Common Types of Real Property Ownership

When our Montgomery, Selma, or Central Alabama bankruptcy attorneys file a Chapter 7 bankruptcy or Chapter 13 debt consolidation plan, we must list all of your real estate holdings, and the legal interest that you have in each piece of property. Most people who own their homes hold it in a term called “fee simple.” This means that you own the property outright even if you do have a mortgage that encompasses a piece of property; however a fee simple holding is not the only type of property interest that we see. To help our clients understand more about the different types of property interest. we have listed the most common ones.

As previously stated the most common type of interest in property is fee simple. It is an outright ownership of that piece of land. Even if you still owe money on the property, you still have the right to sell the land, leave it to your heirs, or make changes to the property as you deem appropriate. A fee simple can be owned solely or can be jointly owned by many different people. When the fee simple is owned by many different individuals, it is commonly known as a joint tenancy or as joint tenants in common. Each individual can own an equal interest or the percentage that each individual owns can vary.

The second most common type of property interest that our Montgomery bankruptcy attorneys encounter is a life estate. A life estate is the right to use and possess a piece of property only during your lifetime, and then upon your death the property passes to an individual or group of people. When you have a life estate this means that you cannot sell the property, give it away, or make any alterations unless you have the consent of the people who own the property after your death. Many people create life estates in their property for testamentary purposes. Instantly upon your death the property will pass to the named individuals in the life estate deed. Usually this property will pass to a spouse or to the children of the person who holds the life estate.

If you have the right to possess a piece of property in the future, this is referred to as a future interest. The most common type of future interest is owned by a person under the terms of a deed or an irrevocable trust. The person will inherit the property through the trust when the current possessor of the property dies. Another type of interest that will occur in the future is a contingent interest. The ownership interest does not come into existence and be created unless one or more conditions are fulfilled by the person who has the contingent interest. For example a person may leave a piece of property to a person, but only if certain conditions are met. If those conditions are not met then the property will pass to someone else.



As most people know, a lien holder is the person or entity that holds a mortgage, deed of trust, judgement lien, or a mechanic’s lien on a piece of real estate. For a lien to exist there must be a person who owns an ownership interest in real estate. Another type of interest in real property is an easement holder. An easement holder is someone who holds the right to travel across another person’s piece of property. This is generally used for egress and ingress to a person who is landlocked and has no other means of reaching a public road.

There are many other types of interest in real estate that exists, but we rarely encounter any of these. The ones mentioned above are by far the most common that you occur in a Chapter 7 bankruptcy or Chapter 13 debt consolidation plan.

If you have any questions about your interest in real estate and how that might affect the filing of a Chapter 7 or Chapter 13, then please call our Montgomery, Selma, and Central Alabama bankruptcy lawyers. All consultations are always free, and we can usually see you within 24 hours! We have offices in Montgomery, Selma, Greenville, and Troy! Call or text us at 334-LAWYERS (529-9377) to set an appointment or use the Contact Form on our website, or you may email us at bsellers@sellerslawfirm.com. Our phone lines are answered 24 hours a day! Remember that doing nothing changes nothing so act today!