It is not uncommon, when buying or selling land, to come across the technical term, in fee simple absolute in possession (or similar). Sometimes, it is referred as the ‘fee simple’.
What is the ‘fee simple’?
Land that is fee simple is a freehold estate of land and is the highest of two forms of land ownership in law. The other estate is a term of years absolutely (ie. a lease). Fee simple means that the land is completely owned and, therefore is capable of being inherited by the land owner’s heirs – whether under a will or the statutory rules of intestacy. A fee simple estate has no time limits as in the case of a leasehold estate, and can last indefinitely.
However, in circumstances where there are no heirs to inherit the land held in fee simple – the Crown (the state) will automatically take possession of the land.
The fee simple can be owned by an individual or another legal entity such as a limited company. The law also states that a fee simple owned by a corporation which can be ‘determined’ by dissolution of the corporation is still a fee simple absolute.
What is fee simple ‘absolute’?
A fee simple absolute is an unconditional fee simple where there are no limits on the owner’s rights in respect of the land. In other words, there are no conditions or restrictions imposed, for instance, that the fee simple is to expire when the transferee leaves full time education, or on their marriage. A fee simple that is restricted in such a way is called a ‘determinable fee’, and will expire on the happening of the condition or specified event. The estate will then revert to the grantor (or their estate or heirs).
A fee simple subject to a legal or equitable right of entry or re-entry is a fee simple absolute.
What does ‘in possession’ mean?
Where the fee simple is stated as being ‘in possession’, this means the land is currently being enjoyed, as well as being in the owner’s possession. This includes land that is rented out: even though a tenant may physically occupy the land, the landlord (the land owner) has the right to receive the rents payable under the lease. The Law of Property Act section 205 (1)(xix) specifically provides that ‘possession’ includes receipt of rents and profits or the right to receive them.
Similarly, trustees of land can own the fee simple in possession, even if they are not in physical occupation of the land or property.