Defeasible Fee Estate in Real Estate

defeasible fee real estate
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When the rights of ownership in real estate are dependent on the occurrence or non-occurrence of a certain event, it is known as a defeasible fee estate. This limits fee simple ownership rights.

The Legality of Defeasible Fees

If a transfer of real estate is qualified by a "condition subsequent," such as the new owner cannot do something, the former owner would retain the right to initiate legal action to retake the property if the new owner does indeed do the prohibited thing. An example might be a prohibition of using the property for hunting on a ranch transfer. Should the new owner allow hunting on the property in the future, the previous owner could initiate legal action to retake it.

A defeasible fee estate may also be qualified by a "special limitation". Here we have a situation where the rights of the new owner are automatically terminated and ownership reverts to the previous owner if a certain limitation is violated. Note that no legal action is required to retake the property in this case. By using the phrases "so long as" or "while or during" this estate is created. Using our ranch example, should the property be transferred to the new owner "so long as it is used only for the raising of cattle," using it for any other purpose would trigger the previous owner's right of reentry and the property ownership would revert.

This type of limitation to ownership isn't common, especially in normal transactions selling homes and even commercial properties. However, when large properties held for generations by a family are involved, a defeasible fee can become a part of the transaction and a limitation on ownership rights.


A parcel north of Taos, NM that was at one time a large ranch. When the heirs in the family decided to split it up and sell it in multi-acre parcels, they honored the wishes of their parents in wanting to keep thetrees on the property. You see, this area is considered a "high desert" climate, and trees are not as common in the flatter areas not on mountainsides. 

This area happened to have a decent covering of small juniper, cedar and scrub oak trees, along with the sagebrush and Chamisa. A limitation was placed on ownership as a defeasible fee. It stated that no more than 10% of the number of trees on a parcel could be cut down for the construction of buildings or any other use. 

Could this be enforced? Legally, the answer would be yes, but practically it would be difficult unless the sellers did a lot of documentation prior to the sale. Taking extensive photos and a count of the number of trees would probably be necessary to prove the limitation had been violated. And, I would think, not a legal opinion, that a notarized document signed by the buyer(s) agreeing to the tree count should be a part of the transaction. The heirs did what they could reasonably and at a low cost to honor their parents' estate wishes but probably didn't go to great lengths to document the number of trees prior to sale.

I also doubt that the heirs had any intention of following up in the future to see if there were violations. The minimum effort and cost were expended to honor their parents' wishes, but the new buyers probably had nothing to fear if the cut down more than 10% of the trees.

Whenever you see a defeasible fee estate situation, there is usually a little bit of interesting history behind it. Property carries a bundle of rights, but there can be limitations that reduce the bundle.

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