60 Pages Posted: 18 Jan 2016 Last revised: 15 Feb 2017
Date Written: July 17, 2016
Urbanization has dramatically altered the way in which land generates and forfeits value. The dominant economic significance of patterns of land use and the opportunity costs of foregone complementarities have made the capacity to reconfigure urban property essential. Yet the architecture of our workhorse tenure form — the fee simple — is ill-suited to meet these challenges. The fee simple grants a perpetual monopoly on a piece of physical space — an ideal strategy when temporal spillovers loom large, interdependence among parcels is low, most value is produced within the four corners of the property and cross-boundary externalities come in forms that governance strategies can readily reach. But times have changed. Categories of externalities that were once properly ignored by the fee simple have become too important to continue neglecting. This paper argues for alternative tenure forms that would move away from the endless duration and physical rootedness of the fee simple.
Keywords: fee simple, eminent domain, urbanization, agglomeration, numerus clausus, call options, portability
Suggested Citation: Suggested Citation
Fennell, Lee Anne, Fee Simple Obsolete (July 17, 2016). 91 New York University Law Review 1457 (2016); University of Chicago Coase-Sandor Institute for Law & Economics Research Paper No. 739; U of Chicago, Public Law Working Paper No. 559; Kreisman Working Papers Series in Housing Law and Policy No. 33. Available at SSRN: https://ssrn.com/abstract=2717111 or http://dx.doi.org/10.2139/ssrn.2717111