PSI Property Ownership Practice Exam

A fee simple subject to a condition subsequent is a type of estate ownership that allows the grantor, or the original owner, to retain some control over the property even after it has been transferred to another party. This type of estate grants full ownership rights to the grantee (the new owner) under the condition that a specified event does not occur. If that event does occur, the grantor has the right to reclaim the property.

The correct understanding revolves around the requirement that the grantor must take specific action to reclaim the property if the condition is violated. Unlike an automatic termination (as might happen in other types of estates), the fee simple subject to a condition subsequent necessitates intervention by the grantor to effectuate the termination of the estate. This makes it clear that ownership is contingent upon certain behaviors or conditions being upheld.

For example, if a property was granted with the stipulation that it must be used for agricultural purposes, and the new owner decides to use it for commercial purposes instead, the original owner (grantor) has the right to take legal action to retake ownership of the property—but they must do so; it does not happen automatically.

This understanding of the rights and obligations associated with a fee simple subject to a condition subsequent