Ownership of Real Property Flashcards
What is fee simple absolute?
Fee simple absolute is absolute ownership of indefinite or potentially infinite duration. It is transferable inter vivos, descendible, and devisable.
How is fee simple absolute created?
“O to A” or “O to A and his heirs.”
What is the accompanying future interest of fee simple absolute?
There is no future interest accompanying fee simple absolute.
What is fee simple determinable?
Fee simple determinable is a present possessory estate that terminates immediately upon the happening of the stated event which reverts to the grantor.
It is devisable, descendible, and transferable inter vivos but always subject to the condition.
How is fee simple determinable created?
Fee simple determinable is created with durational language such as “O to A so long as . . .” or O to A during . . .”
What is the future interest accompanying fee simple determinable?
A possibility of reverter held by the grantor. The possibility of reverter is transferable, descendible, and devisable.
What is fee simple subject to a condition subsequent?
Fee simple subject to a condition subsequent is a present possessory estate in which the grantor reserves the right to terminate the estate upon the happening of a certain event.
How is fee simple subject to a condition subsequent created?
Fee simple subject to a condition subsequent is created by the use of conditional words such as “on the condition that” or “provided that” and an explicit statement of the grantor’s right to reenter.
“O to A provided that A never serves alcohol on the premises. If A does serve alcohol, then A reserves the right to reenter and retake the premises.”
What is the future interest accompanying fee simple subject to a condition subsequent?
The future interest accompanying fee simple subject to a condition subsequent is a right or reentry (aka power of termination).
It is not transferable inter vivos (majority rule), but it is descendible and devisable.
What is fee simple subject to an executory interest?
Fee simple subject to an executory interest is a present possessory estate that automatically terminates upon the happening of a future event and passes to a third party rather than the grantor.
It is descendible, devisable, and transferable inter vivos.
How is fee simple subject to an executory interest created?
It is created by words creating a future interest in someone other than the grantor, such as “O to A unless A does not finish college, then to B.”
What is the future interest accompanying fee simple subject to an executory interest?
The future interest accompanying fee simple subject to an executory interest is an executory interest.
Are words of hope, desire, or intention enough to create a defeasible fee?
No, because courts disfavor restrictions on free land use.
Is a restraint on alienation of a fee simple estate valid?
An absolute restraint on alienation is not valid. A restraint that has a reasonable, time-limited purpose may be enforceable.
What conditions on a fee simple grant will be struck down?
Conditions that violate public policy such as those that penalize marriage or encourage divorce will be struck down.
What is a fee tail?
A fee tail is an estate were inheritability of the land is linked to lineal heirs. It is abolished in most places.
What is a life estate?
A life estate is a present possessory interest that lasts for the lives of one or more people.
How is a life estate created?
A life estate is created by explicit language measuring the grant in lifetime terms, such as “O to A for life.”
What is a life estate pur autre vie?
A life estate pur autre vie is a life estate measures by a life other than the grantee’s, such as “O to A for the life of King Charles.”
What is the future interest accompanying a life estate?
The future interest is a reversion, if held by the grantor, and a remainder if held by a third party.
What are the rights and obligations of a life tenant?
(1) A life tenant is entitled to all ordinary uses and profits from the land.
(2) A life tenant must not commit waste.
(3) A life tenant must preserve the land and structures in a reasonable state of repair.
(4) A life tenant must pay ordinary taxes on the land (limited to the extent of income or profits, or if none, the fair rental value).
(5) A life tenant must pay interest, but not principal, on a mortgage.
(6) A life tenant must pay special short term assessments.
May a future interest holder sue a life tenant?
Yes, if the life tenant is committing waste or for reimbursement of payments for money spent performing the life tenant’s obligations.
May a life tenant exploit natural resources?
Yes, when necessary for repair or maintenance of the land, the land is suitable only for exploitation, or exploitation is expressly or impliedly allowed by the grantor. Additionally, a life tenant can continue mining in mines that are already open.
Is a life tenant responsible for insuring the premises for the benefit of a future interest holder?
No.
Is a life tenant responsible for damages caused by a third party?
No.
May a life tenant alter or demolish existing buildings?
No, unless the market value of the future interests is not diminished and (1) the remaindermen do not object, or (2) a substantial and permanent change in the neighborhood has permanently deprived the property of its reasonable productivity or usefulness.
What happens if a life tenant renounces the estate?
If a life tenant renounces the life estate, the future interest is generally accelerated to become possessory immediately.
What is a reversion?
A reversion is a future interest in a grantor who conveys less than what they own (such as a life estate). It is transferable inter vivos, descendible, and devisable.
What is a remainder?
A remainder is a future interest in a third party that becomes possessory on the expiration of the preceding estate such as “O to A for life, then to B.”
Can a remainder divest the preceding estate?
No.
Can a remainder follow a time gap after the preceding estate?
No.
What estates may a remainder follow?
A remainder follows an estate of a known, fixed duration such as a life estate or a term of years lease.
When is a remainder contingent?
A remainder is contingent when it is created in unborn or unascertained persons or it’s subject to a condition precedent, or both.
Why is an heir an unascertained person while a person is alive?
Because a person has no heirs until they die, only heirs apparent.
What is a condition precedent to a remainder?
A condition precedent is a condition that must be satisfied before the remaindermen have a right to possession, such as “O to A for life, then to B if B graduates from college.”
What is a vested remainder?
A vested remainder is one that is created in an existing and ascertained person that is not subject to a condition precedent.
What is an indefeasibly vested remainder?
An indefeasibly vested remainder is a remainder that is not subject to divestment or diminution (no strings attached).
What is a vested remainder subject to total divestment?
A vested remainder subject to total divestment (aka vested remainder subject to complete defeasance) is a future interest that could be cut short by a condition subsequent.
What is a vested remainder subject to open?
A vested remainder subject to open is a remainder vested in a class of persons that is certain to become possessory but is subject to diminution by the addition of class members.
When is a class gift contingent?
When all class members are unascertained.
When does a class close?
A class closes when it is not possible for other members to join. Under the rule of convenience, a class closes when some member of the class can call for distribution (demand possession).
What are the exceptions to the rule of convenience?
(1) contrary intent
(2) womb rule - if person is in gestation when the class closes, that person is included in the class.
Is survival of a class member until the time the class closes required to share in a class gift?
Generally, survival is not required to share in a class gift unless survival was made an express condition, such as “O to A for life, then to her surviving children.”
What is a shifting executory interest?
A shifting executory interest follows a defeasible fee and cuts short someone other than the grantor.
What is a springing executory interest?
A springing executory interest cuts short the interest of the grantor.
Are remainders and executory interests transferable, descendible, or devisable?
If the remainder is vested, it is transferable, descendible and devisable.
At common law, if the remainder or executory interest was contingent, it was devisable and descendible but not transferable. Today it is also transferable.
What is the rule against perpetuities?
The rule of perpetuities provides that certain future interests are void if there is any possibility they will vest more than 21 years after the death of any person alive at the time of the grant has died.
Which interests does the rule against perpetuities apply to?
The rule against perpetuities applies to contingent remainders, executory interests, options to purchase, vested remainders subject to open, and rights of first refusal.
When does the perpetuities period begin to run?
(1) If the grant is created by will, it runs from the date of the testator’s death.
(2) If the grant is created by deed, it runs from the date of delivery.
(3) If the grant is an irrevocable trust, it runs from the date the trust is created.
(4) If the grant is a revocable trust, it runs from the date the trust becomes irrevocable.
