Fee simple

Key Takeaways

• Fee simple absolute is the largest ownership interest recognized in real property law, unlimited in duration and not subject to any condition that could cut it short.
• A fee simple owner holds the entire bundle of rights: the powers to possess, use, exclude others, lease, mortgage, subdivide, sell, and pass the property on.
• Fee simple does not end at the owner's death. The estate continues and passes by will or by inheritance to the owner's heirs.
• In Washington, a statutory warranty deed in the form set out in RCW 64.04.030 is a conveyance in fee simple to the grantee and the grantee's heirs and assigns.

What It Means

Fee simple is the ownership interest that real estate law treats as complete. A fee simple owner holds the whole Bundle Of Rights in the parcel: the power to occupy it, use it, lease it, mortgage it, subdivide it, sell it, and leave it to heirs. Nothing inside the grant sets an ending date.

Two features carry the definition. Fee simple is perpetual, because the estate is not measured by any person's lifetime, so it survives its owner and moves on by deed, by will, or by inheritance. Fee simple absolute is also unconditional, because no condition written into the grant can cut it off and send the land back to a previous owner. Qualified versions of the estate do exist and end on a stated event, and each of those is a smaller Estate than fee simple absolute.

Complete does not mean unlimited. Every parcel of privately held Real Property stays subject to government powers: property taxes, Police Power regulation such as zoning and building codes, and the power to take land for public use with compensation paid.

How It Works in Washington

In Washington, fee simple is the ordinary result of a residential sale, and the deed form says so. RCW 64.04.030 sets out the statutory warranty deed and provides that a deed in that form, properly executed, is a conveyance in fee simple to the grantee, the grantee's heirs and assigns. The same statute builds three covenants into that short form without spelling them out on the page: that the grantor is lawfully seized of an indefeasible estate in fee simple, that the property is free from encumbrances, and that the grantor will defend the grantee's quiet and peaceable possession against lawful claims.

Washington also requires the transfer itself to be in writing. Under RCW 64.04.010, every conveyance of real estate, or any interest in real estate, and every contract creating or evidencing an encumbrance on real estate, must be by deed. That matters for how brokers explain a closing: the purchase and sale agreement creates the obligation to convey, and the deed is the instrument that moves the fee simple estate to the buyer.

Example

Renee and Marcus Oyelaran buy a house in Spokane for $465,000. They put $93,000 down, which is 20 percent of the price, and finance the remaining $372,000. At closing the sellers sign a statutory warranty deed conveying the property to the Oyelarans.

The Oyelarans now own the parcel in fee simple even though a lender holds a lien against it. The lien is an encumbrance on their estate, not a slice of it. The sellers kept nothing, no condition in the deed can pull the land back to them, and the buyers may sell, lease, remodel, or will the property as they choose. When the $372,000 balance is paid off, the lien is released and the same fee simple estate stands unencumbered. If Marcus dies while the loan is still outstanding, the estate does not end. His interest passes under his will or by inheritance, and the property stays in fee simple.

Common Mistakes and Exam Traps

• Fee simple is an estate, not a form of co-ownership. Joint tenancy and tenancy in common describe how two or more people share title, and either group can hold a fee simple.
• A mortgage or deed of trust does not shrink fee simple into a lesser estate. A lien is an encumbrance on the estate, and the borrower still owns the fee.
• Fee simple absolute is unconditional. When a question attaches a condition such as 'so long as the land is used as a park,' the answer is a qualified fee, not fee simple absolute.
• Fee simple land is not free of government power. Taxation, police power, eminent domain, and escheat reach a fee simple owner the same as any other owner.