Marcio Vasconcelos
If you're a homeowner in the United States, chances are you own your house through fee simple ownership. In the realm of property law, the term "fee simple" occupies a pivotal position. It represents the most extensive form of property ownership available, granting the holder complete control over their land.
However, like many others, you might not be familiar with what this ownership entails and the rights it provides. Luckily, despite its somewhat peculiar name, the concept of this ownership is fairly straightforward..
What is the Meaning of Fee Simple?
In real estate, fee simple refers to the absolute and complete ownership of land and any structures on it by a landowner. As a fee simple owner, you have the freedom to use the land in any way you desire, provided it complies with existing easements and zoning regulations.
This implies you have the liberty to enhance your home by adding a bedroom, constructing a second-floor addition, building a new garage, or even demolishing your current house to construct a new one.
Additionally, you hold the right to sell the property and its buildings whenever you choose, or bequeath it to anyone you wish.
Nonetheless, this type of ownership doesn't guarantee immunity from losing the property. Government entities can employ eminent domain or place liens on fee simple properties if the owners neglect to pay property taxes or violate other rules. In such cases, these authorities can reclaim the property through the process of foreclosure.
Is There Another Term for Fee Simple?
The term "fee simple" is sometimes interchangeably used with "fee simple absolute" in legal contexts. This nomenclature emphasizes the unconditioned nature of the ownership, highlighting that there are no limitations or conditions set on the property's use or its inheritance.
Exploring the Variants of Fee Simple Ownership
Having grasped the concept of fee simple ownership, let's delve into its different forms.
Fee Simple Absolute
While fee simple and fee simple absolute are often used synonymously, they are not exactly the same. The distinction arises from the two primary types of freehold estates: fee simple defeasible and fee simple absolute.
Fee simple absolute stands out as the stronger form of ownership, free of any limitations. It is, in fact, the most typical ownership type in the U.S. When people refer to fee simple ownership, they usually mean fee simple absolute.
In a fee simple absolute scenario, owners can retain their properties and land indefinitely, provided they keep up with mortgage payments and property taxes. They also have the liberty to make any modifications they desire.
Additionally, owners with fee simple absolute can impose specific conditions or life estate terms when transferring property to an heir. For example, an owner may dictate that the home on the land cannot be demolished or that the property must stay within the family.
Fee Simple Defeasible
Also known as fee simple determinable, fee simple defeasible is a slightly less authoritative ownership form. Owners can maintain ownership perpetually under this arrangement, but they must adhere to certain stipulations set by a previous owner. If these conditions are breached, ownership automatically reverts to the former owner.
Consider purchasing land and a house with a condition that it must remain residential. If you convert it into a commercial property like a hotel, thereby breaching the agreement, the property would revert to its previous owner.
Fee Simple Subject To Condition Subsequent
This type is akin to fee simple defeasible. In this case, owners are also bound to meet specific conditions to keep their property. However, if these conditions are violated, the owners might not necessarily lose their land. This is because the original owners do not automatically regain possession. They have the option to overlook the violations, allowing the new owners to continue owning the property.
For example, if you acquire land and a house under the condition that the house remains a residence and later convert it into a hotel, the former owner has the right to take back the property. However, they are not obligated to do so and can choose to let the new owners keep it despite the violation.
People also ask
Can fee simple ownership be inherited?
Yes, fee simple properties are inheritable. The owner can choose to leave the property to anyone through a will or estate plan. Fee simple signifies total ownership of the land, which means it can be passed down to the landowner's heirs, either through a will or according to the legal rules of intestacy.
What is leasehold ownership?
With leasehold ownership, the property is owned by one entity, while another party is granted the right to use the land for a predetermined period, often extending for 55 years or more. Some agreements might offer a life lease, where the tenant retains the right to use the property until their death, after which it reverts to the owner.
In a leasehold situation, tenants are required to pay a fee for the land use, which is a contrast to fee simple ownership where no rent is due. Although you may own any structures on the leased land, at the end of the lease, both the land and the structures return to the owner unless a new lease agreement is made before the expiration of the current one.
