Future Interests

Question 1

The three future interests capable of creation in the grantor

Answer 1

• Possibility of Reverter
• Right of Entry (a.k.a Power of Termination)
• Reversion

Question 2

The life estate that accompanies possibility of reverter

Answer 2

Fee simple determinable

Question 3

The life estate that accompanies right of entry

Answer 3

FS subject to condition subsequent

Question 4

VA SoL clock starts to run when this happens

Answer 4

Starts to run when the condition happens with a fee simple on a condition subsequent, NOT when the right of entry is exercised.

Question 5

When an estate has a future interest of reversion

Answer 5

• Grantor transfers estate of lesser duration or magnitude than she started with
• Estate is neither FS determinable or FS subject to a condition subsequent

Question 6

The three types of future interests held by someone other than grantor

Answer 6

1. Vested remainder
2. Contingent remainder
3. Executory interest

Question 7

Remainder

Answer 7

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.

Question 8

Remainders are sociable

Answer 8

Remainders never travel alone. In other words, remain-ders always accompany a preceding estate of known fixed duration (such as a life estate or term of years)

Question 9

Remainders are patient and polite

Answer 9

A remainder never cuts short or divests the prior taker. Instead, it patiently waits its turn and won’t take until the present life estate or term of years comes to its conclusion.

Question 10

Contingent remainder

Answer 10

A remainder is this if:

1. It is created in an unascertained or unknown person, or
2. it is subject to an unmet condition precedent, or both.

Question 11

Examples of a contingent remainder created in an unascertained or unknown person

Answer 11

• “To A for life, then to B’s first child.” A is alive. B, as yet, has no children.
• “To A for life, then to B’s heirs.” A is alive. B is alive. Because a living person has no heirs, while B is alive his heirs are unknown.
• “To A for life, then to those children of B who survive A.” A is alive. We don’t yet know which, if any, of B’s children will survive A.

Question 12

When a condition is a condition precedent

Answer 12

when it appears before the language creating the remainder or is woven into the grant to the remainderman.

Question 13

Example of contingent remainder that is subject to an unmet condition precedent

Answer 13

“To A for life, then, if B graduates from college, to B.” A is alive. B is still in high school. Before B can take, he must graduate from college. He has not yet satisfied this condition precedent. B has a contingent remainder.

Question 14

A remainder never follows this type of estate

Answer 14

defeasable fee. The holder of a remainder cannot cut short or divest a prior transferee.

Question 15

When a remainder becomes possessory

Answer 15

On the natural expiration or conclusion of a prior possessory estate created by the same conveyance in which the remainder is created.

Typically, a remainder is the future interest that becomes possessory at the natural conclusion of a preceding life estate or term of years.

Question 16

Vested remainder

Answer 16

The remainder is is both created in an ascertained person and not subject to a condition precedent.

Question 17

Condition Precedent

Answer 17

Think of a this as a prerequisite to remainderman’s admission onto Blackacre. It is something that the holder of the remainder must do before being allowed to take.

Question 18

The three rules that limit contingent remainders

Answer 18

1. The Destructibility Rule
2. The Rule in Shelley’s Case
3. The Doctrine of Worthier Title

Question 19

The Destructibility Rule

Answer 19

Provides that a contingent remainder would be destroyed if it was still contingent at the time the preceding estate ended.

Question 20

Example of the destructibility rule

Answer 20

• O conveys “To A for life, and if B has reached the age of 21, to B.”
• A died, leaving behind B, who was 20 at the time.
• B’s contingent remainder would be destroyed and O or O’s heirs would take in fee simple absolute.

Question 21

The destructibility rule’s current use

Answer 21

Today, it’s been abolished.

• Thus, if B is 20 when A dies, O or O’s heirs would hold the estate subject to B’s springing executory interest.
• Once B reaches 21, B takes.

Question 22

VA law on destructibility of contingent remainders

Answer 22

• This doctrine has been abolished in VA.
• Thus, if a cotingent remainder is still contingent when the estate ends, it is not destroyed but continues as an executory interest until the contingency occurs.

Question 23

When The Rule in Shelley’s Case applies

Answer 23

Only when O conveys “To A for life, and then, to A’s heirs.” and A is alive.

Question 24

What the Rule in Shelley’s Case Does

Answer 24

Merges the present and future interests, giving A a fee simple absolute.

e.g. “To A for life, and then, to A’s heirs.” A is alive. This rule just makes this a fee simple absolute.

Question 25

Current status of the Rule in Shelley’s Case

Answer 25

It has been virtually abolished.

Nowadays, if O conveys“To A for life, then to A’s heirs,” A has a life estate and A’s as yet unknown heirs have a contingent remainder. O has a reversion, since A could die without heirs.

Question 26

VA Law on the Rule in Shelley’s Case

Answer 26

• This rule has been abolished in VA.
• Thus, in a conveyance from O to A for life with the remainder to A’s heirs:
  
  • A’s possible heirs have a contingent remainder
  • O has a reversion, since A could die without heirs.

Question 27

When the Doctrine of Worthier Title applies

Answer 27

It applies when O, who is alive, endeavors to create a future interest in his heirs.

Question 28

Effect of the Doctrine of Worthier Title

Answer 28

“To A for life, then to O’s heirs.”- If it did not apply, A would have a life estate and O’s as yet unknown heirs would have a contingent remainder.

With this doctrine, the contingent remainder in O’s heirs is void. Thus, A has a life estate and O has a reversion.

Question 29

When the Doctrine of Worthier Title does not apply to an otherwise applicable conveyance

Answer 29

When grantor clearly intends to create a contingent remainder in his heirs.

Question 30

How to convey and not apply the Doctrine of Worthier Title

Answer 30

• “To A for life, then to O’s heirs,”
• explicitly add: “The doctrine of worthier title is not to apply,”
• A has a life estate and O’s as yet unknown heirs have a contingent remainder.

Question 31

Doctrine of Worthier Title in VA

Answer 31

This doctrine has been abolished in VA as a rule of law and as a rule of construction.

Question 32

Definition of vested remainder.

Answer 32

The absolute right to receive title when a presently existing interest in real property ends.

Question 33

The three kinds of vested remainders

Answer 33

1. The indefeasibly vested remainder
2. The vested remainder subject to complete defeasance (also known as the vested remainder subject to total divestment)
3. The vested remainder subject to open

Question 34

Effect of the indefeasibly vested remainder.

Answer 34

The holder of this remainder is certain to acquire an estate in the future, with no conditions or strings attached.

Example: O conveys “To A for life, remainder to B.” A is alive and B is alive. A has a life estate and B has an indefeasibly vested remainder. B is known. There are no conditions attached to his taking.

Question 35

Effect of the vested remainder subject to complete defeasance, (aka vested remainder subject to total divestment.)

Answer 35

• The holder of the remainder exists.
• The remainder is not subject to any condition precedent, meaning that there are no prerequisites to remainderman’s admission onto Blackacre.
• However, remainderman’s right to possession or time with the land could be cut short because of a condition subsequent.

Question 36

This creates a vested remainder subject to complete defeasance

Answer 36

Condition subsequent

Question 37

A condition is a condition subsequent when:

Answer 37

• The conditional language follows language that would create a vested remainder taken alone and set off by commas or other punctuation.
• Ex: O conveys “To A for life, remainder to B, but if B dies under the age of 25, to C.” A is alive and B is 20 years old.

Question 38

Definition of the vested remainder subject to open.

Answer 38

• The remainder is vested in a group, category, or class of takers, at least one of whom is qualified to take possession. (if no one was qualified, it would be a contingent remainder)
• Since at least one member of the given class is qualified to take the class is still open.
• Each class member’s share is subject to partial diminution or partial decrease because additional unascertained takers can still qualify as class members.

Question 39

An example of a vested remainder subject to open.

Answer 39

• O conveys “To A for life, then to B’s children.” A is alive and B has two children, C and D.
• C and D have this type of remainder.
• Their respective shares will be decreased if B has another child.
• (Note that if instead you were told that B has no children, the as yet unborn children would have contingent remainders)

Question 40

Definition of open/closed classes

Answer 40

A class is either open or closed. A class is open if it is possible for others to enter. A class is closed when its maximum membership has been set, so that persons born thereafter are shut out.

Question 41

How to tell when a class is closed.

Answer 41

• The class closes whenever any member can demand possession. (rule of convenience)
• Example: “To A for life, then to B’s children.” The class closes when:
  
  1. B dies, or
  2. A dies, because B’s children can then take.
• If B’s child predeceases A, the share goes to the child’s devisees or heirs.
• Exception: the womb rule. It tells us that a child of B in the womb at A’s death will share with other heirs.

Question 42

Definition of executory interest

Answer 42

• A future interest created in a transferee (a third party),
• which is not a remainder because it takes effect by either:
  
  • cutting short a transferee’s interest (“shifting”) or
  • cutting short the grantor or his heirs’ interest (“springing”).

Question 43

The two types of executory interests

Answer 43

1. The shifting executory interest
2. The springing executory interest

Question 44

Definiton of the shifting executory interest

Answer 44

The shifting executory interest always follows a defeasible fee, and cuts short someone other than O, the grantor.

Question 45

Example of shifting executory interest

Answer 45

• “To A and his heirs, but if B returns from Europe within the next year, then to B.”
• B is in a position to interrupt, or cut short, A’s otherwise limitless time with the land.
• B is not a remainder because the present estate is not “To A for life,” or “To A for a term of years,
• If B doesn’t return from Europe, A and then her heirs would enjoy infinite time with the land. B will get to take only as a consequence of the disruption of A’s otherwise limitless entitlement.
• B is the executioner—meaning, the holder of an executory interest.

Question 46

How to tell when an interest is a shifting executory interest

Answer 46

When it follows a defeasible fee and takes by interrupting the preceding estate holder’s otherwise limitless time with the land.

Question 47

The buffet analogy

Answer 47

• The remainderman is the kind of person you want next to you in the buffet line. He waits his turn before taking the food.
• The executioner is not the kind of person you want next to you in the buffet line. He can plot to keep you from taking the food at all, or stop you from getting a second helping.

Question 48

How the springing executory interest occurs

Answer 48

This takes effect by cutting short or divesting O, the grantor.

Question 49

Example of a springing executory interest

Answer 49

• O conveys “To A, if and when he marries.”
• A is unmarried.
• If and when A marries, A cuts short O’s otherwise limitless time with the land.
• Hence, O has a fee simple subject to A’s springing executory interest.

Question 50

Transferability of remainders and executory interests in VA

Answer 50

All future interests can be transferred inter vivos or by will, even rights of entry.