What you should know about fee simple defeasible

In real estate, a fee simple defeasible is a type of property ownership that grants the owner certain rights and privileges, but with specific conditions or limitations. It is a hybrid form of ownership that lies between absolute ownership (fee simple absolute) and a lesser interest, such as a leasehold or life estate.

A fee simple defeasible gives the owner of the property the title as well as the majority of the rights that come with fee simple ownership, such as the ability to sell, rent, or mortgage the property. However, a restriction or condition specified in the initial grant or conveyance applies to the ownership interest.

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What is the difference between a fee simple absolute and a fee simple defeasible?

The main difference between an absolute property right and a defeasible property right lies in the conditions and limitations of the property rights.

Fee simple absolute

A fee simple absolute, also known as fee simple estate or fee simple title, is the highest form of ownership. In this type of ownership, the owner (transferee) has full and unrestricted ownership rights to the property. There are no conditions or limitations attached to the ownership, and the owner has the right to own, use, transfer and dispose of the property without any restrictions. The ownership right is considered indefinite and has an unlimited duration. The owner has the right to transmit the property to his heirs by inheritance.

Fee simple defeasible

As explained above, the extinguishable fee simple usufruct is a type of ownership that grants the owner (assignee) full ownership rights, but with certain conditions or limitations. These conditions are specified in the deed and may result in the ownership right being extinguished or modified if they are triggered. Freehold estates can be of two types:

Fee Simple Determinable: In this type of extinguishable estate, the ownership right is automatically extinguished if a specific event occurs or a certain condition is breached. The property reverts to the grantor or his successors without the need for any legal action.

Fee simple subject to condition subsequent

In this type of extinguishable property, the property right is not automatically extinguished if the condition is breached. Instead, the grantor or his successors are entitled to reclaim the property by taking legal action or asserting their right of reentry.

What is an example of a fee simple defeasible estate?

Example of fee simple determinable

Let’s say a university grants a parcel of land to a nonprofit organization for the purpose of constructing and operating a public library. The deed contains a condition stating that the ownership of the property will automatically revert back to the university if the land ceases to be used as a library. If the nonprofit organization stops operating the library or uses the land for any other purpose, the ownership interest would automatically terminate and return to the university.

Example of fee simple subject to condition subsequent

Suppose an individual conveys a piece of land to a local government with the condition that the land must be used exclusively for the construction of a public park. However, the deed states that if the land is not used as a park, the grantor or their successors have the right to reclaim the property. In this case, if the local government decides to repurpose the land for a different use, the grantor or their successors would need to take legal action to reclaim ownership of the property.

These examples illustrate how fee simple defeasible estates can impose conditions or limitations on the use of property, allowing the grantor to maintain some level of control or involvement even after conveying ownership to the grantee.

Another example of defeasible

Suppose John owns a large parcel of land and decides to convey it to a local community organization, Greenway Conservation Society, with a condition of freehold. The condition states that the property must be used for conservation purposes only and that if the land is used for any other purpose, the property will revert to John or his heirs.

In this case, John assigns the property to the Greenway Conservation Society, giving it full ownership rights and control over the land. However, ownership is subject to the condition that the land be used exclusively for conservation purposes.

If, in the future, the Greenway Conservation Society decides to use the land for commercial purposes or uses it in any way that violates the condition, ownership of the land would revert to John or his heirs. They would regain all ownership rights and the Greenway Conservation Society would no longer claim ownership. A fee simple absolute provides unrestricted ownership rights with no conditions or limitations, while a fee simple defeasible includes conditions or limitations that can trigger the termination or modification of the ownership interest.

Written by Vanessa Gallanti. May 24, 2023

Enthusiast about planning, project management, construction materials and technology, and construction. A civil engineer from Los Andes University and a content writer for Kukun.