Future Interests Flashcards
list the types of future interests
(1) future interest held by transferor
— possibility of reverter
– right of entry
– reversion
(2) future interest held by someone other than the transferor
– contingent remainder
– vested remainder
– executory interest
what is a reversion
a reversion arises by operation of law whenever a grantor transfers an estate of lesser duration than what they started with [other than instances giving rise to POR or right of entry]
ex: O to A for 99 years. O has a reversion.
ex: O to A for life years then to B for 99 years. O has a reversion
ex: O to A for life. O has a reversion
characteristics of reversion
transferable
devisable by will
inheritable
holder of reversion can sue for waster and tortious damage to the reversionary interest
are reversions subject to RAP?
No - they are vested
types of vested remainders
indefeasibly vested remainder
vested remainder subject to complete defeasance/total divestment
vested remainder subject to open
types of executory interests
shifting
springing
what is a remainder, in general
future interest in a third person that may become possessory on the natural expiration of the preceding estate
cannot divest a prior estate
cannot follow a time gap after the preceding estate
must be expressly created in the instrument creating the preceding possessory estate
types of remainders
vested
contingent
O to A for life, then to B and his heirs on day after A’s death. what does B have?
B does not have a remainder because there is a gap [B has an executory interest]
what can remainders never follow
fee simples
what is a contingent remainder
A remainder is contingent if:
(1) it is created in unborn or unascertained persons
[O to A for life, then to B’s first child — A is alive. B has no children yet. Remainder is contingent on B’s first child being born.]
or
(2) it is subject to a condition precedent
— note that the condition typically appear BEFORE the language creating the remainder
[O to A for life, then, if B graduates for college, to B. A is alive. B is in high school. B’s interest is contingent on his graduating from college]
or
(3) both (1) and (2)
[so a remainder may be contingent as to a person or event]
O to A for life, then, if B graduates from college, to B. B is in high school.
what does B have?
what does B have if he graduates from college during A’s lifetime?
B has a contingent remainder subject to condition precedent
if B graduates from college during A’s lifetime, B has an indefeasibly vested remainder
technical rules of the common law that do not apply in VA or in most places, but may appear as wrong answers on the MBE
explain what happens if these rules have been abolished in Virginia / other states
(1) destructibility of contingent remainders
COMMON LAW: a contingent remainder was destroyed if it failed to vest before or upon the termination of the preceding freehold estate
VIRGINIA/OTHER STATES: a contingent remainder that fails to vest before or upon termination of preceding estate is converted to an executory interest upon the death of the preceding tenant [O will have a reversionary estate and then be divested when the remainder vests]
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(2) Rule in Shelley’s case / rule against remainders in grantee’s heirs
COMMON LAW: if same instrument created a life estate in A and gave the remainder only to A’s heirs, the remainder was not recognized and the took the life estate and the remainder
VIRGINIA/OTHER STATES: a conveyance from O to A for life with the remainder to A’s heirs is given effect as written
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(3) doctrine of worthier title / rule against remainders in grantor’s heirs
COMMON LAW: a remainder in the grantor’s heirs is invalid and becomes a reversion in the grantor. This doctrine is treated as a rule of construction in which it does not apply if an intent to create a remainder in heirs has been clearly manifested. Also, it only applies to intervivos transfers, not wills, and only if the word “heirs” is used
VA and most states: abolish this rule
what is a vested remainder
a remainder created in an existing and ascertained person and not subject to a condition precedent
what is an indefeasibly vested remainder
A vested remainder that is not subject to divestment or diminution
the holder is certain to acquire an estate in the future with no strings or conditions attached
To A for life, remainder to B. Both A and B are alive.
—- A has a life estate
—– V has an indefensibly vested remainder
To A for life, then to B.
what does B have?
what if B predeceases A?
B has an indefeasibly vested remainder
if B predeceases A, his vested remainder will pass by will or intestacy
what is a vested remainder subject to total divestment / complete defeasance
vested remainder subject to condition SUBSEQUENT
idea is that the remainder man’s right to possession may be cut short because of a condition subsequent
“To A for life, then to B and his heirs; but if B dies unmarried, then to C and his heirs.” B is alive and unmarried.
—- B has a vested remainder subject to total divestment by C’s executory interest
how to distinguish between condition subsequent and precedent?
condition precedent - creates a contingent remainder
condition subsequent - creates a vested remainder subject to total divestment
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COMMA RULE:
when conditional language in a transfer follows language that, taken alone and set off by commas, would create a vested remainder, the condition is a condition subsequent, and you have a vested remainder subject to complete defeasance
To A for life, then to B and his heirs; but if B dies unmarried, to C and his heirs”
“To A for life, then to B, provided, however, that if B dies under the age of 25, to C.”
where language is ambiguous re: conditions subsequent and condition precedent, what do courts do?
courts prefer vested remainders subject to divestments rather than contingent remainders or executory interests
what is a vested remainder subject to open
vested remainder created in a class of persons that is certain to become possessory but is subject to diminution, for example, by the birth of another who will share in the remainder as a class
idea is that there is one group member who is qualified to take possession, but that person’s share might get smaller due to the addition of more people, not yet ascertained, who may join the class
To A for life, then to B’s children. A is alive, B has two children, C and D.
— A has a life estate
— C and D have a vested remainder subject to open
what is a class? [re: class gifts]
group of persons having a common characteristic [children, sisters, etc.]
how to determine class gift shares
the share of each member of the class is determined by number of people in the class
what kind of remainders may class gifts be?
contingent, where ALL group members are unascertained
vested subject to open, when at least one group member exists
when does a class close for the purpose of class gift?
class closes when no others can join in
RULE OF CONVENIENCE — in the absence of express contrary intent, a class closes when some member of the class can call for distribution of their share of the class gift / is eligible to demand possession
