Guide to Understanding
The Term "Fee Simple"
Fee simple is an estate in land in common law. It is the most common way 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 for governments. Fee simple ownership represents absolute ownership of real property but it is limited by the four basic government powers of taxation, eminent domain, police power, and escheat and could also be limited by certain encumbrances or a condition in the deed. How ownership 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 property restrictions or municipal regulation.
Common Law and History
In English common law theory, 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 an abstract entity—called an estate in land—which is what is owned. The fee simple estate is also called "estate in fee simple" or "fee-simple title" and sometimes simply freehold in England and Wales. In the early Norman period, the holder of an estate in fee simple could not sell it, but instead could grant subordinate fee simple estates to third parties in the same parcel of land, a process known as "subinfeudation." The Statute of Quia Emptores adopted in 1290 abolished subinfeudation and instead allowed the sale of fee simple estates.
The concept of a "fee" has its origins in feudalism. According to William Blackstone, the great common law commentator, fee simple is 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 whomever its owner pleases; it can be mortgaged or put up as security as well.
The owner(s) of real property in fee simple title have the right to own the property during their lifetime and typically have a say in determining who gets to own the property after their death. In a sense, one might say fee simple owners "own" the property "forever".
Historically, estates could be limited in time, such as a life estate, which is an interest in lands 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 what was called 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.
Many common law jurisdictions retain the possibility of creating a life estate, although this is uncommon. In the U.S., life estates are most commonly used in the context of either giving a right to someone in a will to use property 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, which is commonly the case these days, then the title is called fee simple absolute. 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 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, the estate will automatically terminate and revert to the grantor or the grantor's estate. 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. In the United States many of these concepts have been modified by statute in some states.
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 rent charge 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 example in England and Wales, the estate charge. In the United States, fee simple owners are subject to property tax and its funds directed to the municipality's general fund. Other local tax assessments called "specials" may be assessed in addition to the property tax to be applied to specific purposes such as road and water/sewer 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.
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.