What is defeasible estate?

A defeasible estate is an estate in land that is created when a grantor transfers his real property with respect to some conditions. This means that the estate is subject to the occurrence or non-occurrence of some events specified by the grantor.

Estate in land

Estate in land

Defeasible estate can be classified in three types: fee simple determinable, fee simple subject to executory limitation, and fee simple subject to condition subsequent.

a) Fee Simple Determinable

In a property with fee simple determinable estate, the interest and right in the property ends automatically when the stated condition of the grantor is violated or not met. The interest of the property will automatically revert back to the grantor or his/her heirs without any action of law. For example, A grants an estate in his property to B for the condition that it will be used as a school. B has a fee simple interest in the property as long it is used as what was agreed. However, if the property is no longer used as a school, then the estate of the property will go back to A automatically.

b) Fee Simple Subject to Executory Limitation

This type of estate is quite similar to fee simple determinable, in which the interest in the property ends automatically if the condition is not met or violated. The only difference between the two is that in a fee simple subject to executory limitation, the interest of the property will not revert back to the original owner or the grantor. Instead, the estate in the property will be automatically given to a third party upon violation of the condition. For instance (from the previous example), A grants his property to B as long at is used as a school; if not used as what is agreed, then the right to the property will be given to C. It must be noted that upon A’s decision to subject his property under fee simple subject to executory limitation, he no longer has an interest in the property.

c) Fee Simple Subject to Condition Subsequent

An estate classified under fee simple subject to a condition subsequent is also very similar to fee simple determinable. The only exception is that the failure to meet the condition will not automatically shift back the estate to the grantor or the original owner. But instead, the grantor will have the option to take back the property or not. This option to reassert one’s right to the property is called “right of re-entry.”

In order for a fee simple subject to a condition subsequent be created, the grantor must explicitly state in the conveyance that he reserves the right to retake the property if the condition is violated.