Oregon 30-Hour Real Estate Law Practice Test

Which term describes an estate that reverts back to the grantor upon a certain condition being met?

1. Fee simple absolute

2. Fee simple subject to a condition precedent

3. Fee simple determinable

4. Lien theory

The correct answer is: Fee simple determinable

The term that describes an estate which reverts back to the grantor when a certain condition is met is known as a fee simple determinable. This type of estate is characterized by its automatic reversion to the grantor upon the occurrence of a specified event or condition. For instance, if a property is conveyed to a buyer “as long as it is used for educational purposes,” the estate will revert to the original owner if that condition is violated. In this context, fee simple determinable is distinct from other types of estates because it is governed by the specific language and conditions outlined in the conveyance. The key element is the automatic nature of the reversion, ensuring that no further legal action is necessary for the property to revert to the grantor once the condition is triggered. The other options, while related to different types of property interests, do not accurately describe this automatic reversion mechanism. For example, fee simple absolute represents ownership without conditions or limitations, and fee simple subject to a condition precedent refers to an estate that is dependent upon the occurrence of a condition but does not revert automatically upon that condition being violated. Lien theory concerns the relationship between borrower and lender regarding property encumbrances and does not pertain to estate reversion concepts.