Escheat

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Escheat is a common law term for a number of situations where a legal interest in land is destroyed by operation of law, so that the ownership of the land reverted to the immediately superior feudal lord.

Most common law jurisdictions have now abolished the concept of feudal holding of property, and so the concept of an escheat loses something of its meaning. The term is often now applied to the transfer to the state of the title to a decedent's property when the owner of the property dies intestate and is not survived by anyone capable of taking the property as heir. For example, a common-law jurisdiction's intestacy statute might provide that when someone dies without a will and is not survived by any spouse, descendants, parents, grandparents, descendants of parents, children or grandchildren of grandparents, or great-grandchildren of grandparents, the intestate decedent's estate will escheat to the state.

Even in England and Wales where escheat still operates as a doctrine, there are unlikely to be any feudal lords to take property on an escheat, so that in practice the recipient of an escheated property is the Crown.

In common law there were two main ways an escheat could happen:

If you were convicted of a felony other than treason (when the property was forfeited to the Crown), in English law, your property escheated. If you were executed for the crime, your heirs were ineligible to inherit it from you. In most common law jurisdictions, this type of escheat has been abolished outright. For example, in the United States, in Article 3 § 3 of the United States Constitution which states that attainders for treason do not give rise to forfeiture or "corruption of blood", the rule has been abolished.
If you had no heirs to receive your property by the laws of intestacy and wills any property owned at death would escheat. In most common law jurisdictions, this has been replaced by bona vacantia or a similar concept rather than escheat (see below).

Essentially escheat operates when property is left with no owner. The background is the Tenure system of land ownership. The doctrine operates to prevent land being left in limbo and ownerless.

In English law, the doctrine of escheat has been replaced in most cases by bona vacantia, so that property owned by an intestate deceased with no living heirs passes into the ownership of the Crown (or in some areas the Duchies of Cornwall or Lancaster who have the right to receive bona vacantia in certain parts of the United Kingdom) without an escheat taking place. Similarly, where a corporation is dissolved any property belonging to that corporation passes as bona vacantia.

Escheat can still occur in England and Wales, if a person is made bankrupt or a corporation is liquidated. Usually this means that all the property held by that person is 'vested in' (transferred to) the Official Receiver or Trustee in Bankruptcy. However, it is open to the Receiver / Trustee to refuse to accept that property by disclaiming it. This is relatively common (affecting a few hundred properties a year) where freehold property, such as the common parts of a block of flats would ordinarily pass to the trustee to be realised in order to pay the bankrupt's debt, but the property is, for example, split into leased flats which give the landlord an obligation to spend money. The bankruptcy of the original owner means that it is no longer the bankrupt's property, but the disclaimer destroys the freehold estate, so that the land ceases to be owned by anyone and becomes land held by the Crown in demesne.

Although such escheated property is owned by the Crown, it is not part of the Crown Estate, unless the Crown (through the Crown Estate Commissioners 'completes' the escheat, by taking steps to exert rights as owner.

However, usually, in the example given above, the tenants of the flats, or their mortgagees (mortgage providers) would exercise their rights given by the Insolvency Act 1986 to have the freehold property transferred to them. This is the main difference between escheat and bona vacantia, as in the latter, a grant takes place automatically, with no need to 'complete' the transaction.

Until the Land Registration Act 2002 this meant that the land would cease to be registered land, acting as a slow leak of property out of registration, since only estates in land could be registered and land in the Crown demesne was not held feudally and so could not be part of an estate.

Escheat can also occur when an entity (such as a bank) holds money or property (such as an account in that bank) and the property goes unclaimed. In many jurisdictions, if the owner cannot be located, such property can be revocably escheated to the government.

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Feudalism

In terms of Feudalism in England, escheat was when the tenant of a fief died without an heir or committed a felony. The fief reverted back to ownership of the King for one year and one day (by right of primer seisin, since all property belonged to the King in a Feudal system), after which it reverted back to the original lord who had granted it. The king took particular interest in this as a source of revenue starting with Henry III.

From the 12th century onward the crown paved the way for escheators (those who managed escheats), with one escheator per county established by the middle of the 14th century. Escheators reported to the Exchequer. Upon learning the death of a tenant the escheator would hold an "inquisition" to learn if the king had any rights to the land, and if there was any doubt the escheator would seize the land and refer the case to Westminster where it would be settled, ensuring that not one day's revenue would be lost. This would be a source of concern with land owners when there were delays from Westminster.

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Escheat of Limbo Cessions

A “limbo cession” is territory which has been ceded without the specification of a “receiving country.” This type of arrangement is often seen in post-war peace treaties. For example, in Article 2 of the Treaty of San Francisco, Japan renounced all right, title and claim to numerous island groups, without specifying a “receiving country.”

Under international treaty law, and within the framework of military occupation, the concept of escheat is helpful in understanding the disposition of limbo cessions. Fundamentally, “escheat” can be defined as “reversion of the title of property to the state in the absence of legal heirs or claimants.” How does this apply to occupied territory? The answer is that the title to a limbo cession reverts to “the conqueror,” which in the post-Napoleonic period will be “the (principal) occupying power.” This is not ownership, but more of a “quasi-trusteeship.”

The form of administration by which an occupying power exercises government authority over occupied territory is called "military government." For a limbo cession, with no designation of a “receiving country” in the peace treaty, the ceded territory escheats to (i.e. remains under the authority of) the military government of the “principal occupying power” as an interim status condition.

Such an explanation is in full compliance with the international legal stipulations that (1) military occupation does not transfer sovereignty and (2) military occupation is, at the most basic level, a transitional period, or a period of “interim (political) status,” (3) the military government of the principal occupying power does not end with the coming into force of the peace treaty, but continues until legally supplanted.

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