The
simplest form of property ownership is a fee simple absolute in
possession. A “fee simple absolute” means that the owner has a 100%
undivided interest in the property. S/He can use it, sell or convey it, and
leave it to someone via a Will.
Fee – inheritable interest in land
Simple – property could be inherited by heirs
Absolute – No restrictions
With
a life estate, however,
the person holding the life estate has only a partial
interest in a property; this person is known as the "life
tenant." A person who has a life estate is entitled to enjoy full use of
the property during his lifetime, but does
not have the right to confer the property upon his death. As a full owner,
the life tenant can live on the property, build and/or renovate, rent, or sell
the property.
When
a life estate is created, the documents must stipulate who the property will go
to (a remainderman) upon the life tenant's death. This person cannot take
possession of the property until the life tenant's death.
For
example, if John dies and leaves his home "to Joe for life, and then to
Jane," Jane is a remainderman because she will inherit the home in
the future, after Joe dies.
When
a life tenant dies, the remainderman's interest in the property immediately
becomes active. This is true even if the life tenant attempted to leave the
property in a Will to someone else, or has sold the property. A life tenant is
unable to grant a greater interest than he himself has in the property, so any attempt by the life tenant to
pass the property onto to someone else in a Will is invalid.
The
fact that the life tenant's interest ends upon his death means that if he sells
the property to someone else, their
(the buyer’s) interest ends immediately upon the life tenant's death.
*Another
limitation on a life estate is the legal doctrine of waste, which prohibits life
tenants from damaging or devaluing the property.
