Texas Real Estate Sales Agent ExamProperty OwnershipMedium
A Texas couple purchased a property with a deed containing a condition that states, 'The property shall never be used for commercial purposes; if it is, ownership shall automatically revert to the grantor or their heirs.' What type of estate has this couple acquired?
- ALeasehold Estate
- BLife Estate
- CFee Simple Defeasible
- DFee Simple Absolute
Show answer & explanationAnswer & explanation
Correct answer: C. Fee Simple Defeasible
This scenario describes a Fee Simple Defeasible estate, specifically a fee simple determinable, where ownership is subject to a condition and automatically reverts to the grantor if the condition is violated.
Why the other options are wrong
- A. A Leasehold Estate is a tenant's right to occupy property for a limited time under a lease, not an ownership interest.
- B. A Life Estate grants ownership for the duration of a person's life, not subject to conditions that revert ownership for a specific use.
- D. Fee Simple Absolute is the highest form of ownership, without any conditions or limitations.
Fee Simple Defeasible
An estate in land that can be terminated (defeated) upon the occurrence or non-occurrence of a specified condition.
- Has conditions attached to ownership
- Can be 'determinable' (automatic reversion) or 'subject to condition subsequent' (grantor must take action)
- Less than Fee Simple Absolute ownership
Memory trick: Fee Simple Defeasible: 'Defeatable' if you don't follow the rules.