BAR FLASHCARDS - PEFI 2.Present ints
3 PRESENT possessory (freehold estates)
- Fee simple absolute
- Defeasible fees
- Life estate
Lexicon: Devisable, Descendible, Alienable
Devisable: Capable of passing by will.
Descendible: Capable of passing by intestacy (no will).
Alienable: Capable of transfer inter vivos (during lifetime).
IdentIFYInG Present POssessOrY estates:
A present possessory estate is a…
Three categories of present possessory freehold estates:
A present possessory estate is an interest that gives the holder the right to present possession.
Three categories of present possessory freehold estates:
• Fee simple absolute
• Defeasible fee (of which there are three types)
• Life estate
Additional present estates, such as concurrent and leasehold estates, are considered in the Multistate Real Property materials.
The examiners will expect you to know three things with respect to each of these estates:
• What language will create the estate?
• Once identified, what are the estate’s distinguishing characteristics? In other words, is the estate devisable, meaning, can it pass by will?
Is the estate descendible, meaning, will it pass by the stat- utes of intestacy if its holder dies intestate (without a will)?
Is the estate alienable, meaning, is it transferable inter vivos, or during the holder’s lifetime?
• Which future interests, if any, is the estate capable of?
FEE SIMPLE ABSOLUTE
- created by: “To A” or “To A and his heirs”
- Potentially LIMITLESS duration
- Devisable, descendible, alienable
How Created: “To A” or “To A and his heirs.” Today, a fee simple is presumed in the absence of express contrary intent (that is, the common law words “and his heirs” are not necessary). Thus, “to A” is sufficient to create the fee simple absolute.
Distinguishing Characteristics: A fee simple absolute is absolute ownership of indefinite or poten- tially infinite duration. It’s freely transferable, devisable by will, and descendible through intestacy.
Accompanying Future Interest:
O conveys “to A” or “to A and his heirs.” A is alive and well. What do A’s heirs have?
Why?
NOTHING, ONYL A has absolute ownership.
A LIVING PERSON has NO HEIRS. They have “heirs-apparent”.
DEFEASIBLE Fees…
3 types:
Defeaseible fees: Fee simples with a condition attached. (Defeasnance = forfeiture).
Defeasible fees are fee simple estates (that is, they are of uncertain or potentially infinite duration) that can be terminated upon the happening of a stated event. You can think of the defeasible fees as three types of fee simple (“to A”) with a catch (a condition attached) that renders the estate subject to the risk of forfeiture. In other words, to be defeasible means to be capable of forfeiture.
- Fee Simple Determinable (and possibility of reverter).
- Fee simple subject to confition subsequent (and right of entry).
- Fee Simple subject to an Executorty interest
Fee simple determinable (and Possibility of reverter)
How created…
Distinguishing characteristics
A fee simple determinable terminates upon the happening of a stated event and automatically reverts to the grantor.
- Terminates automaticlaly on happening of stated event.
- Created by clear durational language: “so long as”, “while”, “during”, “until”
- Devisable, descendible, alienable. BUT, always subject to condition.
a. How Created: A fee simple determinable is created by durational language, such as “to A for so long as…,” “to A while…,” “to A during…,” or “to A until….”
b. Distinguishing Characteristics: The fee simple determinable, like all of the defeasible fees, is trans- ferable, devisable by will, and descendible through intestacy, but always subject to the attached condition. Thus, a fee simple deter- minable can be conveyed, but the grantee takes subject to the estate’s being terminated by the specified event. Remember, if the stated condition is violated, forfeiture is automatic.
FORFEITURE IS AUTOMATIC IF CONDITION IS VIOLATED.
c. Accompanying Future Interest in Grantor—Possibility of reverter:
Recall that one of the distinguishing characteristics of a fee simple determinable is that the estate automatically reverts back to the grantor upon the happening of the stated event. That reversionary future interest in the grantor is called a possibility of reverter.
Whenever a grantor conveys a fee simple determinable, they automatically retain a possibility of reverter. A possibility of reverter is transferable, devisable by will, and descendible by intestacy.
To remember: F S D PO R
Fee simple determinable is accompanied by one future interest:
The possibility of reverter.
Whenever a grantor conveys a fee simple determinable, they automatically retain a possibility of reverter. A possibility of reverter is transferable, devisable by will, and descendible by intestacy.
F S D P O R
Fee Simple Derminable - Possiblity of Reverter
Frank Sinatra didnt prefer Orville Redenbacher
Fee simple subject to Condition subsequent (and right of entry).
Is the right of entry Transferable?
- LOOK FOR: use of CONDITIONAL language + explicit right to re-enter in the event that the condition is betrayed. (X reserves the right to re-eenter and retake).
- NO AUTOMATIC Termination (its at the grantor’s prerogative).
A fee simple subject to a condition subsequent is an estate in which the grantor reserves the right to terminate the estate upon the happening of a stated event, meaning the estate doesn’t automati- cally terminate—the grantor must take some action.
a. How Created: Look for two main ingredients: (1) the use of conditional words, such as “upon condition that,” “provided that,” “but if,” and “if it happens that,” and (2) an explicit statement of the grantor’s right to re-enter. Thus, a grant such as “to A, but if X event occurs, grantor reserves the right to re-enter and retake” creates a fee simple subject to a condition subsequent in A and a right of entry in the grantor. We have conditional words (“but if…”) as well as an explicit statement of the grantor’s right to re-enter (“grantor reserves the right to re-enter and retake”).
b. distinguishing Characteristics
Unlike the fee simple determinable, the fee simple subject to condition subsequent is not automatically terminated if the stated condition occurs. The occurrence of the condition gives the grantor the right to cut the estate short at their prerogative. So, to distin- guish the fee simple subject to condition subsequent on the exam, remember: “it’s my prerogative.” The grantor may choose to termi- nate—or not—if the condition occurs.
c. accompanying Future Interest in Grantor—right of entry
As noted above, a right of entry (also called a power of termination) must be expressly reserved; in contrast with a possibility of reverter, it doesn’t arise automatically. Most courts hold that rights of entry are not transferable inter vivos, but most states agree they are devisable by will, and all states agree they are descendible through intestacy.
A conveyance that contains both durational language and a power of termination
A conveyance that contains both durational language and a power of termination will likely be construed as creating a fee simple subject to a condition subsequent, because the forfeiture is optional at the grantor’s election rather than automatic. Policy disfavors forfeiture of estates.
Fee simple subject to an executory Interest….
Forfeiture?
If a fee simple estate terminates upon the happening of a stated event (because it is determinable or subject to a condition subse- quent) and then passes to a third party rather than reverting to the grantor or giving the grantor a right to terminate, the third party has an executory interest.
a. How Created: “To A, but if X event occurs, then to B” (fee simple with a catch). Look for a third party who will take upon forfeiture of a fee simple estate—for example, “to A, but if X event occurs, then to B.” Notice that in such a grant, B takes if the condition occurs and cuts short A’s fee simple estate.
- THIRD PARTY, NOT GRANTOR, takes if condition is betrayed.
- third party has an executory interest.
b. Distinguishing Characteristics: This estate is just like the fee simple determinable, only now, if the condition occurs, the estate is automatically forfeited in favor of someone other than the grantor.
- FORFEITURE IS AUTOMATIC.
c. Accompanying Future Interest: The shifting executory interest (discussed below) accompanies the fee simple subject to an executory interest.
2 rules of Construction for defeasible Fees
a. Words of desire, Hope, or Intention do not Create a defeasible Fee: Keep in mind that words of mere desire, hope, aspiration, expecta- tion, or motivation are insufficient to render an estate a defeasible fee. Such language is merely an expression of motive rather than a limit on duration, so it’s not construed as imposing a condition on the grant. Courts disfavor restrictions on free land use and won’t find a defeasible fee unless clear, durational language is used.
b. absolute restraints on alienation are Void: Keep an eye out for conditions that purport to restrict the transferee’s ability to transfer a fee simple. An absolute restraint on alienation is an absolute ban on the power to sell or transfer that is not linked to any reasonable time-limited purpose. Under the Rule Against Restraints on Alienation (discussed in Module 5), such absolute restraints on alienation of a fee simple are void.
c. Conditions and Limitations Violating Public Policy are Void: Conditions or limitations that violate public policy generally are struck down, and the grantee takes free of the restraint. If the purpose of the condition is to penalize marriage or encourage divorce, it likely will be struck down. However, if the purpose is to give support until marriage or in the event of divorce, it likely will be upheld.
1) “To A for the purpose of constructing a day care center.”
2) “To A with the hope that he becomes a lawyer.”
3) “To A with the expectation that the premises will be used as a hardware store.”
When A is vested with a fee simple absolute, and not a defeasible fee:
A is vested with a fee simple absolute, and not a defeasible fee:
Fee taIL
The fee tail is an estate where inheritability is limited to lineal heirs. It’s created by the words “to A and the heirs of his body.” Most juris- dictions have abolished the fee tail, and an attempt to create one results in a fee simple.
