What is a habendum clause?
What is the legal implication of this provision?
Is it different than to have and to hold clauses?
In this article, we will break down the notion of “habendum clause” so you know all there is to know about it.
We will look at the habendum clause definition, examples in real estate transactions, oil and gas leases, we’ll compare it to a conveyance clause, reddendum and tenendum clause, we’ll look at how it works and the legal implications of it and more.
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What is a habendum clause
A habendum clause is a type of clause specifying the interest a person may acquire and enjoy in a property or land.
Habendum clauses are typically found in real estate deeds, wills, property-related agreements and leases, particularly the oil and gas leases.
In a real estate purchase agreement, the habendum clause is important as it deals with the transfer of ownership and specification of what the purchaser will enjoy.
In real estate leases, the habendum clause will specify the tenant or lessee’s rights in the leased property or premises such as the period of time the tenant can use and enjoy the premises.
Habendum clause origins
Historically speaking, the Latin phrase “habendum et tenendum” appeared in real estate deeds meaning “to have and to hold”.
We can break down this phrase into its components as follows:
“Habendum”: to have
“Tenendum”: to hold
The “to have” aspect relates to identifying what property rights or interests a person is to have and the “to hold” aspect relates to how the person should manage and hold the property.
To have and to hold clause
A habendum clause is also known as the to have and to hold clause.
Very often, the clause of habendum starts with the phrase “to have and to hold”.
They both refer to the section of the contract dealing with the rights and limitations associated with the property transferred.
Many call the habendum clause as the to have and to hold clause
The to have and to hold clause is a standard and boilerplate clause in a deed or lease agreement specifying the property interests and rights being conveyed.
Habendum clause definition
How do you define habendum?
According to the Merriam-Webster dictionary, habendum is defined as:
The part of a deed that limits and defines an estate of ownership granted and sometimes the type of tenancy by which the estate is to be held
In light of this habendum definition, let’s proceed to define habendum clause.
According to Investopedia, habendum clause is defined as:
A habendum clause is a section of a contract that deals with property rights, interests, and other aspects of ownership being given to one of the parties to a deal
The habendum clause legal definition is a contractual provision formally describing the ownership rights and restrictions associated with a property.
Habendum clause in real estate
The “habendum clause” is generally found in real estate transactions where one party, the grantor, defines the rights and restrictions associated with the property that the other party, the grantee, can enjoy.
Property without restrictions
The habendum clause is usually worded in simple and formulaic legal language stating that the property, home or land is being purchased free and clear of any restrictions and the purchaser will have an absolute right on the property.
Often, properties are sold without any restrictions
The purchaser will have the right to sell the property in the future, transfer it, transform it, alienate it, bequeath it or dispose of it so long as he or she complies with government laws and regulations.
When a property is being purchased without restrictions, we call this “fee simple absolute” or “fee simple” representing the best title a person can own on a real estate asset.
Property with restrictions
In less common situations, properties may be sold with restrictions.
In other words, the purchaser may not have full and absolute ownership and rights do sell, transform, transfer or dispose of the property freely.
A property may be transferred to another for a fixed number of years and after the expiration of that time, the ownership will revert back to the original owner.
Habendum clause comparisons
Habendum clause vs Granting clause
A granting clause is a section of an instrument of conveyance outlining the words where the actual transfer of interest is occurring from one party to another.
You’ll find a granting clause in a conveyance instrument such as a deed to real estate where the grantor’s interest is actually transferred to the grantee.
A habendum clause is a type of clause found in property-related agreements where the rights and restrictions related to the property being transferred are defined.
Habendum clause vs Conveyance clause
A conveyance clause is a contractual provision referring to the act of transferring property from one party to another.
You typically find a conveyance clause in a conveyance instrument such as a contract, lease, deed, title or any other type of legal document.
You are “conveying” or “transferring” property and title to another.
A habendum clause (or a to have and to hold clause) specifically defines what is being transferred and what are the interests, rights, restrictions or limitations associated with the property.
Habendum clause vs Reddendum clause
A reddendum clause is a contractual provision where one party (or grantor) reserves or keeps certain rights on the property.
A property seller may include a reddendum clause to keep the rights to receive rent from the property during his or her lifetime
The habendum clause, on the other hand, may define either rights or restrictions related to the property.
Habendum clause vs Tenendum clause
Historically, deed clauses included the Latin phrase “habendum et tenendum”.
The literal translation is “to have” and “to hold”.
The notion of “habendum” had a different meaning than “tenendum”.
The habendum clause dealt with the quantity of interest that a grantor was conveying to the grantee whereas the tenendum clause dealt with the tenure of the property or how the grantee was to hold the property.
Over time, the “tenure” nuance became obsolete.
In modern times, what we see in deeds and conveyance instruments are habendum provisions providing details as to the rights and limitations associated with the property conveyed.
Habendum clause example
Let’s look at some habendum clause examples to see how they are used in different types of transactions or contracts.
Habendum clause real estate transaction
In the context of a real estate transaction, the habendum clause is used to define the rights and restrictions being transferred by the seller to the buyer.
Typically, properties are sold without any restrictions.
In other words, the purchaser will have the ability to enjoy full ownership rights on the property in the future.
When a person has full ownership rights of a property, we say that his or her property rights are “fee simple absolute” which means the property is freely transferable or inheritable without any limitations or restrictions.
If the property is sold with restrictions, the habendum clause will specify the associated restrictions.
A property sold on a timeshare basis will have restrictions with regards to how long an owner can exercise ownership rights
There are parcels of land available to be purchased and owned for a maximum of 100 years.
Once the 100 years are over, the purchaser will lose his or her rights in the land.
Habendum clause real estate leases
In a real estate lease contract, the habendum clause is used to specify the rights granted to the lessee under the agreement.
Typically, the habendum clause in a lease contract provides the right to the tenant to use the property for a certain period of time.
Tenant shall have and hold the Premises for a period commencing on the Effective Date and continuing for the Term unless sooner terminated as provided in Section X.
Habendum clause oil and gas leases
In the oil and gas industry, the habendum clause is also referred to as the term clause.
In other words, the habendum clause is used in oil and gas lease agreements to define the term of the lease, typically composed of a primary term and a secondary term.
A company may grant a lease on the land for an initial term to have the lessee drill and start producing oil or gas.
If the lessee is unable to start production within the initial term of the lease, the lease will expire.
On the other hand, if the lessee is able to produce oil or gas, the secondary term can begin and will remain as per the terms of the lease.
In essence, the habendum clause is used to define the total period of time that the oil and gas lease will remain in effect.
Here is how an example of a habendum clause in an oil and gas lease:
Habendum clause sample
Let’s see how a habendum clause can be worded in a hypothetical clause.
Sample habendum clause in a real estate transaction:
For good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the seller (“Seller”), does hereby grant, bargain, transfer, sell, assign, convey and deliver to the buyer (“Buyer”), all of its right, title and interest in and to the Property and Buyer, to have and to hold the same unto Buyer, its successors and assigns, forever.
Sample habendum clause in a lease:
Commencing on DATE, Landlord does hereby lease to Tenant and Tenant does lease from Landlord the approximately [10,000] rentable square feet, as shown on the floor plan attached hereto, to have and to hold for the remainder of the Lease Term as set forth in the Lease.
Sample habendum clause in a mortgage:
TO HAVE AND TO HOLD all and singular the aforesaid property unto the Company A, its successors and assigns, in trust for the equal and proportionate benefit and security of the Agents and the Lenders, except as otherwise provided in the Agreement, and for the uses and purposes and subject to the terms and conditions of this Mortgage.
Habendum clause FAQ
Is a habendum clause required
Many states require a habendum clause in a deed to allow for the registration of the deed with the land registry or recorder of deeds.
What does Habendum mean
Habendum is Latin for “to have”.
The ‘habendum clause’ is generally found in real estate deeds or property contracts to define the interest that is being transferred from one party to another.
In a lease agreement, the ‘habendum provision’ outlines the rights granted to the tenant or the duration where the tenant is given the right to use the leased property or premises.
What is the granting clause in a deed
A granting clause is a section of a legal instrument where actually stipulating the transfer terms.
You’ll find a granting clause in a legal transfer instrument such as a real estate deed.
What part of a deed limits the amount of the estate granted
The habendum clause or the to have and to hold provision is the section in a deed outlining the rights and limits to the estate granted.
You can also have a reddendum clause where the grantor reserves certain rights on the property (example: the owner transfers property but keeps rights on all future rent) resulting in a limit to the rights granted on an estate.
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