Estates in Land

Question 1

What is a fee simple absolute?

Answer 1

Fee simple absolute = the ABSOLUTE ownership of potentially infinite duration

1) Language used to create:
* “To A and his heirs”
* “To A”
2) Transferability:
* Devisable (can pass by will)
* Descendible (will pass via statutes of intestacy if holder has no will)
* Alienable (capable of inter vivos transfer)
3) Future Interest:
* NO accompanying future interest

Question 2

What is a fee tail?

Answer 2

Fee tail = estate where inheritability is LTD to lineal heirs, which lasts as long as there are lineal blood decendants of grantee

• NOTE: most jx have ABOLISHED fee tails; an attempt to create a fee tail today leads to fee simple absolute
  1) Language used to create:
• “To A and his heirs of his body”
  2) Transferability:
• Passes automatically to grantee’s lineal decendants
  3) Future Interest:
• Reversion (if held by grantor)

Question 3

What are the 3 defeasible fees?

Answer 3

1) Fee Simple Determinable
2) Fee Simple Subject to Condition Subsequent
3) Fee Simple Subject to Executory Limitation

Question 4

What is a fee simple determinable?

NOTE: NY Distinction

Answer 4

Fee simple determinable = a defeasible fee that terminates upon the occurance of a stated event and AUTOMATICALLY reverts back to grantor

• NY DISTINCTION: In NY the fee simple determinable is called a Fee on limitation
  1) Language used to create:
• “To A…
  
  • for so long as [event…]
  • during [event…]
  • while [event…]
  • until [event…]
• NOTE: words of desire, hope, or intention are INSUFFICIENT to create a defeasible fee
  2) Transferability (ALL subject to condition):
• Devisable (can pass by will)
• Descendible (will pass via statutes of intestacy if holder has no will)
• Alienable (capable of inter vivos transfer)
  
  • NOTE: an absolute (i.e. forever) restraint on alienability as a condition _IS **void**_ (e.g. “To A so long as she never attempts to sell”)

3) Future Interest:
* Possibility of reverter

Question 5

What is a fee simple subject to condition subsequent?

NOTE: NY Distinction

Answer 5

Fee simple subject to condition subsequent = a defeasible fee that gives grantor the RIGHT to terminate upon the occurance of a stated event (i.e. must file an ejectment action)

• NY DISTINCTION: In NY the fee simple subject to condition subsequent is called a fee on condition
  1) Language used to create:
• “To A,…
  
  • but if [event…],
  • upon condition that [event…],
  • provided that [event…],
  • if it happens that [event…]
• …grantor reserves the right to reenter and retake”
• NOTE: words of desire, hope, or intention are INSUFFICIENT to create a defeasible fee
  2) Transferability (ALL subject to condition):
• Devisable (can pass by will)
• Descendible (will pass via statutes of intestacy if holder has no will)
• Alienable (capable of inter vivos transfer)
  
  • NOTE: an absolute (i.e. forever) restraint on alienability as a condition _IS **void**_ (e.g. “To A so long as she never attempts to sell”)

3) Future Interest:

• Right of entry/power of termination (held by grantor)
  
  • NY DISTINCTION: In NY right of reentry is known as right of reaquisition

Question 6

What is a fee simple subject to executory interest?

Answer 6

Fee simple subject to executory interest = a defeasible fee that terminates upon a stated event and then passes to a third party (vs. reversion to grantor)

1) Language used to create:

• Fee simple s/t shifting executory interest…
  
  • “To A,…
    
    • for so long as [event…],
    • **while **[event…],
    • during [event…],
    • **until **[event…]
  • …then to B”
• Fee simple s/t springing executory interest…
  
  • To A
    
    • if and when [even…]
• NOTE: words of desire, hope, or intention are INSUFFICIENT to create a defeasible fee
  2) Transferability (ALL subject to condition):
• Devisable (can pass by will)
• Descendible (will pass via statutes of intestacy if holder has no will)
• Alienable (capable of inter vivos transfer)
  
  • NOTE: an absolute (i.e. forever) restraint on alienability as a condition _IS **void**_ (e.g. “To A so long as she never attempts to sell”)

3) Future Interest:
* The shifting/springing executory interest (3d party) [which is subject to the RAP!]

Question 7

What is a life estate?

Answer 7

Life estate = an estate that is measured by the life of transferee; OR by some other life (pur autre vie)

1) Language used to create:
* “To A for life” (simple life estate)
* “To A for the life of B” (life estate pur autre vie)
* “To A for life, then to B” (B has indefeasibly vested remainder)
* “To A for life, but if…, to B” (B has contingent remainder)
2) Transferability (IF pur autre vie AND measuring life is still alive):
* Devisable (can pass by will)
* Descendible (will pass via statutes of intestacy if holder has no will)
* Alienable (capable of inter vivos transfer)
3) Future Interest:
* Reversion (if held by grantor)
* Remainder (if held by a 3d party)

Question 8

What is a life tenant’s entitlements and restrictions?

Answer 8

The life tenant…

1) is entitled to all ORDINARY uses and PROFITS from the land
2) must NOT commit “waste” (i.e. something that hurts the future interest holder’s interest)

Question 9

What are the 3 types of waste that a life tenant can commit?

NOTE: NY Distinction

Answer 9

3 types of waste…

1) Voluntary or affirmative waste = overt conduct that causes a drop in value (i.e. willful distruction, consumption of natural resource on property)

• “PU-R-G-E” EXCEPTIONS…
  
  • Prior Use, meaning that prior to grant, the land was used for exploitation; life tenant can CONTINUE to exploit (unless otherwise agreed) and subject to Open Mines Doctrine (if mining was done on land, the life tenant can mine from existing mines, BUT NOT new ones)
  • Repairs, meaning the life tenant may consume natural resources for REPAIRS and MAINTANENCE
  • Granted, meaning the life tenant may exploit if GRANTED that right
  • Exploitation, meaning the land is suitable ONLY to exploit (e.g.a quarry)

2) Permissive waste or neglect = this occurs when the land falls into disrepair
* The life tenant must simply MAINTAIN the premises in reasonably good repair

• MUST pay all ordinary TAXES and INTEREST on mtgs (NOT principal)
  
  • NOTE: if the life tenant _fails to pay taxes *or* interest_, the gov’t/mtgee can FORECLOSE on the property, which will CUT OFF the interest to the remaindermen

3) Ameliorative waste = the life tenant must not engage in acts that ENHANCE the property value, UNLESS all future interest holders are KNOWN and CONSENT
* EXCEPTION: if changed conditions have rendered a piece of property UNIHABITABLE, we will allow a life tenant to tear down that structure and replace (Changed Condition Doctrine)
* Policy = protects the sentimental value for future interests
* NY DISTINCTION = In NY via statute, life tenant MAY make reasonable improvements UNLESS remaindermen object

Question 10

What are the 8 types of future interests?

Answer 10

3 interests created in GRANTOR

1) Possibility of Reverter (ONLY accompanies the fee simple determinable)
2) Right of Entry/Power of Termination (ONLY accompanies the fee simple subject to a condition subsequent)
3) Reversion (ONLY accompanies the life estate)

5 interests created in a TRANSFEREE

4) Indefeasibly Vested Remainder (ONLY accompanies the life estate** OR **term of years)
5) Vested Remainder s/t Complete Defeasance** (ONLY accompanies the life estate OR term of years)
6) _Vested Remainder s/t Open** _(ONLY accompanies the life estate OR term of years)
7) Contingent Remainder (ONLY accompanies the **life estate **OR term of years)
8) Executory Interest (ONLY accompanies fee simple subject to executory limitation)

Question 11

What is a remainder AND what are the 4 types?

Answer 11

Remainder = a future interest created in a grantee that is capable of becoming posessory on the natural expiration of the preceeding estate (i.e. it can NEVER cut short the preceeding estate)

• ONLY follows a life estate OR a term of years
• A remainderman is “patient and _polite_”

TYPES:

(i) contingent remainder;
(ii) indefeasibly vested remainder;
(iii) vested remainder s/t complete defeasance; AND
(iv) vested remainder s/t open

Question 12

What is a contingent remainder?

NOTE: NY Distinction

Answer 12

Contingent remainder = a remainder that is created in (i) an UNACERTAINED/UNBORN person; (ii) is subject to a CONDITION PRECEDENT; (iii) or BOTH

• **Unacertained/unborn e.g. = **“To A for life, then to B’s first child (TBD)”
• Condition precedent e.g. =“To A for life, then, IF B graduates from college, to B”
  
  • If B graduates college while A is alive, then B’s contingent remainder BECOMES an indefeasibly vested remainder
• If the contigency never occurs, the original GRANTOR has a reversion

NOTE: contingent remaiders are OPEN TO the Rule Against Perpetuties

NY DISTINCTION: NY has abolished the distinction b/t an EXECUTORY INTEREST and a CONTINGENT REMAINDER. Instead BOTH are called remainders s/t a condition precedent

Question 13

What is the Rule of Destructability of Contingent Remainders?

NOTE: NY Distinction

Answer 13

The Rule of Destructability of Contingent Remainders…

• HISTORICALLY at common law: a contingent remainder was DESTROYED if it was still contingent at the time the preceeding estate ended
• TODAY: the Rule has been abolished; if still contingent at end of preceding estate, then grantor (or his heirs) hold the estate subject to a springing executory interest
• NY DISTINCTION: the Rule has been ABOLISHED in NY

Question 14

What is the Rule in Shelley’s Case?

NOTE: NY Distinction

Answer 14

The Rule in Shelley’s case…

• Applies ONLY to this type of contingent remainder: “To A for life, then, on A’s death, to A’s heirs” A is alive.
• HISTORICALLY at common law: the present and future interests would MERGE giving a fee simple absolute (in order to promote alienability)
  
  • This rule was applied EVEN IF it went against the grantor’s intent
• TODAY: the Rule has been abolished; A would have a life estate and A’s heirs would have a contingent remainder
• NY DISTINCTION: the Rule has been ABOLISHED in NY

Question 15

What is the Doctrine of Worthier Title?

NOTE: NY Distinction

Answer 15

The Doctrine of Worthier Title…

• Applies when: the GRANTOR tries to create a future interest in his OWN heirs
  
  • “To A for life, then to O’s heirs”
  • This is a contingent remainder b/c O is still alive (AND HAS NO HEIRS)
• The Doctrine would make the contingent remainder in GRANTOR’s heirs VOID (i.e. A would have a life estate and O would have a reversion)
  
  • BUT, grantor’s intent CNTRLS (i.e. if he INTENDED-with a clear stmt-to create a contingent remainder in his heirs, then it shall exist)
• NY DISTINCTION: the Doctrine has been ABOLISHED in NY

Question 16

What is a indefeasibly vested remainder?

Answer 16

The holder of this remainder is CERTAIN to acquire an estate in the future, NO STRINGS ATTACHED

Language used to create

• “To A for life, remainder to B” A is alive. B is alive
  
  • A has a life estate
  • B has a indefeasibly vested remainder
  • Grantor has a reversion

NOTE: If remainder predeceases the life tenant, the future interest passes by will or intestacy

Question 17

What is a vested remainder s/t complete defeasance?

NOTE: NY Distinction

Answer 17

The remainderman exists and is NOT s/t a condition precedent, BUT his posession could be cut short by a CONDITION SUBSEQUENT

Language used to create

• Comma rule= if conditional language appears AFTER language that would (by itself) created a vested remander, it’s a CONDITION SUBSEQUENT; if language appears BEFORE then it’s a CONDITION PRECEDENT
• “To A for life, remainder to B, PROVIDED, HOWEVER, that if B dies under the age of 25, to C” A is alive. B is 20
  • A has a life estate
  • B has a vested remainder s/t complete defeasance (and will take upon A’s death)
  • C has a shifting executory interest
  • Grantor has a reversion

NY DISTINCTION: in NY it’s known as remainder vested s/t complete defeasance

Question 18

What is a vested remainder s/t open?

Answer 18

A remaider is vested in a GROUP of takers, at least ONE OF WHOM is qualified to take, BUT each class member’s share is subject to partial diminution b/c ADDITIONAL takers can still join the group

Language to create

• “To A for life, then to B’s children [OPEN].” A is alive. B has two children, C & D

Open class vs. closed class

1) Open = others can still join the group
2) Closed = no other can join the group

• Determined by rule of convenience, which happens WHENEVER any class member can demand posession (i.e A’s death)
  
  • EXCEPTION: under the womb rule, a child of B in the womb @ time of A’s death can share w/ C & D

NOTE: vested remaiders s/t open are OPEN TO the Rule Against Perpetuties

Question 19

What is an executory interest?

NOTE: NY Distinction

Answer 19

It’s a future interest created in a transferee (third party), which is NOT a remainder and which takes effect by either CUTTING SHORT (i) some interest in ANOTHER person (“shifting”); OR (ii) in the GRANTOR (springing)

1) Shifiting executory interest
* Always follows a defeasible fee AND* cuts short someone OTHER than grantor*

• “To A and her heirs, but if B returns from Canada, to B and his heirs”
  
  • A has a fee simple s/t shifting executory interest
  • B has a shifting executory interest

2) Springing executory interest
* Always follows a defeasible fee AND cuts short the GRANTOR

• “To A, if and when he marries”
  
  • A has a springing executory interest
  • O has a fee simple s/t executory interest

NOTE: an executory interests are* OPEN TO the Rule Against Perpetuties*

NY DISTINCTION: NY has abolished the distinction b/t an EXECUTORY INTEREST and a CONTINGENT REMAINDER. Instead BOTH are called remainders s/t a condition precedent

Question 20

What is the Rule Against Perpetutities (RAP)?

Answer 20

RAP = Certain kinds of FUTURE INTERESTS are VOID if there is ANY POSSIBILITY (no matter how remote) that the given interest may vest more than 21 YEARS after the death of a measuring life

Question 21

What are the 4 steps to assessing any Rule Against Perpetutities (RAP) issue?

Answer 21

Step 1: determine which future interest have been created by the conveyance

• RAP ONLY applies to: (i) contingent remainders; (ii) certain vested remainders s/t open; AND (iii) executory interests
• E.g.“To A for life, then to A’s children” A is alive and has NO children (A’s children have a contingent remainder)
• RAP DOES NOT apply to: (i) any future interest in GRANTOR; (ii) indefeasibly vested remainders; OR vested remainders s/t complete defeasance

Step 2: identify the conditions precedent to the vesting of the suspect future interest (i.e. what must happen in order for the future interest can take posession)

• From previous e.g., A must die leaving a children in order for it to take posession

Step 3: find a measuring life (i.e. a person that is ALIVE at the date of the conveyance whose life/death is RELEVANT to the condition occurance)

• From previous e.g., A qualifies as the measuring life

Step 4: Ask: will we know, with CERTAINTY, within 21 yrs of the death of our measuring life (A) if our future interest holder(s) CAN or CANNOT take?

• Yes? the future interest is VALID
  
  • The previous e.g. is valid b/c we’d know at A’s death whethor or not he’d have children
• No? the future interest is VOID
  
  • Must apply Fertile Octogenarian Rule (you can have a child whenever) and the MOST remote scenarios (i.e parade of horribles)

Question 22

What are the 3 bright line rules re: common law Rule Against Perpetuties (RAP)?

Answer 22

1) A gift to an OPEN CLASS that is conditioned on the members surviving to an age BEYOND 21 violates the common law RAP
* “Bad as to one, bad as to all” – to be valid, it must be shown that the condition precedent to EVERY class member’s taking will OCCUR w/in the 21 yr pd
* E.g. “To A for life, then to such of A’s children as to live to atain the age of 30.” A has two children, B and C who are 35 and 40. A is alive >> future interest is VOID (A may have a child a day before he dies) and BECOMES a reversion in O
2) An executory interest with NO TIME LIMIT for vesting violates the common law RAP
* E.g. “To A and his heirs so long as the land is used for farm purposes, and if the land ceases to be so used to B and his heirs” >> executory interest violates RAP (as we don’t know at A’s death whether the condition will be met) and BECOMES a fee simple determinable (with possiblity of reverter)
3) A GIFT from one charity to another WILL NOT violate the RAP
* E.g. “To the American Red Cross, so long as the premises are used for Red Cross purposes, and if they ceased to be so used, then to the YMCA” (normally NOT ok under RAP)

Question 23

What are the 3_ reforms to the Rules of Perpetuity (RAP)_?

NOTE: NY Distinction

Answer 23

1) “Wait and see” or “second look” doctrine: wait until end of measuring life to adjudicate future interest (no more parade of horribles).
2) The Uniform Statutory Rule Against Perpetuities: provides alternative 90 YEAR vesting period
3) Cy pres doctrine: “as near as possible”; a ct. may reform in such a way that most closely maintains grantor’s intent WHILE comporting with the RAP (i.e. reducing any offensive age contingency to 21 yrs)

NY DISTINCTION: the NY reform statute applies the common law RAP and REJECTS the wait and see approach and cy pres (judicial) doctrine EXCEPT for charitable trusts AND pwrs of appointment

• If an interest is invalid b/c condition requires age > 21 yrs, a ct WILL reduce age to 21
• The common law Fertile Octogenarian principle is modifed providing that women OVER AGE of 55 are presumed _to not have any more children_
• The NY “suspension” rule (Trusts and Wills) applies the common law RAP on restrictions of pwr to sell or trnfr