Common Types of Real Property Ownership

When you file for bankruptcy, you must list your legal interest in your real estate. Here are some of the common types of property ownership.

Updated by , Attorney University of the Pacific McGeorge School of Law
Updated 5/23/2024

When you file for bankruptcy, you must list all aspects of your financial situation, including your property. If you own real estate or real property, you'll also be asked to disclose your ownership interest using legal terminology. In this article, you'll find definitions for the most common types of property ownership, such as a fee simple, life estate, future interest, and contingent interest, along with other terms you should know when considering bankruptcy.

Listing Real Estate Ownership on Bankruptcy Forms

When filling out your bankruptcy forms, you must describe all real estate you own on Schedule A/B: Property of the official bankruptcy forms. You'll be asked to include:

  • the property address
  • the property type (single-family home, duplex, condo, and such)
  • who has an interest in the property
  • the property value, and
  • the nature of your ownership interest.

It's the last point that stumps many people. Even though you don't have to fill in the ownership interest portion, it's always good to be complete.

Types of Property Interests

Here are some common ways to own real estate.

  • Fee simple. This is the most common type of interest. It is outright ownership. Even if you still owe money on your mortgage, as long as you have the right to sell the house, leave it to your heirs, and make alterations, your ownership is fee simple. A fee simple interest may be jointly owned by one person or several people. Normally, when people are listed on a deed as the owners—even if they own the property as joint tenants, tenants in common, or tenants by the entirety—the ownership interest is fee simple.
  • Life estate. This is the right to possess and use property only during your lifetime. You can't sell the property, give it away, or leave it to someone when you die. Instead, when you die, the property passes to whoever was named in the instrument (trust, deed, or will) that created your life estate. This type of ownership is usually created when the sole owner of a piece of real estate wants a surviving spouse to live on the property for the rest of his or her life but then have the property pass to the owner's children. In this situation, the surviving spouse has a life estate. Surviving spouses who are beneficiaries of AB, spousal, or marital bypass trusts have life estates.

Other Important Real Property Terms

Most people will use one of the abovementioned terms to describe their real estate ownership interest. But other situations can exist. Here are some terms you're not likely to need but could depending on your circumstances.

  • Future interest. This property right comes into being sometime in the future. A common future interest is owned by a person who—under the terms of an instrument such as an irrevocable trust—will inherit the property when its current possessor dies. Simply being named in a will or revocable living trust doesn't create a future interest, because the person who signed the deed or trust can amend the document to eliminate your interest.
  • Contingent interest. This ownership interest doesn't exist until one or more conditions occur. Wills sometimes leave property to people under certain conditions. If the conditions aren't met, the property passes to someone else. For instance, Emma's will leaves her house to Josh provided that he takes care of her until her death. If Josh doesn't care for Emma, the house passes to Emma's daughter Jessica. Both Josh and Jessica have contingent interests in Emma's home.
  • Lienholder. If you are the holder of a mortgage, deed of trust, judgment lien, or mechanic's lien on real estate, you have an ownership interest in the real estate.
  • Easement holder. You have an easement if you hold a right to travel on or otherwise use property owned by someone else.
  • Power of appointment. If you have a legal right, given to you in a will or transfer of property, to sell a specified piece of someone's property, that's called a power of appointment and should be listed.
  • Beneficial ownership under a real estate contract. This is the right to own property by signing a binding real estate contract. Even though the buyer doesn't yet own the property, the buyer has a "beneficial interest"—the right to own the property after completing the formalities. For instance, property buyers have a beneficial ownership interest while escrow is pending on the property.

You'll find more useful bankruptcy terms in When Is a Bankruptcy Claim Contingent, Unliquidated, or Disputed?

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