Estates In Land Flashcards
Defeasible Fees
A fee simple estate of potentially infinite duration that can be terminated upon the occurrence of some specified event.
Three types of defeasible fees:
• Fee simple determinable—property automatically reverts back to grantor upon the happening of a given event
» Accompanying future interest = possibility of reverter (retained by grantor)
• Fee simple subject to condition subsequent—grantor retains power to terminate grantee’s estate (grantor must take action to terminate; does not occur automatically)
» Accompanying future interest = right of reentry (retained by grantor)
• Fee simple subject to an executory interest—property automatically transfers to a third party (i.e., someone other than grantor) upon the happening of a given event
» Accompanying future interest = shifting executory interest (retained by third party)
Fee Simple Determinable
A fee simple estate that automatically terminates and reverts back to the grantor upon the happening of a given event or condition
• E.g., “to A for so long as he practices law”
» If A stops practicing law, property automatically reverts back to grantor
Characteristics:
• Automatic forfeiture—upon occurrence of the given event or condition, the grantee automatically forfeits the estate
• Potentially infinite—duration can be infinite so long as the event or condition does not occur
• Transferable—the fee estate is alienable, devisable, and descendible, subject to the condition
Creation—requires clear durational language
• i.e., phrases such as “for so long as,” “while,” “during,” “until,” etc.
• Words of desire, hope, or aspiration are insufficient
Accompanying future interest = possibility of reverter
• Grantor retains a possibility of reverter
» I.e., the property may revert back to grantor, but only if the event or condition occurs
• Transferability–grantor’s possibility of reverter is transferable inter vivos, devisable by will, and descendible to grantor’s intestate heirs
Fee Simple Subject to Condition Subsequent
A fee simple in which grantor retains the power to terminate grantee’s estate upon the happening of a given event or condition
• E.g., “to A, but if he wins the lottery, grantor reserves the right to reenter and retake”
Characteristics:
• Forfeiture not automatic—if the event or condition occurs, grantee still retains title until grantor exercises his reentry right
» This is what distinguishes fee simple subject to condition subsequent from a fee simple determinable
• Potentially infinite—duration can be infinite so long as the event or condition does not occur
• Transferable—alienable, devisable, and descendible, subject to the occurrence of the given event or condition
Creation—clear durational language must carve out a right of reentry for grantor
• I.e., it must be explicit that grantor has the right to retake upon occurrence of the event or condition
• Words of desire, hope, or aspiration are insufficient
Accompanying future interest = right of reentry
• Grantor retains right of reentry
• Transferability–in most states, grantor’s right of entry is not transferable inter vivos but devisable by will and descendible to grantor’s intestate heirs
Fee Simple Subject to an Executory Interest
A fee simple that automatically transfers to a third party upon the happening of a given event or condition
• E.g., “To A, but if A is ever arrested, then to B”
Characteristics:
• Automatic forfeiture—upon occurrence of the event or condition, estate automatically transfers to a third person
» Similar to a fee simple determinable, but ownership automatically transfers to a third person, not grantor
• Potentially infinite—duration can be infinite so long as the event or condition does not occur
• Transferable—alienable, devisable, and descendible, subject to the occurrence of the event or condition
» Absolute restraints on alienation are void
Creation—clear durational language is required
• E.g., “To A, but if A gets married, then to B”
• Words of desire, hope, or aspiration are insufficient
Accompanying future interest = shifting executory interest
• The third party holds the shifting executory interest
• Transferable—third party’s interest is alienable, devisable, and descendible
Life Estate
An interest that lasts only for the life of the interest holder
• E.g., O grants “to A for life”; A has a life estate and is the life tenant (LT) until she dies
• LT has all ownership rights but must maintain property and make reasonable repairs; LT cannot commit waste
Accompanying future interest—reversion or remainder
• Reversion—future interest in grantor when a life estate does not provide for disposition of property to a third party
» E.g., O “to A for life”; A is the LT, O has a reversion (i.e., property reverts back to O when A dies)
• Remainder—future interest following a life estate that identifies a third person (i.e., the third party has a remainder)
» E.g., O “to A for life, then to B”; A is the LT, B has a remainder (i.e., when A dies, property goes to B)
Life Estate Pur Autre Vie
A life estate measured by the life of someone other than the LT
• E.g., O grants “To A for the life of B”; A is the LT, holding the property until B dies, at which point property reverts back to O
• Transfer of life estate—creates a life estate pur autre vie held by transferee (e.g., LT transfers life estate to B; B holds a life estate that reverts to the grantor O when the LT dies)
Doctrine of Waste
A life tenant (LT) cannot commit acts that constitute an unreasonable use of land and/or injure the interests of a future interest-holder.
Doing so constitutes waste, of which there are three types:
1. Aff mative (voluntary) waste— actual overt conduct causing a drop in value. LT cannot consume or exploit natural resources on the land except:
a. Where necessary for repairs or maintenance of land,
b. When grant expressly gives the right to exploit, or
c. If land was used for exploitation of resources prior to the grant
» Open mines doctrine—if exploitation occurred before the life estate, LT may only extract from already-open mines
Permissive waste—failure to take reasonable measures to protect land (neglect)/harm to property due to LT neglect
• LT has a duty to repair/maintain property up to the extent of income or profits derived from the land or its rental value
» Includes paying taxes, interest on encumbrances, etc.
» Future interests holders who assume LT’s obligations are entitled to reimbursement
Ameliorative waste—unilateral change that enhances value/LT acts that economically benefit the land Prohibited under common law, but now usually permitted in most modern jurisdictions
Remainder
A future interest in a third person (other than grantor) that arises immediately upon the termination of a preceding life estate
• E.g., “to A for life, then to B”—A has a life estate, B has a remainder
Characteristics:
• Creation—expressly created in the same conveyance in which the preceding estate is created
• Transferable—alienable, devisable, and descendible
• Cannot cut off or divest an interest held by a prior transferee
Categories of remainders:
1) Vested remainders—three types:
i. Indefeasibly vested remainders
ii. Vested remainder subject to total divestment
iii. Vested remainder subject to open (class gift)
2) Contingent remainders—arise if:
a. There is a condition precedent to the future interest becoming possessory,
b. The future interest vests in an unascertained taker, or
c. Both a) and b)
Vested Remainder
A remainder that automatically becomes possessory upon the natural expiration of the preceding estate
• Limitations—vested remainders cannot:
a. Be subject to any condition precedent, or
b. Vest in an unknown or unascertained person
Three types of vested remainders:
1) Indefeasibly vested remainder—becomes possessory immediately upon termination of the prior estate
» E.g., “to A for life, then to B”
2) Vested remainder subject to total divestment—subject to some condition subsequent, such that the remainderman could be divested after taking possession
» E.g., “to A for life, remainder to B; but if B weds, to C”
3) Vested remainder subject to open (class gift)—remainder vested in a described class of takers, at least one of whom is capable of taking possession (i.e., by virtue of being alive)
» E.g., “to A for life, remainder to children of B and their heirs”
» B has one child, who has a vested remainder subject to open (b/c B may have more children)
» Open vs. closed class—class stays open to allow for future members and closes when no new members can be created (e.g., life tenant dies)
» Rule of Convenience—class closes whenever any member can call for distribution of her share; after-born class members get nothing
Contingent Remainder
A remainder will be contingent if it is either:
a. Subject to a condition precedent, or
b. Created in favor of an unascertained or unborn person
Subject to condition precedent—remainder’s taking is contingent on the prior occurrence of some event or condition
• Once the event or condition occurs, the interest automatically becomes an indefeasibly vested remainder
• E.g., “to A for life, then to B and his heirs when B gets married”
» If B is unmarried at the time of the conveyance, A has a life estate, B has a contingent remainder (b/c marriage is a condition precedent), and grantor has a reversion in case B is not married when A dies; if B gets married he has an indefeasibly vested remainder
Subject to unborn or unascertained persons—a remainder created in favor of unborn or unascertained persons
• I.e., remainder is contingent on grantee being born or ascertained
• E.g., “to A for life, then to B’s heirs”
» If B, remainder is contingent b/c heirs of B cannot be ascertained until B dies
Future Interests in Grantor
- Possibility of reverter
• accompanies fee simple determinable - Right of entry/Power of termination
• accompanies fee simple subject to condition subsequent - Reversion
• accompanies when grantor conveys estate of lesser duration (other than above)
Executory Interest
A future interest in a third party that takes effect by cutting short some interest—two types: shifting and springing
• Includes any future interest that is not a remainder
• Look for—indicated by phrases like “but if,” “then to,” “for so long as,” et
• Executory interest holders lack standing to sue for waste
• Transferability—devisable, descendible, and usually transferable
Shifting executory interest—always follows a defeasible fee or vested remainder subject to total divestment
• Cuts short someone other than the grantor
• E.g., “to A, so long as the property is used for storage. But if used for any other purpose, to B”
» A has a fee simple subject to an executory interest
» B has a shifting executory interest—if A stops using the property for storage, A’s interest is cut short (not grantor’s)
Springing executory interest—cuts short a present interest held by the grantor or grantor’s estate
• Cuts short grantor
• E.g., “to A, if and when he gets married”
» A has an executory interest
» Grantor has a fee simple subject to an executory interest; if A gets married, possession springs from grantor to A
Rule Against Perpetuities
No property interest is valid unless it must vest, if at all, no later than 21 years after the death of a life in being at the time the interest was created
• I.e., a future interest is void if there is any possibility, no matter how remote, that it will vest more than 21 years after the death of the measuring life
• Measuring life = a life ”in being” when the interest was created whose actions during life, at death, or within 21 years after death determine whether a future interest satisfies RAP
Note — many states have reformed the common law RAP, providing for an alternative vesting period greater than 21 years:
• wait and see: validity determined per facts as they come to be
• USRAP: provides alternative 90-year vesting period
• cypres: court can redraft “as near as possible” to grantor’s intent
* Unless instructed otherwise, apply the common law RAP
Analyzing RAP Problems
• Determine the future interest — Apply RAP to any future interest that is a contingent remainder, an open class gift (vested remainder subject to open), or an executory interest.
» The rule does not apply to any of the three future interests capable of creation in the grantor (the possibility if reverter, the right of entry, and the reversion), indefeasibly vested remainders, or vested remainders subject to total divestment.
• Find measuring life — look for people alive at the time of conveyance whose lives or deaths are relevant to what has to happen for the future interest holder to take.
• When will we know if future interest holder can take? — determine whether we’ll know for sure within 21 years of the death of a measuring life if the future interest holder(s) can take. If so, the conveyance is good.
» By contrast, if we don’t know for sure within 21 years of the death of a measuring life whether the future interest holder can take, the future interest is void.
