Land Estates and Future Interests Flashcards
Steps to analyze a problem
1- Identify the basic estate that O transferred to A
2- Determine whether the estate is modified or unmodified. If it is modified (defeasible), determine how it is modified. Name it.
3- Once you know what O has transferred to A, you then determine what’s left, determine who holds it, and accurately name it.
4- Determine if any rules of marketability apply
What are the basic estates?
Fee simple, Life Estate, Fee Tail, Fee for a Term of Years
What are the three ways an estate can be modified?
1- Determinable
2- Subject to a Condition Subsequent
3- Subject to Executory Limitation
O gives to A and his heirs
Fee simple absolute
O gives to A for life
Life estate
O gives to A for the life of B
Life estate pur autre vie
O gives to A and the heirs of his/her body
Fee tail male/female
O to A for 6 years
A fee for a term of years
Determinable
To be determinable, an estate must be granted or conveyed with a condition subsequent which, if it occurs, cuts short the estate and returns it to the grantor. These estates are no longer absolute because they can be terminated by the occurrence or non-occurrence of a condition. I usually refer to that as the happening of a condition—but it can also be the not happening of the condition.
Each one of the major forms of estates can arise in a determinable form. This means that it is subject to a conditional limitation, and if the condition is triggered, it is subject to immediate and automatic forfeiture in favor of the grantor.
Subject to condition subsequent
The major estates also come in another flavor, very similar to determinable estates. This form is called estates “subject to condition subsequent.” This is the name for an estate granted or conveyed with a condition subsequent which, if it occurs, gives O, the original grantor, the power to retake the estate.
This is different from a determinable estate. In a determinable estate, the happening of the condition automatically terminates the estate in favor of the grantor. Here, the happening of the condition allows the grantor to make a reentry or repossession of the land—or bring an action to do so. You can tell when you’ve got this type of estate by the language, or operation of the language.
Subject to executory limitation
The last major type of defeasible, or conditioned, estate is an estate “subject to executory limitation.” Here, there is also a condition subsequent, just like we had in the last two types of estates.
The difference is that unlike in a determinable estate, (in which the happening of the event automatically ends the estate and returns it to the grantor), and unlike the estate subject to a condition subsequent, (in which the happening of the event allows the grantor to reenter and reclaim the estate), in an estate subject to executory limitation, the happening of the condition subsequent automatically terminates the estate in favor of another grantee. That means the original grantor has decided that if you trigger the condition, someone else gets the land. (It doesn’t even have to be a screw-up, it could be a naturally occurring event.)
What are the possible future interests that could be retained by O at the time of transfer?
Reversion possibility of reverter, right of entry(re-entry/power of termination)
Reversion
A reversion is the future interest that the grantor retains when the estate that the grantor granted is one that terminates naturally (that is, not by the happening of any specific condition). Life estate, fee tail, and fee for a term of years are examples of estates that terminate naturally.
Possibility of Reverter
A possibility of reverter arises when what O granted to A is some form of determinable estate, where there is a condition upon which the estate returns to the grantor. What the grantor has left is called a possibility of reverter. This applies to any type of determinable estate—fee simple determinable, life estate determinable, or fee tail determinable).
Right of Entry
A right of reentry (right of entry, power of termination, right to retake, etc.) arises when O has granted A any estate in a “subject to a condition subsequent” form, meaning that should the condition occur O may exercise an option to reenter and retake possession of the estate. The right of reentry is a future interest that the grantor creates for themselves, and it depends on circumstances and language. It can occur with a fee simple subject to condition subsequent, a life estate subject to condition subsequent, etc.
If O transfers any estate determinable, what is the future interest held by O?
possibility of reverter
If O transfers any estate subject to a condition subsequent, what is the future interest held by O?
Right of entry, Power of termination (held by O at TOG)
If O transfers any estate that terms naturally, what is the future interest held by O?
Reversion
If O transfers any estate subject to executory limitation, what is the future interested held by O?
No future interest in O (instead it’s with a 3rd party)
What are the general future interests created in a transferee?
Remainder or Executory Interest
When is a vested remainder
?
a remainder is vested when: 1) the grantee is ascertainable and 2) there are no conditions precedent to that person taking the state
What are the types of vested remainders?
indefeasible vested remainder, vested remainder subject to divestment, vested remainder subject to open, vested remainder subject to executory limitation
Indefeasible vested remainder
created in an ascertainable person and not subject to a condition
precedent
Example: O conveys “to A for life, then to B.” B is ascertainable, and no condition precedent must be met before B can take possession
Vested remainder subject to divestment
a vested remainder that is subject to a condition and could be taken away or lost BEFORE the grantee gets it
Example: O conveys “to A for life, then to B, but if B does not live to age 21, then to C.” (All are living. B is 19.) B’s remainder is vested; but it will end if the condition occurs—if B does not live to age 21
Note: Vested remainder in Fee Simple Subject to Executory Limitation looks similar but is not the same. In a VR FSE, the condition has to cut the estate during or after it becomes possessory
Example: O to A for life, then to B and his heirs, but if B uses the land for commercial purposes, to C and his heirs. (All are living.)
Vested remainder subject to open
a vested remainder held by one or more members of a class that may be enlarged in the future
Example: O conveys “to A for life, then to B’s children.” B is alive and has one child, C. C’s remainder is vested, but his share may
become smaller in the future if more children are born
Vested remainder subject to executory limitation
when it is subject to a condition that could cut short the interest only after or during the time that remainderman is in possession of the estate.
Example: O to A for life, then to B and his heirs, but if B uses the land for commercial purposes, to C and his heirs. (O, A, B, and C are living.)
a. A has a life estate
b. B has a vested remainder (B is living and ascertainable, no conditions precedent) in fee simple subject to executory limitation. This is because B could lose his fee simple only after he comes into possession of the estate. B can’t use the land for noncommercial purposes before B has the land.
c. C has a shifting executory interest in FSA
d. O has nothing
Contingent remainder
a remainder is contingent when 1) there is a condition precedent to the grantee taking the estate OR 2) the grantee is unascertainable
Note: A condition precedent is something someone must do to take the estate versus condition subsequent happens after that grantee has possession of the estate (and it’s happening might cut short the estate)
Executory Interest
Future interest created in a grantEE that is not a remainder. If it terminates naturally, there is a remainder. If it terminates by the happening of a condition, there is an executory interest.
i. O conveys to A and her heirs, but if A divorces, then to B for life and then to C
ii. O conveys to A for life, then 15 years after the end of A’s life, to B and her heirs
a future interest can switch from the original or preceding estate to a later estate when the earlier estate is cut short by a condition subsequent. When this happens, it is called either a springing or shifting interest.
Springing executory interest
An interest springs from the preceding estate, if that estate was in the grantor.
Shifting executory interest
An interest shifts from the preceding estate, if that estate was in a grantee.
What are the four rules that further marketability?
1- Rule in Shelley’s Case
2- Doctrine of Worthier Title
3- Doctrine of Destructibility of Contingent Remainders
4- Rule Against Perpetuities
Rule in Shelley’s Case
if a freehold estate is given to a person and, in the same instrument, a remainder is given to the heirs (or the heirs of the body) of that person, he takes both the freehold estate and the remainder
Four requirements for Rule in Shelley’s Case
1- one instrument
2- creates a freehold estate in a transferee and
3- a remainder in that transferee’s heirs, and
4- both interests are legal or both equitable
If the Rule in Shelley’s Case applies, what happens?
The contingent remainder in the transferee’s heirs (unascertainable at the time) becomes a vested remainder in the transferee (ascertainable)
How does the Rule in Shelley’s case apply to the following: O to B for life, then to B’s heirs
Normally:
B- life estate
B’s heirs- contingent remainder in fee simple
O- reversion
Under rule in Shelley’s case:
B- life estate and remainder in fee simple (contingent turns into vested)
B now holds present possessory interest and complete future interests, B’s two interests merge and now B holds a fee simple absolute
Does intent matter in Rule of Shelley’s Case?
No, it is a rule of law
Doctrine of Worthier Title
If a grantor creates a remainder or an executory interest in his own heirs, the grantor retains a future interest in himself rather than creating a future interest in those heirs
When does the doctrine of worthier title apply
1- a conveyance creates a remainder or executory interests
2- in the grantor’s heirs
What happens in effect when the doctrine of worthier title applies?
the contingent future interest in the heirs (who are unascertainable at the time) becomes a vested future interest in the grantor (who is ascertainable)
How does the doctrine of worthier title apply to: O to G for life, then to O’s heirs
Initially:
G- life estate
O’s heirs- contingent remainder in fee simple
O- reversion
But the doctrine creates remainders in grantor’s heirs.. so, the future interest in O’s heirs becomes a future interest in O. The contingent remainder becomes a vested remainder.
What does the doctrine of worthier title apply to?
applies only to both remainders and executory interests in the heirs of the transferors
What does the Rule in Shelley’s case apply to?
Only applies to remainders not executory interests
Doctrine of Destructibility of Contingent Remainders
any contingent remainder that has not vested at the termination of the preceding freehold estate is destroyed
When does the doctrine of destructibility of contingent remainders apply?
1- a contingent remainder
2- doesn’t vest before the preceding freehold estate (typically life estate) ends
How does the doctrine of destructibility of contingent remainders apply to: O to G for life, then to M and her heirs if M marries
Initially
G- life estate
M & her heirs- contingent remainder in fee simple
O- reversion
If M is not married by the time G’s life ends, M’s contingent remainder is destroyed and she loses her interest, then O’s reversion becomes possessory
What type of modification is O conveys “to A and his heirs, as long as A remains married.”
Fee simple determinable
What type of modification is O conveys “to A for life, as long as A stays in law school.”
Life estate determinable
What is the rule against perpetuities?
“No interest is good unless it must vest, if at all, no later than twenty-one years after some life in being at the creation of the interest.”
Which types of estates does the RAP apply to?
The rule applies only to unvested future interests held by a grantee. This means it includes only:
contingent remainders,
vested remainders subject to open, and executory interests.
It does not apply to vested future interests held by a grantee (like vested remainders) and it does not apply to any future interests held by O.
Steps for RAP
(a) identify the contingent interest;
(b) list the lives in being;
(c) consider whether anyone can be born who might affect vesting;
(d) kill off the lives in being at some future date and add 21 years;
(e) ask yourself, “Is there any possibility that the contingent interest will vest after this point?” If so, it is void; if not, it is valid.
