• Many different types of estate are recognised under Australian law. The type of estate depends on the nature of a person's interest in land.

1. Fee simple estates.

• A fee simple estate is the greatest interest in land recognised by the common law. Under Australian property law it is the closest thing to absolute ownership.
• A holder of a fee simple estate can freely dispose his or her interest inter vivos or by will.
• Inter vivos is a Latin term meaning "among the living." Under property law principles it refers to the transfer of property by agreement between living persons.

B) Life estates.

• A life estate gives the life tenant full proprietary rights apart from right to dispose (sell or gift) the property. Effectively it is a right to live in the property until a specified time or event occurs.
  • A life estate can be termination by the death of the life tenant or on occurrence of a specific event such as marriage or bankruptcy.
• When a life estate is created the person granting the life estate must specify the circumstances that will terminate the life estate and who will own the property after the life estate terminates.
  • The person or people who will own the property after the life estate terminates are known as a remainderman or remaindermen because they own the remainder of the property being whatever is left after the life estate ends.
  • Both the life estate and the names of the remaindermen are listed on the certificate of title.
  • Neither the holder of the life estate nor the remainderman can sell or dispose of the property unless they all agree.
  • A life tenancy can be terminated or renegotiated by agreement between the holder of the life estate and all the remaindermen.
• Under a life estate ownership of the property cannot be passed under a will or sold by the holder of the life estate as the right is personal to them. However a remainderman can transfer their right to the remainder either by leaving it in their will, by selling or by gifting it.
• Examples of a life estate include where:
  • P is the registered proprietor of a property. She transfers a life estate to X for X’s life or until X becomes married. When the life estate terminates  (by X’s death or marriage) the ownership of the property reverts back to P as an estate in fee simple; or
  • P is the registered proprietor of a property. She leaves a will granting a life estate to X and Y as joint tenants and the remainder to Z upon termination of the life estate. X and Y live in the property for the rest of their lives. When they are both dead the ownership of the land goes to Z as an estate in fee simple. Neither X or Y can leave any interest to the land in their wills. If Z dies before X or Y his right as the remainderman is an asset of his estate and is dealt with according to his will.
• Although a life estate gives the life tenant many rights it also imposes certain restrictions. A life tenant has to ensure that the property is properly maintained and pay all rates and other expenses of the property while they are living there.
• The holder of the life estate cannot mortgage the property. However the life estate itself is an asset that can be mortgaged.
  • This should be done carefully as a mortgage of a life estate ends upon termination of the life estate.
  • That means that the life tenant’s heirs will have the mortgage as a debt of the estate even though they do not have any share in the inheritance of the property itself.
• If you are considering creating a life estate or are a life tenant you should speak to a lawyer regarding your rights and obligations under the law.

C) Leasehold estates.

• Under a leasehold estate a landlord (the 'lessor') gives a tenant (the 'lessee') a right to exclusive possession of land for a fixed period of time.
• A landlord is usually a holder of a fee simple estate in the land but he or she may also hold a lesser estate such as a life estate or a leasehold estate. If a landlord holds a leasehold estate over the land and then leases (or rents) this out the lessee (such as a person paying rent) in effect becomes a sub-lessee (such as a person paying rent to someone who pays rent to the owner). This is similar to the situation of tenant or sub-tenant in a house rental scenario.
• The following are types of leasehold estates under Australian property law:
  • a fixed term lease is lease that automatically expires at the end of the lease period. It can be for a minimum of one day or a maximum of 999 years;
  • a periodic tenancy does not end until appropriate notice is given. Such tenancies may be created on a monthly or weekly basis or as prescribed under a contractual agreement;
  • a tenancy at will is a unique category of a leasehold estate that does not have any defined duration. One example of a tenancy at will is when a holder of a fee simple estate allows another person to take exclusive possession of land without any agreement and without any payment of rent; and
  • a tenancy at sufferance occurs when a lessee overstays his or her lawful possession of land and the owner has not yet taken steps to remove them.