Fee Simple Ownership

The preceding chapter introduced one of the central concepts of Anglo-American property law: estates in land. Rather than owning land in the abstract, a person owns a legally recognized estate that defines the nature, duration, and extent of that person's rights.

The next question naturally follows:

American property law answers that question with the fee simple absolute.

The fee simple absolute is the broadest and most complete estate recognized by modern American law. It grants its holder the fullest collection of traditional ownership rights, is of potentially perpetual duration, may generally be transferred during life, and ordinarily passes to heirs upon death. Because of these characteristics, fee simple ownership serves as the foundation for nearly every major doctrine discussed in this treatise, including deeds, mortgages, recording acts, trusts, probate, foreclosure, and title examination.

A fee simple is the greatest possessory estate in land recognized by American property law.

The Legal Information Institute describes a fee simple as the greatest possible property interest in land, granting its owner all traditional property rights. A fee simple interest is potentially perpetual, freely transferable, inheritable, and generally unrestricted unless the creating instrument expressly provides otherwise. (Legal Information Institute)

In practical terms, fee simple ownership generally includes the right to:

• possess the property;
• use and enjoy the property;
• exclude others;
• transfer ownership by sale or gift;
• devise the property by will;
• allow the property to pass through intestate succession if no will exists;
• mortgage or otherwise encumber the property; and
• convey lesser interests, such as leases or life estates.

Although these rights are extensive, they are not unlimited. Every fee simple estate exists within a broader legal framework established by constitutions, statutes, regulations, and the common law.

The term fee simple has its origins in the English feudal system.

The word fee derives from the medieval concept of a hereditary estate held by a tenant. The word simple distinguished an estate that could descend generally to the owner's heirs from more limited forms of hereditary ownership, such as fee tail estates.

Under medieval English law, numerous forms of land tenure existed, each carrying different obligations to the Crown or to feudal lords. Over time, many of those distinctions disappeared, and American property law evolved toward recognizing fee simple absolute as the standard form of private ownership.

Today, most privately owned real estate in the United States is held in fee simple. Modern conveyancing statutes also presume that a conveyance transfers a fee simple estate unless a lesser estate is clearly expressed in the instrument.

Fee simple ownership possesses several defining characteristics that distinguish it from other estates in land.

Indefinite Duration

A fee simple estate has no predetermined ending date.

Unlike a lease, which expires according to its terms, or a life estate, which ends upon the death of a specified person, a fee simple estate continues indefinitely until transferred or otherwise terminated according to law.

Because there is no built-in expiration, the estate may continue through successive generations.

Alienability

One of the defining features of fee simple ownership is its alienability, meaning that the owner may generally transfer the estate voluntarily.

The owner may:

• sell the property;
• make a gift of the property;
• exchange it;
• contribute it to a business entity;
• place it into a trust; or
• convey portions of the estate to others.

Modern property law generally disfavors unreasonable restraints on alienation because the free transferability of land promotes economic development and certainty of title.

Inheritability

A fee simple estate ordinarily passes to the owner's heirs or devisees upon death.

If the owner leaves a valid will, the property is generally distributed according to its terms.

If the owner dies intestate, state probate statutes determine the succession of ownership.

Unlike a life estate, the fee simple estate does not terminate merely because the owner dies. Instead, ownership continues through the owner's successors in interest.

Exclusive Possession

Fee simple ownership ordinarily includes the exclusive right to possess the property.

The owner may occupy the land personally, permit others to occupy it through leases or licenses, or leave it vacant, subject to applicable law.

The right to exclude others is one of the traditional incidents of ownership recognized throughout American property law.

Broad Rights of Use

A fee simple owner generally enjoys broad discretion regarding the use of the property.

For example, an owner may:

• build improvements;
• cultivate the land;
• lease portions of the property;
• mortgage the property;
• subdivide the property where permitted;
• transfer all or part of the estate; and
• grant easements or other property interests.

These rights, however, remain subject to applicable legal restrictions discussed later in this chapter.

The most complete form of fee simple ownership is the fee simple absolute.

A fee simple absolute:

• is of unlimited duration;
• carries no built-in conditions or limitations;
• does not terminate automatically upon future events;
• is freely transferable;
• is inheritable; and
• represents the fullest ownership interest recognized by American law.

The Legal Information Institute describes the fee simple absolute as the ultimate property interest in land, held without limitation. (Legal Information Institute)

All other possessory estates may be understood as lesser interests derived from, or measured against, the fee simple absolute.

Modern American law generally presumes that a deed conveys a fee simple estate unless the language of the instrument clearly demonstrates an intent to create a lesser estate. This presumption simplifies conveyancing and promotes certainty in land titles.

Not every fee simple estate is absolute.

A grantor may create a defeasible fee, which is a fee simple estate subject to specified conditions or limitations.

The principal forms are:

Fee Simple Determinable

A fee simple determinable automatically ends if a specified event occurs, causing the property to revert to the grantor or the grantor's successors.

These estates are commonly created using durational language such as "so long as," "while," or "until."

Fee Simple Subject to Condition Subsequent

A fee simple subject to a condition subsequent does not terminate automatically.

Instead, if the specified condition occurs, the grantor retains the right to re-enter and reclaim the property through appropriate legal action.

These estates are commonly created using conditional language such as "provided that" or "but if."

Fee Simple Subject to Executory Interest

A fee simple subject to an executory interest provides that, upon the occurrence of a specified event, ownership automatically shifts to a third party rather than reverting to the original grantor.

These forms of defeasible fees involve important doctrines concerning future interests and will be examined in detail in a later chapter.

This comparison illustrates why fee simple ownership serves as the baseline against which other estates are measured.

• Fee Simple Absolute: duration potentially perpetual; transferable: yes; inheritable: yes; ownership interest: broadest estate recognized by law.
• Life Estate: duration measured by a person's life; transferable generally yes, but only for the duration of the life estate; inheritable: no, terminates at the measuring life's death; ownership interest: limited ownership interest.
• Leasehold Estate: duration fixed or recurring term; transferable often subject to lease terms and law; inheritable: generally limited by the lease; ownership interest: possessory interest rather than full ownership.

This comparison illustrates why fee simple ownership serves as the baseline against which other estates are measured.

Because fee simple represents the broadest estate in land, it forms the foundation of nearly every major area of property law.

Deeds

Most deeds convey fee simple ownership unless a lesser estate is expressly created.

Title Examination

Title examiners determine whether fee simple ownership has been properly conveyed through the chain of title.

Mortgages

Mortgage borrowers commonly grant security interests in fee simple estates, allowing lenders to foreclose upon default in accordance with applicable law.

Foreclosure

A foreclosure generally affects the fee simple estate held by the borrower, together with subordinate interests as determined by state law and the priority of recorded liens.

Probate

Fee simple property ordinarily becomes part of the owner's estate upon death unless ownership passes through another recognized legal mechanism, such as joint ownership with survivorship rights or a properly funded trust.

Trusts

Trustees frequently hold legal title to real property in fee simple for the benefit of trust beneficiaries, illustrating the distinction between legal and equitable ownership.

Taxation

Property taxes, assessment procedures, and valuation commonly assume fee simple ownership unless another legally recognized estate is involved.

Fee simple ownership is frequently misunderstood.

"Fee Simple Means Absolute Freedom"

It does not.

Although fee simple is the broadest estate recognized by law, ownership remains subject to constitutional and statutory limitations.

Governments may regulate fee simple property through:

• zoning ordinances;
• building and safety codes;
• environmental regulations;
• taxation;
• eminent domain;
• police power; and
• other lawful exercises of governmental authority.

A fee simple owner therefore possesses extensive rights, but not unlimited sovereignty over the land.

"Fee Simple Means No One Else Can Have Rights"

Incorrect.

Even when land is owned in fee simple, other legally recognized interests may burden the property, including:

• mortgages;
• easements;
• restrictive covenants;
• utility rights-of-way;
• mineral severances;
• tax liens; and
• recorded leases.

These interests do not necessarily eliminate fee simple ownership, but they may affect how the property may be used or transferred.

A proper study of fee simple ownership should begin with binding legal authority.

Primary Authorities

• State constitutions
• State property statutes
• State conveyancing statutes
• State probate codes
• Judicial decisions interpreting fee simple estates
• Recorded deeds and conveyancing instruments

Authoritative Secondary Sources

Among the leading secondary authorities are:

• Restatement (First) of Property
• Restatement (Third) of Property
• Powell on Real Property
• Thompson on Real Property
• Tiffany Real Property
• American Law of Property
• Corpus Juris Secundum (C.J.S.) Property
• American Jurisprudence 2d (Am. Jur. 2d) Property

These authorities explain and synthesize fee simple doctrine but do not replace controlling statutes or judicial decisions.

• A fee simple is the greatest possessory estate in land recognized by American property law.
• The fee simple absolute is the broadest form of ownership, carrying the fullest traditional bundle of property rights.
• Fee simple ownership is characterized by indefinite duration, alienability, inheritability, exclusive possession, and broad rights of use.
• Modern American law generally presumes that a conveyance transfers a fee simple estate unless a lesser estate is clearly expressed.
• Defeasible fees are fee simple estates subject to specified conditions and will be examined separately in later chapters.
• Fee simple ownership remains subject to governmental powers such as taxation, zoning, eminent domain, and the police power, as well as valid private encumbrances like easements and mortgages.

Next Chapter — Life Estates

The next chapter examines the life estate, a freehold estate measured by the life of a designated person. It explores the rights and responsibilities of life tenants, the interests of remaindermen and reversioners, the doctrine of waste, and the role of life estates in estate planning, trusts, probate, and property conveyancing.