Definition of a Fee Simple Mortgage

Definition of a Fee Simple Mortgage
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Fee simple, the highest interest in property recognized by law, means that the owner is entitled to all property rights, including the land and its improvements such as a house. This is the most common type of ownership, typically acquired through a mortgage. The fee simple owner also may sell, rent and transfer her property as she wishes; its only restrictions are those that interfere with other laws.

Ins and Outs of the Fee Estate

The term "fee simple" originally came from "fief," or feudal land holding, and "simple," referring to without conditions. This developed due to many complex situations of land ownership that existed, especially in times of war. Fee simple, also referred to as a "freehold" or "estate in fee simple," was developed to clear up confusion and legally define rights. Fee simple ownership also has been used to differentiate among other types of restrictive ownership that might end with the life of the deed holder, restrict property usage or set ownership to a specified number of years.

When You Acquire Fee Simple Ownership

Though fee simple refers to a type of property ownership and a mortgage refers to financing, the two typically go hand in hand. This is because the borrower offers the fee-simple property as security for the loan. In a nutshell, this means that although ownership is said to be absolute, it's contingent on repayment of the loan. If the owner defaults, the mortgage company can seize the property.

What are the Restrictions on the Fee Title?

There are generally two types of fee simple deeds: fee simple absolute and fee simple defeasible. As the name suggests, fee simple absolute grants the owner absolute control over the land, unless it conflicts with eminent domain, zoning, police power and restrictive covenants.

Fee simple defeasible means that the grantor of the deed has placed a restriction on the transfer. Though not common, these types of fee simple deeds usually have "if" clauses that outline how the property can be used. For example, a property may be transferred as long as it's kept in its historic condition, if no alcohol is consumed on the premises, or as long as it's used as a home for the elderly. If not followed, ownership reverts back to the original owner.

Unrestricted Powers to Sell and Transfer

Because the owner has few restrictions placed on what she can do with her home, the sale or gift of it remains entirely up to her. As a fee simple deed holder, she has unrestricted power to transfer ownership as she sees fit in any circumstance. At its core, fee simple ownership lasts forever. This means that if the owner doesn't transfer ownership during her lifetime, she remains owner until her death. Upon her death, ownership is transferred to her heirs as outlined in her will. If she has no heirs, the state takes ownership.