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MBE Property > 2. Future Interests > Flashcards

2. Future Interests Flashcards

1
Q

What is a ‘future interest’?

A

A kind of estate that exists at the time it is conveyed, without possessory interest until a future event occurs.

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2
Q

What are the three types of future interests for a grantor?

A
  • Reversion
  • Possibility of Reverter
  • Powers of Termination
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3
Q

What is a Grantor’s Reversionary Interest?

A

A future interest retained by the grantor when transferring less than a fee interest to a third person.

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4
Q

Is a reversion transferable, deviseable, and descendible?

A

Yes.

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5
Q

Is a reversion subject to the Rule Against Perpetuities?

A

No.

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6
Q

What is a Grantor’s Possibility of Reverter?

A

The grantor’s future interest that triggers automatic land reversion after a determinable estate event.

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7
Q

How is a Grantor’s Possibility of Reverter created?

A

A fee simple determinable automatically creates a possibility of reverter.

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8
Q

Is a Grantor’s Possibility of Reverter transferable, devisable, and descendible?

A

Yes.

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9
Q

Is a Grantor’s Possibility of Reverter subject to the Rule Against Perpetuities?

A

No.

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10
Q

What is a Grantor’s Power of Termination?

A

A future interest in the grantor when attempting to create an FSSCS or a defeasible life estate.

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11
Q

How is a Grantor’s Power of Termination created?

A

It must be expressly stated in the conveyance.

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12
Q

Is the Power of Termination descendible and devisable?

A

Yes.

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13
Q

Is the Power of Termination transferable inter vivos?

A

No.

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14
Q

What happens when the language in a grant is unclear to create a Grantor’s Power of Termination?

A

Courts generally treat a provision in a deed as a covenant and not a condition subsequent.

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15
Q

Is the Power of Termination subject to the Rule Against Perpetuities?

A

No.

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16
Q

What are the two types of future interests for a grantee?

A
  • Remainder
  • Executory
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17
Q

What is a Remainder?

A

A future interest in a grantee that follows the natural end of the preceding estate.

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18
Q

What are the two types of remainders?

A
  • Contingent remainders
  • Vested remainders
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19
Q

What is a Contingent Remainder?

A

A remainder that is contingent if:

  1. the taker’s status is uncertain in the present time; or
  2. subject to a condition precedent, not automatically vested upon the previous estate’s natural end.
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20
Q

Is a Contingent Remainder transferable, descendible, and devisable?

A

Yes, when the person is ascertainable.

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21
Q

Is a Contingent Remainder subject to the Rule Against Perpetuities?

A

Yes.

22
Q

What are the three ways that a Contingent Remainder can be destroyed?

A
  • Fails to vest by the natural termination of the prior vested estate
  • The doctrine of merger
  • Holder of the present possessory estate surrenders his interest before the contingent remainder vests
23
Q

What is the doctrine of merger for a contingent remainder?

A

Occurs when a party with a present or future interest acquires all outstanding present and vested estates in the subject property.

24
Q

What are three situations where the doctrine of merger for a contingent remainder can occur?

A
  • Surrender of the present estate to the owner of a future estate
  • Release of a future estate to the owner of a present estate
  • All holders of present and future vested interests convey their interests to a third party
25
Q

What is a Vested Remainder?

A

A remainder that requires ascertainable takers at its creation and automatic vesting without conditions precedent upon the prior

26
Q

Is a Vested Remainder transferable, descendible, and devisable?

A

Yes.

27
Q

What are the two types of Vested Remainders?

A
  • Vested Remainder Subject to Open
  • Vested Remainder Subject to Total Divestment
28
Q

What is a Vested Remainder Subject to Open?

A

A remainder vested subject to open if the conveyance grants a remainder to a class of grantees with at least one member holding a vested remainder initially.

29
Q

Is a Vested Remainder subject to open subject to the Rule Against Perpetuities?

A

Yes.

30
Q

What is a Vested Remainder Subject to Total Divestment?

A

A remainder that is presently vested but may be terminated on the happening of a future event.

31
Q

What is an Executory Interest?

A

A future interest in a third person that cuts short the previous estate before it would have naturally terminated.

32
Q

Is an Executory Interest transferable, descendible, and devisable?

A

Yes.

33
Q

Is an Executory Interest subject to the Rule Against Perpetuities?

A

Yes.

34
Q

What are the two types of Executory Interests?

A
  • Shifting Executory Interest
  • Springing Executory Interest
35
Q

What is a Shifting Executory Interest?

A

An interest that cuts short a prior estate created by the same conveyance.

The interest passes from one grantee to another.

36
Q

What is a Springing Executory Interest?

A

An interest that follows a gap in possession or divests the estate of the transferor.

The interest passes from a grantor to a grantee.

37
Q

What is a Class Opening?

A

The point in time when a gift or bequest from an estate is distributed or made available to the beneficiaries.

38
Q

What happens when a class is already closed at the time the gift takes effect?

A

All members of the class at that moment will take.

39
Q

What happens when any members of the class are later conceived or born after the gift takes effect?

A

They will not share in the estate.

40
Q

What is the Rule Against Perpetuities?

A

An interest must vest within 21 years of the creation of the interest based on a life-in-being.

41
Q

What are the six types of future interest that apply to the Rule Against Perpetuities?

A
  • Option to purchase connected with a fee
  • Executory interests
  • Contingent remainders
  • Powers of appointment
  • Class gifts
  • Right of first refusal
42
Q

What is a Restraint on Alienation?

A

A condition placed on the ownership of real property that restricts the free conveyance of that property.

43
Q

What are the three types of Restraints on Alienation?

A
  • Disabling Restraint
  • Forfeiture Restraint
  • Promissory Restraint
44
Q

What is a Disabling Restraint?

A

A restraint where a grantee may not convey; always void.

45
Q

What is a Forfeiture Restraint?

A

A restraint where the grantee loses his estate if he attempts to convey.

46
Q

When are Forfeiture Restraints valid?

A

For life estates and future interests, but not enforceable for fee simple estates.

47
Q

What is a Promissory Restraint?

A

A restraint where the grantee promises not to convey.

48
Q

What happens when a Promissory Restraint is breached?

A

It does not void the conveyance; it makes the promisor liable for breach of contract damages.

49
Q

What is a general power of appointment?

A

Gives the holder the right to appoint the property to anyone, including themselves.

50
Q

How is a general power of appointment valid under the Rule Against Perpetuities?

A

It must be exercisable, but not necessarily exercised, during the period allowed by the Rule.

51
Q

What is a special power of appointment?

A

Gives the holder the right to appoint the property to a limited class of persons.

MBE Property (13 decks)

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