Estates and Interests
Real property refers to land and anything affixed to it. Buildings are fixtures. Anything attached to buildings or otherwise attached to land such as to be a permanent part of it and likely to cause damage if removed is a fixture. There are special rules foe tenant’s trade fixtures, which may be removed by the tenant at the end of the tenancy, subject to conditions.
Property law allows for various types of estates, interests or rights in land. In strict legal terms, a person does not own land as such, but rather owns or holds an estate or interest in land. An estate or interest in land refers to the major categories of entitlements or rights in land (and buildings). Estates refer to the more significant permanent rights in land. Interests refer to lesser types of rights in land, than estates.
Different persons may own different estates in the same land simultaneously. A person may own a life estate in land which is a present right to full ownership during that person’s life. Simultaneously another person (frequently a child of the first person) may own a future estate or reversion in the land. This is present right to enjoy the property after the termination of the life estate.
The fee simple estate may itself be subject to a lease, an easement or restrictive covenants in favour of other. These latter rights are commonly described as interests, implying a lesser category of right than an estate. An interest in land may be more valuable and dominant that an estate, as where a fee simple estate is subject to a long (e.g. 900 year lease) at a nominal rent. Persons may own a particular estates or interests in land as co-owners.
Estates in land have a complicated history running from Norman times in England. Formerly many types of estates existed. In modern times, the principal estate that is in practice encountered is the fee simple interest. This position is now formalised under recent law reforms, which provides that the fee simple interest in possession is the only form of freehold estate that may exist.
The Freehold / Fee Simple Interest
For most practical purposes, the fee simple estate equates to full ownership. It is the largest interest in land in the sense that it may potentially continue forever. It can be sold, transferred by gift or on death. Generally, it is not possible to place restrictions on the sale or transferability of the free simple estate. Restrictions on transfer or so called alienation may to be found void.
A fee simple interest always exists in land. It is in one sense, the highest interest known to land law. It is not, however, necessarily the most valuable right in land. If for example, a person holds a life estate or lease, there will be, by definition, someone who holds the fee simple interest or so called reversion in relation to this interest. This immediate right to possession will only arise for the fee simple owner, at the end of the life interest or lease. If the life is young or lease is long, the fee simple estate may have little value.
After the recent land law reforms, the other types of legal estates, such as the life estate, are deemed equitable and not legal interests. The freehold owner is deemed trustee under a deemed trust of land. See the chapter on trusts of land. The purpose is to facilitate the sale of land, by providing a single owner with power of sale, where there are omplex multiple rights in land.
Until the recent land law reforms, the fee simple interest would not pass by deed, unless certain key words were used in the deed. A transfer of property from A to B would simply give B a life estate, unless the words “to B and his heirs” or to B “in fee simple” were used. This provision has now been modified by the recent land law reforms so that on a transfer, the fullest interest which the seller can transfer, is presumed to be transferred.
The strict wording was never required in relation to transfers in wills nor in relation to the transfer of registered land. In the case of registered lands, the forms of transfers are prescribed by the land registry rule.
It is possible to have a fee simple estate, which is subject to conditions. Where the relevant condition applies, the estate may terminate. In this event, the original grantor of the estate or his successors may become entitled to the property once again. “Conditional fees” do not terminate automatically on the condition applying. The original grantor obtains a right of entry, which must be exercised. If this not exercised for 12 years, the Statute of Limitations applies and it may no longer be exercised.
Another form of estate is one which by its terms, terminates automatically on the occurrence of a particular event or condition. In this case, the creator has a so called possibility of reverter. The interest is called a determinable fee. The law leans against automatic termination and favours conditional fees over determinable fees. Indeed, conditions which cause a fee simple interest to determine automatically, may be held void as being against public policy or constitutional rights.
Conditions restricting the transfer of estates, are likely to be entirely void. Some restrictions on sale, for example, requiring sale to certain categories of person maybe invalidated. In modern times, discriminatory conditions based on gender, race, religion, social groups are likely to be void under constitutional and equality law.
It is permissible to apply conditions on land ownership under a trust. Transfers under wills are treated as being made under a trust. For example, a will may make a bequest of property on condition that the transferee resides or continue to reside there. Such conditions are more likely to be upheld under a trust, but may nonetheless be found void, when they are against public policy. Many such conditions may also be rendered void for being uncertain in scope.
Complete restrictions on marriage may be held to be void. Partial restrictions may be potentially valid, if they can be interpreted as consistent with public policy. It may, for example, be possible to imply an intention that the transferee be provided for until he or she marries.
Equality legislation prohibits discrimination on certain grounds, in relation to certain matters. The prohibited grounds include gender, marital status, family status, sexual orientation, religion and age (except underage), disability, race, current nationality, ethnic or national origin membership with the traveler community. The provision does not apply to disposals by will or gift or disposals of an interest, which are not available to the public generally, provision of accommodation in a person’s home or in so far as it affects a person’s private or family life or that of other persons residing in the home.
Where the condition subject to which the fee simple is made, is held void, the condition evaporates and the person is absolutely entitled to the property. If, however, a determinable fee is involved, (one which determines automatically on the condition applying) then the entire estate is void.
Fee Farm Grants
A type of estate unique to Ireland is a the fee farm grant. A fee farm grant is effectively a freehold estate, subject to a rent. Technically, it is a freehold estate by reason of its perpetual duration. However, otherwise its characteristics are those of a lease. The 2009 land law reforms prohibit the creation of new fee farm grants. However, unlike other forms of interest they’re not converted into fee simple interests, so that they will continue to exist for many years to come.
There are three types of fee farm grants. Two categories are of ancient origin and are rarely encountered today. In its most common form, it is a lease for ever .The fee farm grantor is equivalent to the lessor or landlord. He enjoys the same rights of recovery for rent as the landlord.
There has been legislation for over 130 years allowing for the purchase out of the rents under a fee farm grant. This legislation now applies to a wide range of long leases. leases. See the separate chapter on grant rent.
Formally, a special type of freehold estate existed known as a fee tail. Under this type of estate, land passed automatically on death to the children, usually the eldest male child of the current owner. If there ceased to be children, the estate would cease to exist and revert back to the original creator (or more likely his successors).
The pressure to commercialize land caused legislation to be introduced to enable fee tails to barred and thereby become saleable. The fee tail was an anomaly and was abolished by the recent land law or format. Existing fee tails are transformed into fee simple interest.
Prior to 2009, it was possible to create a life estate in land as a legal estate. There has been legislation for over 130 years which in effect provided that property subject to a life estate could be sold and the proceeds invested in new property or liquid investments, in respect of which, the life owner would have an interest or income. The freehold owner, subject to whose estate, the life estate exists, has an interest in the substituted property or capital.
The 2009 land law reforms provide that any attempt to create an estate for a life of person after terminate on death is not valid as a legal estate. From now on, such arrangements may only take place under trust. This is part of the policy of reducing the number and type of legal estate.
It is possible to own a future estate or interest in land. This is an estate or right that is to take effect in the future. The fee simple interest of property subject to a life interest for a living person, is a future interest. Despite, its postponement, it has a present actual existence and value. It could in principle be sold for its present value as a future interest, (i.e, the future value discounted at the appropriate rate, to reflect the period of postponement until it becomes enjoyed).
It is possible to create contingent interests. They are interests which will only become vested, once a future event or contingency, occurs. In this case, there is no immediate right, but only an expectation. The interest may have a prospective value, but it would be discounted for the possibility that it may never exist.
Trust of Land
Until the recent land law reforms, it was possible for there to be multiple legal interests in the one piece of land, many of which were future interests. The recent land law reforms act now provide that the only legal interest in land is the fee simple interest in possession. A limited category of the terminable or conditional fee simple interest are still permissible. Apart from this, all other interest including future interest must exist as equitable interests.
The purpose of the legislation is to ensure that a buyer may usually have to deal only, with a single legal owner. All other interests in land are deemed interests under a trust. That means that on a sale such interest can be sold by the legal owner who is deemed trustee of the land.
The owner of the future interests and rights must assert their rights, primarily against the legal owner. They may register notices, so as to reduce the risk that the legal owner may simply sell without respecting their right. A further protection is that the full ability to sell fee from equitable rights, requires two trustees. This is designed to provide some measure of counter balance and protection.
Rules Against Perpetuities
Prior to 2009, there were very complex rules regarding the validity of future interests. They were designed to prevent the creation of interests which might vest at a remote future date. The rules developed in the Middle Ages and could have arbitrary and unintended effects. The bulk of them rules have now been abolished and the land law reforms have simplified the position.
The recent law reforms have abolished the older rules, which limited the length of time for which postponement of future rights might be allowed and restricting the period during which income maybe accumulated. The rules applied to the postponement of the vesting, (i.e. the actual ownership of the future right) that was effected by the rule, not necessarily the actual time the interest took effect.
The rules required that the future interest would have to vest (i.e. be ascertained and fixed) within the lives in being mentioned or impliedly referred to, plus 21 years thereafter. In practice, this meant that vesting could be postponed for no more than a number of generation.
The recent land law reforms have provided for the possibility of applying to court to varya trust. This is designed to cater for any practical problems that may arise from the fact that contingent interest now may remain unvested for a considerable period under a trust. The trustee or beneficiary will entitled to apply.
The Irish reforms, by abolishing the rules on postponement of vesting, have gone farther than might have been expected. Other jurisdictions such as England and Wales and United States jurisdictions have simply amended the rules, typically limiting the period of time in which vesting may not take place for a period such as 80 years.