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What does “fee simple” mean?

On Behalf of | May 13, 2022 | Residential Real Estate

When entering a real estate transaction, there are many legal terms that may arise which could be unfamiliar. It is worthwhile for Massachusetts buyers and sellers to understand all the terms being used in the contracts and proceedings when dealing with a real estate purchase, in order to make sure the terms of the agreement are properly understood. “Fee simple” is one term that people may hear in a real estate transaction. Here is some information on what it means.

Simply put, fee simple is a term that means full, unlimited, irrevocable ownership of land, including any buildings on that land. The majority of home purchases in the United States are defined as fee simple. However, some modifiers can be added after the term fee simple that can mean different things. For example:

  • Fee simple subject to condition subsequent: This provides the grantor with the option to take back property if certain agreed upon criteria are not met. This is called the “right of re-entry.” If terms are violated without any response or action from the grantor, the owner will not have to give up the property.
  • Fee simple determinable: This type of fee simple automatically transfers ownership back to the grantor if conditions are not met. Unlike fee simple subject to condition subsequent, they do not need to take any action in order to regain ownership if there is a violation of the agreement.
  • Fee simple subject to executory limitation: This is similar to fee simple determinable, except that the property is transferred to a third party if conditions are not met, rather than the grantor.

The three above terms are categorized as fee simple defeasible, which means full ownership with conditions that, if violated, allow for real estate ownership to be revoked. Fee simple absolute, by contrast, is an unconditional and irrevocable ownership without any conditions. Buyers and grantors can work with a Massachusetts lawyer to fully understand which terms are used in their contracts and documents and what consequences they may have.