There are six major real estate interests. There was a distinction drawn at early common law between Freehold estate and non-freehold estates. Nowadays however there is no real reason for this distinction.
Freehold Estates Non-Free Hold Estates
1. Fee Simple Estates 4. Estate for Years
2. Life Estates 5. Estate from year to year (Periodic Tenancy)
3. Fee-Tail Estates 6. The Estate at Will
Fee Simple Estates
Using Default Rules
Estates are created by using appropriate words in a deed, will or grant. Words of purchase identify the person in whom the estate is created. Words of limitation are words describing the type of estate created. Thus, where there are no words of limitation specifying the type of estate created the law imposes the default estate (fee simple estate).
At common law it was understood that the words “and his heirs” created a fee simple by estate. If there were no restrictions or conditions were imposed on the fee simple estate then it became a fee simple absolute. Although it stated “and his heirs,” the heirs of a grantee did not gain any possession or any present interest.
Today the default rule is fee simple estate.
Heirs have no present interest
A grant “to A and his heirs” gives A’s heirs no present interest in the property. The words “and his heirs” are only words of limitation indicating a takes a fee simple. A can sell or give away the fee simple, thus depriving A’s heirs of the land.
Note this distinction however…
“O to A for life then to B”
Words of purchase?—There are two individuals who take an interest immediately—A and B. The words of purchase are “…to A” and “…to B”
Words of limitation? For A the words of limitation are “…for life”
For B there are no words of limitation therefore it would default to a fee simple estate. This is not a fee simple absolute because it is subject to A’s life estate (fee simple subject to a life estate).
The old common law rule was formalistic, if you don’t u
A loss of title in a fee simple subject to condition subsequent is not automatic. It requires a court order. Upon breach there is no forfeiture, court judgment creates the forfeiture, not the breach of condition.
i. Fee Simple Subject to Condition—it does not cause a forfeiture. There
is arestriction, however the remedy is either injunction or damages.
Public Policy Against Forfeiture
In deciding the law of a case the court looks to the grantor’s intention in the deed or grant. When the grantor’s intention is ambiguous however, the public policy constructional preference is the one least likely to lead to forfeiture. Despite this constructional preference lawyers should try to avoid ambiguity at all costs. Options—fee simple determinable, subject to condition subsequent, and subject to condition.