Estates in Land

Question 1

Defeasible fees

Answer 1

A fee simple estate of potentially infinite duration that can be terminated upon the occurrence of some specified event
* I.e. present fee estate vested in some person, who many lose the fee interest upon the occurrence of some event
* Language: requires clear words of intent for the fee estate to be forfeited
-Words of desire, hope, or aspiration are insufficient

Three types:
1) Fee simple determinable
2) Fee simple subject to condition subsequent
3) Fee simple subject to an executory interest

Question 2

Fee simple determinable

Answer 2

A fee simple estate (property) 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

Question 3

Fee simple subject to condition subsequent

Answer 3

A fee simple in which grantor retains the power to terminate grantee’s estate upon the happening of a given event or condition -Grantor must take action to terminate; does not occur automatically
-E.g. “to A, but if he wins the lottery, grantor reserves the right to reenter and retake”

Question 4

Fee simple subject to an executory interest

Answer 4

A fee simple (property) that automatically transfers to a third party (i.e. someone other than grantor) upon the happening of a given event or condition
-E.g. “To A, but if A is ever arrested then to B”

Question 5

Fee simple determinable-Characteristics

Answer 5

• 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

Question 6

Fee simple determinable-Creation

Answer 6

Requires clear durational language
-Phrases such as “for so long as,” “while,” “during,” “until,” etc.
-Words of desire, hope, or aspiration are insufficient

Question 7

Fee simple determinable-Accompanying future interest

Answer 7

• 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

Question 8

Fee simple subject to condition subsequent-Characteristics

Answer 8

• 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 occue
• Transferable: alienable, devisable, and descendible, subject to the occurrence of the given event or condition

Question 9

Fee simple subject to condition subsequent-Creation

Answer 9

• 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 the occurrence of the event or condition
• Words of desire, hope, or aspiration are insufficient

Question 10

Fee simple subject to condition subsequent-Accompanying future interest

Answer 10

• 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

Question 11

Fee simple subject to an executory interest-Characteristics

Answer 11

• Automatic forfeiture: upon occurence 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 descindible, subject to the occurrence of the event or condition
  -Absolute restraints on alienation are void

Question 12

Fee simple subject to an executory interest-Creation

Answer 12

• 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

Question 13

Fee simple subject to an executory interest-Accompanying future interest

Answer 13

• Accompanying future interest = shifting executory interest
• The third party holds the shifting executory interest
• Transferable: third party’s interest is alienable, devisable, and descendible

Question 14

Life estate

Answer 14

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
* Defeasibility: can be defeasible like fee estates (e.g. determinable, subject to condition or executory interest) or indefeasible
* LT has all ownership rights but must maintain property and make reasonable repairs; LT cannot commit waste

Question 15

Life estate-Accompanying future interest

Answer 15

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)

Question 16

Life estate pur autre vie (p.a.v.)

Answer 16

A life estate measured by the life of someone other than 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 p.v. held by transferee (e.g. LT transfers life estate to B; B holds a life estate that reverts to the grantor O when LT dies)

Question 17

Doctrine of waste

Answer 17

A life tenant 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 3 types

Question 18

Aff mative (voluntary) waste

Answer 18

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 the already-open mines

Question 19

Permissive waste

Answer 19

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 encumberances, etc.
* Future interests holders who assume LT’s obligations are entitled to reimbursement

Question 20

Ameliorative waste

Answer 20

LT acts that economically benefit the land
-prohibited under common law, but now usually permitted in most modern jurisdictions

Question 21

Remainder

Answer 21

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

Question 22

Remainder-Characteristics

Answer 22

• 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

Question 23

Vested remainder

Answer 23

• 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:
  1) Indefeasibly vested remainders
  2) Vested remainder subject to total divestment
  3) Vested remainder subject to open (class gift)

Question 24

Indefeasibly vested remainder

Answer 24

Becomes possessory immediately upon termination of the prior estate
-E.g. “to A for life, then to B”

Question 25

Vested remainder subject to total divestment

Answer 25

Subject to some condition subsequent, such that the raminderman could be divested after taking possession
-E.g. “to A for life, remainder to B; but if B weds, to C”

Question 26

Vested remainder subject to open (class gift)

Answer 26

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 (because 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
* Rule of convenience: class closes whenever any member can call for distribution of her share; after born class members get nothing

Question 27

Contingent remainder

Answer 27

A remainder will be contingent if it is either:
a) Subject to a condition precendent, or
b) Created in favor of an unascertained or unborn person

Question 28

Contingent remainder-subject to a condition precedent

Answer 28

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 (because 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

Question 29

Contingent remainder-subject to unborn or unascertained persons

Answer 29

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

Question 30

Rule of destructibility

Answer 30

At common law, a contingent remainder is destroyed if it remains contingent (i.e. the condition is not satisfied) when the preceding estate ends
* E.g. O grants “to A for life, then the B once he goes to law school”; A dies and B has not gone to law school
-At common law, B gets nothing upon A’s death
* Modern rule: gives a reversion to grantor or grantor’s estate until grantee satisfies the condition

Question 31

Merger (Shelley’s Rule)

Answer 31

Arises when a conveyance attempts to give a life estate to grantee with a remainder to grantee’s intestate heirs
* At common law, the two estates merge
* E.g. O grants “to A for life, then to A’s heirs” and A is alive; at common law, remainder merges and A has a fee simple absolute
* Modern rule: A has a life estate and his heirs have contingent remainders; O has a reversion because A could die without heirs

Question 32

Doctrine of worthier title

Answer 32

Arises when grantor creates a life estate in another but creats a future interest in grantor’s heirs
* E.g. O grants “to A for life, then to O’s heirs”
* Under the doctrine, the contingent remainder in O’s heirs is void; A instead has a life estate and O has a reversion

Question 33

Executory interest

Answer 33

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,” etc.
* Executory interest holders lack standing to sue for waste
* Transferability: devisable, descendible, and usually transferable

Question 34

Shifting executory interest

Answer 34

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)

Question 35

Springing executory interest

Answer 35

Cuts short a present interest held by the grantor or grantor’s estate
* 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

Question 36

Rule Against Perpetuities

Answer 36

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
-Unless instructed otherwise, apply the common law RAP

Question 37

Analyzing a conveyance subject to the RAP

Answer 37

1) Determine the interest being granted
2) Apply RAP to any future interest that is a contingent remainder, an open class gift, or an executory interest
3) If conveyance violates RAP, strike only the violating future interest
-What remains = the new conveyance

Question 38

Rights of first refusal and RAP

Answer 38

Contingent interests in property (i.e. options and rights of first refusal) violate RAP if they could possibly be exercised outside the time period allowed by RAP

Question 39

Class gifts and RAP

Answer 39

For class gifts to satisfy RAP, class must be closed with all conditions precedent satisfied for every member
-Rules of convenience for class gifts may save a class conveyance that would otherwise violate RAP

Question 40

Examples of RAP violations

Answer 40

1) Age contingency beyond 21: a conveyance to an open class is contingent on members reaching an age over 21
-Void under RAP because it cannot vest within 21 years of a life being at the time of creation
2) Fertile octogenarian: presumption that any woman is capable of giving birth, regardless of her age or condition
-E.g. grantor conveys “to A for life, then to A’s children who reach age 30.” A is 80, her son is 40. Conveyance violates RAP, as A’s don could die, she could have a daughter at 81, then die when she’s 82. The remaining daughter’s interest will not vest for another 28 years.

Question 41

Charity to charity RAP exception

Answer 41

RAP does not apply to conveyances from one charity to another