the other owners are the 100% automatic owners of the remainder of the property. In other words, everybody is 100% owner of the property. Whereas a tenancy in common means that each person has a percentage interest in the property, that if one or the other should pass, it essentially will pass to their heirs and not automatically to the other person on title."
A: "A joint tenancy with right of survivorship basically means that if you have two or more people on a title or on a deed, if one of them should pass away, then the other owners are the 100% automatic owners of the remainder of the property. In other words, everybody is 100% owner of the property. Whereas a tenancy in common means that each person has a percentage interest in the property, that if one or the other should pass, it essentially will pass to their heirs and not automatically to the other person on title."