PastPaperHero | Ownership of real property

Learning Outcomes

This article outlines the core rules governing fee simple estates and their defeasible forms, including:

Identifying a fee simple absolute from common conveyance language and explaining why it is the largest estate in land, fully transferable and without inherent future interests.
Distinguishing among fee simple determinable, fee simple subject to condition subsequent, and fee simple subject to executory limitation by focusing on durational versus conditional wording and the presence or absence of a right of entry.
Determining which future interest accompanies each defeasible estate—possibility of reverter, right of entry, or executory interest—and whether it is held by the grantor or a third-party transferee.
Applying the distinction between automatic termination and elective termination when a stated event occurs, and predicting who has the present right to possess the property at each stage.
Separating true defeasible fees from mere statements of purpose, precatory language, or covenants, particularly in grants that reference a specific use of the land.
Evaluating restraints on alienation attached to fee simple estates, identifying when such restraints are void, and understanding how invalid restraints affect the classification of the estate.
Using structured issue-spotting steps to dissect exam-style conveyances, track changes in ownership over time, and avoid common MBE traps involving ambiguous language or overlapping future interests.

MBE Syllabus

For the MBE, you are required to understand the characteristics of present possessory freehold estates, particularly the fee simple and its defeasible forms, with a focus on the following syllabus points:

Identify a conveyance creating a fee simple absolute and understand the effect of “and his heirs” and similar language.
Distinguish between durational language (creating a fee simple determinable) and conditional language (creating a fee simple subject to condition subsequent).
Recognise the future interests associated with defeasible fees retained by the grantor (possibility of reverter, right of entry/power of termination) and by a third party (executory interest).
Identify a fee simple subject to an executory limitation and distinguish executory interests from remainders.
Understand the concept of automatic versus elective termination of defeasible fees and the policy against forfeitures and restraints on alienation.
Distinguish a true defeasible fee from a mere statement of purpose or contractual obligation.

Test Your Knowledge

Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.

Oliver conveys Blackacre "to Anna and her heirs so long as the property is used for residential purposes." What interest does Anna possess?
1. Fee simple absolute
2. Fee simple determinable
3. Fee simple subject to condition subsequent
4. Life estate
In the conveyance "to Anna and her heirs so long as the property is used for residential purposes," what future interest does Oliver retain?
1. Reversion
2. Remainder
3. Possibility of reverter
4. Right of entry
Oliver conveys Whiteacre "to Ben and his heirs, but if Ben ever uses the property for commercial purposes, Oliver or his heirs may re-enter and re-take the premises." Ben opens a shop on Whiteacre. What must Oliver or his heirs do to regain possession?
1. Nothing; possession automatically reverts to them.
2. File a lawsuit for damages only.
3. Take affirmative steps to exercise their right of entry.
4. Obtain Ben's consent to terminate his estate.
A conveyance "to Clara and her heirs, but if the property is ever used for non-residential purposes, then to Desmond and his heirs" creates what interest in Desmond?
1. Possibility of reverter
2. Right of entry
3. Vested remainder
4. Executory interest

Introduction

Real property ownership can be divided into various interests based on the duration and conditions of possession. A core theme of the Property questions on the MBE is: who has the right to possess the land now, and who might have that right in the future?

The starting point for analysing ownership is the concept of present possessory estates – interests that give the holder the immediate right to possess the land.

Key Term: Present Possessory Estate
An interest in land that gives the holder the legal right to current possession.

The most complete form of ownership is the fee simple absolute. However, ownership can also be granted subject to conditions or limitations, creating defeasible fees. These estates have the potential to last forever but may be cut short if a specified event occurs.

When working through MBE questions, the most important skill in this area is careful reading of the conveyance language. Small differences in wording determine:

What present estate is created.
Who holds any future interest.
Whether the estate ends automatically or only if someone acts.

The sections that follow explain the fee simple absolute and then the three defeasible fees, with emphasis on the specific language used in conveyances and how that language translates into legal consequences.

Key Term: Words of Purchase
The part of a conveyance that identifies the grantee (e.g., “to A”).

Key Term: Words of Limitation
The part of a conveyance that describes the estate granted (e.g., “and her heirs,” “for life,” “so long as the land is used as a park”).

Fee Simple Absolute

The fee simple absolute is the largest possible estate in land, representing the maximum ownership allowed by law. It is potentially infinite in duration, meaning there is no fixed end point to the ownership. The holder of a fee simple absolute has full possessory rights now and in the future and can transfer the property during life or at death.

Historically, creating a fee simple absolute required specific language: "to A and his heirs." The phrase "and his heirs" are words of limitation, signalling the inheritable nature of the estate, not that the heirs receive any present interest. A’s heirs have no interest while A is alive.

Today, most jurisdictions have abolished the need for this technical language. A simple conveyance "to A" is presumed to transfer the grantor's entire estate, which is typically a fee simple absolute, unless the language clearly indicates intent to create a lesser estate.

Key Term: Fee Simple Absolute
The largest estate in land recognised by law, potentially infinite in duration, fully alienable, and without limitations or conditions within the grant itself.

Creation and Presumptions

Modern law presumes that a grantor conveys the greatest estate she owns unless the conveyance clearly states otherwise. This means:

"O conveys Blackacre to A" – A is presumed to take a fee simple absolute.
"O conveys Blackacre to A and her heirs" – A also takes a fee simple absolute; the extra words do not change the estate.

Courts prefer clarity and disfavour forfeitures, so ambiguous grants are usually construed to create a fee simple absolute rather than a defeasible fee or life estate.

When evaluating language, also distinguish between genuine limitations and mere statements of purpose or hope.

Key Term: Precatory Language
Nonbinding expressions of desire or hope (e.g., “it is my wish,” “I hope”) that do not create legal conditions or limitations on an estate.

Example: O conveys "to A, my hope and wish being that A will leave the property to B." A takes a fee simple absolute. B takes nothing. The precatory wording expresses the grantor’s preference, not a binding condition.

Rights and Transferability

The holder of a fee simple absolute:

May possess and use the land for any lawful purpose.
May sell, gift, lease, or mortgage the property.
May devise it by will, or if the owner dies intestate, it passes by intestate succession.

Because the estate is potentially infinite, there is no built-in future interest in anyone else arising from the language of the grant itself.

Key Term: Reversion
A future interest that remains in the grantor when the grantor transfers a lesser estate than she owns (for example, after a life estate). There is no reversion when the grantor conveys a fee simple absolute.

Key Term: Remainder
A future interest in a transferee that becomes possessory upon the natural expiration of a prior estate (usually a life estate) and does not divest or cut short that prior estate.

A fee simple absolute has no corresponding future interest: once granted, the grantor retains nothing, and no third party holds a future interest that could cut the estate short based on conditions within the grant itself.

Restraints on Alienation and Fee Simple Absolute

Because a fee simple absolute is fully transferable, any attempt to impose a total restraint on its alienation is generally void as against public policy.

Key Term: Restraint on Alienation
An express restriction on the ability of the current owner to transfer an interest in property. Total restraints on a fee simple are void; some partial restraints may be valid if reasonable.

If a conveyance says, "to A and her heirs, but A may never sell or transfer the property," the restraint is invalid. A still takes a fee simple absolute and may ignore the restraint. On the MBE, when you see an absolute bar on transfer of a fee simple, treat the restraint as void and the estate as a fee simple absolute.

Defeasible Fees

Defeasible fees are fee simple estates that can be terminated upon the happening of a stated event. They are "defeasible" because they are capable of being defeated or undone. While potentially infinite like a fee simple absolute, their duration is tied to a condition or limitation.

Key Term: Defeasible Fee
A fee simple estate that may last forever but is subject to termination upon the occurrence (or non-occurrence) of a specified event.

There are three main types:

Fee simple determinable.
Fee simple subject to condition subsequent.
Fee simple subject to executory limitation.

Each uses different language and carries different consequences for when and how the estate ends.

Key Term: Durational Language
Words that measure the estate by time or duration (e.g., “so long as,” “while,” “during,” “until”).

Key Term: Conditional Language
Words that make the estate subject to a condition but do not themselves measure duration (e.g., “on condition that,” “provided that,” “but if”).

A recurring exam skill is to distinguish durational language (fee simple determinable) from conditional language (fee simple subject to condition subsequent) and then check who holds the future interest (grantor or third party).

Courts tend to disfavour forfeitures. If the language is ambiguous between determinable and subject to condition subsequent, courts prefer the latter, because it avoids automatic forfeiture.

Fee Simple Determinable

A fee simple determinable is an estate that automatically terminates upon the occurrence of a specified event, reverting back to the grantor. The defining characteristic is the use of clear durational language in the conveyance.

Creation language: Look for words indicating duration, such as "so long as," "while," "during," or "until."

Example: "O conveys Blackacre to A and her heirs so long as the premises are used for school purposes." A holds Blackacre in fee simple determinable: A has the present right to possess the land, but the estate will automatically end if Blackacre ceases to be used for school purposes.

Default rule: Once the specified event happens, A’s estate ends by operation of law; A has nothing. There is no need for the grantor to act.

Key Term: Fee Simple Determinable
A fee simple estate that automatically terminates upon the happening of a stated event, at which point ownership reverts to the grantor.

Future Interest: Possibility of Reverter

Whenever a grantor conveys a fee simple determinable, the grantor retains a possibility of reverter.

Key Term: Possibility of Reverter
The future interest retained by a grantor who conveys a fee simple determinable; it automatically becomes possessory if the stated condition occurs.

The possibility of reverter is held by the grantor (or the grantor’s successors) and, under modern law, is usually freely transferable and inheritable. On the MBE, you should know:

It becomes possessory automatically when the condition is violated.
It merges into a fee simple absolute in the grantor once it becomes possessory.
Future interests in the grantor (including the possibility of reverter) are not subject to the Rule Against Perpetuities for MBE purposes.

Transferability and Use by Transferees

The grantee can transfer a fee simple determinable. The transferee takes it subject to the same durational limitation.

Example: O conveys "to A so long as no liquor is sold on the premises." A later conveys to B. B still holds a fee simple determinable. If liquor is sold, the estate automatically reverts to O or O’s successors.

The possibility of reverter itself is treated as a property interest. In most modern jurisdictions, it is transferable inter vivos, devisable, and descendible.

Worked Example 1.1

Grantor conveys Greenacre "to the City Library for so long as the premises are used for library purposes." Ten years later, the City Library moves its operations to a new building and converts Greenacre into administrative offices. Who owns Greenacre?

Answer:
Grantor (or Grantor's successors) owns Greenacre in fee simple absolute. The conveyance used clear durational language ("for so long as"), creating a fee simple determinable in the City Library and retaining a possibility of reverter in Grantor. When the City ceased using Greenacre for library purposes, the condition occurred, and the estate automatically terminated and reverted to Grantor (or their successors).

Fee Simple Subject to Condition Subsequent

A fee simple subject to condition subsequent is an estate that may be terminated by the grantor upon the happening of a specified event. Unlike the fee simple determinable, termination is not automatic; the grantor must take action to exercise the right to terminate.

Creation language: Look for clear conditional language, such as "upon condition that," "provided that," "but if," or "if it happens that," plus language granting the grantor the right to re-enter or terminate upon the event’s occurrence.

Example: "O conveys Blackacre to A and his heirs, but if intoxicating liquors are ever sold on the premises, O or O's heirs may re-enter and retake the premises."

Here:

A has a fee simple subject to condition subsequent.
O retains a right of entry (also called a power of termination).
If liquor is sold, A’s estate does not end automatically; O must exercise the right of entry.

Key Term: Fee Simple Subject to Condition Subsequent
A fee simple estate that the grantor may choose to terminate upon the happening of a stated event by exercising a right of entry.

Future Interest: Right of Entry

Key Term: Right of Entry
The future interest retained by a grantor who conveys a fee simple subject to condition subsequent, giving the grantor the power (but not the automatic right) to terminate the estate if the condition occurs; also called a power of termination.

Important points for the MBE:

The estate continues until the grantor asserts the right of entry (e.g., by peaceable re-entry where lawful or by bringing an ejectment action).
If the grantor does nothing, the grantee may continue in possession even after the condition is breached.
There may be issues of waiver or laches if the grantor delays unreasonably, but such detail is rarely tested; the key rule is that termination is elective, not automatic.

Historically, rights of entry were not transferable inter vivos but were descendible. Modern statutes often allow transfer, and on the MBE you can assume that future interests are generally transferable unless the question indicates otherwise.

Worked Example 1.2

Grantor conveys Redacre "to University, provided that if the land is ever used for non-educational purposes, Grantor shall have the right to re-enter and reclaim the land." University builds a research facility initially, but 20 years later converts half of the facility into a commercial biotech incubator leased to private companies. Grantor learns of this and wants the land back. Does Grantor automatically own Redacre?

Answer:
No. The conveyance used conditional language ("provided that if") coupled with an express right of re-entry, creating a fee simple subject to condition subsequent in University and retaining a right of entry in Grantor. Even though the condition (non-educational use) occurred, University's estate continues until Grantor takes affirmative steps to exercise the right of entry, such as bringing an action for ejectment. Ownership does not automatically revert.

Comparing Determinable vs. Condition Subsequent

To distinguish a fee simple determinable from a fee simple subject to condition subsequent, focus on two questions:

Is the language durational or conditional?
Does the grantor reserve a right of entry?

Purely durational language (so long as, while, during, until) usually signals a fee simple determinable.
Conditional language plus an explicit right of entry usually signals a fee simple subject to condition subsequent.
Ambiguous language is often construed as a fee simple subject to condition subsequent because courts avoid automatic forfeitures.

Worked Example 1.3

O conveys "to A for school purposes, and if the land is not used as a school, O may re-enter and reclaim the land." The property is later used exclusively for office space. What estate does A have, and what future interest does O hold?

Answer:
The phrase "for school purposes" is arguably descriptive, but the additional clause "O may re-enter and reclaim the land" clearly reserves a right of entry. Courts would treat this as a fee simple subject to condition subsequent in A, with O holding a right of entry. A’s estate does not end automatically; O must exercise the right of entry to cut off A’s interest.

Fee Simple Subject to Executory Limitation

A fee simple subject to executory limitation is an estate that automatically terminates upon the happening of a stated event, but ownership then passes to a third party rather than reverting to the grantor.

Creation language: Can use either durational language ("so long as," "until") or conditional language ("but if," "provided that"). The key difference from the other defeasible fees is that the future interest is held by a transferee (third party), not the grantor.

Example 1: "O conveys Blackacre to A and her heirs, but if A dies without issue surviving her, then to B and his heirs."

Example 2: "O conveys Blackacre to A and her heirs for so long as the property is used residentially, then to B and his heirs."

In both examples, A’s estate is a fee simple subject to executory limitation, and B holds an executory interest.

Key Term: Fee Simple Subject to Executory Limitation
A fee simple estate that automatically terminates upon the happening of a stated event, at which point ownership passes to a third-party transferee.

Key Term: Executory Interest
A future interest held by a third-party transferee that becomes possessory by divesting (cutting short) a prior interest or by springing out of the grantor’s estate upon the occurrence of a stated event.

An executory interest that cuts short another transferee’s interest is called a shifting executory interest.

Key Term: Shifting Executory Interest
An executory interest that divests the interest of a transferee (e.g., A’s fee simple shifting to B upon a stated event).

In the fee simple subject to executory limitation context, the executory interest is always shifting: it cuts off the grantee’s fee simple when the condition occurs.

Key exam point: A remainder cannot follow a fee simple estate. If a future interest in a transferee follows any form of fee simple, it must be an executory interest, not a remainder.

Executory interests are subject to the Rule Against Perpetuities. Many conveyances involving fee simple subject to executory limitation will be drafted so that the executory interest clearly vests or fails within a life in being plus 21 years.

Worked Example 1.4

O conveys "to A and her heirs so long as the land is used as a church, and if it ever ceases to be so used, then to B and his heirs." A later closes the church and converts the building into a restaurant. Who owns the property?

Answer:
A initially held a fee simple determinable subject to an executory interest; B held a shifting executory interest. The language "so long as" is durational, and the future interest goes to B, a third party. When the land ceased to be used as a church, A’s estate terminated automatically, and B’s executory interest became possessory. B now owns the property in fee simple absolute.

Distinguishing Defeasible Fees from Mere Purpose or Contract Conditions

Not every reference to use or purpose creates a defeasible fee. Courts often construe vague or soft language as:

A fee simple absolute accompanied by a nonbinding statement of purpose; or
A fee simple absolute subject to a covenant (enforceable by damages or injunction), not a future interest in the land.

Language like "subject to the understanding that" or "for the purpose of building a hospital" is often too weak or imprecise to create a defeasible fee. To create a defeasible fee, the grant typically must say that the estate will last only so long as a condition is met or that it may be terminated if the condition is not met.

Example: "O conveys Greenacre to Charity for the purpose of operating a shelter thereon." This is usually interpreted as a fee simple absolute in Charity, with no possibility of reverter or right of entry. If Charity uses the land for another purpose, there is no automatic forfeiture.

By contrast, "O conveys Greenacre to Charity so long as it is used to operate a shelter, and if it ceases to be used as a shelter, O may re-enter and reclaim the land" clearly creates a defeasible fee (here, a fee simple subject to condition subsequent) with a right of entry in O.

Worked Example 1.5

Grantor conveys "to Town for the purpose of maintaining a public park." Twenty years later, Town converts half the land into a municipal office complex. Grantor’s successor sues, claiming that the land automatically reverted. How should a court rule?

Answer:
The phrase "for the purpose of maintaining a public park" is a statement of purpose, not clear durational or conditional language. There is no explicit possibility of reverter or right of entry. Courts, especially given the policy against forfeitures, would construe this grant as conveying a fee simple absolute to Town. Grantor’s successor has no future interest and cannot reclaim the land based on Town’s change of use. The proper analysis is that there is no defeasible fee.

Defeasible Fees and Restraints on Alienation

Defeasible fees can operate as partial restraints on alienation because the possibility of forfeiture may discourage transfer or affect value. However, they are generally upheld when the condition relates to land use or to some reasonable limitation.

A total restraint on transfer ("to A, but A may never sell or transfer") attached to a fee simple is void. A still holds a fee simple absolute. By contrast, a defeasible fee that restricts certain uses ("so long as used as a farm") is valid; the owner may still transfer the property, though the transferee takes subject to the same condition.

Additional Worked Examples

Worked Example 1.6

O conveys "to A and her heirs so long as the land is used for school purposes, then to B and his heirs." What interests are created?

Answer:
A has a fee simple determinable subject to an executory limitation. The durational language "so long as" creates a fee simple determinable, but the future interest is in B, a third party, not O. B holds a shifting executory interest that will cut short A’s estate if the property ceases to be used for school purposes. O retains no future interest.

Worked Example 1.7

O conveys "to A and her heirs, but if A ever attempts to transfer the property, then to B and his heirs." Is the restraint on alienation valid, and what interests exist?

Answer:
This provision attempts a forfeiture restraint on A’s ability to transfer a fee simple. Total restraints on alienation of a fee simple are void. The attempted condition is invalid, so A takes a fee simple absolute free of the restraint. B’s purported executory interest is void because the condition it depends on is an invalid restraint on alienation.

Worked Example 1.8

O conveys "to A and her heirs so long as no liquor is sold on the premises." Ten years later, liquor is sold on the land. O does nothing for fifteen years, and A continues in possession. Who owns the property for MBE purposes?

Answer:
The durational language "so long as" creates a fee simple determinable in A and a possibility of reverter in O. When liquor was first sold, A’s estate terminated automatically, and O’s possibility of reverter became a fee simple absolute. Even if O does nothing immediately, legal title is considered to have shifted to O at the moment of breach. Any issues of adverse possession or laches are beyond the core exam point: a fee simple determinable terminates automatically upon violation of the condition.

Key Point Checklist

This article has covered the following key knowledge points:

A fee simple absolute is the largest estate in land, potentially infinite in duration, fully transferable, and has no associated future interest.
Modern law presumes a fee simple absolute unless the conveyance clearly creates a lesser estate; "and his heirs" are words of limitation, not a gift to the heirs.
Precatory language (hope, wish, desire) does not create conditions; it usually leaves the grantee with a fee simple absolute.
Defeasible fees are fee simple estates that can end upon a specified event and include fee simple determinable, fee simple subject to condition subsequent, and fee simple subject to executory limitation.
Fee simple determinable uses durational language ("so long as," "while," "during," "until") and automatically reverts to the grantor via a possibility of reverter when the condition is violated.
Fee simple subject to condition subsequent uses conditional language ("but if," "provided that," "on condition that") plus an express right of entry, requiring the grantor to take affirmative action to terminate the estate.
Courts prefer to construe ambiguous language as creating a fee simple subject to condition subsequent rather than a fee simple determinable, to avoid automatic forfeiture.
Fee simple subject to executory limitation arises when the future interest is in a third party; upon the event, the estate automatically shifts to that third party, who holds a shifting executory interest.
A future interest in a transferee that follows any fee simple cannot be a remainder; it must be an executory interest.
Not every reference to "purpose" or "use" creates a defeasible fee; vague purpose language often yields a fee simple absolute, sometimes with a covenant, rather than a defeasible estate.
Total restraints on alienation of a fee simple are void; attempts to enforce such restraints do not prevent the grantee from holding a fee simple absolute.

Key Terms and Concepts

Present Possessory Estate
Fee Simple Absolute
Words of Purchase
Words of Limitation
Precatory Language
Defeasible Fee
Durational Language
Conditional Language
Fee Simple Determinable
Possibility of Reverter
Fee Simple Subject to Condition Subsequent
Right of Entry
Fee Simple Subject to Executory Limitation
Executory Interest
Shifting Executory Interest
Reversion
Remainder
Restraint on Alienation

Ownership of real property - Fees simple