Fee Simple Defeasible vs. Fee Simple Absolute: What’s the Difference?
The information provided on this page is for general informational purposes only and does not constitute legal, financial, or investment advice. Oil and gas laws, mineral rights regulations, and royalty structures vary significantly by state and jurisdiction. While we strive to provide accurate and up-to-date information, no guarantee is made to that effect, and laws may have changed since publication.
You should consult with a licensed attorney specializing in oil and gas law in your jurisdiction, a qualified financial advisor, or other appropriate professionals before making any decisions based on this material. Neither the author nor the publisher assumes any liability for actions taken in reliance upon the information contained herein.
Property deeds can be extremely complicated. What about when you are purchasing a new asset? Well, it is extremely critical to fully understand what exactly it is that you are buying.
In property transactions, fee simple defeasible and fee simple absolute are two of the most common acquisitions. In this article, we will define these terms. After that, we will be helping you understand the difference between the two and what they mean for mineral rights.
What is a Fee Simple Absolute?
A fee simple absolute is the absolute highest form of property ownership that one can have. In a fee simple absolute, a person owns a property until he or she transfers it to someone else. It is usually through sale, gift, or inheritance. Here, property owners own surface rights as well as mineral rights, without any limiting conditions.
What is a Fee Simple Defeasible?
On the other hand, a defeasible is a type of property ownership in which the assets can be taken away from the owner. This is after the occurrence (or-non occurrence) of a special event. Fee simple defeasible can be broken down into two very similar categories: “fee simple determinable” and “fee simple subject to condition subsequent.”
In order to paint a better picture, here’s a good example of a defeasible: I sell you my property for a fee simple defeasible with the condition that you create an oil well on the land in the next five years. If you fail to set up the oil well in the predetermined time period, then the ownership will revert back to me.
Fee Simple Defeasible vs. Fee Simple Absolute
As you can see, the difference between a fee simple defeasible and a fee simple absolute is quite easy to see. If the previous seller retains any conditional interest in the property, then the deed is most likely to be a fee simple defeasible. For most people, however, a fee simple absolute is the easiest and most common type of property ownership. Here, all deals are final and the new owner is free to do as they wish with the property.
If you have further questions, feel free to reach out to us here.
Leave a Reply
Want to join the discussion?Feel free to contribute!