Fee simple

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In English law, a fee simple or fee simple absolute is an estate in land, a form of freehold ownership. It is a way that real estate and land may be owned in common law countries, and is the highest possible ownership interest that can be held in real property. Allodial title is reserved to governments under a civil law structure. The rights of the fee simple owner are limited by government powers of taxation, compulsory purchase, police power, and escheat, and it could also be limited further by certain encumbrances or conditions in the deed, such as, for example, a condition that required the land to be used as a public park, with a reversion interest in the grantor if the condition fails; this is a fee simple conditional. [1]

Contents

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). If the tenant's overlord was the king, grand serjeanty, then this might require providing many different services, such as providing horses in time of war or acting as the king's ceremonial butler. These fiefs gave rise to a complex relationship between landlord and tenant, involving duties on both sides. For example, in return for receiving his tenant's fealty or homage, the overlord had a duty to protect his tenant. When feudal land tenure was abolished all fiefs became "simple", without conditions attached to the tenancy.

Common law

In English common law, the Crown had radical title or the allodium of all land in England, meaning that it was the ultimate "owner" of all land in the past feudal era. 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", 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 (sell) it from the possession of his overlord. However, a tenant could separate 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. [2]

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 also be mortgaged or put up as security. [3] Owners of real property in fee simple 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. Common temporal limitations include life estate, 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. A fee also could be limited through the method of its inheritance, 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. If no heirs could be found, then 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 denotes the maximum ownership in land that can be legally granted; it is the greatest possible aggregate of rights, powers, privileges and immunities available in land. The three hallmarks of the fee simple estate are that it is alienable, devisable and descendible.

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. [4] To convey an estate in fee simple at common law, the deed or will must state "to B and his heirs." Anything short of those 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. [4]

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 either to grant someone use of the property for the remainder of that person's life in a will, or by a grantor to reserve the right to continue using the property for the remainder of the grantor's life after it is sold. The right to ownership of the property after the death of the life estate owner is called the remainder estate. In England and Wales fee simple is the only freehold estate that remains; a life estate can only be created in equity and is not a right in property.

Types of fee simple

If previous grantors of a fee simple estate do not create any conditions for subsequent grantees, then the title is called fee simple absolute. A fee simple absolute is the highest estate permitted by law and it gives the holder 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). When a specified event happens, the estate may become void or subject to annulment. There are two types of defeasible estates: 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 if the condition occurs, but the estate does not automatically revert to the grantor; this is a fee simple subject to a condition subsequent. In most jurisdictions in the United States these concepts have been modified by statute. Fee simple determinable was generally preferred by courts in the common law of the early United States. Recently, that trend has reversed, and most courts in the United States will find a fee simple subject to condition subsequent in situations where the conveying document's language is unclear.

Rent

The claim that no rent or similar obligations are due from the owner of property in fee simple 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. England and Wales impose an estate charge. In the United States, fee simple owners are usually subject to property tax and the revenue generated is directed to the municipality's general fund. Other local tax assessments called "special purpose taxes" may be assessed in addition to the property taxes for 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; however, these are generally treated legally as covenants running with the land (contracts binding on the possessors of real property) imposing an affirmative duty to pay money rather than as rent for property held in fee simple.

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.

The English word fee ultimately goes back to the Indo-European root *peku, which refers to moveable wealth, that is, cattle. The Latin word pecunia, money, also comes from this root and becomes pecuniary in English. The root appears in Modern German as Vieh, cattle, beast. [5]

See also

Notes

  1. Indiana Court of Appeals (2007). Jensen v. City of New Albany. 868 N.E.2d 525.
  2. Henderson, Ernest F. Select Historical Documents of the Middle Ages, (London: George Bell and Sons, 1910), 149–150. Excerpt retrieved 2007-10-31
  3. Property: Examples and Explanations, B. Barlow Burke
  4. 1 2 Moynihan's Introduction to the Law of Real Property, Sheldon F. Kurtz
  5. American Heritage Dictionary of the English language, editions with the Index of Indo-European Roots, under peku

Related Research Articles

Escheat is a common law doctrine that transfers the real property of a person who has died without heirs to the Crown or state. It serves to ensure that property is not left in "limbo" without recognized ownership. It originally applied to a number of situations where a legal interest in land was destroyed by operation of law, so that the ownership of the land reverted to the immediately superior feudal lord.

In common law and statutory law, a life estate is the ownership of land for the duration of a person's life. In legal terms, it is an estate in real property that ends at death when ownership of the property may revert to the original owner, or it may pass to another person. The owner of a life estate is called a "life tenant".

This aims to be a complete list of the articles on real estate.

A deed is any legal instrument in writing which passes, affirms or confirms an interest, right, or property and that is signed, attested, delivered, and in some jurisdictions, sealed. It is commonly associated with transferring (conveyancing) title to property. The deed has a greater presumption of validity and is less rebuttable than an instrument signed by the party to the deed. A deed can be unilateral or bilateral. Deeds include conveyances, commissions, licenses, patents, diplomas, and conditionally powers of attorney if executed as deeds. The deed is the modern descendant of the medieval charter, and delivery is thought to symbolically replace the ancient ceremony of livery of seisin.

An estate in land is an interest in real property that is or may become possessory.

An estate, in common law, is the net worth of a person at any point in time alive or dead. It is the sum of a person's assets – legal rights, interests and entitlements to property of any kind – less all liabilities at that time. The issue is of special legal significance on a question of bankruptcy and death of the person.

Seisin denotes the legal possession of a feudal fiefdom or fee, that is to say an estate in land. It was used in the form of "the son and heir of X has obtained seisin of his inheritance", and thus is effectively a term concerned with conveyancing in the feudal era. The person holding such estate is said to be "seized of it", a phrase which commonly appears in inquisitions post mortem. The monarch alone "owned" all the land of England by his allodial right and all his subjects were merely his tenants under various contracts of feudal tenure.

In English law, seignory or seigniory, is the lordship (authority) remaining to a grantor after the grant of an estate in fee simple.

<i>Quia Emptores</i> English statute

Quia Emptores is a statute passed by the Parliament of England during the reign of Edward I in 1290 that prevented tenants from alienating their lands to others by subinfeudation, instead requiring all tenants who wished to alienate their land to do so by substitution. The statute, along with its companion statute Quo Warranto also passed in 1290, was intended to remedy land ownership disputes and consequent financial difficulties that had resulted from the decline of the traditional feudal system in England during the High Middle Ages.

Use, as a term in real property of common law countries, amounts to a recognition of the duty of a person to whom property has been conveyed for certain purposes, to carry out those purposes. In this context "use" is equivalent to "benefit".

Feoffment type of land transfer

In the Middle Ages, especially under the European feudal system, feoffment or enfeoffment was the deed by which a person was given land in exchange for a pledge of service. This mechanism was later used to avoid restrictions on the passage of title in land by a system in which a landowner would give land to one person for the use of another. The common law of estates in land grew from this concept.

Overlord Lord of a tenant

An overlord in the English feudal system was a lord of a manor who had subinfeudated a particular manor, estate or fee, to a tenant. The tenant thenceforth owed to the overlord one of a variety of services, usually military service or serjeanty, depending on which form of tenure the estate was held under. The highest overlord of all, or paramount lord, was the monarch, who due to his ancestor William the Conqueror's personal conquest of the Kingdom of England, owned by inheritance from him all the land in England under allodial title and had no superior overlord, "holding from God and his sword", although certain monarchs, notably King John (1199-1216) purported to grant the Kingdom of England to Pope Innocent III, who would thus have become overlord to English monarchs.

A defeasible estate is created when a grantor transfers land conditionally. Upon the happening of the event or condition stated by the grantor, the transfer may be void or at least subject to annulment. Historically, the common law has frowned on the use of defeasible estates as it interferes with the owners' enjoyment of their property and as such has made it difficult to create a valid future interest. Unless a defeasible estate is clearly intended, modern courts will construe the language against this type of estate. Three types of defeasible estates are the fee simple determinable, fee simple subject to an executory limitation or interest, and the fee simple subject to a condition subsequent.

Lease and release is literally the lease (tenancy) of non-tenanted property by its owner followed by a release (relinquishment) of the landlord's interest in the property. This sequence of transactions was commonly used to transfer full title to real estate under real property law. Lease and release was a mode of conveyance of freehold estates formerly common in England and in New York for tax avoidance and speed. Between its parties it achieves the same outcome as a deed of grant/transfer/conveyance.

In common law jurisdictions like England and Wales, Australia, Canada, and Ireland, a freehold is the common ownership of real property, or land, and all immovable structures attached to such land. It is in contrast to a leasehold: in which the property reverts to the owner of the land after the lease period has expired. For an estate to be a freehold, it must possess two qualities: immobility and ownership of it must be of an indeterminate duration. If the time of ownership can be fixed and determined, it cannot be a freehold. It is "An estate in land held in fee simple, fee tail or for term of life."

A reversion in property law is a future interest that is retained by the grantor after the conveyance of an estate of a lesser quantum that he has. Once the lesser estate comes to an end, the property automatically reverts back to the grantor.

Even before the Norman Conquest, there was a strong tradition of landholding in Anglo-Saxon law. When William the Conqueror asserted sovereignty over England in 1066, he confiscated the property of the recalcitrant English landowners. Over the next dozen years, he granted land to his lords and to the dispossessed Englishmen, or affirmed their existing land holdings, in exchange for fealty and promises of military and other services. At the time of the Domesday Book, all land in England was held by someone, and from that time there has been no allodial land in England. In order to legitimise the notion of the Crown's paramount lordship, a legal fiction - that all land titles were held by the King's subjects as a result of a royal grant - was adopted.

In English and Irish law, a fee farm grant is a hybrid type of land ownership typical in cities and towns. The word fee is derived from fief, meaning a feudal landholding, and a fee farm grant is similar to a fee simple in the sense that it gives the grantee the right to hold a freehold estate, the only difference being the payment of an annual rent and covenants, thus putting both parties in a landlord-tenant relationship.

The Rule in Shelley's Case is a rule of law that may apply to certain future interests in real property and trusts created in common law jurisdictions. It was applied as early as 1366 in The Provost of Beverly's Case but in its present form is derived from Shelley's Case (1581), in which counsel stated the rule as follows:

…when the ancestor by any gift or conveyance takes an estate of freehold, and in the same gift or conveyance an estate is limited either mediately or immediately to his heirs in fee simple or in fee tail; that always in such cases, 'the heirs' are words of limitation of the estate, not words of purchase.

Real property legal term; property consisting of land and the buildings on it

In English common law, real property, real estate, realty, or immovable property is land which is the property of some person and all structures integrated with or affixed to the land, including crops, buildings, machinery, wells, dams, ponds, mines, canals, and roads, among other things. The term is historic, arising from the now-discontinued form of action, which distinguished between real property disputes and personal property disputes. Personal property was, and continues to be, all property that is not real property.