Defeasible estate
Encyclopedia
A defeasible estate is created when a grantor transfers land conditionally. Upon the happening of the event or condition stated by the grantor, the transfer may be void or at least subject to annulment. (An estate not subject to such conditions is called an indefeasible estate.) Historically, the common law has frowned on the use of defeasible estates as it interferes with the owners' enjoyment of their property and as such has made it difficult to create a valid future interest. Unless a defeasible estate is clearly intended, modern courts will construe the language against this type of estate. Three types of defeasible estates are the fee simple determinable, fee simple subject to an executory limitation or interest, and the fee simple subject to a condition subsequent
.
Because a defeasible estate always grants less than a full fee simple
, a defeasible estate will always create one or more future interest
s.
Some jurisdictions in the United States
have abolished this interest. For example, Kentucky
abolished the fee simple determinable and possibility of reverter by statute in 1960. An attempt to create such an interest is construed as a fee simple subject to condition subsequent (see below), and a person who would have possibility of reverter at common law will instead have a right of entry.
A fee simple determinable does not violate the rule against perpetuities, since the interest in real property reverts to the grantor or his heirs, who are measuring lives.
Example:
O grants Blackacre to A and A's heir; but if A ever accepts a candy bar from C, then to B and B's heirs.
Here, O is the original owner. She grants A a fee simple subject to the subsequent condition that he doesn't accept a candy bar from C. But unlike a fee simple subject to a condition subsequent
, Blackacre goes to a third party (B) instead of the grantor (O) if the condition is met. Also unlike a fee simple subject to a condition subsequent, B then automatically gains the interest in Blackacre and does not only have a mere right to sue for re-entry
.
What would happen if the property were conveyed? Let's say A sold Blackacre to D. If A afterwards accepted an offer for a candy bar from C, Blackacre automatically goes to B. But if A died without ever accepting a candy bar from C, the condition could not possibly be met. D would then have a fee simple absolute.
is created when the words of a grant support the conclusion that the grantor intends to convey a fee simple absolute but has attached a condition to the grant so that if a specified future event happens the grantor will get its fee simple absolute back, provided that the grantor exercises his right of entry
(or power of termination). Thus, a fee simple subject to condition subsequent does not end automatically upon the happening of the condition. The future interest is called a "right of reentry" or "right of entry
," and the property only reverts back to the original grantor if he exercises this right.
The right of entry is not automatic, but rather must be exercised to terminate the fee simple subject to condition subsequent. To exercise right of entry, the holder must take substantial steps to recover possession and title
, for example, by filing a lawsuit. Physical entry is not required, but the holder must do more than just proclaim an intent to take back.
One of the languages used to create a fee simple subject to condition subsequent and a right of entry is "to A, but if A sells alcohol on the land, then grantor has the right of entry(or power of termination)."
Common uses include language such as "may", "but if", "however", or "provided that..."
Condition subsequent
Condition subsequent refers to an event or state of affairs that brings an end to something else. A condition subsequent is often used in a legal context as a marker bringing an end to one's legal rights or duties...
.
Because a defeasible estate always grants less than a full fee simple
Fee simple
In English law, a fee simple is an estate in land, a form of freehold ownership. It is the most common way that real estate is owned in common law countries, and is ordinarily the most complete ownership interest that can be had in real property short of allodial title, which is often reserved...
, a defeasible estate will always create one or more future interest
Future interest
In property law and real estate, a future interest is a legal right to property ownership that does not include the right to present possession or enjoyment of the property. Future interests are created on the formation of a defeasible estate; that is, an estate with a condition or event...
s.
Fee simple determinable
A fee simple determinable is an estate that will end automatically if the stated condition occurs. The interest will revert to the grantor or the heirs of the grantor. A possibility of reverter follows a fee simple determinable. Durational language such as "to A as long as the property is used for a park" creates a fee simple determinable and a possibility of reverter.Some jurisdictions in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
have abolished this interest. For example, Kentucky
Kentucky
The Commonwealth of Kentucky is a state located in the East Central United States of America. As classified by the United States Census Bureau, Kentucky is a Southern state, more specifically in the East South Central region. Kentucky is one of four U.S. states constituted as a commonwealth...
abolished the fee simple determinable and possibility of reverter by statute in 1960. An attempt to create such an interest is construed as a fee simple subject to condition subsequent (see below), and a person who would have possibility of reverter at common law will instead have a right of entry.
A fee simple determinable does not violate the rule against perpetuities, since the interest in real property reverts to the grantor or his heirs, who are measuring lives.
Fee simple subject to an Executory limitation
A fee simple subject to an executory limitation is an estate that ends when a specific condition is met and then transfers to a third party. The interest will not revert to the grantor. If the condition is met, the grantee loses the interest and the third party gains it automatically.Example:
O grants Blackacre to A and A's heir; but if A ever accepts a candy bar from C, then to B and B's heirs.
Here, O is the original owner. She grants A a fee simple subject to the subsequent condition that he doesn't accept a candy bar from C. But unlike a fee simple subject to a condition subsequent
Condition subsequent
Condition subsequent refers to an event or state of affairs that brings an end to something else. A condition subsequent is often used in a legal context as a marker bringing an end to one's legal rights or duties...
, Blackacre goes to a third party (B) instead of the grantor (O) if the condition is met. Also unlike a fee simple subject to a condition subsequent, B then automatically gains the interest in Blackacre and does not only have a mere right to sue for re-entry
Right of entry
Right of entry refers to one's right to take or resume possession of land, or the right of a person to go onto another's real property without committing trespass. It also refers to a grantor's power to retake real estate from a grantee in the case of a fee simple subject to condition subsequent....
.
What would happen if the property were conveyed? Let's say A sold Blackacre to D. If A afterwards accepted an offer for a candy bar from C, Blackacre automatically goes to B. But if A died without ever accepting a candy bar from C, the condition could not possibly be met. D would then have a fee simple absolute.
Fee simple subject to condition subsequent
A fee simple subject to a condition subsequentCondition subsequent
Condition subsequent refers to an event or state of affairs that brings an end to something else. A condition subsequent is often used in a legal context as a marker bringing an end to one's legal rights or duties...
is created when the words of a grant support the conclusion that the grantor intends to convey a fee simple absolute but has attached a condition to the grant so that if a specified future event happens the grantor will get its fee simple absolute back, provided that the grantor exercises his right of entry
Right of entry
Right of entry refers to one's right to take or resume possession of land, or the right of a person to go onto another's real property without committing trespass. It also refers to a grantor's power to retake real estate from a grantee in the case of a fee simple subject to condition subsequent....
(or power of termination). Thus, a fee simple subject to condition subsequent does not end automatically upon the happening of the condition. The future interest is called a "right of reentry" or "right of entry
Right of entry
Right of entry refers to one's right to take or resume possession of land, or the right of a person to go onto another's real property without committing trespass. It also refers to a grantor's power to retake real estate from a grantee in the case of a fee simple subject to condition subsequent....
," and the property only reverts back to the original grantor if he exercises this right.
The right of entry is not automatic, but rather must be exercised to terminate the fee simple subject to condition subsequent. To exercise right of entry, the holder must take substantial steps to recover possession and title
Title (property)
Title is a legal term for a bundle of rights in a piece of property in which a party may own either a legal interest or an equitable interest. The rights in the bundle may be separated and held by different parties. It may also refer to a formal document that serves as evidence of ownership...
, for example, by filing a lawsuit. Physical entry is not required, but the holder must do more than just proclaim an intent to take back.
One of the languages used to create a fee simple subject to condition subsequent and a right of entry is "to A, but if A sells alcohol on the land, then grantor has the right of entry(or power of termination)."
Common uses include language such as "may", "but if", "however", or "provided that..."