Future Interest in Transferee Flashcards
Retained by Transferor (3)
- Reversion
- Possibility of Reverter
- Right of Entry
Passed to Transferee (2)
- Remainder
2. Executory Interest
Types of Remainders (2)
- Vested
2. Contingent
Types of Vested Remainders (3)
- Indefeasibly Vested
- Vested Subject to Total Divestment
- Vested Subject to Open (or Partial Divestment)
Reversion
Transfers a lesser estate
– also effectively a catch all for other unspecified residual interests where grantor transfers less than full interest in property
Fully transferrable at life and death
Possibility of Reverter
She creates a determinable estate of the SAME QUANTUM
Most likely fully transferrable (but some states retain CL restrictions)
Right of Entry
Follows an estate SUBJECT TO CONDITION SUBSEQUENT
Often fully transferrable but more likely subject to CL restrictions
Remainder
Must be possible (but not certain) to take effect at natural end of prior estate
– Tip: never follows a fee simple estate because a fee has no “natural” end
NOTE: also possible to have a combination Vested Subject to Open and Subject to Divestment
Executory Interest
Divests or cuts short prior estate or interest
– Tip: generally has to follow a vested estate/interest
Vested
Given to at least one ascertained person AND not subject to any condition precedent
Contingent
Given only to unascertained persons OR subject to some condition precedent occurring other than natural termination of preceding event
Indefeasibly Vested
All identified takers, cannot be divested
Vested Subject to Total Divestment
Where a shifting interest in a transferee can divest a vested remainder before it becomes possessory (think condition subsequent)
Vested Subject to Open (or Partial Divestment)
Remainder in a class of persons in which one member is ascertained and there is no condition precedent, but new class members may still be identified
• Note: Unborn children have some contingent interest until the class closes – what is it? (In the clouds?)
“O TO A FOR LIFE, THEN TO B IF B GRADUATES FROM LAW SCHOOL.” B has not been to law school. Identify any future interests.
- B has a contingent remainder in FSA (subject to condition precedent of B graduating from law school before vesting)
- O has a reversion in FSA.
“O TO A FOR LIFE, THEN TO THE MEMBERS OF SHOEMAKER’S PROPERTY CLASS IN 2026.”
Conveyance occurs in 2017. Identify any future interests.
- Future property class members have a contingent remainder in FSA. (There are no identified takers in this group yet! Remainder “in the clouds”?)
- O has a reversion in FSA.
Vested vs. Contingent:
Why Does This Distinction Matter?
[P.T.D.R.S.]
- When Take POSSESSION: vested accelerates in possession whenever and however preceding estate ends, contingent cannot if contingency still exists
- TRANSFERABILITY During Life: CL said only vested transferable; modern rule both transferable
- DESTRUCTIBILITY: CL said contingent remainders destroyed if still contingent when preceding estate terminated; modern rule says remain valid and take effect at end of contingency (see reading on Doctrine of Destructibility of Contingent Remainders for next week)
- RAP Rule Against Perpetuities: generally only contingent interests subject to Rule Against Perpetuities (but we will cover this in much more nuanced detail soon—there are important exceptions)
- STANDING of Interest Holder: some states recognize vested interest holders have greater standing re: the property than contingent interest holders; vested interest holders may also have stronger claims in situations like waste or other property use conflicts
Vested vs. Contingent:
Why Does This Distinction Matter?
[P.T.D.R.S.]
- When Take POSSESSION: vested accelerates in possession whenever and however preceding estate ends, contingent cannot if contingency still exists
- TRANSFERABILITY During Life: CL said only vested transferable; modern rule both transferable
- DESTRUCTIBILITY: CL said contingent remainders destroyed if still contingent when preceding estate terminated; modern rule says remain valid and take effect at end of contingency (see reading on Doctrine of Destructibility of Contingent Remainders for next week)
- RAP Rule Against Perpetuities: generally only contingent interests subject to Rule Against Perpetuities (but we will cover this in much more nuanced detail soon—there are important exceptions)
- STANDING of Interest Holder: some states recognize vested interest holders have greater standing re: the property than contingent interest holders; vested interest holders may also have stronger claims in situations like waste or other property use conflicts
Vested vs. Contingent:
Why Does This Distinction Matter?
[P.T.D.R.S.]
- When Take POSSESSION: vested accelerates in possession whenever and however preceding estate ends, contingent cannot if contingency still exists
- TRANSFERABILITY During Life: CL said only vested transferable; modern rule both transferable
- DESTRUCTIBILITY: CL said contingent remainders destroyed if still contingent when preceding estate terminated; modern rule says remain valid and take effect at end of contingency (see reading on Doctrine of Destructibility of Contingent Remainders for next week)
- RAP Rule Against Perpetuities: generally only contingent interests subject to Rule Against Perpetuities (but we will cover this in much more nuanced detail soon—there are important exceptions)
- STANDING of Interest Holder: some states recognize vested interest holders have greater standing re: the property than contingent interest holders; vested interest holders may also have stronger claims in situations like waste or other property use conflicts
“O TO A FOR LIFE, THEN TO A’S CHILDREN AND THEIR HEIRS.”
A has one child, B.
What is B’s interest?
- A has life estate.
- B has a vested remainder subject to open in FS.
• Note: Unborn children have some contingent interest until the class closes – what is it? (In the clouds?)
“O TO A FOR LIFE, THEN TO B AND HER HEIRS, BUT IF B DOES NOT SURVIVE A TO C AND HER HEIRS.”
- B has a vested remainder in fee simple subject to divestment
- C has an executory interest in fee simple
A has a life estate
• B has a vested remainder in fee simple subject to divestment
• C has an executory interest in fee simple
DISTINGUISHING REMAINDERS – CONTINGENT VS. VESTED SUBJECT TO DIVESTMENT.
A CONDITION PRECEDENT (CONTINGENT): generally is…
A condition that must be satisfied before remainderman has right to claim actual possession
DISTINGUISHING REMAINDERS – CONTINGENT VS. VESTED SUBJECT TO DIVESTMENT. A CONDITION SUBSEQUENT (VESTED SUBJECT TO DIVESTMENT): generally is…
A condition that applies after an interest becomes possessory and determines how long the interest may last
DISTINGUISHING REMAINDERS – CONTINGENT VS. VESTED SUBJECT TO DIVESTMENT. Practical Test:
will generally be a condition precedent if (1) express AND (2) either in the same clause creating the remainder or in the preceding clause
DISTINGUISHING REMAINDERS – CONTINGENT VS. VESTED SUBJECT TO DIVESTMENT Typical Patterns
– Life Estate -› Contingent Remainder(s) -› Reversion
– AND: Contingent Remainder in Fee Simple -› Contingent Remainder in Fee Simple
– Vested Defeasible Estate or Vested Remainder Subject to (Partial/Total) Divestment -› Executory Interest
– AND: Vested Remainder in Fee Simple Subject to (Partial or Total) Divestment -› Executory Interest
When/how does title transfer for reversion?
AUTOMATIC title transfer/possession at end of preceding estate
When/how does title transfer for a possibility of reverter?
AUTOMATIC title transfer/possession upon violation of defeasible estate’s special limitation
When/how does title transfer for a right of entry?
O must act to Re-take
Must elect to retake possession upon violation of preceding defeasible estate’s condition subsequent
Rule of Construction: Do we prefer a Contingent or Vested Remainder?
Prefer vested over contingent
“O TO A FOR LIFE, THEN TO B IF B GRADUATES FROM LAW SCHOOL.”
B has not been to law school. Identify any future interests.
- B has a contingent remainder in FSA (subject to condition precedent of B graduating from law school before vesting)
- O has a reversion in FSA.
State of Title: “O TO A FOR LIFE, THEN TO B AND HIS HEIRS.”
– A has a life estate.
– B has an indefeasibly vested remainder in FSA.
“O TO A FOR LIFE, THEN TO A’S CHILDREN AND THEIR HEIRS.”
A has one child, B.
What is B’s interest?
- A has life estate.
* B has a vested remainder subject to open in FS.
State of Title: “O TO A FOR LIFE, THEN TO B AND HER HEIRS, BUT IF B DOES NOT SURVIVE A TO C AND HER HEIRS.”
• B has a vested remainder in fee simple subject to divestment
• C has an executory interest in fee simple
O has reversion
State of Title: “O to A so long as used for school purposes.”
A - FSD, O - PoR in FSA
State of Title: “O to A, but if not used for school purposes, then O may re-take and re-enter.”
A - FSSCS, O - RoE in FSA
State of Title: “O to A so long as used for school purposes, then to Z.”
A - FSD, Z EI in FSA
State of Title: “O to A, but if not used for school purposes, then Z may re-take and re-enter.”
A - FSSEL, Z - EI in FSA
A fee simple determinable ends when?
Automatically upon the happening of the stated condition
State of Title “O to A as long as the land is used for a school.”
A - FSD, O has PoR
A fee simple subject to condition subsequent does not end _____ but may be cut short or _______ at the transferor’s election when?
- Automatically
- divested
- Upon the happening of the stated condition
State of Title: “O to B, but if the land ceases to be used for a school, then O may re-enter and re-take the land.”
B - FSSCS, O - RoE in FS
State of Title: “O to A as long as the land is used for a school, then to Z”
A - FSD, Z - EI in FS
State of Title: “O to B, but if the land ceases to be used for a school, then Z may re-enter and re-take the land”
B - FSSEL, Z - EI in FS
What are the magic words with determinable?
Words with a durational aspect e.g. so long as, while, during, until
