Types of Ownership
There are two broad categories of rights to real estate: freehold estates and leasehold estates. A freehold estate involves ownership, while a leasehold estate involves tenancy, more commonly called rental. Each category breaks down into many subcategories that can affect your rights to use a property.
A free simple estate gives an owner all rights to a property for an unlimited time. A free simple defeasible estate puts limits on a property, stating ways that it can and cannot be used. For instance, an owner might stipulate on the deed that the property can only be used for a church or that it cannot be used as a restaurant. In some cases, if the agreement is broken, the land reverts back to the grantor.
In a real-estate transaction, a seller is called a grantor and a buyer is called a grantee. In a similar manner, in a rental transaction, a landlord is called a lessor and a tenant is called a lessee.
If you purchase property with others, your deed might state that your share of the ownership transfers to the other owners upon your death. Or it might state that your heirs receive your ownership interests. There are also specific types of wording designed specifically for married couples.
A life estate gives an individual the rights to use the land based on the life of specific person. Those rights end with the death of that person, and they revert to whomever the documents specify. Here's an example. You have inherited a house, but you have no need to live in it. Your father needs a place to live, but you don't want to sell the property to him or give him full ownership. You can grant your father a life estate. Upon his death, the property can revert back to you or to anyone else you specify.
A life estate can be based on the life of an individual other than the owner of the life estate. You might grant someone a life estate that terminates upon your own death, with the property going directly to your heirs.
Can life estates be sold?
Yes, they can, but since they are based on the life of an individual, which is always uncertain, they are not very marketable.
The owner of a life estate is expected to maintain the property in a reasonable manner. For instance, the property cannot be stripped of natural resources such as trees.