Two related topics are core real estate exam material: the kind of estate someone owns (how much of the property's rights, and for how long) and how title is held when there's more than one owner. The explanations below follow the California Department of Real Estate's Reference Book. States differ on some forms of co-ownership, so check your state's rules.
Freehold estates
- Fee simple absolute: the largest estate the law recognizes. The owner controls the property's disposition, including the right to sell it or leave it by will, with no time limit.
- Fee simple defeasible: a fee estate that can be defeated if a condition is broken. For example, land sold on the condition it be used for a certain purpose can revert to the seller if the use changes.
- Life estate: ownership for the lifetime of a person, usually the holder but sometimes someone else. What happens to the property afterward is set by the original grant.
Related: What to Expect on Your State’s Real Estate Salesperson Licensing Exam
Less-than-freehold estates
These are the rights of tenants who rent or lease property. They're treated as personal property, not real property. A lease for a fixed term, such as one year, is an estate for years; a month-to-month rental is a periodic tenancy.
Sole ownership
Ownership by one person (sometimes called "several" ownership, meaning severed from others). Typically only that owner's signature is needed to transfer the property.
Tenancy in common
- Two or more owners each hold an undivided interest, meaning none owns a specific part of the property.
- Shares can be unequal, such as one-tenth, three-tenths and six-tenths. If the deed doesn't say, shares are presumed equal.
- Each owner can sell or mortgage their own share without the others' consent.
- No right of survivorship: when an owner dies, their share passes to their heirs or under their will.
- It's the default: if a deed to two or more people doesn't specify joint tenancy, partnership or community property, it creates a tenancy in common.
Joint tenancy
- Two or more owners hold equal undivided interests.
- Traditionally, the four unities must exist: time, title, interest and possession. Owners acquire at the same time, by the same deed, with equal shares and an equal right to possess the whole. If one is missing, the result is a tenancy in common.
- The defining feature is the right of survivorship: when a joint tenant dies, their interest passes to the surviving joint tenants, not to their heirs. A joint tenant can't leave their interest by will.
- A joint tenant who sells their interest severs the joint tenancy as to that share. The buyer becomes a tenant in common with the others.
A handy mnemonic for the four unities: T-TIP (time, title, interest, possession).
Community property
In California and some other states, property acquired during marriage is generally community property, owned equally by both spouses. Many states don't use this system, so learn whether your state does.
On the exam
Expect scenario questions: three friends buy a cabin and one dies, and the question asks who owns the share. The answer depends on whether they were joint tenants (the survivors) or tenants in common (the deceased owner's heirs).