Present and Future Estates

Question 1

Present and Future Estates

Fee Simple Absolute - General

Answer 1

distinguished by:

1) absolute ownership and
2) freely devisable, descendible, and alienable.

e.g. “To A” or “To A and his heirs”

Question 2

Present and Future Estates

Fee Tail - General

Answer 2

Fee Tail passed directly to grantee’s lineal blood descendants.

Future Interest = In O, Reversion; In 3rd Party, Remainder

Abolished in U.S. - attempt to create creates a fee simple absolute.

Question 3

Present and Future Estates

Defeasible Fee - Three Kinds

Answer 3

1) Fee Simple Determinable
2) Fee Simple Subject to Condition Subsequent
3) Fee Simple Subject to Executory Limitation

Question 4

Present and Future Estates

Fee Simple Determinable - General

Answer 4

1) Grantor must use clear, durational language
2) Forfeiture AUTOMATIC if stated condition violated
3) Freely devisable, descendible, and alienable, but always SUBJECT TO THE CONDITION (may never convey MORE than what you have).

Future Interest = Possibility of Reverter - freely devisable, descendible, and alienable.
(FSD-POR)

e.g. O “to A so long as…”

Question 5

Present and Future Estates

Fee Simple Determinable - Future Interest?

Answer 5

Possibility of Reverter

Question 6

Present and Future Estates

Fee Simple Subject to Condition Subsequent - General

Answer 6

Grantor must:

1) use clear, durational language AND
2) explicitly carve out the right to re-enter.
3) no automatic end of estate, but may be cut short AT GRANTOR’s OPTION (if the stated condition occurs)

Future Interest = Right of Entry (aka Power of Termination)

e.g. “To A, but if X event occurs, grantor reserves the right to re-enter and retake”

Question 7

Present and Future Estates

Fee Simple Subject to Condition Subsequent - Future Interest?

Answer 7

Right of Entry (aka power of termination)

Question 8

Present and Future Estates

Fee Simple Subject to Executory Limitation

Answer 8

1) Clear language of condition
2) If condition broken, estate automatic forfeited
3) in favor of someone OTHER THAN THE GRANTOR

Future Interest = Shifting Executory Intereste.g.

“To A, but if X event occurs, then to B.”

Question 9

Present and Future Estates

Fee Simple Subject to Executory Limitation - Future Interest?

Answer 9

Shifting Executory Interest (in a 3rd party, not grantor)

Question 10

Present and Future Estates

2 Rules of Construction for the 3 Defeasible Fees

Answer 10

1) Words of mere desire, hope, or intention are insufficient to create a defeasible fee.
2) Absolute restraints on alienation (absolute ban on power to sell or transfer that is not linked to a time-limited purpose) are VOID.
e. g. “To A so long as she never attempts to sell” = void.

Question 11

Present and Future Estates

Life Estate

Answer 11

1) must be measured in explicit lifetime terms (NEVER in terms of years)
2) holder of a life estate = life tenant.
3) Life tenant entitled to all ordinary uses and profits BUT
4) Life Tenant must NOT commit waste/hurt the future interest holders.

Future Interest = grantor holds a Reversion; 3rd Party holds a Remainder

e.g. O conveys “to A for life.”

Question 12

Present and Future Estates

Life Estate Pur Autre Vie

Answer 12

A life estate measured by a life other than the grantee’s.

e.g. “To A for the life of B”

Question 13

Present and Future Estates

Waste - 3 Kinds

Answer 13

1) Voluntary/Affirmative Waste = overt conduct (usually willful destruction) that causes a drop in value.
2) Permissive Waste/Neglect = land allowed to fall into disrepair
3) Ameliorative Waste = acts that will enhance the property’s value unless ALL future interest holders are KNOWN AND CONSENT.

Question 14

Present and Future Estates

Life Estate - Future Interest

Answer 14

In Grantor = Reversion

In 3rd Party = Remainder

Question 15

Present and Future Estates

Voluntary Waste and Natural Resources(Rule and 4 exceptions)

Answer 15

Generally: Life tenant must NOT exploit natural resources unless one of FOUR EXCEPTIONS (PREG) applies.

1) Prior Use - prior to the grant, the land was used for exploitation
2) Repairs - may consume nat’l resources for repairs and maintenance
3) Exploitation - the land is suitable for no other purpose
4) Grant - may exploit if granted that right

Question 16

Present and Future Estates

Permissive Waste in Life Tenancy

Answer 16

Waste through negligent failure to do ordinary maintenance - LT must not commit.

The life tenant must maintain the premises in reasonably good repair.

Question 17

Present and Future Estates

Permissive Waste and Taxes in Life Tenancy

Answer 17

LT must pay all ordinary taxes on the land, to the extent of income or profits from the land.

If no income/profit, LT must pay all ordinary taxes to the extent of fair rental value.

If there’s a mortgage on the land, must pay the interest, NOT the principal.

Question 18

Present and Future Estates

Future Interests in Grantor

Answer 18

Possibility of Reverter
Right of Entry (aka Power of Termination)
Reversion

Question 19

Present and Future Estates

Future Interests in Transferees

Answer 19

Vested Remainder (three types)
Contingent Remainder
Executory Interest (two types: shifting or executory)

Question 20

Present and Future Estates

3 Types of Vested Remainder

Answer 20

1) Indefeasibly Vested Remainder
2) Vested Remainder Subject to Complete Defeasance (aka vested remainder sbj to total divestment)
3) Vested Remainder Subject to Open

Question 21

Present and Future Estates

Possibility of Reverter

Answer 21

Future interest in grantor.

Accompanies ONLY the fee simple determinable

Generally transferable, devisable, and descendible.

Question 22

Present and Future Estates

Right of Entry

Answer 22

aka Power of Termination - Future interest in grantor

Accompanies ONLY the fee simple subject to condition subsequent

Question 23

Present and Future Estates

Reversion

Answer 23

Future interest that arises in a grantor who transfers an estate of lesser quantum than she started with, other than a fee simple determinable or fee simple subject to condition subsequent.

Question 24

Present and Future Estates

Remainder Generally

Answer 24

A future interest in a grantee that is capable of becoming possessory upon expiration of prior possessory estate created in same conveyance.

Remainderman is patient - WAITS for preceding estate to expire before taking possession

Always accompanies preceding estate of known, fixed duration (usually a life estate or term of years)

NEVER follows defeasible fee.

Question 25

Present and Future Estates

Contingent Remainder

Answer 25

Future interest created in an unascertained person OR subject to a condition precedent, or both.
e.g. “To A for life, then, if B does X, to B” (CP)

REMEMBER:

1) Rule of Destructibility of Contingent Remainders (common law only)
2) Rule in Shelley’s Case (common law only)
3) Doctrine of Worthier Title (still viable rule of construction)

Question 26

Present and Future Estates

Condition Precedent - How to ID

Answer 26

Condition is a CP when the condition appears BEFORE the language creating the remainder or is woven into the grant to remainderman.

e.g. “To A for life, then, if B does X, to B”

Question 27

Present and Future Estates

The Rule of Destructibility

Answer 27

At common law, a contingent remainder will be destroyed if it was still contingent at the time the preceding estate ended. Today, rule has been ABOLISHED.

e. g. “To A for life, and if B has reached age 21, to B.” A dies when B is 19.
- at common law B’s CR is destroyed, O/O’s heirs get fee simple.
- today, O/O’s heirs hold the estate subject to B’s springing executory interest (no longer a CR).

Question 28

Present and Future Estates

The Rule in Shelley’s Case

Answer 28

At common law, the rule applied only in one setting: “To A for life, then, on A’s death, to A’s heirs.” A is alive.

At common law, present and future interests merge, giving A fee simple absolute.

Rule of Law, not rule of construction - so applied even in face of contrary grantor intent.

Today, virtually abolished - when “To A for life, then to A’s heirs,” A has a life estate, A’s unknown heirs have a CR, and O has a reversion (in case A dies without heirs).

Question 29

Present and Future Estates

Doctrine of Worthier Title

Answer 29

Still viable in most states. Applies when O, who is alive, tries to create a future interest in his heirs.

e.g. O, who is alive, conveys “To A for life, then to O’s heirs.”
Without DWT, A has life estate and O’s heirs have CR.

BUT, under DWT, CR is O’s heirs is VOID. A has a life estate and O has a reversion.

Rule of construction, not a rule of law - grantor’s contrary intent controls.

Question 30

Present and Future Estates

Bruce Willis Rule of Property (Heirs)

Answer 30

A living person HAS NO HEIRS.

While O is alive, he has only prospective heirs.

Question 31

Present and Future Estates

Vested Remainder Generally

Answer 31

Remainder that is both created in an ascertained person and is NOT subject to any condition precedent.

Only remainders can be vested.

Question 32

Present and Future Estates

Indefeasibly Vested Remainder

Answer 32

Holder is certain to acquire an estate in the future, with NO STRINGS ATTACHED.

e.g. “To A for life, remainder to B.” A is alive. B is alive. (A has a life estate; B has an indefeasibly vested remainder)

At common law, this future interest may pass by will or intestacy (i.e., devisable and descendable).

Question 33

Present and Future Estates

Vested Remainder Subject to Complete Defeasance

Answer 33

aka vested remainder subject to total divestment

Holder’s right to possession could be cut short because of a condition subsequent (aka STRINGS ATTACHED).

e.g. To A for life, remainder to B, provided, however, that if B dies under age 25, to C.”

Question 34

Present and Future Estates

Condition Subsequent - How to ID

Answer 34

“Comma Rule”: When conditional language in a transfer follows language that, taken alone and set off by commas, would create a vested remainder, the condition is a condition subsequent.

e.g. “To A for life, remainder to B, provided, however, that if B dies under age 25, to C.” A is alive. B is 20.

A has Life EstateB has Vested Remainder Sbj to Complete DefeasanceC has shifting executory interest.

Compare “To A for life, and if B has reached age 25, to B” = condition PRECEDENT; B has contingent remainder.

Question 35

Present and Future Estates

Vested Remainder Subject to Open

Answer 35

Remainder is vested in a group/class of takers, at least one of whom is qualified to take, BUT each class member’s share could still be reduced because additional members could still join the class.

At common law, devisable and descendable.

e.g. “To A for life, then to B’s children.” A is alive. B has two children, C and D. (B could still have another kid).

When does class close? Common Law Rule of Convenience = when any member can demand possession. (here, when either A or B dies).

Question 36

Present and Future Estates

Common Law Rule of Convenience

Answer 36

A class (for vested remainder subject to open) closes whenever any member can demand possession.

Question 37

Present and Future Estates

Executory Interests, Generally

Answer 37

= a future interest created in a 3rd party which is not a remainder and which takes effect by cutting short either some interest in another person (shifting) or some interest in the grantor or is heirs (springing).

Question 38

Present and Future Estates

Shifting Executory Interest

Answer 38

Always follows a Defeasible Fee and cuts short someone other than the grantor.

e.g. “To A and her heirs, but if B returns from Canada within the next year, to B and his heirs.”

Question 39

Present and Future Estates

Springing Executory Interest

Answer 39

Cuts short the interest of O, the grantor.

e.g. “To A, if and when he marries.” A is unmarried.
A has a springing executory interest.
O as a fee simple subject to A’s SEI.

“To A, if and when he becomes a lawyer.”

Question 40

Present and Future Estates

Rule Against Perpetuities - Generally

Answer 40

Certain kinds of future interests are VOID if there is any possibility, however remote, that the given interest may vest more than 21 years after the death of a measuring (relevant) life in being.

Applies to 1) contingent remainders, 2) executory interests and 3) some vested remainders subject to open.

Does NOT apply to: 1) any future interest in the grantor, 2) indefeasibly vested remainders, or 3) vested remainders subject to complete defeasance.

Question 41

Present and Future Estates

Four Step Analysis for RAP

Answer 41

1) Classify the Future Interest created. Does RAP apply?
2) ID conditions precedent to the vesting of the suspect future interest.
3) Find a measuring life - someone alive at date of conveyance whose life or death relevant to the condition’s occurrence.
4) Ask: Will we know, with certainty, that the conditions will have occurred within 21 years of the death of the measuring life (so that future interest holder can take)?

IF RAP violated, court will strike offending clause.

Question 42

Present and Future Estates

RAP does NOT apply to these future interests

Answer 42

1) Any future interest in the grantor
2) indefeasibly vested remainders
3) vested remainders subject to complete defeasance

Question 43

Present and Future Estates

Fertile Octogenarian Rule for RAP

Answer 43

It’s a thing

Question 44

Present and Future Estates

Two Bright Lines Rules of Common Law RAP

Answer 44

1) A gift to an open class that is conditioned on the members surviving to an age beyond 21 violates the RAP at common law.
AND "bad as to 1, bad as to all" - must show that condition precedent to EVERY class member's taking will occur within the perpetuities period, or the conveyance is VOID as to all.

2) An executory interest with no limit on the time within which it must vest violates the RAP. (many shifting executory interests violate the RAP).
e. g. “To A and his heirs so long as the land is used as a farm, and if the land ceases to be so used, to B and his heirs.”

Question 45

Present and Future Estates

RAP Exception?

Answer 45

Charity to Charity - a gift from one charity to another does NOT violate the RAP.

BOTH must be Charities!

Question 46

Present and Future Estates

RAP Reform

Answer 46

Wait and See
Uniform Statutory RAP (USRAP)
Cy Pres
Reform of Offending age contingency

Question 47

Present and Future Estates

Wait and See and RAP Reform

Answer 47

Rather than invent a “parade of horribles” at the time of creation of grant, wait until end of measuring life to see the REALITY - if future interest holder will be able to take within 21 years, NOT void.

Question 48

Present and Future Estates

Uniform Statutory RAP (USRAP) and RAP Reform

Answer 48

Codifies common law RAP and ALSO provides an alternative 90 year vesting period - the future interest is valid if it will vest within 90 years.

Question 49

Present and Future Estates

Cy Pres and Rap Reform

Answer 49

embraced both by Wait and See and USRAP

“as near as possible”: If a given disposition violates the RAP, a court may reform it in a way that most closely matches grantor’s intent while still complying with the RAP.

Question 50

Present and Future Estates

Reform of Offending Age Contingency and RAP Reform

Answer 50

If the problem is that the future interest depends on an age contingency beyond 21 years, it will simply be changed to 21 years.