Future Interests Flashcards
what is a future interest?
an interest that gives its holder the right or possibility of future possession of an estate
does a future interest create only a future right in the property?
NO (creates a present, legally protected right in the property)
what are the three future interests that can be retained by a GRANTOR?
1) possibility of reverter
2) right of entry
3) reversion
what are the three general future interests that can be retained by anyone OTHER than a grantor? (grantee/3d party)
1) contingent remainder
2) vested remainder (3 types)
3) executory interest (2 types)
what is a reversion?
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)
in what ways can a reversion be alienated? (if at all)
transferable, devisable, descendible
does a reversion have to be expressly reserved in the grant?
NO (happens by operation of law)
can a grantor sue for tortious damages or waste to their reversionary interest?
yes
what is a remainder?
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)
how must a remainder be created?
must be EXPRESSLY created in the instrument that created the underlying possessory estate (ie–life estate)
what are the two general types of remainder?
vested and contingent
what is a contingent remainder?
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
why is a remainder created in unborn/unknown persons deemed “contingent”?
because until the remainderman is ascertained, no one is ready to take possession if the preceding estate ends
when is a condition “precedent”?
if it must be satisfied before the remainderman has a right to take possession
how do we identify when there’s a condition precedent?
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
what is a vested remainder?
a remainder (1) created in an existing and ascertained person and (2) not subject to a condition PRECEDENT
what are the three types of vested remainders?
1) indefeasibly vested remainder
2) vested remainder subject to total divestment/complete defeasance
3) vested remainder subject to open
what is an indefeasibly vested remainder?
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
what is a vested remainder subject to total divestment/complete defeasance?
a vested remainder that is subject to a condition SUBSEQUENT (right to possession could be cut short by the happening of the CS)
how do we tell the difference between a condition subsequent and a condition precedent? (comma rule)
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)
what interest is preferred when the language is ambiguous in a grant of a vested remainder?
vested remainders subject to total divestment (over contingent remainders/executory interests)
what is a vested remainder subject to open?
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)
how many class members need to be able to take to make a vested remainder subject to open certain to become possessory?
only one needs to be qualified to take
what is a class gift?
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)
when will a class close? (rule of convenience)
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)
what is an executory interest?
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)
what is a shifting executory interest?
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”
what is a springing executory interest?
an interest that cuts short the interest of the grantor (ie – “to A when she becomes a lawyer”
what is the main difference between remainders and executory interests?
remainders WAIT patiently and executory interests CUT OFF a party’s interest (don’t wait)
