Future Interests

Question 1

what is a future interest?

Answer 1

an interest that gives its holder the right or possibility of future possession of an estate

Question 1

does a future interest create only a future right in the property?

Answer 1

NO (creates a present, legally protected right in the property)

Question 2

what are the three future interests that can be retained by a GRANTOR?

Answer 2

1) possibility of reverter
2) right of entry
3) reversion

Question 3

what are the three general future interests that can be retained by anyone OTHER than a grantor? (grantee/3d party)

Answer 3

1) contingent remainder
2) vested remainder (3 types)
3) executory interest (2 types)

Question 4

what is a reversion?

Answer 4

the estate left in the grantor if they convey less than they own (ie – “to A for life” b/c fee simple absolute could endure forever)

Question 5

in what ways can a reversion be alienated? (if at all)

Answer 5

transferable, devisable, descendible

Question 6

does a reversion have to be expressly reserved in the grant?

Answer 6

NO (happens by operation of law)

Question 7

can a grantor sue for tortious damages or waste to their reversionary interest?

Answer 7

yes

Question 8

what is a remainder?

Answer 8

a future interest in a third person that can become possessory on the NATURAL expiration of the preceding estate (usually life estate or term of years)

Question 9

how must a remainder be created?

Answer 9

must be EXPRESSLY created in the instrument that created the underlying possessory estate (ie–life estate)

Question 10

what are the two general types of remainder?

Answer 10

vested and contingent

Question 11

what is a contingent remainder?

Answer 11

a remainder that EITHER…
1) is created in unborn or un-ascertained persons, OR
2) is subject to a condition precedent
(OR BOTH)
**TLDR = can be contingent as to a person or an event

Question 12

why is a remainder created in unborn/unknown persons deemed “contingent”?

Answer 12

because until the remainderman is ascertained, no one is ready to take possession if the preceding estate ends

Question 13

when is a condition “precedent”?

Answer 13

if it must be satisfied before the remainderman has a right to take possession

Question 14

how do we identify when there’s a condition precedent?

Answer 14

by looking for the condition to appear BEFORE the language creating the remainder OR for it to be WOVEN into the grant to the remainderman

Question 15

what is a vested remainder?

Answer 15

a remainder (1) created in an existing and ascertained person and (2) not subject to a condition PRECEDENT

Question 16

what are the three types of vested remainders?

Answer 16

1) indefeasibly vested remainder
2) vested remainder subject to total divestment/complete defeasance
3) vested remainder subject to open

Question 17

what is an indefeasibly vested remainder?

Answer 17

a vested remainder that is NOT subject to divestment or diminution; holder is certain to acquire an estate in the future with NO strings attached

Question 18

what is a vested remainder subject to total divestment/complete defeasance?

Answer 18

a vested remainder that is subject to a condition SUBSEQUENT (right to possession could be cut short by the happening of the CS)

Question 19

how do we tell the difference between a condition subsequent and a condition precedent? (comma rule)

Answer 19

when conditional language in a transfer follows language that, TAKEN ALONE AND SET OFF BY COMMAS, would create a vested remainder, it is a condition SUBSEQUENT!
(CP either appears before we’re introduced to the remainderman or woven into the grant to remainderman)

Question 20

what interest is preferred when the language is ambiguous in a grant of a vested remainder?

Answer 20

vested remainders subject to total divestment (over contingent remainders/executory interests)

Question 21

what is a vested remainder subject to open?

Answer 21

a vested remainder created in a class of persons (ie–children) that is CERTAIN to become possessory BUT is subject to diminution (share gets smaller by adding more takers to the class)

Question 22

how many class members need to be able to take to make a vested remainder subject to open certain to become possessory?

Answer 22

only one needs to be qualified to take

Question 23

what is a class gift?

Answer 23

a gift to a group of persons having a common characteristic
**NOTE = may be vested subject to open (when at least one member can take) OR contingent (when all members are yet unknown)

Question 24

when will a class close? (rule of convenience)

Answer 24

when some member of the class can call for distribution of their share of the class gift/demand possession
(no one born after that time may share in the gift)

Question 25

what is an executory interest?

Answer 25

a future interest in a third party that either…
– divests a grantee’s preceding freehold estate (shifting), OR
– cuts short a grantOR’s estate (springing)

Question 26

what is a shifting executory interest?

Answer 26

an interest, that always follows a defeasible fee AND cuts short someone OTHER than the grantor (ie– “to A, but if B returns from Canada, to B and his heirs”

Question 27

what is a springing executory interest?

Answer 27

an interest that cuts short the interest of the grantor (ie – “to A when she becomes a lawyer”

Question 28

what is the main difference between remainders and executory interests?

Answer 28

remainders WAIT patiently and executory interests CUT OFF a party’s interest (don’t wait)