Future Interests Flashcards
Possibility of Reverter
Correlative Present Interest - Fee Simple Determinable
Example - To A so long as alcohol is not used on the premises
Rights of Grantor - Estate automatically reverts to grantor upon occurrence of stated event.
Alienability - Transferable, descendible, and devisable
Right of Entry
Correlative Present Interest - Fee Simple Subject to Condition Subsequent
Example - To A on condition that if alcohol is used on the premises, O shall have the right to reenter and retake the premises
Rights of Grantor - Estate does not revert automatically; grantor must exercise his right of entry
Alienability - Descendible and devisable, but some courts hold not transferable inter vivos.
Future interests in Transferor - Reversionary Interests
Possibilities of Reverter
Rights of Entry
Reversions
Reversions
A reversion is the estate left in a grantor who conveys less than they own.
Whenever a grantor transfers an estate of lesser duration than what they started with - other than instances giving rise to a possibility of reverter or a right of entry - the future interest that arises is a reversion.
Future Interest in Transferee - Remainder
A remainder in a future interest in a third person that can become possessory on the natural expiration of the preceding estate.
It cannot divest a prior estate and it cannot follow a time gap after the preceding estate.
A remainder must be expressly created in the instrument creating the preceding possessory estate. Remainders are either vested or contingent.
Sociable - Remainders are always accompany a preceding estate of known, fixed duration (such as life estate or term of years).
A Remainder never cuts short or divests the prior taker. It won’t take until the present life estate or term of years comes to its conclusion.
Contingent Remainder
A remainder is contingent if:
- It’s created in unborn or unascertained persons, or
- it’s subject to a condition precedent, or both.
In other words, a remainder may be contingent as to person or as to event.
Subject to Condition Precedent
A condition is precedent if it must be satisfied before the remainder has a right to possession.
Look for the condition to appear before the language creating the remainder or for it to be woven into the grant to the remainder.
Think of it as a prerequisite to the remainder’s admission, that is, it’s something they must do in order to succeed in taking possession.
Vested Remainders
A vested remainder is one created in an existing and ascertained person, and not subject to a condition precedent.
There are three types of vested remainders: 1) indefeasibly vested remainder; 2) vested remainder subject to total divestment; and 3) vested remainder subject to open.
Indefeasibly Vested Remainder
A vested remainder that is not subject to divestment or diminution.
The holder of this remainder is certain to acquire an estate int eh future, with no strings or conditions attached.
Vested Remainder Subject to Total Divestment
This is a VR that is subject to a condition subsequent.
Remainders right to possession could be cut short because of a condition subsequent.
VR Subject to Open
VR created in a class of persons that is certain to become possessory, but is subject to diminution - I.e., birth of additional persons who will share in the remainder as a class.
We have a group of persons, at least one of whom is qualified to take possession, but each group member’s share could get smaller because additional takers, not yet ascertained, may still join the class.
Class Gifts
A class is a group of persons having a common characteristic. The share of each member is determined by the number of persons in the class.
A class gift of a remainder may be vested subject to open (where at least one member exists) or contingent (where all group members are unascertained.
When the Class Closes - Rule of Convenience
A class is open when it’s still possible for others to join in. A class is closed when no others can join in.
To figure out whether a given class has closed, we apply the rule of convenience.
Under the rule, 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. So a class closes when any member can demand possession.
Future Interests in Transferees - Executory Interests
EI’s are future interests in 3P’s that either divest a transferee’s preceding freehold estate (shifting interests) or follow a gap in possession or cut short a grantor’s estate (springing interests)
Shifting Executory Interest
Always follows a defeasible fee and cuts short someone other than the grantor.
