Types of Ownership

Types of ownership estates

Type	Description	Key point
Fee simple	The highest and most complete form of ownership recognized by law. Includes bundle of rights	Inheritable, transferable, indefinite duration, subject only to government powers
Fee simple defeasible	Ownership that can be lost if a condition is violated	Includes: condition subsequent (goes to court), and determinable (automatically reverts)
Life estate	Ownership limited to someone’s life	Not inheritable unless converted
Estate in reversion	Property returns to the grantor after life estate ends	Common with elderly parents
Remainder estate	Goes to a named third party after life estate ends	Person = Remainderman

Severalty: sole ownership by one legal entity (individual, corporation, trust, LLC)
- Full control and responsibility
- Title held in the name of one owner only
Co-ownership (a.k.a. concurrent ownership): two or more people share ownership at the same time
- Tenancy in common (TIC)
  - Default co-ownership if not otherwise specified
  - Each owner has undivided interest (can be unequal %)
  - Freely transferable (owners can sell/gift without consent)
  - No right of survivorship - passes to heir by will or probate
  - Most common form for unrelated owners and business partners
- Joint tenancy
  - Equal ownership with right of survivorship
  - When one dies, their share automatically transfers to surviving joint tenants
  - Must be create with 4 unities:
    - Time - acquired at the same time
    - Title - on same deed
    - Interest - equal share
    - Possession - same right to use entire property
  - If any unity is broken (e.g., one sells their interest), it reverts to tenancy in common
- Tenancy by entirety
  - Married couples only
  - Similar to joint tenancy, but with martial protections
  - Both spouses must sign to convey
  - Right of survivorship included
  - Not recognized in MN
Ownership in legal entities
- Corporation
  - Owned by shareholders
  - Legal entity - ownership is in stock shares
  - Perpetual existence
  - Real estate owned in severalty by corporation
- Partnership
  - General partnership: all partners manage and are liable
  - Limited partnership: general partners mange; limited partners are passive and have limit liability
  - Real estate titled in partnership’s name
- LLC (limited liability company)
  - Combines liability protection of corporation with tax advantage of partnership
  - Real estate held in name of LLC
  - Ownership via membership interest
- Trusts
  - Legal arrangement where title is held by a trustee for a beneficiary
  - Types:
    - Living trust
    - Testamentary trust (from a will)
    - Land trust (confidential ownership)
MN specific
- Co-ownership in MN
  - MN recognizes:
    - Tenancy in common
    - Join tenancy
    - Single ownership
  - MN does not recognize tenancy by entirety
- Joint tenancy in MN
  - Must be clearly stated in deed (e.g., “as join tenants with right of survivorship”)
  - Survivorship rights must be intentional
  - If not stated, defaults to tenancy in common
  - Severed when one joint tenant sells or gifts their interest
- Contract for deed (special MN ownership case)
  - Buyer holds equitable title
  - Seller retains legal title until full payment
  - Popular for owner-financed deals
  - Cancellation requires legal notice and 120-day waiting period
- Homestead rights
  - MN law protects up to $450,000 of equity in homestead from cone creditors
  - Both spouses must sign any document conveying or encumbering homestead property
  - Applies even if only one spouse is on title
- Common interest ownership (CIO) - condos, townhomes, co-ops
  - Owners own individual unit in fee simple, plus common areas a tenants in common
  - MN Common Interest Ownership Act (MCIOA) governs:
    - Required disclosures
    - Recission periods (10 days to cancel after receiving disclosures)
    - HOA powers, assessments, and management