IV. FUTURE INTERESTS (275-95, 303-28) Flashcards
possessory estate: life estate
correlative future interest in grantor: ______________
reversion
possessory estate: fee simple determinable
correlative future interest in grantor: ______________
possibility of reverter
possessory estate: fee simple on condition subsequent
correlative future interest in grantor: ______________
right of entry
reversion, possibility of reverter, right of entry are future interests in ________
grantor
remainder and executory interest are future interests in _______
grantee
reversion
future interest in grantor after he conveys vested estate of lesser quantum than he has
possibility of reverter
future interest in grantor after he carves out determinable estate of same quantum
right of entry
future interest in grantor that he creates subject to condition subsequent
remainder
future interest in grantee, has capacity of becoming possessory at expiration of prior estates and can’t divest prior estates (naturally follows)
executory interest
future interest in grantee that divests/cuts short prior estate
shifting executory interest
divests the grantee, prior estate generally has fee simple subject to executor limitation
springing executory interest
divests the grantor by springing out of grantor’s estate at a future date
Can a remainder follow a fee simple?
NO - must follow a fee tail, life estate, or term of years
vested remainders (definition)
remainder created in an ascertained person AND not subject to a condition precedent
condition precedent
express condition attached to remainder
indefeasibly vested remainder
holder of remainder is certain to acquire a possessory estate at some time in the future and is also certain to be entitled to retain the possessory estate permanently
vested remainder subject to open
vested in a class of person, at least one of whom is qualified to take possession, but shares of class member are not yet fixed because more people can subsequently become members of the class
Class gifts
gift to group of persons described as a class; class is either open (possible for others to enter class) or closed (not possible for others to enter the class)
ex. class gift to “children of A” remains open until A’s death
What is O grants “to A for life, then to A’s kids”, and at the time of the conveyance A has one child, X. If X dies before A, who gets the remainder when A dies?
CL Rule: whoever A’s heirs are get X’s divested remainder, and siblings keep their remainder
American Rule: parents keep X’s divested remainder, siblings keep their remainder
Why are vested remainders subject to divestment reachable by creditors?
they are certain to come into possession
vested remainder subject to divestment
either vested subject to being divested by operation of a condition subsequent or vested subject to divestment by inherent limitation of estate in remainder
contingent remainder
remainder that is either created in an unascertained person OR subject to a condition precedent
O to A for life, then to B and his heirs if B survives A, and if B does not survive A to B’s children and their heirs - who has what?
O: nothing
A: life estate
B and B’s children have alternative contingent remainders
indefeasibly vested, vested subject to open, and vested subject to complete defeasance are types of ___________________
vested remainders
Indefeasibly vested remainder
holder of remainder is certain to acquire a possessory estate at some time in the future and is also certain to be entitled to retain the possessory estate permanently
Vested remainder subject to open
vested in a class of persons, at least one of whom is qualified to take possession but shares of class members are not yet fixed because more people can subsequently become members of the class
O to A for life, then to B’s heirs
A: life estate
B’s heirs: contingent remainder (heirs not determined until B dies)
O: reversion (B may be alive when A dies)
Statute of Uses (1536)
Before Statute, large part of land in England was held in use; Henry VIII abolished the uses and turned them into legal estates that would be subject to all feudal incidents on death of legal owner. Large result of the Statute of Uses is that it increased alienability of the land.
cestui que use
the person for whose benefit the feeoffment was made
O enfeoffed (conveyed a freehold of land into the possession of his bro A with the understanding that O’s wife and kids would have the use of the land
What is A vs. O’s wife and kids?
CL cts refused to enforce uses but chancellor compelled the feoffee to uses to hold land in accordance with the understanding
A is the feoffee to uses (trustee), holds seisin
O’s wife and kids are cestuis que use (beneficiaries)
How to distinguish executory interest from a remainder?
both are future interests in grantee but executory interests = no preceding estate, follows a fee simple, does not follow natural termination of preceding estate
Symphony Space v. Pergola
Court holds Symphony Space own theater space; option agreement violates RAP (date in 2003 more than 21 years after creation of option); court says it must strike down entire agreement because whole thing is void if it violates RAP. Court holds perpetuities period is 21 years in commercial transactions where no measuring life is stated in agreement.
Cy Pres Doctrine
“as near as possible”; the invalid interest could have been struck out or the instrument could be reformed to approximate the intentions of the creator. (court could have stricken one date that was outside RAP range and upheld rest of contract)
“Wait and See” Doctrine
Wait out the common law perpetuities period before declaring the contingent interest void.
USRAP
Replaces RAP with an extending of “wait and see” for 90-year vesting period – some still say that is too long and criticize it for tying up wealth.
Statute of Enrollments
Required the parties to go to the enrollment office to record the land transfer to have the public notice.
What made livery of seisin obsolete?
Statute of Frauds required written instrument to be used to transfer title to land (prior to this Statute of Usues permitted legal title to be conveyed by deed)
3 rules cts have established to destroy contingent interests and make land more marketable
(1) Destructibility of contingent remainders: A remainder in land is destroyed if it does not vest at or before termination of preceding freehold estate; applies to contingent remainders ONLY.
(2) Rule in Shelley’s case: If one instrument creates a life estate in land in A and purports to create a remainder in A’s heirs, remainder becomes a remainder in fee simple (or fee tail) in A; has been abolished in most jxns
(3) Doctrine of worthier title: When an inter vivos (while you’re alive) conveyance purports to create a future interest in the heirs of the grantor, the future interest is void and the grantor has a reversion
Destructibility of contingent remainders
A remainder in land is destroyed if it does not vest at or before termination of preceding freehold estate; applies to contingent remainders ONLY.
Doctrine of merger: If life estate and next vested estate in fee simple come into hands of one person, lesser estate is merged into the larger (Same Instrument Exception: If the life estate and the next vested interest were created by the same instrument, there is no merger if merger would destroy an intervening contingent remainder because this would defeat the grantor’s intent. But if A subsequently conveys the life estate with the reversion then merger can take place.)
Why were destructibility of contingent remainders, rule in Shelley’s case, doctrine of worthier title, and Rule Against Perpetuities established?
courts established three rules (plus RAP) to destroy contingent interests and make land more marketable (mostly have been abolished, but since they remain in existence in some jxns we still have to learn them)
Rule in Shelley’s case
If one instrument creates a life estate in land in A and purports to create a remainder in A’s heirs, remainder becomes a remainder in fee simple (or fee tail) in A; has been abolished in most jxns
Doctrine of worthier title
When an inter vivos (while you’re alive) conveyance purports to create a future interest in the heirs of the grantor, the future interest is void and the grantor has a reversion
Are interests retained by the grantor subject to RAP?
NO, reversions, possibilities of reverter, and rights of entry are treated as vested as soon as they arise.
What are the 3 interests RAP applies to?
contingent remainders, executory interests, class gifts
Rule of proof for RAP
must prove that contingent interest is certain to vest or terminate no later than 21 years after death of some person alive at the creation of the interest
en ventre sa mere
in mom’s belly
Saving Statute
cross out the offending party of a grant that violated RAP (codification of cy pres)
abeyance
a state of temporary disuse or suspension
