Fee simple

In English law, a fee simple (or fee simple absolute) is an estate in land, a form of freehold ownership. It is the way that real estate is owned in common law countries, and is the highest ownership interest possible that can be had in real property. Allodial title is reserved to governments under a civil law structure. Fee simple ownership represents an ownership interest in real property; but it is limited by government powers of taxation, eminent domain, police power, and escheat, and it could also be limited further by certain encumbrances or conditions in the deed. How fee simple ownership interest is limited by these government powers often involves the shift from allodial title to fee simple such as when uniting with other property owners acceding to zoning restrictions and/or municipal regulation.

History

The word "fee" is derived from fief, meaning a feudal landholding. Feudal land tenures existed in several varieties, most of which involved the tenant having to supply some service to his overlord, such as knight-service (military service) or where the overlord was the king, Grand Serjeanty, which might require providing many different services, such as providing horses in time of war, or simply to act as the king's ceremonial butler. These fiefs thus gave rise to a complex relationship between landlord and tenant, involving duties on both sides. For example the overlord, in return for receiving his tenant's fealty or homage, took upon himself the duty to protect his tenant. On the abolition of feudal land tenure, all fiefs became "simple", that is to say no conditionality was attached to the tenancy.

Common Law

In English common law, the Crown has radical title or the allodium of all land in England, meaning that it is the ultimate "owner" of all land. However, the Crown can grant ownership in an abstract entity—called an estate in land—which is what is owned, rather than the land it represents. The fee simple estate is also called "estate in fee simple" or "fee-simple title" and sometimes simply freehold in England and Wales. From the start of the Norman period, when feudalism was introduced to England, the tenant or "holder" of a fief could not alienate it from the possession of his overlord, that is to say sell it, but instead could separate off a parcel of the land and grant it as a subordinate fief to his own sub-tenant, a process known as sub-enfeoffing or "subinfeudation". The 1290 Statute of Quia Emptores abolished subinfeudation and instead allowed the sale of fee simple estates.

The concept of a "fee" has its origins in feudalism. William Blackstone defined fee simple as the estate in land that a person has when the lands are given to him and his heirs absolutely, without any end or limit put to his estate. Land held in fee simple can be conveyed to whomsoever its owner pleases; it can be mortgaged or put up as security. Owners of real property in fee simple title have the privilege of interest in the property during their lifetime and typically have a say in determining who gets to own an interest in the property after their death.

Historically, estates could be limited in time, such as a life estate, which is a land ownership that terminates upon the grantee's (or another person's) death, even if the land had been granted to a third party, or a term of years (a lease for a specified term, such as in an estate for years). It also could be limited in the way that it was inherited, such as by an "entailment" which created a fee tail. Traditionally, fee tail was created by words of grant such as "to N. and the male heirs of his body", which would restrict those who could inherit the property. When all those heirs ran out the property would revert to the original grantor's heirs. Most common law countries have abolished entailment by statute.

Duration

An estate in fee simple is the "highest" obtainable estate known in law. It denotes the maximum of legally granted ownership, the greatest possible aggregate of rights, powers, privileges and immunities which a "person" may have in land. The three hallmarks of the fee simple estate are that it is alienable, devisable and descendable.

Creation and characteristic of fee simple

Rules requiring words of general inheritance to create fee simple by conveyance have been abolished by statute in the United States. It used to be the rule that in order to convey an estate in fee simple, the deed or will must state "to B and his heirs." Anything short of those magic words transferred a smaller estate.

Modern deeds usually follow a standardized form. There is a presumption that the testator intends to convey his or her property in fee simple, unless the will indicates an intention to transfer a smaller estate, such as a life estate. Today, there is a policy favoring the "free" transfer of interest ownership in land.

Life estate

Many jurisdictions retain the possibility of creating a life estate, although this is uncommon. In the United States, life estates are most commonly used in the context of either granting to someone in a will the properties use for the remainder of that person's (or another person's) life, or reserving to a grantor who is selling property the right to continue using the property for the remainder of his/her life. The right to ownership after the death of the subject person would be called the remainder estate. In England and Wales fee simple is the only freehold estate that remains and a life estate can only be created in equity.

Types of fee simple

If previous grantors of a fee simple estate do not create any conditions for subsequent grantees to own the conveyed property in fee simple title, then the title is called fee simple absolute. A fee simple absolute is the highest estate permitted by law and it invests the holder of the fee with full possessory rights and obligations now and in the future. Other fee simple estates in real property include fee simple defeasible (or fee simple determinable) estates. A defeasible estate is created when a grantor places a condition on a fee simple estate (in the deed). Upon the happening of a specified event, the estate may become void or subject to annulment. Two types of defeasible estates are the fee simple determinable and the fee simple subject to a condition subsequent. If the grantor uses durational language in the condition such as "to A. as long as the land is used for a park" then upon the happening of the specified event (in this case if the land is used for anything other than a park), the estate will automatically terminate and revert to the grantor or the grantor's estate; this is called a fee simple determinable. If the grantor uses language such as "but if alcohol is served" then the grantor or the heirs have a right of entry, but the estate does not automatically revert to the grantor; this is a fee simple subject to a condition subsequent. In most states in the US, many of these concepts have been modified by statute. Generally speaking, fee simple determinable was preferred by courts in the common law of the early United States. Recently, that trend has reversed, and most of today's US courts will find a fee simple subject to condition subsequent (instead of a fee simple determinable) in situations where the conveying document's language is unclear.

Rent

It is often said that no rent or similar obligations are due from the owner of property in fee simple. That is only partially true. For example, a rentcharge may exist requiring a freeholder to pay a fixed sum of money closely resembling rent, and many jurisdictions have created financial obligations that may be imposed on a freehold estate. For instance, in England and Wales, there is an estate charge. In the United States, fee simple owners are subject to property tax and the revenue generated directed to the municipality's general fund. Other local tax assessments called "special purpose taxes" may be assessed in addition to the property taxes being applied to specific purposes such as infrastructure improvements. Real estate owned as a condominium is usually similarly owned in fee simple, but typically subject to rules in the declaration of condominium or created by the condominium association, such as paying required monthly fees for maintaining the property's common areas.

Etymology

Fee - A right in law to the use of land; i.e. a fief. Simple - in the unconstrained sense:

1. without limit to the inheritance of heirs;
2. unrestricted as to transfer of ownership.

See also

• Allodial title
• Leasehold
• Life estate
• Quia Emptores
• Fee tail
• Ground rent