Also known as: subject to an executory limitation · executory limitation
Written by attorneys · grounded in primary & secondary sources — see below
An estate in fee simple that arises when a conveyance creates a fee simple in a grantee and provides that the estate will be divested upon a stated event in favor of a third party other than the grantor. The divestment occurs automatically upon the event without any action by the grantor. The future interest that cuts short the estate is an executory interest.
Summit Malls conveyed an outparcel to Horizon Outfitters by deed stating that the parcel would pass automatically to ClearAir Foundation if Horizon ever sold tobacco products. Horizon later leased space to a vape kiosk selling nicotine items. ClearAir asserted ownership and sued to quiet title. The deed language imposed an executory limitation that divested Horizon's fee upon the prohibited use and shifted title directly to the charity.
Hermitage Methodist Homes received personal property under terms that would shift the assets to another entity upon a specified future event. The conveyance created a defeasible interest in the homes that ended automatically when the event occurred. Dominion Trust held the succeeding interest that became possessory without any further action by the original grantor.
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A fee simple subject to an executory limitation ends automatically upon a stated event and shifts title to a third party other than the grantor. A fee simple determinable ends automatically but leaves a possibility of reverter in the grantor. The key distinction is the identity of the holder of the future interest that follows the defeasible estate.
Language that grants a fee simple and then states that upon a named event title will pass automatically to a third party creates the estate. The automatic shift to someone other than the grantor distinguishes the executory limitation from a condition subsequent or special limitation retained by the grantor.
Yes. The estate is fully alienable and mortgageable until the divesting event occurs. A mortgagee or purchaser takes subject to the executory limitation but receives whatever interest the grantor held at the time of the transfer.
Title shifts automatically to the holder of the executory interest. No entry or court action by the succeeding party is required. The prior estate ends at the moment the event takes place.