2. Future Interests Flashcards
What is a ‘future interest’?
A kind of estate that exists at the time it is conveyed, without possessory interest until a future event occurs.
What are the three types of future interests for a grantor?
- Reversion
- Possibility of Reverter
- Powers of Termination
What is a Grantor’s Reversionary Interest?
A future interest retained by the grantor when transferring less than a fee interest to a third person.
Is a reversion transferable, deviseable, and descendible?
Yes.
Is a reversion subject to the Rule Against Perpetuities?
No.
What is a Grantor’s Possibility of Reverter?
The grantor’s future interest that triggers automatic land reversion after a determinable estate event.
How is a Grantor’s Possibility of Reverter created?
A fee simple determinable automatically creates a possibility of reverter.
Is a Grantor’s Possibility of Reverter transferable, devisable, and descendible?
Yes.
Is a Grantor’s Possibility of Reverter subject to the Rule Against Perpetuities?
No.
What is a Grantor’s Power of Termination?
A future interest in the grantor when attempting to create an FSSCS or a defeasible life estate.
How is a Grantor’s Power of Termination created?
It must be expressly stated in the conveyance.
Is the Power of Termination descendible and devisable?
Yes.
Is the Power of Termination transferable inter vivos?
No.
What happens when the language in a grant is unclear to create a Grantor’s Power of Termination?
Courts generally treat a provision in a deed as a covenant and not a condition subsequent.
Is the Power of Termination subject to the Rule Against Perpetuities?
No.
What are the two types of future interests for a grantee?
- Remainder
- Executory
What is a Remainder?
A future interest in a grantee that follows the natural end of the preceding estate.
What are the two types of remainders?
- Contingent remainders
- Vested remainders
What is a Contingent Remainder?
A remainder that is contingent if:
- the taker’s status is uncertain in the present time; or
- subject to a condition precedent, not automatically vested upon the previous estate’s natural end.
Is a Contingent Remainder transferable, descendible, and devisable?
Yes, when the person is ascertainable.
Is a Contingent Remainder subject to the Rule Against Perpetuities?
Yes.
What are the three ways that a Contingent Remainder can be destroyed?
- 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
What is the doctrine of merger for a contingent remainder?
Occurs when a party with a present or future interest acquires all outstanding present and vested estates in the subject property.
What are three situations where the doctrine of merger for a contingent remainder can occur?
- 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
What is a Vested Remainder?
A remainder that requires ascertainable takers at its creation and automatic vesting without conditions precedent upon the prior
Is a Vested Remainder transferable, descendible, and devisable?
Yes.
What are the two types of Vested Remainders?
- Vested Remainder Subject to Open
- Vested Remainder Subject to Total Divestment
What is a Vested Remainder Subject to Open?
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.
Is a Vested Remainder subject to open subject to the Rule Against Perpetuities?
Yes.
What is a Vested Remainder Subject to Total Divestment?
A remainder that is presently vested but may be terminated on the happening of a future event.
What is an Executory Interest?
A future interest in a third person that cuts short the previous estate before it would have naturally terminated.
Is an Executory Interest transferable, descendible, and devisable?
Yes.
Is an Executory Interest subject to the Rule Against Perpetuities?
Yes.
What are the two types of Executory Interests?
- Shifting Executory Interest
- Springing Executory Interest
What is a Shifting Executory Interest?
An interest that cuts short a prior estate created by the same conveyance.
The interest passes from one grantee to another.
What is a Springing Executory Interest?
An interest that follows a gap in possession or divests the estate of the transferor.
The interest passes from a grantor to a grantee.
What is a Class Opening?
The point in time when a gift or bequest from an estate is distributed or made available to the beneficiaries.
What happens when a class is already closed at the time the gift takes effect?
All members of the class at that moment will take.
What happens when any members of the class are later conceived or born after the gift takes effect?
They will not share in the estate.
What is the Rule Against Perpetuities?
An interest must vest within 21 years of the creation of the interest based on a life-in-being.
What are the six types of future interest that apply to the Rule Against Perpetuities?
- Option to purchase connected with a fee
- Executory interests
- Contingent remainders
- Powers of appointment
- Class gifts
- Right of first refusal
What is a Restraint on Alienation?
A condition placed on the ownership of real property that restricts the free conveyance of that property.
What are the three types of Restraints on Alienation?
- Disabling Restraint
- Forfeiture Restraint
- Promissory Restraint
What is a Disabling Restraint?
A restraint where a grantee may not convey; always void.
What is a Forfeiture Restraint?
A restraint where the grantee loses his estate if he attempts to convey.
When are Forfeiture Restraints valid?
For life estates and future interests, but not enforceable for fee simple estates.
What is a Promissory Restraint?
A restraint where the grantee promises not to convey.
What happens when a Promissory Restraint is breached?
It does not void the conveyance; it makes the promisor liable for breach of contract damages.
What is a general power of appointment?
Gives the holder the right to appoint the property to anyone, including themselves.
How is a general power of appointment valid under the Rule Against Perpetuities?
It must be exercisable, but not necessarily exercised, during the period allowed by the Rule.
What is a special power of appointment?
Gives the holder the right to appoint the property to a limited class of persons.
