(1) Property: Conveyance of Present/Future Interest Flashcards
Overview of Present/Future Interests
Present Interests
1. Fee Simple
2. Fee Simple Determinable
3. Fee Simple Condition Subsequent
4. Fee Simple Subject to Executory Interest (Shifting/Springing)
5. Fee Tail
6. Life Estate
Future Interest
1. Vested Remainder - Subject to Open
2. Vested Remainder - Subject to Complete Divestment
3. Contingent Remainder
4. Reverter
5. Right of Re-Entry
6. Reversion
Fee Simple
Present Interest
(“and heirs”)
Fee simple is absolute ownership with no future interest. Under common law the words “and heirs” are required but not under the modern trend.
Fee Simple Determinable
(“as long as, while, during”)
Definition: A fee simple determinable is a conditional conveyance that allows the grantor to retain a possibility of reverter.
Rule: It is created when the grantor uses words of duration in the conveyance to indicate that the interest being conveyed will automatically terminate if a specified condition occurs.
Definition & Rule:
Fee Simple Subject to a Condition Subsequent
Present Interest
(“but if”)
Definition: A fee simple subject to a condition subsequent is a conditional conveyance that allows the grantor to retain a right of re-entry.
Rule: It is created when the conveyance expressly states that the interest being conveyed is subject to the grantors right of re-entry if a specified condition occurs.
What happens when the event occurs under Fee Simple Condition Subsequent?
Present Interest
Nothing, if the condition occurs the grantees present interest in the property will be lost only if the grantor affirmatively exercises his right of re-entry and re-takes possession of the land.
Definition & Rules
Fee Simple Subject to Executory Interest
Present Interest
Definition: A fee simple subject to an executory interest is a conditional conveyance of real property, in which a third-party will be entitled to the property upon the occurrence of a specified condition.
Rule: It is created when the grantor uses words such as “To person A, so long as (or but if) … to person Y”.
a. Shifting Executory Interest
Rule: A shifting executory interest is when the interest goes from grantee to grantee.
Ex. To B and his heirs but if C returns to Paris then to C.
b. Springing Executory Interest
Rule: Springing is when the interest goes from grantee to grantor to grantee.
Ex. To B for life and one year after B’s death to C and his heirs.
Fee Tail
Present Interest
(“heirs of the body”)
A fee tail is when an estate can only be passed down to the grantees blood descendants. The fee fail has been eliminated in most states and is treated as fee simple.
Life Estate
Present Interest
(“To A for life”)
A life estate is a present possessory estate that is limited in duration by the life of the grantee.
Rights and Obligations of a Life Estate Tenant
Present Interest - Life Estate
A life tenant has the right of (a)possession, (b) the right to all rents and profits during possession, and (c) the right to lease, sell or mortgage their interest in the property (i.e., the right of alienation).
Does the life tenant need to ensure the land benefits the remainderman?
Present Interest - Life Estate
NO, the life tenant is under no obligation to ensure the land benefits the remainderman.
Is the life tenant responsible for damage caused by 3rd parties?
Present Interest - Life Estate
NO, the life tenant is not responsible for damage caused by 3rd parties.
Who is responsible for the mortgage? And who is responsible for the interst of a mortgage?
Present Interest - Life Estate
The life tenant is responsible for the interest of a mortgage but the remainderman is responsible for the mortgage.
Life Estate Pur Autre Vie
Present Interest - Life Estate
(“To B for the life of C”)
A life estate measured by the life of a 3rd party.
Types of Remainders
Future Interests
- Vested Remainder
- Vested Remainder Subject to Open
- Vested Remainder Subject to Complete Divestment
- Contignent Reminader
Vested Remainder
Future Interests
A vested remainder is an interest that is not subject to any conditions precedent and is created in an ascertainable grantee. “to B for life, then to C and his heirs.”
Vested Remainder Subject to Open
Future Interests
A remainder to a class of grantees whose identity, share and number is determined in the future. However there must be one ascertainable class member. Those born after the class closes are not apart of the class. The class closes when any member of the class becomes entitled to immediate possession of the property.
Ex. Group of children at death of donor – “to my children”)
Ex. To B for life and then to B’s children as they turn 18”. B has 3 kids, 10, 15 and 20 – the property interest may be shared if the younger children turn 18)
Vested Remainder Subject to Complete Divestment
Future Interests
There is one ascertainable grantee and the occurrence of a condition subsequent will completely divest the remainder interest.
Ex. To B for life and then to C but if C has no children then to D’s children. – C has a vested remainder interest but if he is not survived by his children at the time of B’s death then C’s interest will be divested
Contingent Remainder
Future Interests
A remainder is contingent if it is created in a grantee that is unascertainable or if it is subject to an express condition precedent to a grantee’s taking.
Ex. “to B for life, remainder to C’s heirs.” If C is alive at the conveyance then C’s heirs are not yet ascertainable and the remainder is contingent.
Reverter
Future Interests
A possibility of reverter is a future interest retained by the grantor when a fee simple determinable is conveyed. If such condition occurs, the present possessory interest in the grantee will automatically terminate and vest in the grantor.
Right of Re-entry
Future Interests
A right of re-entry is a future interest retained by the grantor after a fee simple subject to a condition subsequent is granted, wherein the grantor has the right to re-enter and take the property if a specified condition occurs. The present interest is lost only if the grantor exercises the right it does not automatically terminate.
Reversion
Future Interests
A reversion is the future interest held by the grantor after a life estate or estate for years when the future interest is not conveyed to a 3rd party. Reversions are not subject to the rule against perpetuities.
Restraints on Alienation (Definition)
Future Interests
A restraint on alienation occurs when the grantor attempts to restrict the alienability or transferability of the land. 3 types of restraints exist: (1) disabling restrains – all transfers are void; (2) forfeiture restraints – land is forfeited if a transfer is attempted; AND (3) promissory restraints – an attempted transfer breaches a covenant.
Enforcing Restrains
Future Interests
Restraints are enforceable based on (1) the interest conveyed; AND (2) whether the restraint is reasonable.
A restrain is reasonable if the restraint lasts for a specific period of time or concerns the appearance or purpose of the land.
All absolute restrictions on alienation or transferability on fee simple estates are void and unenforceable.
Rule of Perpetuities
Future Interests
A specific future interest is only valid if it vest by the end of a living being plus 21 years.
The court is against restricting property interest, if it falls outside of the rule of perpetuities, the court will rule against it.
When does the Rule of Perpetuities not Apply?
Future Interests
Doesn’t apply to future interests which revert to the grantor.
