Future interests and future interest holders Flashcards
Life estates: reversion
A reversion follows a life estate if possession of the land returns to the grantor after the life estate ends.
Life estates: remainder
A remainder follows a life estate if possession of the land goes to a third-party transferee after the life estate ends.
Life estates: obligations of a life tenant
Life tenants have the obligation:
(1) To the extent they receive a financial benefit from the property—i.e., the reasonable or actual rental value of the property when occupied:
(a) to pay all ordinary taxes on the land; and
(b) to pay interest on the mortgage;
(2) To reasonably repair the property, although a life tenant is not responsible for damage caused by a third-party tortfeasor.
Life tenants are not obligated to insure the property.
Remainders: contingent
A contingent remainder is one that is not vested, for example:
(1) To A for life, then to A’s firstborn grandchild;
(2) To A for life, then to B if B survives A.
Remainders: vested
A vested remainder is one:
(1) With an ascertained grantee; and
(2) That is not subject to a condition precedent.
Remainders: vested subject to open
A vested remainder in a class gift whose full membership is unknown although at least one person in the class has vested.
As members are identified, the vested members will be partially divested of their interests.
Remainders: doctrine of worthier title
The doctrine converts remainders in a grantor’s heirs into reversions to the grantor.
But for the doctrine, the remainder in effect would have produced the same results as intestate succession.
Remainders: rule in Shelley’s Case
The rule converts remainders in a grantee’s heirs into a fee simple absolute to the grantee.
But for the rule, the remainder in effect would have produced the same results as intestate succession.
Executory interests
Springing executory interests divest the grantor, whereas shifting executory interest divest a prior grantee.
Doctrine of waste
The doctrine of waste applies when more than one party has an interest in the same piece of real property, as is the case with holders of present and future interests.
There are three types of waste:
(1) Affirmative waste—voluntary conduct that results in a reduction of value;
(2) Permissive waste—neglect toward property that results in a reduction of value; and
(3) Ameliorative waste—when the life tenant or person in possession changes a use of property that increases its value.
The doctrine of waste also applies between landlords and tenants, co-tenants out of possession and tenants in possession, and mortgagees and mortgagors.
Remainders: survivorship contingency
If a survivorship contingency is stated in a conveyance, then the majority view is that the contingency applies at the termination of the interest that precedes distribution of the remainder.
A minority approach interprets a survivorship contingency to require surviving only the testator and not the life tenant.
