Future Interests Flashcards
Categories of future interests classified based on what.
six categories of future interests, classify based on whether they are retained by a OR, or by a transferee
Future interests capable of creation in the grantor AKA revertor
only 3 future interest capable of creation in the grantor
I. The possibility of reverter: it accompanies only the FS determinable. (FSDPOR)
II. The right of entry, also known as the power of termination: It accompanies only the fee simple subject to condition subsequent. It’s the OR’s prerogative.
III. The reversion: A reversion is the future interest that arises in a OR who transfers an estate of lesser quantum than she started with, other than a FS determinable or a FS subject to a condition subsequent. Catchall future interest for PR
a. Exs.: OR, holder of FS absolute, conveys
i. “To A for life.”
ii. To A for 99 years
iii. To A for life, then B for 99 years.
iv. OR conveyed less than everything she has, so OR has reversion
Future interests in Transferees AKA remainder
If our future interest is held by someone other than the OR, then it must be expressly created in the instrument. It has to be either
I. A vested remainder (3 kinds: 1) indefeasibly vested remainder,2) vested remainder subject to complete defeasance (aka the vested remainder subject to total divestment), and 2) the vested remainder subject to open
II. A contingent remainder OR
III. An executor interest (2 kinds 1) shifting executor interest and 2) springing executor interests
Steps in categorising interests in transferees AKA remanider interests
I. We must distinguish vested remainders (of which there are three kinds), from contingent remainders;
II. We must distinguish the three kinds of vested remainders from each other; and
III. We must distinguish all remainders from executory interests.
First are you in the remainder bucket? either vested or contingent
“Remainders patiently wait for preceding life estate or term of years to end.” Created in same grant that prior possessory estate.
Remainderman is sociable, patient and polite
a. Sociable, never travels alone.
i. Remaindeerman always accompany a preceding estate of fixed duration. That preceding estate is usually a life estate or a term of years.
b. Patient and polite, meaning: never follow a defeasible fee. Earlier estate must naturally end. Don’t take as a consequence of someone’s premature forfeiture.
c. Remainders can’t cut short or divest a prior fee. If they cut something short, they are executor interests if held by someone other than OR.
Remainders are either vested or contingent, first figure out if it’s contingent
a. Contingent- if it is created in an unascertained person or is subject to a condition precedent, or both.
OR has reversion- if contingent precedent not satisfied.
i. Ex: to a for life, then to b’s first child. And B has no children.
ii. Ex: To A for life then to B’s heirs. We don’t know whether B’s heirs will outlive A.
1. Ex: To a for life, then if B graduates from college(condition precedent), to B.
a. B is now in high school. B hasn’t yet satisfied condition precedent. Something that remainderman has to do.
c. OR has reversion—if B never graduates, OR or OR’s heirs
d. If b graduates fro college during A’s life, B’s contingent remainder is transformed into a indefeasible vested remainder.
Contingent remainders and rule of destructibility
- Common law—contingent remainder was destroyed if it was still contingent at the time the preceding estate ended
- Ex: To A for life and if B has reached the age of 21, to B. A dies before B reaches 21.
a. Historically at common law: B’s contingent remainder was destroyed. O or O’s heirs would take in fee simple absolute.
b. Today: The destructibility rule has been abolished. Thus if B is still under 21 when A dies, OR or OR’s heirs hold the estate subject to B’s springing executor interest. Once B reaches 21, B takes.
Contingent remainders and rule in shelley’s case
If an instrument gives a life estate to A, and the remainder to A’s heirs, the remainder is not recognized.
- Ex.: O conveys to A for life, then on A’s death, to A’s heirs. A is alive.
a. Historically, the present and future interests merge, giving A a FS absolute. Purpose: to promote alienability, becomes easier for A to sell and transfer blackacre. - The rule in shelley’s case is a rule of law not of construction
a. Applied even in face of contrary OR intent. - Today the rule in Shelley’s case has been virtually abolished
a. A has life estate
b. A’s unknown heirs have remainder
c. O has reversion, since A could die without heirs
Doctrine of worthier title
(AKA rule against a remainder in grantor’s heirs)
remainder in grantor’s heirs is invalid, it becomes a right of reversion in the grantor
- EX: O who is alive, conveys “To A for life,then to O’s heirs.”
- Doctrine endeavors to promote free land transfer. O cant pre tie up the FS absolute interest. Want to give O flexibility to change his mind. Lets O and A still transfer in FS absolute.
- The rule is a rule of CONSTRUCTION not a rule of law.
a. Grantor’s intent controls. If grantor clearly intends to create a contingent remainder in his heirs, that intent is binding. OR must have to state “ doctrine of worthier title does not apply” or “OR intends not to reserve a reversion on its behalf.”
Distinguish the three kinds of vested remainders
When the interest is in a known ascertainable taker, it is a vested remainder. 3 different types of vesting.
1) the indefeasibly vested remainder, where holder of remainder is certain to acquire the estate in the future w no strings attached
2) vested remainder subject to complete defeasence. Strings are attached. AKA vested remainder subject to total divestment
3) vested remainder subject to open
Indefeasibly vested remainder
remainder where:
- identify of takers is known
- no other condition precedent other than expiration of the preceding interest
- no condition subsequent can cut short the remainder
i. Ex.: To a for life, remainder to B. A is alive, B is alive.
2. Why—B is KNOWN with no strings attached.
3. If B predeceases A- B’s future interest passes by will or intestacy.
Vested remainder subject to complete defeasence
Strings are attached. AKA vested remainder subject to total divestment
vested remainder subject to condition SUBSEQUENT
i. Remainderman exists. His taking is not subject to any condition precedent. However, his right to possession could be cut short because of a condition subsequent.
1. Dif b/w condition precedent creating a contingent remainder, and a condition subsequent which creates a vested remainder subject to complete defeasance.
2. Ex: OR conveys To A for life, remainder to B, provided however, that if B dies under the age of 25 (condition subsequent), to C. A is alive, B is 20 y/o.
a. if B dies before 25, B and his family lose everything.
b. A has life estate
c. B has vested remainder subject to complete defeasance. (condition subsequent establishes this)
d. C has a shifting executor interest
e. If B is under 25 at the time of A’s death, B still takes. Bc not a prereq to B’s ability to enter. It’s just a cloud hanging over him until he reaches 25—if he dies before 25, his estate loses the land.
f. OR has reversion, it’s possible that neither C nor Cs heirs will exist if and when the condition is breached.
Vested remainder subject partial defeasance (subject to open)
- vested remainder created in a class of persons subject to diminution but certain to become possessory
- the class may increase in size
i. Remainder is vested in a group at least one of whom is qualified to take.
ii. But each class member’s share could get smaller because additional members can still join in.
iii. Ex: to A for life, then to B’s children. B has 2 kids, C and D. C and D have vested remainder subject to open.
1. their class may grow in size
iv. Class is either open or closed
1. Open if others can join
CLASS CLOSES WHEN ANY MEMBER CAN DEMAND POSSESSION.
i. Closes when A dies, because that’s when C & D can demand possession. .
ii. Once A dies a child of B born or conceived thereafter will not share in the gift.
1. Exception: child in womb at time of A’s death will share with C and D.
v. what if member of class predecease A?
1. Common law—absence of statute, their share goes to their devisees or heirs
Distinguish remainders from executor interest
a. Definition: Future interest created in transferee (3P) which is not a remainder and which takes effect by cutting short some interest in another person (“Shifting”) or in the grantor or his heirs (“springing”)
Shifting executor interest
i. always follows a defeasible fee and cuts short someone other than OR.
ii. Ex: To A and her heirs, but if B returns from Canada sometime next year, to B and his heirs.
1. B has: shifting executor interest
2. Why doesn’t B have a remainder?: bc remainders never follow defeasible fees
3. A has: fee simple subject to B’s shifting executor interests
4. Does the conveyance violate the rule against perpetuities (RAP)? No bc of the one year limit.
iii. Ex: to a but if a uses the land for nonresidential purpose at any time during the next 20 years, then to B
