There are a variety of ways in which a person can own commercial or residential real estate. The most common form of ownership is fee simple absolute. Fee simple absolute means the owner has the right to sell the property, use the property as security for loans (i.e., encumber the property), improve the land or buildings, possess the property and pass the property on to his or her beneficiaries as part of their estate. A fee simple absolute is the most complete form of ownership. Property can also be owned jointly by two or more persons. A tenancy in common, for example, is a form of Joint ownership whereby all of the owners have a distinct and undivided interest in the property. Each owner is free to possess, sell or encumber the property. Should one of the owners die, his or her interest will be transferred according to his or her will or according to the state's intestacy laws if there is no will.
A joint tenancy is also a form of joint ownership. However, when a joint tenant dies, his or her interest in the property is transferred to the remaining joint tenants, not to his or her beneficiaries. This transfer of ownership to the remaining owners is known as a right of survivorship.
Additionally, property can be owned by a husband and wife as an estate by the entireties. This is similar to a joint tenancy. However, if the marriage is dissolved, the former husband and wife become tenants in common.
An encumbrance is an obligation that attaches to a piece of real property and is held by a party who is not the owner of the property. An encumbrance is not an ownership interest in real property, and the property may be bought and sold even though there are encumbrances attached to the property. A person who buys property with an encumbrance is bound by the encumbrance.
One of the more common forms of an encumbrance is an; easement. An easement is the right to use another person's land for a particular purpose. There are many forms of easements. Public utility companies frequently have utility easements that permit them to run gas, water or electrical lines through property. The owner of property on a waterfront might sell to the owner of an adjacent lot without access an easement to cross over to the water. A person who owns property that is landlocked may receive an easement from an adjacent landowner to have access in and out of the property. This is known as a right of way. Another type of encumbrance is a lien, which is a charge against property that provides security for a debt or obligation of the property owner. The lien holder does not own the property. The owner of property may voluntarily agree to a lien, perhaps by taking out a mortgage. Sometimes mortgages provide the holder of the mortgage with additional rights if the property is sold or encumbered further. A lien will be imposed for nonpayment of taxes. Another common lien is a construction lien. A construction lien may arise when someone furnishes labor or materials to improve a piece of property and is not paid. By giving proper written notice and filling and serving a claim of lien with the clerk of the court within the required time, the construction lien or (the person holding the lien) may force the payment of the lien. Deed restrictions, also known as covenants, conditions or restrictions, encumber an owner's freedom to use the land. They may be imposed on a buyer when properly is sold and are included a the deed to the property. Property developers seeking to retain a certain community atmosphere often use deed restrictions. Restrictions may limit the color of a house, the size and shape of a house, and require general upkeep of the property. There are other restrictions on the use of property as well, such as zoning ordinances and building codes.