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A Fee Simple Defeasible estate is characterized by the possibility of termination if a specific condition is not met. This type of estate grants the owner full rights to the property, but that ownership comes with specific conditions or limitations. Should the owner violate these conditions, the estate may revert back to the grantor or a third party, which reflects the essential feature of a defeasible estate - the potential for loss of ownership due to the occurrence or non-occurrence of an event.

For instance, a property might be granted for educational purposes only, meaning that if the property ceases to be used in that capacity, it could revert to the original owner or their heirs. This element of conditional ownership is what distinctly classifies it as a defeasible estate.

In contrast, a Fee Simple estate without any conditions would have an indefinite duration and would not be subject to the terms that could lead to its termination. Hence, characterizing it as having only trustee or estate shareholder ownership is inaccurate, as Fee Simple Defeasible can exist in individual ownership without any such restriction. Additionally, while performance requirements may exist, they are not a defining aspect of Fee Simple Defeasible, as the critical characteristic is the condition that allows the estate to be terminated.