What Is a Freehold Estate?

A freehold estate is one where somebody has permanent ownership of a piece of land. This contrasts with a leasehold estate where the person outright owns any buildings on the land, but only has ownership of the land itself until a set date. There are several different versions of freehold estate in operation, the most notable being a fee simple and a life estate.

Some pieces of land are technically leased to the "owner" rather than sold outright. In many cases these leases date back decades or even centuries and will run until long after the present residents have died. The lease itself can be bought or sold, meaning that in many cases owning the lease has the same practical effect as owning the land outright. Where the land is not covered by a lease, the land is known as a freehold estate.

The most common form of freehold estate is known as a fee simple absolute. This means that the owner of the land is not subject to any contractual restrictions. He owns the land outright and can largely do whatever he likes with it, including passing it on to any heirs.

There are other versions of a fee simple estate which have conditions placed by a former owner in making a sale, often many years ago. For example, the owners of the land may be required to use it for a particular purpose, or alternatively be barred from using it for a particular purpose. Breaching this condition means the land ownership may return to the original seller or her descendants. Such conditions may also be binding on anyone who inherits the estate.

A life estate is one where the person, known as a life tenant, has legal ownership of the land, but only until he dies. He can sell the land or take out a mortgage, but the ownership of the property still reverts to the original owner when the first life tenant dies. For example, if Adam sells Brian a life estate and Brian then sells the land to Charlie, Adam will regain ownership when Brian dies, even if Charlie is still living on the land.

In some cases, a freehold estate may be subject to a fee tail arrangement. This means that although a person is the legal owner of the land, she cannot sell it to anyone else. Instead it passes to her heir upon her death. The heir is subject to the same rules meaning the land passes down the family line, though sometimes illegitimate children are excluded. While common several centuries ago, particularly among aristocracy, fee tail has been abolished in many places, including all but four American states.