- Official section
- National I: Property Ownership, estates and conveyances
- Broker weight
- Part of 10% of the national broker portion
- Expected scored items
- The current PSI outline assigns Property Ownership about 10 of the 100 scored national broker items
Real estate glossary and exam guide
Defeasible fee: fee ownership with a built-in condition
A defeasible fee can look like ordinary fee-simple ownership until one sentence in the deed changes everything. That sentence links title to a use, event, or condition. Your exam job is to decide whether ownership ends automatically, whether the grantor must choose to reclaim, or whether title shifts to a third party. Then name the future interest that matches the result.
Last updated: August 1, 2026
What does this exam area cover?
Short answer: A defeasible fee is fee-simple ownership that can end when a deed condition or limitation operates. A fee simple determinable ends automatically and leaves a possibility of reverter in the grantor. A fee simple subject to a condition subsequent continues until the grantor exercises a right of entry. A fee simple subject to an executory limitation shifts automatically to a third party, who holds an executory interest.
This guide follows the PSI Illinois Candidate Information Booklet effective June 24, 2026 and sources checked through August 1, 2026. The national outline tests estates, conveyances, encumbrances, and title effects but does not separately assign a question count to defeasible fees. Illinois adds a material current rule through the Rights of Entry or Re-entry Act, 765 ILCS 330. Among other provisions, the Act limits an unbroken possibility of reverter or right of entry to 40 years and restricts alienation and devise. This page teaches the exam distinctions, not an opinion about the validity or enforcement of a particular deed clause.
What is on the official outline?
- Topic
- Defeasible fee definition
- What to know
- Fee-simple estate, qualified title, condition, limitation, stated event, termination, future interest, grantor, grantee, deed, conveyance, title risk, and enforcement
- Best exam move
- Choose defeasible fee when the deed makes continued ownership depend on a stated use, event, or condition.
- Topic
- Fee simple absolute baseline
- What to know
- Potentially perpetual ownership, inheritance, devise, transfer, no special defeasing condition, full duration, ordinary restrictions, government power, private controls, and title
- Best exam move
- Start with fee simple absolute and select a defeasible form only when the deed clearly creates the special limitation.
- Topic
- Fee simple determinable
- What to know
- Automatic termination, duration language, so long as, while, during, until, use ends, event occurs, grantor, possibility of reverter, and no election required
- Best exam move
- If title ends automatically and returns to the grantor line, choose fee simple determinable.
- Topic
- Possibility of reverter
- What to know
- Grantor future interest, automatic return, determinable fee, present future interest, condition status, title search, release, statutory duration, trust, corporation, and succession
- Best exam move
- Pair possibility of reverter only with the determinable estate.
- Topic
- Fee simple subject to condition subsequent
- What to know
- Condition, breach, title continues, grantor choice, enforcement, re-entry, legal action, waiver, delay, provided that, on condition that, but if, and deed construction
- Best exam move
- If breach gives the grantor an option to reclaim rather than automatic title, choose condition subsequent.
- Topic
- Right of entry or power of termination
- What to know
- Grantor future interest, condition subsequent, election, enforcement, re-entry, recovery action, waiver, release, limitations, title cloud, and no automatic possession
- Best exam move
- Pair right of entry with condition subsequent and look for an affirmative enforcement step.
- Topic
- Fee simple subject to executory limitation
- What to know
- Automatic divestment, third party, named transferee, shifting title, executory interest, event, condition, grantor, original grantee, and future ownership
- Best exam move
- If title automatically leaves the present owner for a third party, choose executory limitation.
- Topic
- Executory interest
- What to know
- Third-party future interest, automatic shift, divestment, springing or shifting concepts, condition, future holder, transfer, perpetuities, deed, will, and legal review
- Best exam move
- Choose executory interest when the future holder is neither the present grantee nor the grantor line and the shift is automatic.
- Topic
- Words of duration
- What to know
- So long as, during, while, until, only while, continuous use, automatic end, deed context, intent, punctuation, habendum, granting clause, and inconsistency
- Best exam move
- Treat duration words as determinable clues, not as substitutes for reading the complete instrument.
- Topic
- Words of condition
- What to know
- Provided that, on condition that, but if, right to re-enter, power to terminate, breach, election, notice, enforcement, deed context, and grantor intent
- Best exam move
- Treat condition words plus a re-entry remedy as strong condition-subsequent clues.
- Topic
- Triggering event
- What to know
- Use discontinued, prohibited use begins, sale, alcohol, school, park, religious use, charitable purpose, deadline, fact dispute, temporary interruption, abandonment, cure, and proof
- Best exam move
- State the precise event and decide whether the deed says it actually occurred before changing title.
- Topic
- Covenant or deed restriction
- What to know
- Promise, land-use restriction, affirmative covenant, negative covenant, injunction, damages, association, enforcement, no automatic forfeiture, remedies, notice, and running with land
- Best exam move
- Do not convert every restriction into a defeasible fee; ask whether the estate itself can end.
- Topic
- Transfer by present owner
- What to know
- Sale, gift, deed, inheritance, mortgage, lease, buyer notice, title exception, condition continues, future interest, price, marketability, insurance, and disclosure
- Best exam move
- A conveyance passes the qualified estate, not fee-simple title free of the condition.
- Topic
- Release and title cleanup
- What to know
- Future-interest holder, release, extinguishment, quitclaim, consideration, recording, title insurer, statutory exception, merger, court action, settlement, and legal description
- Best exam move
- A valid recorded release can remove the future-interest claim, but an ordinary resale by the defeasible owner cannot.
- Topic
- Illinois 40-year limit
- What to know
- 765 ILCS 330/4, unbroken condition, possibility of reverter, right of entry, date created, 40 years, longer stated duration, statutory cap, record, and current source
- Best exam move
- Apply the Illinois limit only when the facts invoke Illinois law and the statutory requirements are met.
- Topic
- Illinois transfer restrictions
- What to know
- No alienation, no devise, possibility of reverter, right of entry, trust termination, asset recipients, corporate dissolution, release, lease exception, rent, mortgage, and vendor lien
- Best exam move
- Do not use a national assumption about transferability when an Illinois question supplies 765 ILCS 330 facts.
- Topic
- Validity and public policy
- What to know
- Illegal condition, discrimination, unreasonable restraint, public policy, ambiguity, changed circumstances, charitable purpose, constitutional rule, fair housing, severability, and counsel
- Best exam move
- Classifying the deed form does not prove that every condition is valid or enforceable.
- Topic
- Title and transaction review
- What to know
- Recorded deed, chain of title, future-interest holder, date, condition status, evidence, notice, release, litigation, title commitment, exception, lender, appraisal, marketability, and closing
- Best exam move
- Treat an unresolved defeasible condition as a title and marketability issue requiring document and legal review.
Which distinctions produce the most mistakes?
- Terms
- Fee simple absolute vs. defeasible fee
- Difference
- Fee simple absolute has no special private condition that can end the estate. A defeasible fee can terminate or be reclaimed under its creating limitation.
- Question cue
- Unqualified duration versus conditional duration.
- Terms
- Determinable vs. condition subsequent
- Difference
- A determinable fee ends automatically. A condition-subsequent fee continues until the grantor elects and lawfully acts to reclaim.
- Question cue
- Automatic return versus optional re-entry.
- Terms
- Possibility of reverter vs. right of entry
- Difference
- A possibility of reverter follows a determinable fee. A right of entry follows a condition subsequent.
- Question cue
- Automatic future interest versus enforcement option.
- Terms
- Executory limitation vs. determinable fee
- Difference
- Both can shift title automatically, but an executory limitation shifts to a third party while a determinable fee returns to the grantor line.
- Question cue
- Third party versus grantor.
- Terms
- Executory interest vs. remainder
- Difference
- An executory interest divests another fee upon a condition. A remainder becomes possessory at the natural end of a preceding estate such as a life estate.
- Question cue
- Cuts short versus waits for natural expiration.
- Terms
- Defeasible fee vs. life estate
- Difference
- A defeasible fee is potentially perpetual but can end on a condition. A life estate is certain to end when the measuring life ends.
- Question cue
- Conditional fee versus life-measured estate.
- Terms
- Defeasible fee vs. leasehold
- Difference
- A defeasible fee is a freehold ownership estate. A leasehold is a nonfreehold possessory interest under a lease.
- Question cue
- Qualified ownership versus contract possession.
- Terms
- Title condition vs. restrictive covenant
- Difference
- A title condition can defeat the estate. A covenant regulates conduct and ordinarily uses contract or equitable remedies rather than title forfeiture.
- Question cue
- Estate ends versus promise enforced.
- Terms
- Breach vs. enforcement
- Difference
- Breach is the triggering fact. Enforcement is the later act required for a condition subsequent, but not for automatic limitation forms.
- Question cue
- Event occurs versus holder acts.
- Terms
- Transfer of present fee vs. release of future interest
- Difference
- The present owner conveys the defeasible estate. The future-interest holder releases the possibility, right, or executory claim.
- Question cue
- Qualified title moves versus condition removed.
- Terms
- Classification vs. enforceability
- Difference
- Classification identifies the estate and future interest. Enforceability asks whether current law permits that particular condition and remedy.
- Question cue
- Name the form, then test the law.
The D-E-E-D method for defeasible-fee questions
- Duration language: locate so long as, while, during, until, provided that, on condition that, but if, re-entry, automatic termination, or a named third-party taker.
- Ending mechanics: decide whether title ends automatically or remains until someone elects to enforce.
- Endpoint: identify whether title returns to the grantor line or shifts to a third party, then name possibility of reverter, right of entry, or executory interest.
- Date and governing law: check the deed date, condition status, release, waiver, limitations period, Illinois 40-year rule, public policy, and any special exception.
- Documents and transaction effect: review the full deed, chain of title, title commitment, evidence of breach, release, litigation, mortgage, and buyer disclosure.
- Present estate
- Fee simple determinable
- What happens after trigger
- Returns automatically to grantor line
- Future interest
- Possibility of reverter
- Present estate
- Fee simple subject to condition subsequent
- What happens after trigger
- Grantor may elect to reclaim
- Future interest
- Right of entry or power of termination
- Present estate
- Fee simple subject to executory limitation
- What happens after trigger
- Shifts automatically to third party
- Future interest
- Executory interest
- Present estate
- Fee simple absolute
- What happens after trigger
- No special defeasing event
- Future interest
- No defeasible-fee future interest
- Present estate
- Restrictive covenant
- What happens after trigger
- Promise remedy, not automatic estate change
- Future interest
- Enforcement right depends on covenant law
How do the rules work in scenarios?
Automatic return to the grantor
Scenario: A deed conveys Oakacre to the town so long as the land is used as a public library. The deed states that title automatically reverts if library use ends.
- So long as is duration language.
- The deed expressly makes termination automatic.
- Title returns to the grantor line rather than a third party.
Answer: The town holds a fee simple determinable, and the grantor retains a possibility of reverter.
The grantor must choose
Scenario: A deed conveys Pineacre to a museum, provided that no portion is used for retail sales, and reserves to the grantor the right to re-enter after breach.
- Provided that signals a condition rather than pure duration.
- The deed reserves a right to re-enter.
- A prohibited sale does not by itself complete the grantor's enforcement choice.
Answer: The museum holds a fee simple subject to a condition subsequent, and the grantor holds a right of entry.
Automatic shift to a neighbor
Scenario: A deed gives Riveracre to A, but if alcohol is ever sold there, then to B. A later opens a wine shop.
- The stated event divests A's fee.
- The deed sends title to B rather than back to the grantor.
- The shift is automatic under the stated facts.
Answer: A held a fee simple subject to an executory limitation, and B held the executory interest.
A use covenant does not mention forfeiture
Scenario: A subdivision declaration says lots may be used only for residences and authorizes the association to seek an injunction. It does not say title ends or returns.
- The language regulates use.
- The stated remedy is an injunction.
- No future estate or title-forfeiture mechanism appears.
Answer: The facts describe a restrictive covenant, not a defeasible fee.
A buyer receives the condition too
Scenario: A school holds land in fee simple determinable and sells its entire interest to a developer without obtaining a release from the grantor's successor.
- The school can convey only the estate it holds.
- The condition and possibility of reverter remain relevant title interests.
- The resale does not transform qualified title into fee simple absolute.
Answer: The developer takes the defeasible estate, subject to the unresolved future interest.
Illinois condition remains unbroken for 45 years
Scenario: An Illinois deed created a possibility of reverter 45 years ago. The stated condition has never been broken, no exception is supplied, and the deed purported to make the possibility last forever.
- Illinois section 330/4 applies to an unbroken possibility of reverter.
- The statute limits validity to 40 years from creation when the stated period is longer.
- The forever language does not override the statutory cap under the supplied facts.
Answer: The claimed possibility has exceeded the Illinois 40-year statutory period.
Breach does not mean automatic title
Scenario: A condition-subsequent deed prohibits commercial use. The grantee opens a shop, but the grantor has taken no re-entry or recovery action.
- The shop can constitute the specified breach.
- A condition-subsequent estate does not automatically terminate.
- The grantor must decide whether and how to enforce the right under current law.
Answer: The breach activates a possible right of entry, not an automatic transfer by itself.
What are the common exam traps?
- Trap
- Calling every fee simple absolute
- Correction
- Read the entire deed for a use limitation, condition, automatic return, right of re-entry, or third-party shift.
- Trap
- Treating all defeasible fees as automatic
- Correction
- A condition-subsequent fee continues until the grantor elects and lawfully enforces the right of entry.
- Trap
- Pairing possibility of reverter with condition subsequent
- Correction
- Possibility of reverter pairs with fee simple determinable. Right of entry pairs with condition subsequent.
- Trap
- Sending every automatic shift to the grantor
- Correction
- An executory limitation shifts automatically to a third party.
- Trap
- Relying on one magic word
- Correction
- Words are clues. The complete deed, stated remedy, context, and governing law determine the estate.
- Trap
- Calling every deed restriction a defeasible fee
- Correction
- A covenant can restrict use without creating title forfeiture or a future estate.
- Trap
- Assuming resale removes the condition
- Correction
- A buyer generally receives the same qualified estate unless the future interest is validly released or resolved.
- Trap
- Assuming a mortgage reaches better title
- Correction
- The lender's collateral is subject to the defeasible character and recorded future interest.
- Trap
- Ignoring whether the trigger actually occurred
- Correction
- A suspicious use is not enough. Apply the deed's exact event, timing, duration, and evidence.
- Trap
- Ignoring release or waiver
- Correction
- A recorded release, settlement, conduct, or statute can affect the future interest and enforcement analysis.
- Trap
- Applying perpetual national shorthand in Illinois
- Correction
- 765 ILCS 330 limits specified unbroken grantor future interests to 40 years and contains transfer and exception rules.
- Trap
- Treating classification as proof of validity
- Correction
- An illegal, discriminatory, ambiguous, or public-policy-violating condition may not be enforceable even if its words resemble a defeasible form.
- Trap
- Confusing executory interest with remainder
- Correction
- An executory interest cuts short another fee. A remainder waits for a preceding estate to end naturally.
- Trap
- Calling these official PSI questions
- Correction
- These are original practice questions aligned to the public outline.
Can you answer these original practice questions?
These questions are original study items aligned to the published outline. They are not copied, recalled, or predicted PSI questions.
1. A deed grants land to a city 'so long as it is used as a park,' with automatic return to the grantor if park use ends. What estate does the city hold?
- Fee simple absolute
- Fee simple determinable
- Life estate
- Tenancy in common
Show answer and explanation
Answer: Fee simple determinable
The duration language and automatic return to the grantor create a determinable fee and possibility of reverter.
2. Which future interest accompanies a fee simple subject to a condition subsequent?
- Possibility of reverter
- Right of entry
- Remainder
- Life estate
Show answer and explanation
Answer: Right of entry
The grantor retains the right to elect to terminate and reclaim after the stated breach.
3. A deed gives land to A, but if A stops farming, title automatically passes to B. What future interest does B hold?
- Reversion
- Executory interest
- Leasehold
- Easement
Show answer and explanation
Answer: Executory interest
B is a third party who receives title automatically by divesting A's fee when the event occurs.
4. What is the most important difference between a determinable fee and a condition-subsequent fee?
- Whether the land is improved
- Whether termination is automatic or requires the grantor's enforcement choice
- Whether a broker is involved
- Whether property tax is due
Show answer and explanation
Answer: Whether termination is automatic or requires the grantor's enforcement choice
Automatic termination defines the determinable estate. A condition subsequent activates a right that the grantor may exercise.
5. A declaration prohibits commercial use and authorizes injunctions but says nothing about title ending. What is the best classification?
- Fee simple determinable
- Restrictive covenant
- Life estate pur autre vie
- Possibility of reverter
Show answer and explanation
Answer: Restrictive covenant
The provision regulates conduct through an equitable remedy rather than creating an estate that terminates.
6. A holder of a defeasible fee sells without a release from the future-interest holder. What does the buyer generally receive?
- Fee simple absolute automatically
- The same qualified estate, subject to the condition
- Only a hotel license
- No interest at all
Show answer and explanation
Answer: The same qualified estate, subject to the condition
A transfer passes the estate owned. It does not unilaterally extinguish someone else's future interest.
7. Under 765 ILCS 330/4, what is the maximum stated validity period for an unbroken Illinois possibility of reverter covered by the statute?
- 10 years
- 20 years
- 40 years
- Forever
Show answer and explanation
Answer: 40 years
The current Illinois statute caps the covered unbroken future interest at 40 years from creation.
8. A condition-subsequent grantee breaches the condition. Which statement is most accurate?
- Title always shifts to a third party instantly
- The grantor's right of entry can be exercised under applicable law, but title does not automatically end from breach alone
- The condition becomes a life estate
- The mortgage lender becomes the grantor
Show answer and explanation
Answer: The grantor's right of entry can be exercised under applicable law, but title does not automatically end from breach alone
Condition subsequent separates breach from the grantor's later enforcement decision.
9. Which phrase is the strongest clue to a fee simple determinable?
- So long as the land is used for a school
- To A and B as tenants in common
- For a ten-year lease term
- Subject to the existing mortgage
Show answer and explanation
Answer: So long as the land is used for a school
So long as is classic duration language, although the full instrument must still be read.
10. What should a candidate determine first after finding conditional deed language?
- The broker's commission split
- Whether title ends automatically or only after an enforcement choice
- The owner's credit score
- The building's square footage
Show answer and explanation
Answer: Whether title ends automatically or only after an enforcement choice
That decision separates determinable and executory forms from condition subsequent and points to the correct future interest.
How should you study this area?
- Session
- Session 1
- Focus
- Build the three-form map
- Proof you are ready
- Write determinable, condition subsequent, and executory limitation from memory with termination method, endpoint, and future interest.
- Session
- Session 2
- Focus
- Read deed language
- Proof you are ready
- Classify 24 granting clauses and underline the exact words showing duration, condition, re-entry, automatic return, or third-party shift.
- Session
- Session 3
- Focus
- Separate title conditions from covenants
- Proof you are ready
- For 14 restrictions, state whether the remedy changes title, permits re-entry, authorizes injunction, or remains uncertain without the full deed.
- Session
- Session 4
- Focus
- Follow sales and mortgages
- Proof you are ready
- Trace eight transfers and four loans, naming the present estate, surviving future interest, buyer risk, lender risk, and needed release.
- Session
- Session 5
- Focus
- Master the Illinois overlay
- Proof you are ready
- Read every section of 765 ILCS 330 and explain the 40-year rule, transfer restriction, trust and corporation provisions, releases, and exceptions.
- Session
- Session 6
- Focus
- Run the D-E-E-D method
- Proof you are ready
- Score at least 90 percent and explain duration, ending mechanics, endpoint, date and law, and document effect for every miss.
Do not count recognition as mastery. Close the notes and explain the rule, apply it to a new fact pattern, and identify why each distractor fails.
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Questions students ask about What Is a Defeasible Fee? Illinois Real Estate Exam Guide
What is a defeasible fee in real estate?
A defeasible fee is fee-simple ownership that can end or be defeated when a stated event occurs or a condition is breached. The deed creates both the present fee and a future interest. The future interest may belong to the grantor or a third party, and the estate may end automatically or only after an enforcement choice.
What is a fee simple determinable?
It is a defeasible fee that ends automatically when the stated limitation occurs. The grantor retains a possibility of reverter. Duration words such as so long as, while, during, or until can signal this form, but the entire deed and governing law control.
What is a fee simple subject to a condition subsequent?
It is a fee that does not end automatically after a condition is breached. The grantor retains a right of entry, also called a power of termination, and must elect to enforce it through the legally required action. Phrases such as provided that, on condition that, or but if can be clues.
What is a fee simple subject to an executory limitation?
It is a fee that shifts automatically to a named third party when the stated event occurs. The third party holds an executory interest. This differs from a possibility of reverter or right of entry, both of which are future interests retained by the grantor.
What is the difference between a possibility of reverter and a right of entry?
A possibility of reverter accompanies a fee simple determinable and becomes possessory automatically when the limitation occurs. A right of entry accompanies a fee simple subject to a condition subsequent and gives the grantor the choice to reclaim after breach.
Does every deed restriction create a defeasible fee?
No. A covenant or deed restriction may regulate use without making title end. Its remedy may be an injunction, damages, or another enforcement measure. A defeasible fee requires deed language and legal effect showing that the estate itself can terminate or be reclaimed.
Can the owner of a defeasible fee sell or mortgage it?
Yes, the present owner can generally transfer or encumber the estate held, but the condition and future interest can continue to burden the title. The buyer or lender cannot receive greater title than the grantor owns unless the condition and future interest are validly released or otherwise resolved.
How long can an unbroken possibility of reverter or right of entry last in Illinois?
Under 765 ILCS 330/4, a possibility of reverter or right of entry for breach of a condition subsequent, where the condition has not been broken, is not valid for longer than 40 years from creation. If created for longer, the statute states that it is valid for 40 years.
Can an Illinois possibility of reverter or right of entry be sold or devised?
Section 1 of the Illinois Rights of Entry or Re-entry Act states that a possibility of reverter or right of entry for breach of a condition subsequent is not alienable or devisable. Other sections address trust termination, corporate dissolution, releases, leases, rents, mortgages, and related exceptions, so the whole Act must be reviewed.
Where does a defeasible fee fit on the current Illinois broker exam outline?
The current PSI outline does not name defeasible fee as a separate numbered line. It fits within National I, Property Ownership, especially real-property estates, conveyances, encumbrances, effects on title, and ownership implications. Study it as an ownership and deed-interpretation concept, not as a separately weighted area.
Are the examples official PSI questions or legal advice?
No. They are original educational examples based on the public outline and cited sources. Real deed conditions can raise title, limitations, fair-housing, public-policy, tax, charitable-use, and litigation issues that require current legal and title review. Sources were checked through August 1, 2026.
Primary sources
- PSI Illinois Candidate Information Booklet effective June 24, 2026
- 765 ILCS 330, current Illinois Rights of Entry or Re-entry Act
- 735 ILCS 5/2-501, Illinois procedure recognizing future-interest categories
- Illinois Appellate Court official opinion explaining fee simple as absolute title and the quantity of the estate
- Illinois Appellate Court official decision distinguishing a fee simple determinable from a fee subject to a condition subsequent
The current official outline controls the tested scope. Statutes, regulations, and official agency materials control when a general study rule and a jurisdiction-specific rule differ.
Editorial status
Checked against primary sources
The Pass Illinois editorial team last checked this guide on August 1, 2026. Every practice question is an original study item, and the source links above let you verify the rules that support the lesson.