Estates in Land

Question 1

What is a Fee Simple Absolute

Answer 1

It is a present possessory estate, which means that is an interest that gives the holder the right to present possession.

It can be sold, divided, devised or inherited and has an indefinite or potentially infinite duration.

Question 2

Defeasible fees (general concept)

Answer 2

Are fee simple estate (of potentially infinite duration) that can be terminated upon the occurrence of some specified event

• I.e., estate with a remainder vested in some person, who may lose the vested interest upon the occurrence of some event
• Language - requires clear words of intent for remainder to vest
  
  • Words of desire, hope, or aspiration are insufficient
• Types:
  
  • Fee Simple
  • Fee Simple Determinable
  • Fee Simple Subject to Condition Subsequent
  • Fee Simple Subject to Executory Interests

Question 3

Types of defeasible fees

Answer 3

1. Fee simple determinable
   
   • Accompanying future interest: possibility of reverter (retained by granter)
2. Fee simple subject to condition subsequent
   
   • Accompanying future interest: right of reentry (retained by granter)
3. Fee simple subject to an executory interest:
   
   • Accompanying future interest: shifting executory interest (retained by third party)

Question 4

Fee Simple Determinable

Answer 4

A fee simple estate that automatically terminates and reverts back to the granter 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 granter

Accompanying future interest = possibility of reverter

• Grantor retains a possibility of reverter
  
  • I.e., the property may revert back to granter, but only if the event or condition occurs

Question 5

Characteristics and Fee Simple Determinable

Answer 5

Characteristics:

• Automatic forfeiture- upon the 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- alienable, devisable, and descendible, subject to the occurrence of the given event

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

Question 6

Fee simple subject to condition subsequent

Answer 6

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’’

Accompanying future interest = right of reentry

• Grantor retains right of reentry

Question 7

Characteristics and Fee Simple Subject to Condition Subsequent

Answer 7

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

Question 8

Fee simple subject to an executory interest

Answer 8

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’’

Accompanying future interest= shifting executory interest

• The third party holds the shifting executory interest

Question 9

Characteristics of fee simple subject to an executory interest

Answer 9

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 granter
• 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

Question 10

Life Estate (general concept)

Answer 10

An interest that lasts only for the life of the interest holder

• E.g., 0 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

Life estate pur autre vie - a life estate measured by the life of someone other than the LT

• E.g., 0 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 0

Accompanying future interest: Reversion or remainder

Question 11

Accompanying future interest of Life Estate

Answer 11

Accompanying future interest - reversion or remainder

• Reversion- future interest in granter when a life estate does not provide for disposition of property to a third party
  
  • >> E.g., 0 ‘‘to A for life’’; A is the LT, 0 has a reversion (i.e., property reverts back to 0 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., 0 ‘‘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 12

Doctrine of waste definition

Answer 12

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
  
  • Affirmative: LT cannot consume or exploit natural resources on the land
  • Permissive: harm to property due to LT neglect
  • Ameliorative: LT acts that economically benefit the land

Question 13

Affirmative waste and exceptions

Answer 13

Under affirmative (voluntary) waste, LT cannot consume or exploit natural resources on the land except:

1. Where necessary for repairs or maintenance of land,
2. When grant expressly gives the right to exploit, or
3. 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

Question 14

Permissive and Ameliorative waste

Answer 14

Permissive waste- harm to property due to LT neglect

• LT has a duty to repair/maintain property up to the extent of income/profits derived from the land or the rental value of the land
  
  • >> Failure to do so is permissive waste

Ameliorative waste – LT acts that economically benefit the land

• Prohibited under common law, but now usually permitted in most modern jurisdictions

Question 15

What is a remainder?

Answer 15

A future interest in a third person (other than granter) that arises immediately upon the termination of the preceding estate.

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

Question 16

What categories or remainder exist?

Answer 16

1. Vested remainders- three types:
   
   • a) Indefeasibly vested remainders
   • b) Vested remainder subject to total divestment/executory limitation
   • c) 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
   • Both a) and b)

Question 17

What is a vested remainder? Limitation?

Answer 17

A remainder that automatically becomes possessory upon the natural expiration of the preceding estate

• Limitations- vested remainders cannot:

1. Be subject to any condition precedent, or
2. Vest in an unknown or unascertained person

Question 18

Three types of vested remainder

Answer 18

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)

Question 19

Class gift considerations

Answer 19

• 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

Question 20

When a Remainder is Contingent?

Answer 20

A remainder will be contingent if it is either:

1. Subject to a condition precedent, or
2. Created in favor of an unascertained or unborn person

Question 21

When a remainder is subject to a condition precedent?

Answer 21

Subject to condition precedent - remainder’s taking is contingent on the 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 granter has a reversion in case B is not married when A dies; if B gets married he has an indefeasibly vested remainder

Question 22

When a remainder is subject to unborn or unascertained persons?

Answer 22

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 has no children at the time of conveyance, remainder is contingent b/c heirs of B cannot be ascertained until B dies

Question 23

What is the rule of destructibility?

Answer 23

Rule of destructibility - 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., 0 grants ‘‘to A for life, then to 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 granter or grantor’s heirs until grantee satisfies the condition

Question 24

What is the Merger (Shelley’s Rule) doctrine?

Answer 24

Merger (Shelley’s Rule) - arises when a conveyance attempts to give a life estate to grantee with a remainder to grantee’s heirs

• At common law, the two estates merge
• E.g., 0 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; 0 has a reversion b/c A could die without heirs

Question 25

What is Doctrine of worthier title?

Answer 25

Arises when granter creates a life estate in another but creates a future interest in grantor’s heirs

• E.g., 0 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 0 has a reversion

Question 26

What is an Executory Interest?

Answer 26

A future interest in a third party that takes effect by cutting short some interest

• 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

Two types: shifting and springing

• Shifting executory interest - always follows a defeasible fee
• Springing executory interest - cuts short the interest of the granter or his heirs

Question 27

What is Shifting executory interest?

Answer 27

Always follows a defeasible fee

• Cuts short someone other than the granter
• 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 28

What is Springing executory interest?

Answer 28

Springing executory interest - cuts short the interest of the granter or his heirs

• E.g., ‘‘to A, if and when he gets married’’
• >> A has an executory interest
• >> Granter has a fee simple subject to an executory interest; if A gets married, possession springs from granter to A

Question 29

What is the Rule against perpetuities?

Answer 29

No property interest is valid unless it must vest, if at a11, 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

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 30

Special considerations regarding the RAP

Answer 30

Rights of first refusal & RAP - 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.

Class gifts & RAP – for class gifts to satisfy RAP, class must be closed with all conditions precedent satisfied for every member

• Rule of Convenience for class gifts may save a class conveyance that would otherwise violate RAP

Charity-to-charity exception - RAP does not apply to conveyances from one charity to another