Estates in Property Law
In New South Wales, there are three (3) systems of land:
- 1. Torrens Title: more commonly known as freehold title and comprises most of residential property in NSW. Properties held under Torrens Title means that, apart from any mortgages placed on the property, the land is entirely owned by the person names on the title deed.
- 2. Old Systems Title: this is the early system of land title in Australia. This form of title was used prior to the introduction of the Real Property Act 1900 (NSW). Under old systems title, land is passed with a separate deed or instrument. Accordingly, evidence of land ownership is passed through a ‘chain of evidence’ as opposed to one single title deed. However, since the introduction of Torrens Title, most land held under Old System Title is now being transferred to Torrens Title.
- 3. Crown Land: this is land that belongs to the Commonwealth Government.
Within these three (3) systems of land, there are different ‘estates’ which one can hold in the land.
Estate in Fee Simple
An estate in fee simple denotes a form of freehold ownership. A fee simple estate has three (3) characteristics:
- 1. Alienable: the capacity for the property right to be sold or otherwise transferred from one party to another.
- 2. Descendible: the ability to transfer interest’s in the property, including title, debts, rights and obligations upon the death of the owner. It is common that property is transferred to a spouse, or, in the event the owner has no spouse, then an appropriate next of kin.
- 3. Devisable: similar to descendible, the owner is able to deal with the property by leaving it to another person pursuant to a will.
An estate in fee simple can be categorised further as a ‘Fee Simple Defeasible’ estate. This is created when a grantor places a condition on the fee simple estate. When a specified event happens, the estate may become void or subject to annulment. There are two (2) types of defeasible estates:
- 1. Fee Simple Determinable: when the grantor uses durational language in the condition, then upon the happening of a specific event, the estate will automatically terminate. For example, “to (insert person), as long as the land is used for a park”.
- 2. Fee Simple subject to condition subsequent: for example, “to (insert person), but if alcohol is served”, then the grantor has conditional rights of entry. However, this does not automatically allow the property to revert to the grantor.
Life Estate
A life estate gives the proprietor full rights other than the right to pass the estate to their next of kin.
There are different types of life estates:
- 1. Life estate contingent: the estate terminates on the death of the life tenant or on the occurrence of a specific event
- 2. Pur autre vie: a life estate enjoyed by the tenant for the life of another person.
A life estate is created through a transfer, a transmission application, or a primary application.
The instrument creating the life estate can be terminated in the following ways:
- 1. The death of the life tenant;
- 2. The death of the specified person in the case of an estate pur autre vie;
- 3. The happening of specific event; or
- 4. A combination of the above.
How can we help?
Whilst the creation of the different estates is relatively straight forward, it is important that the drafting of the estate clearly indicates the type of estate that you are seeking to create. If the estate cannot be clearly identified, or the wrong type of estate is created, this may ultimately affect your rights in dealing with your property.
At JB Solicitors, we are able to comprehensively draft the terms of the estate to lodge with the NSW Land Registry Services. Please do not hesitate to contact the experienced team at JB Solicitors and we will be more than happy to assist you.
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