Oregon 30-Hour Real Estate Law Practice Test

What type of interest does a school hold in land given to it with the stipulation of its use for educational purposes?

1. Life estate

2. Fee simple absolute

3. Fee simple determinable

4. Leasehold interest

The correct answer is: Fee simple determinable

A school that is given land with the stipulation that it must be used for educational purposes holds a fee simple determinable interest in that land. This type of interest is characterized by the fact that it automatically ends if the specified condition—is in this case, the use of the land for educational purposes—is not met. The key element of a fee simple determinable is the presence of a condition that, if violated, can result in the automatic reversion of the property back to the grantor or another predetermined party. This means that the school has the right to use and occupy the land as long as it continues to serve the educational purpose stipulated in the deed. If the school were to cease using the property for educational purposes, the interest would revert back to the original grantor without requiring any legal action. Understanding this, it is clear that this type of interest aligns directly with the conditions set forth in the question, thus confirming that it is the correct choice. Other forms of property interest, such as a life estate or leasehold interest, do not incorporate the automatic reversionary aspect based on the conditional use, which distinguishes fee simple determinable as the suitable answer in this case.