Ownership Interests Flashcards
Fee simple absolute
Absolute ownership of potentially infinite duration.
“To A” or “To A and his heirs”
Freely alienable, devisable, and descendible.
No accompanying FI.
Fee simple determinable
Limited by specific durational language.
“So long as,” “while,” “during,” “until.”
Automatically terminates upon happening of stated event.
FI = Possibility of reverter in the grantor
Fee simple subject to condition subsequent
Limited by specific conditional language.
“Upon condition that,” “provided that,” “but if.”
Will terminate only if the grantor affirmatively demonstrates intent to terminate.
FI = Right to reenter in the grantor
Fee simple subject to executory interest
Limited by specific conditional language.
Automatically terminates upon happening of stated event, and title passes to a third party.
FI = Executory interest in the third party.
Life estate
Present possessory estate fully transferable during measuring life.
If third party: “to A for life,” “to B after the life of A, “to A for life, but if he drinks then to B” (defeasible).
If measured by grantee’s life, not devisable/descendible by grantee.
May be cut short by specified event (defeasible life estate).
Life estate waste
Limits the rights a holder of a LE. LT must deliver property to future interest holder in substantially the same condition as when LT took possession.
Holder of any FI may bring suit against LT for injunction.
Life estate allocation of burdens
LT must pay property taxes to the extent LT receives a financial benefit from the land.
Pre-existing mortgage obligations and assessments for public improvements are allocated between LT and future interest holder.
Reversion
FI held by a grantor who transfers a LE or estate for years without conveying remaining FI to a third party.
Not subject to RAP. Alienable, devisable, descendible.
Possibility of reverter
FI retained by a grantor when a FSD is conveyed.
Alienable, devisable, descendible.
Right of reentry
FI retained by a grantor after a FSSCS is granted.
Alienable, devisable, descendible in most states.
Remainder
FI that becomes possessory upon the natural expiration of a prior estate that is created in the same conveyance in which the remainder is created.
Vested if not subject to any conditions precedent + ascertainable grantee.
Vested remainder subject to open
If at least one class member is qualified to take possession at the time of the conveyance, each class member’s share is subject to partial diminution.
Additional takers not yet ascertained can still vest.
Vested remainder subject to complete divestment
The occurrence of a condition subsequent will completely divest the remainder.
Contingent remainder
Created in an unascertainable grantee or is subject to an express condition precedent to grantee’s taking.
Executory interest
FI in a third party (not a remainder) that cuts the prior estate short upon the occurrence of a specified condition.
Transferable and subject to RAP.
Shifting executory interest
Cuts short a prior estate created in the same conveyance.
Estate shifts from one 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 the grantor.
Rule Against Perpetuities (RAP)
Specific FIs are valid only if they must vest or fail by the end of a life in being plus 21 years.
Applies to: contingent remainders, vested remainders subject to open, executory interests.
RAP rule for class gifts
If RAP voids a transfer to any class member, then the transfer is void as to all class members, even those whose interests have already vested.
EXCEPT: transfers of a specific dollar amount to each class member; transfers to a subclass that vests at a specific time.
RAP charity-to-charity exception
If property passes from one charity to another, RAP does not apply.
Tenancy in common
Two or more grantees with unity of possession.
No right of survivorship.
Each cotenant holds undivided interest with unrestricted rights to possess whole property.
Interest freely devisable/transferable.
Joint tenancy
Two or more persons own the property with right of survivorship.
Requires the Four Unities.
Severance converts JT into a TIC only with respect to the severed shares.
Four Unities for JT and TbE
(1) P - equal rights to Possess the whole
(2) I - with identical equal Interests
(3) T - created at the same Time
(4) T - by the same Title (instrument)
JT severance
Converts to a TIC only with respect to the severed share.
Sale - don’t need consent; severs JT as to seller but JT of non-transferors remains intact.
Mortgage - severs JT under title theory, but not under lien theory.
Judicial lien - typically will not sever the JT; severance occurs when the property is levied and sold.
Tenancy by entirety (TbE)
Same unities as JT, plus unity of person (parties must be married to each other when deed is executed or conveyance occurs).
Neither party can alienate or encumber property without other’s consent.
Presumed that divorce converts to a TIC.
Co-tenant right to possess
Each co-T has right to possess the entire property.
Generally not required to pay rent when other co-Ts do not use the property (unless co-T has been ousted).
Co-tenant contribution
Co-T can collect contribution from other co-Ts for operating expenses (e.g., taxes)…
BUT, if in sole possession, only if they exceed the rental value of the property.
No right to contribution for improvements.
Co-tenant repair rights
May maintain separate action for contribution in some states if notified other co-Ts of need for the repairs.
Co-tenant rent received rights
Co-T must account for rent received from third parties, but can deduct expenses.
Net proceeds are divided among co-Ts based on ownership interests.
Co-tenant duties owed
Co-T owes a duty of fair dealing to other co-Ts, but generally owes no fiduciary duties.
EXCEPT: a co-T buys the property at a tax or foreclosure sale (the other co-Ts can buy back their interests within a reasonable time).
Partition rights
A TC or JT generally has the right to unilaterally partition property. TbE does NOT.
Co-tenant easement rights
Co-Ts may agree to create an easement.
A unilaterally-created easement is only enforceable against the co-T who created it.
Fair Housing Act
FHA prohibits discrimination in the sale, rental, and financing of homes and in other housing-related transactions.
EXEMPT: owner-occupied buildings with < four units (including the owner’s); single-family homes sold or rented without a broker.
FHA protected classes
Race, color, religion, national origin, sex, disability, familial status.
Discrimination claims under FHA
P need only show a disparate racial impact.
No intent or purpose needed.
Conflict of laws
Generally apply the laws of the state where the real property is located.
