The Fee Simple and Fee Tail


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Terms:


Fee Simple
An interest in property that allows its holder and his or her heirs to own and possess the property in perpetuity.

Defeasible Fee:
A fee simple interest that can be terminated by the occurrence or non-occurrence of an event or condition.

Fee Simple Determinable
A fee simple interest in property that is terminated automatically upon the occurrence or non-occurrence of an event or condition.

Fee Simple Subject to a Condition Subsequent
A fee simple interest that can be terminated at the will of a future interest holder upon the occurrence or non-occurrence of an event or condition.

Fee tail
An interest in land that is inheritable by and transferable to only lineal descendants of the original grantee.


The highest level of ownership a person can have in any real property is the fee simple. Ownership of a fee simple in a parcel of property means the right to own and possess that property in perpetuity (forever). However, the fee simple itself can be subjected to various conditions and/or contingencies. Therefore, a fee simple that is completely unconditional and that bestows upon its owner absolute unconditional ownership of property forever is known as the “fee simple absolute”. For example:

  1. Fred owns an apartment building in fee simple absolute. He sells his apartment building to Rickey for $1,000,000. Once Rickey buys the apartment building, he will take all of Fred’s rights to the building. He will therefore own a fee simple absolute in the building and he has the right to possess the building forever or sell it to a third party. In addition, if Rickey dies without otherwise disposing of the building, his heirs will take over the building.
  2. Fred owns an apartment building in fee simple absolute. He sells his apartment building to Rickey for $1,000,000. However, at the time of the deal, Fred has a clause written in the contract that states that if Rickey ever divorces his wife, Lucy, then the apartment building will go back to Fred. Although Rickey has a fee simple in the building (he has the right to possess it forever), it is not a fee simple absolute because it is conditional upon an event (or, in this case, upon the non-occurrence of an event). So, Rickey’s estate would be classified as a fee simple, but not as a fee simple absolute.

The language that has historically been used to create a fee simple absolute in a recipient is “to Recipient and his heirs.” Historically, if a person merely gave property “to Recipient, then the recipient would only get the right to possess the property for the rest of his or her life (a life estate). However, the modern rule is that “to Recipient” creates a fee simple absolute in the recipient. For example:

Omar gives Whiteacre to “Andrew and his heirs.” Andrew has a fee simple absolute. If Omar gives Whiteacre “to Andrew”, then, under the old rule, Andrew would merely have a life estate in Whiteacre. However, under the modern rule, Andrew would get a fee simple absolute in Whiteacre.

The rules pertaining to the fee simple absolute are simple. The holder has absolute ownership; his or her ownership lasts forever unless the holder transfers it. There are no limitations on who the holder can give, sell or devise the land to. The owner cannot be divested of the property. If the owner dies without giving away the property, it goes to his or her heirs. In other words the property cannot be taken away from Andrew, in the above example, under ordinary circumstances.

The lesser fee simples are called the “defeasible fees”. A defeasible fee is simply a fee simple interest in land that can be taken away from the holder by the occurrence or non-occurrence of a specified event. The two defeasible fees are the fee simple determinable and the fee simple subject to a condition subsequent. These are very similar to each other and they share the same practical laws. The difference between them lies only in the language of their formation and in the nature of the condition upon which the ownership interest rests.

The Fee Simple Determinable

A fee simple determinable is an interest in land that will end automatically if a certain specified event happens. Said another way, the fee simple determinable is a fee simple interest that is subject to a restriction that has the potential to terminate the interest. For the interest to exist or to continue to exist, a certain event must happen or not happen. For example:

Fred owns an acre of land. Fred gives the land “to Barney, as long as the land is used to plant corn.” This is a fee simple determinable. Barney now owns the land. However, his ownership will automatically end if the land is ever used for something other than growing corn. If Barney grows corn for ten years and in the eleventh year decides to grow potatoes, Barney’s ownership of the land will automatically end and the land will return to Fred. If Barney’s children ever stop using the land for corn, the ownership will automatically end and the land will go back to Fred or Fred’s heirs if Fred is no longer alive. If Barney’s great great great grandchildren ever use the land for something other than growing corn, the land will go back to Fred’s heirs. See Mahrenholz v. County Board of School Trustees, 93 Ill. App.3d 366 (1981).

Note that a fee simple determinable can be transferred. In other words, in the above example, Barney can sell the land to whomever he wants. However, whoever buys the land still owns it subject to the condition that existed when Barney owned the land. In other words if Barney were to sell the land to Mr. Slate, Mr. Slate would also have to use the land to grow corn. If he used the land for anything else, he would lose his interest and the land would go back to Fred. This is because Barney cannot sell an interest that is greater than the one he owned. Since Barney owned the fee simple determinable, that is all he can transfer to a third party.

The creation of a fee simple determinable is accomplished by using language such as “To Recipient and his heirs, so long as (insert event or condition)” or “To Recipient until (insert event or condition).”

If such language is used, the recipient receives a fee simple determinable, while the original owner retains a “possibility of reverter.” The name is, of course, derived from the fact that, although the owner has given a fee simple to the recipient, there is a possibility that the property will someday “revert” to the original owner.

Of course, the original owner need not retain this “possibility of reverter.” Instead, he or she may give that interest to a third party. In such a case, the interest that the third party holds is called an “executory interest.” It is called such because, in law, something that is “executory” is something that has not taken effect, but can potentially take effect. Thus, although the third party has the right to have the property if the fee simple determinable terminates, this right has not vested yet, and may, in fact, never vest if the condition that ends the fee simple determinable does not occur. Therefore, he or she has an “executory interest.” For Example:

John Adams wants to give his house to his nephew, Sam. However, he is worried that Sam and his friends drink too much and he doesn’t want his house to turn into a beer party hall. On the other hand, he has no interest in getting the house back either. Instead he would want his friend, Thomas, to have the house if Sam does not have it. So, he gives the house to Sam and says he is giving it “to Sam, so long as beer is not consumed on the premises and then to Thomas.” In such a case, Sam has a fee simple determinable (well, technically, in this case , it’s called a fee simple subject to an executory limitation, but it’s the same thing), while Thomas has an executory interest.

Fee Simple Subject to Condition Subsequent

The fee simple subject to condition subsequent is very similar to the fee simple determinable. The major difference is that while a fee simple determinable automatically ends if the grantee (the person who received the land) does not fulfill the condition, the grantee’s interest in a fee simple subject to condition subsequent does not automatically end if the event or condition occurs. Rather, the grantor may, if he or she wants to, take the land back. If he or she does not want to take the land back, he or she can simply allow the grantee’s interest to continue. For example:

  1. Fred gives an acre of land “to Barney as long as the land is used to grow corn”. This is a fee simple determinable. If Barney ever uses the land for something other than growing corn, the land will automatically revert back to Fred.
  2. Fred leaves a piece of land “to Barney, but if the land is ever used for something other than growing corn then Fred retains the right of entry.” This is a fee simple subject to a condition subsequent. If the land is used for growing potatoes, Fred has the right to reclaim the land. However, if Fred does not exercise this right of re-entry, then Barney’s ownership of the land simply continues as before.

The creation of a fee simple subject to a condition subsequent is accomplished by using language such as “To Recipient and his heirs, but if (insert event or condition), then Grantor retains a right to re-enter.”

If such language is used, the recipient receives a fee simple subject to a condition subsequent, while the original owner retains a “right of re-entry”. As with the fee simple determinable, the Grantor can give the right of re-entry to a third party. If this is done, then the third party’s interest is also called an executory interest for the same reason as with the fee simple determinable.

The Fee Tail

Under the Estate system, there was also an interest, called the “fee tail” that was a fee interest, in that it had the possibility of lasting forever, but that was a lesser interest than a fee simple. The fee tail was an interest that allowed a person to have an interest in land in perpetuity, but only so long as it was kept within the ownership of his or her lineal descendants. For Example:

Cal, an owner of many coal mines, wants to give a coal mine to Jack Dawson. However, he is worried that Jack will sell it to Cal’s competitor. So, he can give Jack a “fee tail” interest so that, if the mine is ever sold to a person who is not among Jack’s lineal descendants, the mine will automatically go back to Cal (or his descendants).

The creation of a fee tail is accomplished by using the language “To Recipient and the heirs of his body.”

Keep in mind that “To Recipient and his heirs” (without the language "of his body") or even “To Recipient” would create a fee simple absolute. With a fee simple absolute, you will recall, the holder has complete and absolute discretion to give or sell the property to whomever he or she wants.

It should be noted that the fee tail is, for all intents and purposes, obsolete. Not only is it never used nowadays, most states will even refuse to enforce a fee tail because of the general thought that restraints on the marketability of property are disfavored. Therefore, in most jurisdictions today, the language “To Recipient and the heirs of his body” will create a fee simple absolute.



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