A life estate is a freehold estate created when an owner of a free simple estate conveys ownership to another, but only for the balance of a lifetime of the party to whom the property is conveyed. The party who receives the ownership of a life estate is called a life tenant. During the life of the life tenant, they have all rights in the property. They may lease it, mortgage it, or even sell it. However, the life tenant cannot convey more rights than they possess and must preserve the property for the one who is to receive it upon their death.
Since the life tenant has no ability to control the property after their death, in the event the property is leased, mortgaged, or sold, those rights terminate upon the death of the life tenant.
Provision must be made in the deed that creates a life estate for the succession of ownership upon the death of the life tenant. The party who created the life estate, called the grantor, may wish to have the property ownership returned to them or to their heirs. The right to regain the ownership is called reversion estate.
The grantor may instead wish to have the property pass to another person or entity named in the original deed. If someone other than original owner is to receive the ownership, t is called a remainder estate. The difference between a reversion estate and a remainder estate is simply who is to receive the ownership of the property.
Estate in possesion
In the remainderman is certain to receive the rights, they are a vested remainderman. If there is uncertainty as to wheter or not the rights will pass to the remainderman, they are a contingent remainderman (e.g. future children). A life estate is usually, but not always, based on the life of the life tenant. Instead, it may be based on the life of a third person. When based on the life of a third person, the estate is called an estate pur autre vie, which means “an estate for the life of another”.
One who has possession or control of property has an estate in possession. An owner in fee simple or a life tenant has an estate in possession. When a party is to receive rights in the future, they have an estate in expectancy. A remainderman would have an estate in expectancy.