Future Interests Flashcards
What are the six categories of future interests? Which are retained by the grantor? Which are retained by a transferee?
Capable of Creation in the Grantor:
- The Possibility of Reverter
- The Right of Entry (Power of Termination)
- Reversion
Held By Someone Other Than the Grantor (Future Interests in Transferees):
- Vested Remainder
- Contingent Remainder
- Executory Interest
What type of estate does the possibility of reverter accompany?
Fee simple determinable
What type of estate does the right of entry/ power of termination accompany?
Fee simple subject to condition subsequent
What is a reversion? What type of estate does it accompnay?
A reversion is the future interest that arises in a grantor who transfers an estate of less quantum (duration/magnitude of the estate than what O posessed) than she started with, other than a fee simple determinable or a fee simple subject to condition subsequent. Default future interest.
What are the types of vested remainders?
Three types:
- The indefeasibly vested remainder
- The vested remainder subject to complete defeasance (also known as the vested remainder subject to total divestment), and
- the vested remainder subject to open
What are two types of executory interest?
- Shifting executory interest
- Springing executory interest
What is a remainder?
A future interest created in a grantee that is capable of becoming possessory upon the expiration of a prior possessory estate created in the same conveyance in which the remainder is created. Remainders are either vested or contingent.
The remainderman always accompanies a preceding estate of known fixed duration. That preceding estate is usually a life estate or a term of years. Remainderman never follows a defeasible fee.
Remainderman cannot cut short or divest a prior transferee. In other words, if your present estate is a defeasible fee, your future interest is NOT a remainder. Instead, it will be an executory interest if held by someone other than the grantor.
When is a remainder vested?
If it is both created in an ascertained person AND is not subject to any condition precedent.
When is a remainder contingent?
If it is created in an unascertained person OR is subject to a condition precedent OR both.
What is the vested remainder subject to complete defeasance (also known as the vested remainder subject to total divestment)?
The remainderman exists. His taking is NOT subject to any condition precedent. However, his right to possession could be cut short because of condition subsequent. (Strings attached here)
NOTE: Here, note the diffence between a condition precedent, which creates a contingent remainder, and a condition susequent, which creates a vested remainder subject to complete defeasance.
To tell the difference, apply the “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. By contrast, if the conditional language appears before the language creating the remainder, the condition is a condition precedent, and you have a contingent remainder.
What is a vested remainder subject to open?
Here, a remainder is vested in a group of takers, at least one of whom is qualified to take (that’s why its considered vested). But each class member’s share is subject to partial diminution because additional members can still join in.
When is a class open? When does a class close?
A class is open if others can still join.
A class is closed when no others can join. The class closes whenever any member can demand possession.
What is an executory interest?
It is a future interest created in a transferee (a third party), which is not a remainder and which takes effect by either cutting short some interest in another person (“shifting”) or in the grantor or his heirs (“springing”).
What is a shifting executory interest?
It always follows a defeasible fee and cuts short someone other than O the grantor.
Example: “To A and her heirs, but if B returns from Canada sometime next year, to B and his heirs.”
B has a shifting executory interest because B can cust short A’s limitless time with the land. A has a fee simple subject to B’s shifting executory interest.
What is a springing executory interest?
A future interest that follows a gap in possession or divests the estate of the transferor. Cuts short O, the grantor. Applies to grantor and his heirs.
Example:
O conveys: “To A, if and when he marries.” A is unmarried. A has a springing executory interest. O has a fee simple subject to A’s springing executory interest.
