3.1 Interests and Estates in Land

Interests and Estates in Land

An interest in real estate is ownership of any combination of the bundle of rights to real property, including the rights to possess, use, transfer, encumber, and exclude others. Interests can be divided among multiple parties (undivided interest), meaning each owner has a share of the whole property, not a specific physical part.

Examples of interests include:

• An owner enjoying the complete bundle of rights
• A tenant with temporary rights to use and exclude
• A lender with the right to encumber the property (mortgage)
• A repairman with a lien for unpaid services
• A buyer with rights under a sale contract
• A mining company with rights to extract minerals
• A municipality controlling land use (zoning)
• A utility company with easement rights

Interests differ by duration, the area they apply to (land, air, subsurface), whether they’re public or private, and if they include legal ownership. If an interest includes the right of possession, it’s called an estate in land.

Encumbrances (like tax liens, mortgages, or easements) restrict an owner’s rights but don’t grant possession. Public interests (like zoning or eminent domain) allow government entities to control land use for the public good.

Estates in land are interests that include possession. There are two main types:

• Freehold estates: Ownership for an indefinite period (could last a lifetime or generations).
• Leasehold estates: Temporary rights to possess, defined by the lease term.

Both are called tenancies: the owner is a freehold tenant, and the renter is a leasehold tenant.

Check-In Questions

• Which of the following is not