Present and Future Interests Flashcards
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”
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.
Defeasible Fee - Three Kinds
1) Fee Simple Determinable
2) Fee Simple Subject to Condition Subsequent
3) Fee Simple Subject to Executory Limitation
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
(FSD-POR)
e.g. O “to A so long as…”
Fee Simple Determinable - Future Interest?
Possibility of Reverter
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”
Fee Simple Subject to Condition Subsequent - Future Interest?
Right of Entry (aka power of termination)
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 Interest
e.g. “To A, but if X event occurs, then to B.”
Fee Simple Subject to Executory Limitation - Future Interest?
Shifting Executory Interest (in a 3rd party, not grantor)
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.
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.”
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”
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.
Life Estate - Future Interest
In Grantor = Reversion
In 3rd Party = Remainder
Voluntary Waste and Natural Resources
Rule and 4 exceptions
Generally: Life tenant must NOT exploit natural resources unless one of FOUR EXCEPTIONS 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) Grant - may exploit if granted that right
4) Exploitation - the land is suitable for no other purpose
Permissive Waste in Life Tenancy
permissive waste = negligent waste.
The life tenant must maintain the premises in reasonably good repair.
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.
Future Interests in Grantor
Possibility of Reverter
Right of Entry (aka Power of Termination)
Reversion
Future Interests in Transferees
Vested Remainder (three types) Contingent Remainder Executory Interest (two types: shifting or executory)
3 Types of Vested Remainder
Indefeasibly Vested Remainder
Vested Remainder Subject to Complete Defeasance (aka vested remainder sbj to total divestment)
Vested Remainder Subject to Open
Possibility of Reverter
Accompanies ONLY the fee simple determinable
Right of Entry
aka Power of Termination
Accompanies ONLY the fee simple subject to condition subsequent
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.
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 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.
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
2) Rule in Shelley’s Case
3) Doctrine of Worthier Title
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”
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).
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).
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.
Bruce Willis Rule of Property (Heirs)
A living person HAS NO HEIRS.
While O is alive, he has only prospective heirs.
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.
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).
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.”
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 Estate
B has Vested Remainder Sbj to Complete Defeasance
C has shifting executory interest.
Compare “To A for life, and if B has reached age 25, to B” = condition PRECEDENT; B has contingent remainder.
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).
Common Law Rule of Convenience
A class closes whenever any member can demand possession.
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).
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.”
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.”
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.
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)?
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
Fertile Octogenarian Rule for RAP
It’s a thing
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.”
RAP Exception?
Charity to Charity - a gift from one charity to another does NOT violate the RAP.
RAP Reform
Wait and See
Uniform Statutory RAP (USRAP)
Cy Pres
Reform of Offending age contingency
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.
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.
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.
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.
The Present Estates (4)
1) Fee Simple Absolute
2) Fee Tail
3) Defeasible Fees
4) Life Estate
