Estates and Future Interests Flashcards
rule of alienability
• Alienability: All present possessory interests and all future interests are transferable inter vivos and at death (testate and intestate), except for rights of entry, which are not transferable inter vivos in a majority of jurisdictions. In addition, all present and future interests are subject to the claims of creditors.
five rules of construction
– (1) No new (or hybrid) estates will be recognized.
»> ex) like a condition followed by a possibility of reverter or a duration followed by right of reentry
– (2) A deed conveys the grantor’s entire estate, unless expressly limited.
– (3) A grantor may not convey a greater estate than he or she possesses.
– (4) If a conveyance is ambiguous and may reasonably be construed as more than one estate, there is a presumption in favor of the larger possessory estate and a presumption against finding a future interest
– (5) Read and analyze the interests in a conveyance in sequence—from left to right.
present interest flowchart (4 steps & note)
– 1. Does the present interest—by its terms—last indefinitely? If so, it’s a FSA.
– 2. Does it potentially last forever but may be cut short by an event? If so, it’s a defeasible fee simple (FSD, FSSCS, or FSSEL).
– 3. Does the present interest end at someone’s death? If so, it’s a life estate.
– 4. Is the present interest measured by a calendar period (e.g., one year)? If so, it’s a lease.
**note: can only have one possessory interest at a time, but multiple people can share it
words of limitation vs words of purchase
- words of limitation: define the length of the transfer (designate the estate)
- words of purchase: designate the grantee
3 ways that land may be transferred
o by deed (living person conveys/grants transfer of real property)
grantor grantee
land must be “alienable”
o by will (a decedent devises the land)
testator/testatrix devisee
land must be “devisable”
o by intestate succession (when a person dies with no will, we follow statutory law and the property descends)
decedent heir/next of kin
land must be “descendible”
order of operation:
»> issue (lineal descendants) and spouse, and if none…
»> parents or living issue of the parents, and if none…
»> ancestors and/or blood relatives not in the categories above, and if none…
»> to the state (doctrine of escheat)
fee simple absolute
• **presumption in favor of FSA
o all of the rights in the “bundle of sticks” (present AND future interest)
o at common law: you must say “to A and his heirs”
»> **remember, your heirs received nothing at this point – your heirs do not exist until you die (for now they are “heirs apparent”)
o modern law: if you say, “to A,” courts will assume a fee simple transfer upon conveyance/devise unless you use words of limitation
»> courts will focus on trying to determine the grantor’s intent and not just be bound by language errors
o freely alienable, devisable, and descendible
life estate (6 rules)
o just a present interest and the interest holder is called a “life tenant”
o language: must clearly indicate this intention – “to B for life”
o **this is essentially just a fee simple carveout and it is assumed that the transferor retains a future interest (reversion) that becomes possessory upon the end of B’s life estate
»> alternatively, O can say “to B for life, and then to C” – when the future interest is held by C, we call it a remainder
o life estate pur autre vie: a life estate measured by the life of another (B, as the transferee, would have a life estate PAV that ends when the other person dies)
»> **note: if B receives a life estate “for so long as C lives,” if B dies, B still retains the interest PAV – only reverts upon C’s death
o you cannot convey a LE to a corporation (or the like) because they have a potentially limitless lifetime unless you are using your own lifetime as a measure
»> transferor retains control and the corp retains nothing
o freely alienable, but NOT devisable or descendible **unless it is a LE Pur Autre Vie
»> you may only convey your interest in the land (the LE)
2 rules for duties/rights of life tenant:
- use of land
- waste (& who has standing to sue)
– a. LT is entitled to all ordinary uses and profits from land (e.g., LT may live on the property and continue to operate a business or farm on the property)
– b. But LT must not commit WASTE. Remaindermen (and holders of reversions) may sue for waste; holders of executory interests may not. Vested remaindermen may obtain equitable relief and/or damages; contingent remaindermen may only obtain equitable relief.
LT - voluntary waste
- i. “voluntary waste” is affirmative or overt conduct that causes damage to the property
- Examples: Breaking a window playing baseball; hitting the garage wall with a vehicle
- it is also considered voluntary waste for a life tenant to consume or exploit natural resources (oil, gas, coal, timber, etc.) on the property, except in the following situations:
– Prior Use Doctrine (subject to the Open Mines Rule)
»> If the prior user exploited natural resources (e.g. operated two coal mines), the LT may continue to operate these two mines but may not open any new mines
»> open mines: can extract minerals on the premises only if the minerals were being extracted when the future interest was created
– Resources needed to repair property (e.g., timber for a log home)
– Specific grant in deed or will for LT to exploit resources
– Exploitation of resources is only suitable use of property (e.g., life estate in rock quarry)
LT - permissive waste
• ii. “permissive waste” is NEGLECT - LT has a duty to make ordinary repairs, but not capital improvements
• in addition, LT is required to pay ordinary expenses (or otherwise will be liable for waste), including: >>> Mortgage INTEREST payments >>> Annual real estate taxes >>> Home Owner Association (HOA) dues *** thinks short term expenses
• BUT NOT: mortgage PRINCIPAL or property insurance (the remainderman must pay these)
*** think long term expenses
• BUT LT’s obligation to make repairs and to pay taxes and mortgage interest is limited to amount of income received from the land or, if none, the land’s fair rental value
LT - ameliorative waste (what is it; when can it be committed validly)
• iii. “ameliorative waste” is a change to the property that increases its value
- rule: a life tenant may commit such waste if the market value of the future interests is not diminished AND EITHER
- the remaindermen do not object, or
- the land/surrounding area has changed so much that the prior use deprived the property of reasonable value.
fee tail
• fee tail: duration determined by the lives of the lineal descendants of a person (used for keeping property in the family for generations)
o pretty much moot today (usually just read as a FSA)
o fee tail holder can convert the estate into a fee simple by an inter vivos transfer (disentailing the tail)
o “to B and the heirs of his body”
defeasible fees (define; 3 types)
• defeasible fees
o **these are just present interests that MAY be cut short by some event
o fee simple determinable (FSD)
o fee simple subject to condition subsequent (FSSCS)
o fee simple subject to executory limitation (FSSEL) (sometimes called fee simple determinable subject to EL! - same thing)
fee simple determinable
o fee simple determinable: a fee simple estate that automatically ends when a certain event or condition occurs, giving the right of possession to the transferor (reversion)
characterized by words of duration (so long, while, during)
»> ex) “to B and his heirs so long as it is used as a farm”
future interest that follows is always a possibility of reverter in the transferor
»> AUTOMATICALLY becomes possessory upon occurrence of the stated condition
both the FSD AND the POR are freely alienable, devisable, and descendible **but the durational condition continues to apply to any transferee
fee simple subject to condition subsequent
o fee simple subject to condition subsequent: a fee simple estate created in the transferee that may be termed at the election of the transferor when a certain condition/event occurs
characterized by words of condition (provided that, but if)
»> ex) “to B, but if popcorn is ever sold on the premises…”
future interest that follows is always a right of reentry (right of entry) in the transferor
»> transferor must ELECT to terminate the estate upon occurrence of the condition and regain possession
»> if the transferee refuses to honor the transferor’s right to repossession, the transferee holds the land in adverse possession
»> the grantor has a reasonable time after breach within which to declare a forfeiture or to elect not to declare a forfeiture – if he fails to do so, his power to do so expires
»> ***right of reentry/entry is NOT ALIENABLE INTER VIVOS
freely alienable, devisable, and descendible **all transferees are bound by the condition
