Estate

Key Takeaways

• An estate measures the extent and duration of a person's interest in land, including whether the right to possess it exists now or begins later.
• Freehold estates such as fee simple and life estates last for an indefinite time, while leasehold estates run for a stated term.
• A deed in the statutory warranty form under RCW 64.04.030 is a conveyance in fee simple to the grantee and the grantee's heirs and assigns unless the deed says otherwise.
• Washington's tax statutes list a lease of real property for a term shorter than the life of the holder as personal property under RCW 84.04.080.

What It Means

An estate is the measure of a person's interest in land. It answers two questions at once: how much of the ownership that person holds, and when the right to possess the property begins. More than one estate can exist in the same parcel at the same moment without any conflict, because the interests are different sizes and start at different times.

Estates divide first by duration. A freehold estate lasts for an indefinite period, and the two you meet most are Fee Simple, the largest interest the law recognizes, and a Life Estate, which is measured by someone's lifetime and ends when that life ends. A Leasehold Estate runs for a term instead, so a tenant holds possession without holding the underlying ownership.

Estates also divide by timing. A present estate carries the right to possess the land now. A future estate, such as an Estate In Remainder, is owned now but gives possession later, when the estate ahead of it ends. Naming the estate is the first step in any title question, because the estate decides what the holder is able to sell, lease, mortgage, or leave behind.

How It Works in Washington

In Washington, moving an estate from one person to another is a paper transaction. RCW 64.04.010 requires that "every conveyance of real estate, or any interest therein" be by deed, so a sale of a fee simple, a grant of a life estate, and a transfer of a remainder interest all travel on a written instrument rather than a handshake.

The size of the estate a deed conveys is set by statute unless the deed limits it. RCW 64.04.030 supplies the statutory warranty deed form and provides that a deed in that form "shall be deemed and held a conveyance in fee simple to the grantee, his or her heirs and assigns," carrying the covenants of lawful seizin, freedom from encumbrances, and quiet possession. A grantor who means to convey less than fee simple, such as one reserving a life estate, has to write that limit into the deed itself.

Washington's tax statutes then sort estates by duration. RCW 84.04.090 defines real property to include the land and its improvements "and all rights and privileges thereto belonging," but excludes "leases of real property and leasehold interests therein for a term less than the life of the holder." RCW 84.04.080 puts those shorter leases on the personal property list, which is why the same tenancy can be an estate in land for agency purposes and personal property for tax purposes. For practice in this style, work through our 50 Washington practice exam questions.

Example

Ruth owns a house on five acres near Yakima, appraised at $410,000. She signs a statutory warranty deed conveying the property to her son Marcus but reserves a life estate for herself, and the deed is recorded. Ruth now holds a present freehold estate measured by her own life, and Marcus holds a future estate, a remainder, that he owns today but cannot possess until Ruth's estate ends.

Ruth then rents the detached cottage to a tenant, Dana, for 12 months at $1,100 per month, which is $13,200 for the year. Dana holds a leasehold estate that expires on the last day of that term. Three estates now exist in one parcel at the same time: Dana's leasehold, Ruth's life estate, and Marcus's remainder. Ruth cannot leave the house to anyone in her will, because her estate ends at her death, and she cannot grant Dana more than she holds, so the lease cannot outlast the life estate it came from.

Common Mistakes and Exam Traps

• An estate describes the interest a person holds, not the dirt itself, so two or more estates can exist in one parcel at the same time.
• In a probate question the word estate means everything a person owned at death. In a title question it means the interest held in one parcel. Check which sense the question is using.
• A tenant does hold an estate. A leasehold is a possessory estate for a term, not an absence of property rights.
• Fee simple is the largest estate, and a life estate ends at the measuring life, so a life tenant has nothing left to pass by will.