Present and Future Estates Flashcards
Present and Future Estates
Fee Simple Absolute - General
distinguished by:
1) absolute ownership and
2) freely devisable, descendible, and alienable.
e.g. “To A” or “To A and his heirs”
Present and Future Estates
Fee Tail - General
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.
Present and Future Estates
Defeasible Fee - Three Kinds
1) Fee Simple Determinable
2) Fee Simple Subject to Condition Subsequent
3) Fee Simple Subject to Executory Limitation
Present and Future Estates
Fee Simple Determinable - General
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…”
Present and Future Estates
Fee Simple Determinable - Future Interest?
Possibility of Reverter
Present and Future Estates
Fee Simple Subject to Condition Subsequent - General
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”
Present and Future Estates
Fee Simple Subject to Condition Subsequent - Future Interest?
Right of Entry (aka power of termination)
Present and Future Estates
Fee Simple Subject to Executory Limitation
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.”
Present and Future Estates
Fee Simple Subject to Executory Limitation - Future Interest?
Shifting Executory Interest (in a 3rd party, not grantor)
Present and Future Estates
2 Rules of Construction for the 3 Defeasible Fees
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.
Present and Future Estates
Life Estate
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.”
Present and Future Estates
Life Estate Pur Autre Vie
A life estate measured by a life other than the grantee’s.
e.g. “To A for the life of B”
Present and Future Estates
Waste - 3 Kinds
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.
Present and Future Estates
Life Estate - Future Interest
In Grantor = Reversion
In 3rd Party = Remainder
Present and Future Estates
Voluntary Waste and Natural Resources(Rule and 4 exceptions)
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
Present and Future Estates
Permissive Waste in Life Tenancy
Waste through negligent failure to do ordinary maintenance - LT must not commit.
The life tenant must maintain the premises in reasonably good repair.
Present and Future Estates
Permissive Waste and Taxes in Life Tenancy
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.
Present and Future Estates
Future Interests in Grantor
Possibility of Reverter
Right of Entry (aka Power of Termination)
Reversion
Present and Future Estates
Future Interests in Transferees
Vested Remainder (three types) Contingent Remainder Executory Interest (two types: shifting or executory)
Present and Future Estates
3 Types of Vested Remainder
1) Indefeasibly Vested Remainder
2) Vested Remainder Subject to Complete Defeasance (aka vested remainder sbj to total divestment)
3) Vested Remainder Subject to Open
Present and Future Estates
Possibility of Reverter
Future interest in grantor.
Accompanies ONLY the fee simple determinable
Generally transferable, devisable, and descendible.
Present and Future Estates
Right of Entry
aka Power of Termination - Future interest in grantor
Accompanies ONLY the fee simple subject to condition subsequent
Present and Future Estates
Reversion
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.
Present and Future Estates
Remainder Generally
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.
Present and Future Estates
Contingent Remainder
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)
Present and Future Estates
Condition Precedent - How to ID
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”
Present and Future Estates
The Rule of Destructibility
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).
Present and Future Estates
The Rule in Shelley’s Case
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).
Present and Future Estates
Doctrine of Worthier Title
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.
Present and Future Estates
Bruce Willis Rule of Property (Heirs)
A living person HAS NO HEIRS.
While O is alive, he has only prospective heirs.
Present and Future Estates
Vested Remainder Generally
Remainder that is both created in an ascertained person and is NOT subject to any condition precedent.
Only remainders can be vested.
Present and Future Estates
Indefeasibly Vested Remainder
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).
Present and Future Estates
Vested Remainder Subject to Complete Defeasance
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.”
Present and Future Estates
Condition Subsequent - How to ID
“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.
Present and Future Estates
Vested Remainder Subject to Open
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).
Present and Future Estates
Common Law Rule of Convenience
A class (for vested remainder subject to open) closes whenever any member can demand possession.
Present and Future Estates
Executory Interests, Generally
= 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).
Present and Future Estates
Shifting Executory Interest
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.”
Present and Future Estates
Springing Executory Interest
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.”
Present and Future Estates
Rule Against Perpetuities - Generally
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.
Present and Future Estates
Four Step Analysis for RAP
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.
Present and Future Estates
RAP does NOT apply to these future interests
1) Any future interest in the grantor
2) indefeasibly vested remainders
3) vested remainders subject to complete defeasance
Present and Future Estates
Fertile Octogenarian Rule for RAP
It’s a thing
Present and Future Estates
Two Bright Lines Rules of Common Law RAP
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.”
Present and Future Estates
RAP Exception?
Charity to Charity - a gift from one charity to another does NOT violate the RAP.
BOTH must be Charities!
Present and Future Estates
RAP Reform
Wait and See
Uniform Statutory RAP (USRAP)
Cy Pres
Reform of Offending age contingency
Present and Future Estates
Wait and See and RAP Reform
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.
Present and Future Estates
Uniform Statutory RAP (USRAP) and RAP Reform
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.
Present and Future Estates
Cy Pres and Rap Reform
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.
Present and Future Estates
Reform of Offending Age Contingency and RAP Reform
If the problem is that the future interest depends on an age contingency beyond 21 years, it will simply be changed to 21 years.
