Kovats Real Estate School Practice Test

Which of these describes an estate that can be terminated upon a specified event occurring?

1. Life estate

2. Remainder estate

3. Defeasible fee

4. Fee simple

The correct answer is: Defeasible fee

The term that describes an estate that can be terminated upon the occurrence of a specified event is a defeasible fee. This type of estate, often called a fee simple subject to a condition subsequent or a fee simple determinable, is characterized by certain conditions or restrictions that, if violated, can result in the termination of the estate. For example, a property might be conveyed to a buyer with the stipulation that it must be used for educational purposes. If the property ceases to be used for that purpose, the original grantor (or their heirs) could reclaim the property. This condition makes the estate defeasible because it is contingent upon the fulfillment of the specified requirements. In contrast, a life estate is based on the lifespan of a specific individual and does not end upon a specified event, but rather upon the death of that individual. A remainder estate is an interest in property that takes effect after the termination of a prior estate, typically a life estate. Fee simple denotes the most complete form of ownership in real estate and does not contain conditions that would allow for its termination based on an event; it is generally permanent unless the owner willingly sells or transfers it. Thus, a defeasible fee uniquely captures the idea of an estate that termin