Ownership - Future Interests Flashcards
Reversion
Held by grantor who transfers LE or estate for years without conveying the remaining FI to a 3d party
- Not subj. to RAP
Possibility of Reverter
Auto. reverts to grantor upon occurence of stated event when FSD conveyed
- Freely transferable
Right of Reentry
Held by grantor after FSSCS is granted
- Right to take back prop.
- Grantor must exercise the right of reentry to take the prop. back from the grantee
Executory Interest
FI in 3d party (not a remainder) that cuts the prior estate short upon the occurence of a specified condition b/f it would have naturally been terminated
- Transferable
- Subject to RAP
- Can be shifting or Springing
Shifting Executory Interest
Cuts short prior estate created in same conveyance
- Estate shifts from 1 grantee to another grantee upon the happening of a condition
Springing Executory Interest
Divests the grantor’s interest or fills a gap in possession in which the estate reverts to grantor
Remainder
FI that becomes possessory upon the expiration of a prior estate of known fixed duration created in same conveyance in which the remainder is created
Contingent Remainder
- Created in an unascertainable grantee or
- Remainder that is not vested
- Remainder Interest that may not vestw
- is subject to an express condition precedent to grantee’s taking (b/c of unknown beneficiary or known beneficiary subj. to cond. precedent that has not yet occurred)
Vested Remainder
An interest that cant be taken away
- Not subject to any conditions precedent
- Created in an ascertainable person
Vested Remainder Subject to Complete Divestment
Therer is a condition on a vested remainder
- The occurance of a cond. subseq. will divest the remainder
- The vested remainder could be lost entirely after the ascertainable person receives the property
Vested Remainder Subject to Open
Class Gifts
- Group of unspecified persons whose number, identity, and share of the int. is determined in the future
- If at least 1 class mem. is qualified to take poss. at the time of the conveyance,
- then each class member’s share is subj. to partial diminution
- b/c additional takers not yet ascertained can still vest
- Once the class Closes
- Any person who might otherwise have become a class member can’t claim an int. in the prop.as a class member
How are class openings created?
A class is deemed open the moment the class opens
- Inter vivos conveyance - when the conveyance is made, the class opens
- Testamentary conveyance - when testator dies, the class opens
Rights don’t vest until the class is open
When does a class close?
A class closes to new members as soon as at least one member of the class comes into immed. poss. of the land
What is the rule of convenaience ?
A class closes as soon as at least one member of the class comes into immed. poss. of the land
- But if there is a potential member that is alive, but has to satisfy a cond. precedent to join the class, they are allowed to do so even after the class is closed
Transferability
- Remainders & Executory Interests are transferable inter vivos and Devisable/Descendible
Rules Against Perpetuities (RAP)
Spcific Future Interests are valid only if they must vest or fail by the end of a life in being plus 21 years
If RAP applies, what is the analysis ?
Can someone come into existence more than 21 years after everyone currently alive is dead that will have a poss. interest?
RAP Vest or Fail Requirement
- If there is any possibility that it will not be known whether the int. will vest or fail within the applicable pd.
- RAP has not been satisfied
At what time does the RAP analysis start?
At the time of creation of the prop. int.
- Is there a possibility of a RAP violation?
RAP - Measuring Lives
- A mesauring life is a natural person alive when the interest was created
- Measuring life must be human
- Can be anyone so long as they are identifiable & connected w/ vesting or failing of the interest
RAP - What if the measuring life is not specified?
The measuring life is the life directly related to the future int. that is subj to the rule
RAP - If there is no measuring life, what is the effect?
The applicable vesting period is 21 years from the time that the future int. is created
RAP only applies to what types of land interests ?
It doesn’t apply to present estates. It only applies to:
- Future Interests
- Executory Interests
- Contingent Remainder
- Vested Remainder Subj. to Open
- Partial Restraints on Alienation
- Purchase Options
- Right of first refusals
- Powers of Appointment
What is the effect of a RAP Violation?
If a future interest violates RAP
- If it is possible that the fut. int. will not vest w/in 21 years of the measuring life THEN there is a violation
- Only the offending interest fails (future interest)
- Unless (rare case) the voiding of the future int. undermines the grantor’s intent THEN the entire transfer is voided
RAP - When does a Contingent Remainder Vest?
Requires:
- Identification of the taker and
- Satisfaction of all the conditions precedent
RAP - When does An Executory Interest Vest?
Vesting means the taking of possession
- Did a contingent event occur?
RAP - When does a Remainder Subject to Open Vest?
When the class closes
- All or Nothing Rule
- If any class members interest might vest beyond 21 years after the measuring life
- all the cllass members interests are void
- So, you can’t have interest subj. to open beyond the perpetuities period
What are the exceptions to the Rule of convenience ?
2 Exceptions
- Transfer of a Specific Dollar amountto each class memebr OR
- Transfer of Specific Dollar amount to a subclass that vests at a specific time
Any pers. who is entitled to transferred interest is not prohibited from taking that interest just b/c there are other members of the class who are prohibited from taking the int.
Common Violations of RAP
- “Survival beyond age 21” Condition
- Fertile Octogenarian
- Unborn Spouse
- Defeasible Fee followed by executory Interest
- Conditional passage of interest
Common Violation of Rap - Class Transfers “Survival Beyond age 21” Condition
The transfer to a class is violates the Rule:
- If transfer to class is conditioned on the class members surviving to an age beyond 21 AND
- The class is open
Common Violation of Rap - Fertile Octogenarian
Anyone, regardless of age or physical condition (including 80 year old woman - “Octogenarian”) is deemed capable of having children
- Same states have set an age limit beyond which it is rebuttably presumed that a woman can’t have a child
Common Violation of Rap - Unborn Spouse
If an interest following a widow’s life estate can’t vest until the widow dies, then it violates the rule
- Rule presumes that a grantor could subsequently marry a person who was not a life in being at the time interest was created
Common Violation of Rap - Defeasible fee followed by executory interest
- Violates the rule unless there is a time limit on the vesting of the executory interest that satisfies the rule
- If limit is durational
- then striking of EI leaves grantor w/ Possibility of Reverter
- If Limit is conditon subsequent
- Striking of EI leaves holder of defeasible fee with FSA
Common Violation of Rap - Slothful Executor
- Rule presumes that the executor of the estate might not probate the will for many years after the testator’s death
What is the doctrine of worthier title?
Rule of construction - applies in some states
- Preference for prop. passing by descent instead of devise
- Creates presumption that there is a reversion to grantor, rebuttable by showing of contrary intent
- Prevents remainder’s in the grantor’s heirs
What is total restraint on alienation ?
- A no sell provision
- If grantee tries to sell, they lose the rights to the prop.
- Can never have total restrain on a fee
