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Real Property > Ownership of Realty > Flashcards

Ownership of Realty Flashcards

1
Q

Estate in Land

A

A realty interest that is presently or may become possessory

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2
Q

Present Possessory Estates

A

Can include freehold estates and non-freehold estates.

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3
Q

Freehold Estate

A

Gives the owner of the estate title to or a right to hold the property.

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4
Q

Leasehold Estate

A

A type of non-freehold estate where the estate is limited in duration. E.g. “to A for a term of 10 years.”

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5
Q

Non-Freehold Estate

A

Gives mere possession.

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6
Q

Types of Freehold Estates

A

Includes:

  • Fee simple absolute
  • Defeasible estates
  • Life Estate
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7
Q

Words of Purchase

A

Describe the persons who take an interest under a grant or device. E.g. “to A”

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8
Q

Words of Limitation

A

Describe the nature of the estate taken by the purchasers. E.g. “and her heirs” describe that the estate taken is a FSA.

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9
Q

Preference of Courts: Forfeiture v. Alienability

A

Keep in mind that courts disfavor forfeiture and favor free alienability.

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10
Q

Labels for Recipients of Realty Transfers (Devisees, Heirs, and Grantees)

A
  • (Devisees) take by will
  • (Heirs) take by law of intestacy
  • (Grantees)- take by inter vivos (between the living) transfer
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11
Q

Fee Simple Absolute

A

The largest possible estate in land; a FSA holder has all possible rights that a person may have in the realty including:

  • the unimpeded right to sell or convey all or part of the property; and
  • the unimpeded right to devise the property
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12
Q

When a FSA Owner Dies Intestate

A

The property will pass to the owner’s heirs by intestacy.

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13
Q

Language that Conveys a FSA

A

Traditionally included “to A and her heirs.” However, under modern law, a FSA is presumed when the words “to A” are used (therefore, there is a presumption of FSA in the absence of words of limitation).

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14
Q

Presumption of FSA

A

If language is ambiguous, courts presume that the grantor intended one to have the greatest possible estate conveyed.

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15
Q

Termination of FSA

A

The only way for a FSA to terminate is for the owner to die without a will or heirs, and the property escheats to the state.

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16
Q

Defeasible Estates

A

An estate that may terminate before its maximum duration has run. Includes:

  • Fee Simple Determinable
  • Fee Simple Subject to a Condition Subsequent
  • Fee Simple Subject to Executory Interest
  • Fee Tail
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17
Q

Fee Simple Determinable (FSD)

A

Terminates automatically on the happening of a named future event. When the event occurs, the estate returns to the grantor

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18
Q

Words of Limitation for a FSD

A

Includes durational language:

  • for so long as
  • during
  • while
  • until

-Keep in mind that a determinable estate is created in one clause with a limitation built into that one clause.

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19
Q

Fee Simple Subject to a Condition Subsequent (FSCS)

A

An estate that can be retaken by the grantor on the happening of a named future event/condition. But the condition only gives the grantor the right to take the estate (unlike FSD it does not automatically terminate).

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20
Q

Words of Limitation for a FSCS

A

Includes conditional language:

  • provided, however
  • however if
  • but if
  • on condition that
  • in the event that

-Remember that an estate subject to a condition subsequent is created in two separate clauses; and with a condition stated in the second clause.

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21
Q

Reservation of Power of Termination for FSCS

A

Remember that the power of termination must be expressly reserved to the grantor (e.g. grantor has power to terminate) or else a court will hold that there is a failed attempt to create a FSCS.

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22
Q

FSD v. FSCS: When the Language is Ambiguous

A

If the language is ambiguous, courts interpret the grant as an attempt to create FSSCS (because courts abhor forfeiture), though, this often fails and the grant becomes a FSA for lack of a specific power of termination.

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23
Q

Fee Simple Subject to Executory Interest (FSEI)

A

An estate that is terminated on the occurrence of some event, property then passes to someone other than the grantor.

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24
Q

Words of Limitation for FSEI

A

A FSEI is created by either durational or conditional language.

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25
Q

Fee Tail

A

At early CL, a freehold estate that descends to the grantee’s lineal descendants (children) only.

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26
Q

Fee Tail General

A

FT where the children of the grantee take ownership in the estate when the grantee dies. E.g. “to A and the heirs of his body.”

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27
Q

Fee Tail Male/ Fee Tail Female

A

When a FT limits descent to the male or female heirs of the grantee. E.g. “to A and the heirs {male/female] of his body.”

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28
Q

Fee Tail Special

A

A FT where descent is limited to the grantee’s descendants by a specific spouse. E.g. “to the heirs of his body by his wife B.”

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29
Q

Fee Tails in the Modern Law

A

FTs are disfavored in modern law. Today, if the words “to A and the heirs of his body” are used:

  • most states will give grantee FSA
  • a few states will give grantee a LE, with a remainder per stirpes in the grantee’s lineal descendants who are alive for the life tenant’s death.
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30
Q

Future Interests in a FT

A

FTS are followed by reversion in the grantor or a remainder in a third party. The future interest becomes possessory if and when the grantee’s lineal line ends.

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31
Q

Life Estate (LE)

A

Lasts for the duration of the grantee’s life. E.g. “to A for life.” Keep in mind that LEs can be made defeasible (determinable, subject to condition subsequent, subject to executory limitation).

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32
Q

Life Estate Pur Autre Vie

A

An estate where the duration is measured by the life of someone other than the grantee. E.g. “to A for the life of B.”

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33
Q

What happens when Grantee Dies for LE Pur Autre Vie?

A

If grantee predeceases the measuring life, the grantee’s heirs are entitled to the use of the land until the measuring life dies. If the measuring life ends before the grantee, the grantee’s interest terminates.

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34
Q

What Happens When There Are Multiple Measuring Lives for a Life Estate Pur Autre Vie?

A

The majority of courts hold that there life estate will terminate upon the death of the later measuring life.

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35
Q

Duties that Come with a LE

A

Include:

  • Duty to Repair
  • Mortgages
  • Taxes
  • Special Assessments
  • Avoid Waste
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36
Q

LEs: Duty to Repair

A

A life tenant has a duty to maintain the property in a reasonable state of repair (ordinary wear and tear are permissible). This duty is also imposed on a tenant for a term of years.

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37
Q

LEs: Limitations on Duty to Repair

A

The duty to repair is limited to the extent of income derived, or if life tenant personally occupies the premises, to the extent of the reasonable rental value of the land (however, this limitation does not apply to a tenant for a term of years).

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38
Q

LEs: Mortgages

A

The life tenant has a duty to pay the interest on a mortgage to the extent of profits derived from the property. A tenant for years or a periodic tenant has no CL duty to make mortgage payments (but look out for duties required by commercial leases).

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39
Q

LEs: Taxes

A

The life tenant must pay all ordinary taxes, to the extent of profits derived from the property. A tenant for years or a periodic tenant has no CL duty unless:

  • the lease is “perpetual” or for a long term with an option in the tenant and his successors to renew “forever”
  • the tenant holds without any obligation to pay rent; or
  • the tenant has erected improvements on the leased premises for his own benefit.
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40
Q

LEs: Special Assessments

A

The life tenant must pay the full cost of special assessments if the life of the public improvement is less than the duration of the life tenant’s estate. A tenant for years or periodic tenant has no CL duty.

41
Q

Future Interests: Grantors and Grantees

A

Future interests include:

  • Grantors future interests include: possibility of reverter, power of termination/right of reentry, and reversion
  • Grantee future interests include: executory interest and remainder
42
Q

Acceptance of Present Interests v. Acceptance of Future Interests

A

Keep in mind that the recipient of a present possessory estate can deny acceptance of the devise to them. However, this individual cannot deny acceptance on behalf of the future interest holder. (E.g. the recipient of a LE can reject the life estate but cannot reject the remainder meant for another).

43
Q

Possibility of Reverter

A

A future interest in the grantor that follows a determinable estate (FSD or LED)

44
Q

Possibility of Reverter: Language Needed?

A

A FSD or LED automatically create a possibility of reverter; no special language needed (silent reversionary interest).

45
Q

Transferability of the Possibility of Reverter

A
  • CL- could only descend through intestacy

- ML- is freely transferable, devisable, and descendible

46
Q

Power of Termination

A

A future interest in the grantor when the grantor attempts to create a FSCS or a defeasible LE.

47
Q

Exercising the Power of Termination

A

Keep in mind that unlike the possibility of reverter, when one is given a power of termination, the property does not automatically revert upon the happening of the event. The grantor must exercise the right of reentry and take affirmative steps to retake the property.

48
Q

Transferability of Power of Termination

A

CL- only transferrable via inter vivos

-ML- power of termination is descendible and devisable, however it is not transferable inter vivos.

49
Q

Reversion

A

A future interest retained by the grantor when the grantor transfers less than a fee interest to a third person (when the entire estate is not accounted for).

50
Q

Transferability of Reversion

A
  • CL- only transferrable via intestacy

- ML- is freely transferable, devisable, and descendible.

51
Q

Grantor’s Future Interest in Leasehold Estate

A

Traditionally, the grantor/landlord was said to maintain a fee subject to leasehold interest. But the modern approach claims that the landlord holds a reversion.

52
Q

Remainders

A

A future interest created in a third person that is intended to take effect after the natural termination of the preceding estate. Can be contingent or vested.

53
Q

Contingent Remainder

A

A remainder that is not vested. A remainder is contingent if:

  • The takers are unascertained or
  • The interest is subject to a condition precedent

-Remember that if a remainder is contingent, the grantor’s estate will retain a reversion.

54
Q

Transferability of a Contingent Remainder

A

Under modern law, a contingent remainder is transferable, descendible, and devisable (except when the contingent remainder is in an unascertained person).

55
Q

Doctrine of Destructibility of Contingent Remainders (DOD)

A

At CL, a contingent remainder in realty is destroyed by:

  • it fails to vest (expiration)
  • the doctrine of merger
  • forfeiture/renunciation by grantee

-However, remember that many modern jurisdictions have abolished the doctrine of destructibility of contingent remainders.

56
Q

DOD: Expiration

A

Under DOD, a contingent remainder is destroyed if it fails to vest by the natural termination of the prior vested estate.

57
Q

What Happens When a Contingent Remainder is Destroyed?

A

The grantor’s reversion will become possessory.

58
Q

DOD: Merger

A

When one party who possesses a present or future interest in the subject realty, by subsequent transactions, obtains all outstanding present and vested estates in that property (when one obtains a present interest and future interest that are not blocked by a vested estate) E.g.:

  • Surrender of the present estate to the owner of a future estate
  • Release of a future estate to the owner of a present estate (e.g. grantor gives life tenant his right to reversion)
  • When all holders of present and future vested interests convey all of these interests to a third party.
59
Q

DOD: Forfeiture/Renunciation

A

When the holder of the present possessory estate surrenders his interest before the contingent remainder vests.

60
Q

DOD: Limitation on Merger

A

Even if one acquires the present and future interest, merger cannot apply if they were given these interests at the same time or by the same instrument.

61
Q

What Happens in Jurisdictions that Do Not Have DOD?

A

If a contingent remainder has not vested at the natural termination of the prior vested estate, it will become an executory interest, subject to the Rule Against Perpetuities.

62
Q

Distinguishing Contingent Remainders from Executory Interests (When the Language is Ambiguous)

A

If a future interest is created such that it may in some cases fall in automatically at the natural termination of the previous estate, an irrebuttable presumption will arise, causing the interest to be treated for all purposes as a contingent remainder.

63
Q

Vested Remainder

A

The remainder has ascertainable takers and will fall in automatically at the natural termination of the previous estate (no conditions precedent).

64
Q

Transferrability of a Vested Remainder

A

A vested remainder is transferable, descendible, and devisable.

65
Q

Special Types of Vested Remainders

A

Include a vested subject to open and a vested subject to total divestment

66
Q

Vested Remainder Subject to Open

A

A remainder that:

  • Has been made to a class
  • has at least one member who is ascertainable and who has satisfied any conditions precedent (but there may be other members that can join to class).
67
Q

Vested Remainders Subject to Open: When Does the Class Open?

A
  • Inter vivos transfers- class opens at the time of the conveyance
  • Testamentary transfers- class opens at the death of the testator
68
Q

Vested Remainder Subject to Open: When Does the Class Close? (Rule of Convenience)

A

The Rule of Convenience states that a class closes as soon as one member of the class becomes entitled to immediate possession of the property (e.g. an ascertainable person who has satisfied all the conditions). But keep in mind that any other potential class members who are alive at this point will be allowed to satisfy the conditions and join the class.

69
Q

Vested Remainder Subject to Total Divestment

A

A remainder that is presently vested but may be terminated on the happening of a future event. E.g. “to A for life, remainder to B for so long as the premises are used for educational purposes.” In such cases the grantor retains a possibility of reverter.

70
Q

Grantor’s Rights for Vested Remainders

A

Keep in mind that if a remainder has vested, the grantor retains nothing unless it is a vested remainder subject to total divestment. If there is a remainder subject to total divestment, the grantor has a possibility of reverter.

71
Q

Executory Interest

A

A future interest in a third person that cuts short the previous estate before it would have naturally terminated. E.g. “to A, but if liquor is served on premises, to B and his heirs.” Includes shifting executory interests and springing executory interests.

72
Q

Shifting Executory Interest

A

An interest that cuts short a prior estate created by the same conveyance. The interest passes from one grantee to another. “E.g. to A, but if drugs are sold on premises, to B and his heirs).

73
Q

Springing Executory Interest

A

An interest that follows a gap in possession or divests the estate of the transferor. E.g. “to A for life, remainder to B and her heirs one month after A’s death.” Keep in mind that grantor will retain a reversion.

74
Q

What Happens in Between the GAP Between the Preceding Interest and the Springing Executory Interest?

A

Grantor’s reversion becomes possessory.

75
Q

Important Rules that Can Affect Conveyances

A

Include:

  • The Rule in Shelley’s Case
  • Doctrine of Worthier Title
  • Rule of Convenience
  • Postponed Gift to a Class (with No Condition Precedent)
  • Immediate Gift to a Class (Coupled with a Condition Precedent)
  • Gift to a Class with Combination of Postponements
  • Waste
76
Q

Rule in Shelley’s Case

A

Applies when:

  • A gets a freehold estate (LE or FT)
  • A’s heirs get a remainder in fee (of in tail)
  • The same instrument creates both A’s and A’s heir’s interests; and
  • Both estates must be legal or both must be equitable.

-E.g. One grant where O gives “to A for life, remainder to the heirs of A.”

77
Q

What happens when the Rule in Shelley’s Case Applies?

A

-A gets a LE and a remainder, which under the doctrine of merger, gives A a FSA. A’s heirs get nothing.

78
Q

The Rule in Shelley’s Case in the Modern ERA

A

The rule has been abolished by statute or judicial decision in most states.

79
Q

The Rule in Shelley’s Case: Irrebutable Presumption

A

The Rule in Shelley’s Case is a rule of law, which the court must treat as creating an irrebuttable presumption.

80
Q

Doctrine of Worthier Title

A

Doctrine that states that a grantor cannot create a remainder in his or her heirs. This is a rule of construction, not law.

81
Q

Doctrine of Worthier Title: When it Applies

A

Applies when:

  • A receives an estate less than fee simple, such as a LE or a term of years
  • O’s heir’s receive a remainder or an executory interest
  • Both interests must be created by same instrument; and
  • Both interests must be legal or both must be equitable

-E.g.- O in a single instrument conveys “to A for life, remainder to the heirs of O.”

82
Q

Doctrine of Worthier Title: Rebuttable Presumption.

A

The Doctrine of Worthier Title is a rule of construction not law. Therefore, language leaving a remainder to O’s heirs creates a rebuttable presumption that O intended to retain that interest in himself as a reversion.

-The presumption can be rebutted by clear express evidence that O did intend to create a remainder in his heirs.

83
Q

What happens when the Doctrine of Worthier Title Applies?

A

O retains a reversion and O’s heirs take nothing.

84
Q

The Doctrine of Worthier Title Under Modern Law

A

The doctrine applies to inter vivos transfers.

85
Q

Postponed Gift to a Class (with No Condition Precedent)

A
  • E.g. “to A for life, remainder to the children of B”
  • If the class is already closed at time the postponement ends (e.g. end of LE), all members of the class will be included and will take.
  • If the class has members but is not yet closed at the time postponement ends, all members of class present at time of postponement will be included and take (but after born children are precluded)
  • If the class has no members at the time the postponement ends, all members of the class will be included and may take (some cases suggest that the first-born child takes entire estate on birth subject to partial divestment of other children).
86
Q

Immediate Gift to a Class Coupled with a Condition Precedent

A
  • E.g. “to B’s children who reach 21”
  • In such a case, the class closes when the first member of the class satisfied the condition.
  • All then-born members of the class are included and may take if and when they satisfy the condition.
  • However, after born children will be excluded.
87
Q

Gift to a Class with a Combination of Postponements

A
  • E.g. O conveys “to A for life, remainder to B’s children who reach 21”
  • The postponement is deemed to end, and the class closes when the last condition is satisfied.
  • All members born before the class closes are included, and they may take if and when they satisfy the condition.
  • However, all after born persons are excluded.
88
Q

Waste

A

The possessor a life estate or leasehold interest may not do anything that adversely affects the future interest that follows the LE. Includes voluntary waste, involuntary/permissive waste, and ameliorative waste. Keep in mind that an owner of a fee estate can do whatever they want with property.

89
Q

Voluntary Waste

A

The voluntary commission of an act that has more than a trivial injurious effect on or change in the property.

90
Q

Consumption of Natural Resources v. Waste

A

Despite the prohibition on voluntary waste, a life tenant or lease tenant may consume natural resources:

  • For the repair and maintenance of the property; or
  • With permission of the grantor; or
  • Under the open mines doctrine (if grantor was exploiting the natural resources, it is presumed grantee can continue that exploitation)
91
Q

Involuntary/Permissive Waste

A

When the life tenant or leasehold tenant permits the premises to fall into disrepair. Also occurs when a tenant fails to pay mortgage interest payments, taxes, or the tenant’s share of special assessments.

92
Q

Ameliorative Waste

A

An act of a tenant that actually increases the value of the premises by permanently altering it.

93
Q

When Ameliorative Waste is Permitted?

A

Under CL- a life tenant could never make substantial alterations unless authorized to do so.

Under ML- a life tenant is allowed to commit ameliorative waste if:

-The market value of the remainderman’s interest is not impaired; and

  • Either:
  • It is permitted by the remainderman; or
  • A substantial and permanent change in the neighborhood has deprived the property of a reasonable current value.
94
Q

Ability to Sue For Waste (Grantors v. Remaindermen)

A
  • A holder of a reversion has standing to sue for damages for past waste or an injunction to stop future waste.
  • A vested remainderman also has standing to sue for damages for past waste or an injunction to stop future waste.
  • A contingent remainderman cannot sue for damages and can only sue for an injunction to stop the waste from occurring.
95
Q

Restraint on Alienation

A

A condition placed on ownership of real property that restricts the free conveyance of that property. Includes disabling restraints, forfeiture restraints, promising restraints, and partial restraints.

96
Q

Disabling Restraint

A

Makes clear that A cannot convey. E.g. “to A and his heirs so long as A or his heirs do not sell, mortgage, or otherwise transfer his interest in property.” Are always void.

97
Q

Forfeiture Restraint

A

When A loses his estate if he attempts to convey. Are valid for life estates and future interests, but are unenforceable for fee simple estates. E.g. “to A and his heirs, but if A or his heirs should ever convey the property to anyone, then to B and her heirs”

98
Q

Promising Restraint

A

When A promises not to convey. Are valid for life estates and future interests, but are not enforceable for fee simple estates. E.g. “A hereby promises not to coney the property during his lifetime.” If A breaches the promissory restraint it does not void the conveyance (instead A is liable for breach of K damages).

99
Q

Partial Restraints

A

May be enforced, with the court weighing the duration and number of persons excluded.

Real Property (12 decks)

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