A fee simple estate subject to a condition that title reverts if the land ceases to be used as a park is:
Correct Answer
B) A defeasible fee, whose duration depends on the condition
Why this is correct: A fee simple subject to a condition subsequent is a defeasible fee; title can revert if the condition (e.g., use as a park) fails, affecting its marketability and value. Why the other choices are wrong: "An absolute fee simple carrying no limitation whatsoever on its use" contradicts the condition stated. "A leasehold interest held by the grantee" is wrong; this is a freehold, not a leasehold. "An easement in gross benefiting the grantor" is incorrect; an easement is a right of use, not an ownership estate. Exam tip: Defeasible fees have conditions; valuing them as absolute fee simple overstates value.
Why This Is the Correct Answer
Option B is correct because a reversion triggered by the land ceasing to be used as a park is exactly the defining feature of a defeasible fee: the estate's duration depends on the continuation of the stated use. It remains a fee and can last forever, but it is defeasible because it can be defeated by the event described. That contingency limits the owner's ability to convert the property to a higher and better use, which is where the value effect originates. Naming the estate correctly is the first step, since it defines the interest appraised.
Why the Other Options Are Wrong
Option A: An absolute fee simple carrying no limitation whatsoever on its use
A fee simple absolute is by definition free of private conditions on use, so it cannot coexist with a reverter clause tied to a particular use. The stem itself supplies the condition, which rules this out on the facts. Candidates select it when they reason that a fee is a fee, overlooking that the fee family divides into absolute and defeasible branches.
Option C: A leasehold interest held by the grantee
A leasehold is a nonfreehold estate created by a lease, giving possession for a definite or renewable term with reversion to the landlord at expiration, and it involves rent and a landlord-tenant relationship. Nothing here describes a term, rent, or a lessor. Both a leasehold and a defeasible fee can end, which is the surface similarity, but one is a tenancy and the other is ownership.
Option D: An easement in gross benefiting the grantor
An easement in gross is a nonpossessory right of use benefiting a person or entity rather than a parcel, such as a utility line easement, and it conveys no estate in the land. The grantor here retains a future interest in the ownership itself, a possibility of reverter or right of reentry, which is a different creature entirely. Confusing a retained future interest with an easement mixes possessory and nonpossessory categories.
Defeasible Can Be Defeated
Defeasible means defeatable. The owner holds a full fee right up until the moment the condition fails, and then the estate can be defeated and snap back to the grantor. Words to watch: 'so long as' means it ends by itself, 'but if' means the grantor has to come take it back.
How to use: Scan the stem for any language conditioning ownership on a use continuing. If you find it, the estate is defeasible and cannot be fee simple absolute. Then check whether the appraisal assumes fee simple absolute, because valuing a conditioned estate as unconditioned overstates value and misidentifies the interest.
Exam Tip
State the estate appraised explicitly in the report; if it is anything other than fee simple absolute, explain how the limitation was reflected in the analysis.
Common Mistakes to Avoid
- -Appraising a defeasible fee as though it were fee simple absolute
- -Confusing a possibility of reverter with an easement or a lease reversion
- -Ignoring the condition in the highest and best use analysis because the current use complies with it
Concept Deep Dive
Analysis
This question tests the classification of freehold estates and the valuation consequence of a limitation on duration. A fee simple absolute is the largest estate recognized, of potentially infinite duration and subject only to the four governmental powers of taxation, eminent domain, police power, and escheat. A defeasible fee is also a freehold of potentially infinite duration, but it carries a limitation that can cut it short if a stated event occurs or a stated use ceases. Within that family, a fee simple determinable ends automatically when the limiting condition fails, with a possibility of reverter springing back to the grantor, while a fee simple subject to a condition subsequent gives the grantor a right of reentry that must be exercised. Language matters: 'so long as' or 'while' signals determinable, and 'but if' or 'on condition that' signals a condition subsequent. For the appraiser, the practical point is that the estate is narrower than fee simple absolute, the holder cannot freely change the use, marketability and financing are constrained, and a value conclusion premised on fee simple absolute would be overstated.
Background Knowledge
You need to know the hierarchy of estates, distinguishing freehold from nonfreehold and, within freehold, fee simple absolute from defeasible fees and life estates. You should also know the two defeasible variants and their future interests, the possibility of reverter for a determinable fee and the right of reentry for a condition subsequent, and that USPAP requires the appraiser to identify the property rights appraised as part of problem identification.
Real-World Application
A parcel deeded to a city 'so long as used for public park purposes' comes up for appraisal ahead of a proposed sale. The appraiser identifies the defeasible fee, confirms the grantor's heirs hold the reverter, and concludes that a market value premised on redevelopment would require the reverter to be released, disclosing that limitation prominently.
More Property Description Questions
A property is located in FEMA flood zone AE with a base flood elevation of 485 feet. The lowest floor is at 487 feet. What is the significance for the appraisal?
In a leasehold estate, the tenant's interest in the property is called:
A ground lease typically involves:
An appraisal of a rented single-family home where the lease runs another four years at below-market rent is valuing which interest, from the owner's side?
A duplex operates legally in a zone later rezoned single-family. What is its status, and the key appraisal question?
Which component carries roof loads down to the foundation in a typical wood-framed house?
A property owner wants to operate a daycare center in an area zoned for single-family residential use. What would they most likely need to obtain?
A deed restriction that prohibits the construction of fences over 4 feet in height is an example of:
Room count in residential appraisal conventionally excludes:
Type I construction classification typically refers to buildings with:
People Also Study
Real Estate Market
13.6% of exam
Land or Site Valuation
4.5% of exam
Sales Comparison Approach
16.4% of exam
Cost Approach
13.6% of exam
Income Approach
8.2% of exam
Previous Question
A structure described as 'balloon framed' would most likely date from:
Next Question
A residential property is located in a subdivision governed by covenants, conditions, and restrictions (CC&Rs) recorded in 1985. One CC&R prohibits detached accessory structures over 12 feet in height. The property currently has a 14-foot-tall detached garage built in 2012. No enforcement action has been taken. How should the appraiser reflect this violation in the appraisal report?