O'ship of RP - Present Estates and Future Int's

Question 1

What is a fee simple?

Answer 1

In present estates, fee simple is the default estate. A fee simple is created when the grantor uses any of the following language:
“O to A”
“O to A and his/her heirs”
“O to A forever”

Question 2

A defeasible fee is…

Answer 2

… a conveyance in fee simple in which the grantor places express conditions on the conveyance (e.g., “O to A on the condition that . . .”). A defeasible fee is capable of lasting forever, but may be terminated by the occurrence of an event.

Question 3

A defeasible fee gives the grantee a _____ interest in the property, but reserves a _____ in the property in the favor of the grantor or a third party.

Answer 3

present possessory

future interest

Question 4

There are three main types of defeasible fees:

Answer 4

1. Fee simple determinable
2. Fee Simple Subject to Condition Subsequent
3. Fee Simple Subject to Executory Interest

Question 5

Fee Simple Determinable.

Answer 5

A fee simple determinable is a conditional conveyance in which the grantor retains a possibility of reverter. The possibility of reverter vests automatically when the condition fails (i.e., the grantor does not have to reclaim the property, the interest automatically vests back to him). A fee simple determinable is created when the grantor uses durational language, such as:

“While the property is used for farming”
“During the property’s use as a farm”
“Until the property is no longer used as a farm”

Question 6

Fee Simple Subject to Condition Subsequent.

Answer 6

A fee simple subject to condition subsequent is a conditional conveyance in which the grantor retains a right of entry. The right of entry does NOT vest automatically when the condition fails (i.e., the grantor must reclaim the property). A fee simple subject to condition subsequent is created when the grantor uses conditional language, such as:

“Provided that the property is used for farming”
“On the condition that the property is used as a farm”

MBE TIP:
THIS WOULD NOT CREATE A FSSCS: “for the purpose of…” need more than this, such as the above, making ownership clearly conditional

Question 7

Fee Simple Subject to Executory Interest.

Answer 7

A fee simple subject to executory interest is a conditional conveyance in which a third party (not the grantor) is granted an executory interest in the property. An executory interest is a future interest that divests (i.e., terminates) an earlier interest. For example:

“O conveys Greenacre to A and his heirs, but if Greenacre is no longer used as a farm, then to B and her heirs.”

A has a fee simple subject to an executory interest. B has an executory interest, because B is a third party (not the grantor) and her interest divests A’s interest.

Question 8

A life estate is

Answer 8

a present possessory estate that is limited by a person’s life (terminates when the measuring life dies). A life estate is created when the grantor uses the following language:

“O to A for A’s life” (A is the measuring life – life estate terminates when A dies)
“O to A for B’s life” (B is the measuring life – life estate terminates when B dies)

Question 9

Is a life estate transferable?

Answer 9

Yes, a life estate is transferable. The transferee’s interest in the property terminates upon the death of the measuring life.

Question 10

What is a reversion?

Answer 10

If possession of the land goes back to the grantor after the life estate terminates, then the grantor retains a reversion.

Question 11

What is a remainder?

Answer 11

If possession of the land goes to a third party after the life estate terminates, then the third party takes a remainder.

Question 12

A remainder can be…

Answer 12

… vested or contingent.

Question 13

A vested remainder is a future interest that is both:

Answer 13

1. Given to an ascertained (i.e., readily identifiable) grantee;

AND

2. NOT subject to a condition precedent (i.e., a condition that must be satisfied in order for the interest to vest).

Question 14

A contingent remainder is a future interest that

Answer 14

…fails either of the two elements for a vested remainder (given to an ascertained grantee and not subject to a condition precedent.

For example:

“O conveys Greenacre to A for life, then to A’s firstborn child. At the time of conveyance, A has no children.” A’s firstborn child has a contingent remainder, because the firstborn child is not an ascertainable grantee.

“O conveys Greenacre to A for life, then to B on the condition that B survives A.” B has a contingent remainder. B is an ascertainable grantee; however, B’s interest is subject to a condition precedent (B must survive A).

Question 15

A life tenant has the obligation to pay…

Answer 15

all current charges, including property taxes, mortgage interest, and the cost of maintenance. Restatement (First) Property, § 129.

This is a personal liability, entitling the holder of the future interest to a damages award. However, the life tenant’s obligation to pay current expenses is limited to the income produced by (or that could reasonably have been produced by) the land, such as rents that could have been obtained.

Question 16

In a will or device, what does “issue” mean?

Answer 16

Direct descendants (eg, children or grandchildren

Question 17

If testator gives to “children of A in fee simple” what did testator give?

What about children who might be born to the A after the testator’s death?

Answer 17

A class gift.

the class is deemed to close at the moment the gift takes effect (ie, when testator dies) and all children of A born thereafter are excluded. Only surviving grandchildren at time of testator’s death receive the fee simple.

Question 18

Life tenants have a duty not to

Answer 18

Life tenants have a duty not to commit voluntary or permissive waste with regard to the property during their life tenancy. A failure to keep the property in repair, pay taxes on the property, or pay interest on any mortgage on the property all constitute permissive waste.

Question 19

Voluntary waste is

Answer 19

an affirmative act that serves to somehow damage the land. This “damage,” however, is not necessarily an act that reduces the value of the land.

For example, a life tenant’s affirmative act of changing the basic use of the land during his tenancy would be characterized as “damage” to the land that constitutes voluntary waste even if the land value increased as a result.

The life tenant is held liable to the remainderman for any waste during his or her life tenancy.

Question 20

Is a right of first refusal (aka a preemptive right) subject to RAP

Answer 20

YES.

Question 21

What does the language “subject to the understanding that within one year…” create?

Answer 21

A contractual obligation.

Though there is a time element, this is not a fee simple determinable. Need language such as “as long as” or “until” for that to be created.

Question 22

While the RAP generally does not apply to interests retained by the grantor, it does apply to

Answer 22

options and rights of first refusal if they are mere contract or covenant rights.