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Property > Present Estates and Future Interest > Flashcards

Present Estates and Future Interest Flashcards

1
Q

What is an heir?

A

the persons who are entitled to succeed a decedent’s estate based on the local statute of intestate succession when the decedent has died without a will.

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2
Q

What is intestate succession?

A

Succession at death to the estate of a person who dies without a legally valid will.

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3
Q

What is testate succession?

A

Succession at death to the estate of a person who dies with a legally valid will.

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4
Q

What are devisees?

A

The beneficiaries under a legally valid will.

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5
Q

What are issues / descedants?

A

The surviving children, grand-children, great-grandchildren, and so on, of a decedent.

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6
Q

What are collaterals?

A

All people related by blood to the decedent who are neither descendants nor ancestors.

Ex: brothers, sisters, cousins, nephews, nieces, aunts, uncles, etc.

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7
Q

What does escheat mean?

A

When a person dies intestate and without heirs, the person’s property escheats to the state where the property is located.

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8
Q

What is a present estate?

A

A present possessory interest that entitles its holder to the immediate possession of real property.

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9
Q

What is a future interest?

A

A present non-possessory interest that will or may become a present estate in the future.

Can be held by the transferor or a third-party transferee.

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10
Q

What are the three types of freehold estates?

A
  1. Fee simple
  2. Life estate
  3. Fee tail
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11
Q

What are the four non-freehold estates?

A
  1. Terms of years
  2. Periodic tenancy
  3. Tenancy at will
  4. Tenancy at sufferance
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12
Q

What is a fee simple?

A

The longest possible estate - the duration is potentially indefinite

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13
Q

What are the two key characteristics of a fee simple?

A
  1. Heritability - it can be inherited
  2. Alienability - it can be conveyed to someone else during the owner’s lifetime
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14
Q

How is a fee simple created?

A

It is the default estate, so unless otherwise stated, a fee simple is assumed.

“To A and his heirs.”

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15
Q

What is a fee tail?

A

An estate that transfers to the lineal descendants, and expires when all of the lineal descendants have died.

“To A and the heirs of his body.”

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16
Q

What happens when a fee tail ends?

A

Every fee tail has a reversion or remainder.

When the bloodline runs out and the fee tail ends, the land will revert to the grantor, or the grantor’s heirs, by way of reversion.

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17
Q

What is a divesting executory interest?

A

A future interest held by a party that is not currently in possession.

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18
Q

What is a life estate?

A

A property interest that last for the duration of the transferee’s life, or the life of a third-party.

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19
Q

What is pur autre vie?

A

When a life estate is measured by the lifespan of a third-party.

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20
Q

What happens when a life estate ends?

A

Every life estate is followed by a future interest:
1. A reversion in the transferor
2. A remainder in a transferee
3. Both

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21
Q

What are problems with legal life estates?

A
  1. Sale: the life tenant cannot sell the property
  2. Lease: the life tenant can’t lease the property for a period longer than their own life
  3. Mortgages: if may be difficult to obtain a mortgage on a life estate
  4. Waste: the life tenant may act in a way that undermines the interest of a future interest-holder
  5. Insurance: the life tenant has no duty to insure buildings, but if they do, only they receive the insurance payout
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22
Q

What is waste in terms of a life estate?

A

When an interest-holder acts in a way that undermines the interest of a future interest-holder.

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23
Q

What is the law of waste?

A

The life tenant is forbidden to alter the property in a way that reduces the value of the property as a whole.

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24
Q

What are the three categories of waste?

A
  1. Affirmative waste
  2. Permissive waste
  3. Ameliorative waste
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25
Q

What is affirmative waste?

A

Waste that arises from voluntary injurious acts that have more-than-trivial effects.

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26
Q

What is permissive waste?

A

Waste that arises from a tenant’s failure to act.

A failure or neglect to maintain and care for the property.

Ex: lack of property maintenance, neglecting ordinary repairs, failing to pay taxes, etc.

27
Q

What is ameliorative waste?

A

Waste that arises from substantial changes to the property by a tenant that increase, rather than decrease, the market value of the land.

28
Q

What is a fee simple absolute?

A

A fee simple that cannot be divested, nor will it end upon the occurrence of any future event.

29
Q

What is a fee simple defeasible?

A

A fee simple that will terminate, prior to its natural end point, on the occurrence of some specified future event.

30
Q

What are the three types of defeasible fees simple?

A
  1. Fee simple determinable
  2. Fee simple subject to a condition subsequent
  3. Fee simple subject to an executory limitation
31
Q

What is a fee simple determinable?

A

When a fee simple uses DURATIONAL language.

It will AUTOMATICALLY expire when a stated event occurs.

32
Q

What is a fee simple subject to a condition subsequent?

A

When a fee simple uses CONDITIONAL language.

It does NOT automatically terminate, but can be cut short (divested) at the transferor’s election when a stated event occurs.

33
Q

What is a fee simple subject to executory limitation?

A

When a grantor transfers what appears to be a fee simple subject to a condition subsequent, and in the same instrument creates a future interest in a third-party rather than himself.

An executory interest that follows a fee simple subject to a condition subsequent.

34
Q

Can a fee simple subject to an executory limitation be self-created by the grantor?

A

Yes. For example, they can convert their fee simple absolute into a fee simple subject to executory limitation.

O conveys “to B, if B reaches the age of 30.”

35
Q

What is a remainder? Which estate does it follow?

A

A future interest in a transferee or remainderman, when the right of the current holder naturally expires.

Only applied to life estates of terms of years.

O conveys “to A for life, and then to B.” - B has the remainder.

36
Q

Who can retain a remainder?

A

ONLY the transferee, never the transferor.

37
Q

What is a reversion? Which estate does it follow?

A

The interest left in a transferor when he carves out of his estate a lessor estate, and does not provide who is to take the property when the lessor estate expires.

A life estate.

Ex: O conveys “to A for life.” O has a reversion.

38
Q

What is a possibility of reverter? Which estate does it follow?

A

A future interest following a fee simple determinable.

It automatically vests when the condition fails, and the fee simple determinable ends.

39
Q

What is a right of entry? Which estate does it follow?

A

A future interest following a fee simple subject to a condition subsequent.

When an owner transfers an estate subject to a condition subsequent, and retains the power to cut short or terminate the estate.

It does NOT vest automatically when the condition fails.

40
Q

What is the difference between a remainder and an executory interest?

A

A remainder takes possession as soon as the prior estate ends, whereas an executory interest divests a prior estate.

41
Q

What are the two types of remainders?

A
  1. Vested
  2. Contingent
42
Q

What is a vested remainder?

A

A remainder to an ascertained person AND which is not subject to a condition precedent.

43
Q

What is an indefeasibly vested remainder?

A

A remainder that is certain to become possessory in the future and cannot be divested.

“To A for life, and then to B and his heirs.”

44
Q

What is a vested remainder subject to divestment?

A

A remainder that is vested but not certain to become possessory – it can be divested if an event happens.

Ex: “to A for life, remainder to C, but if C fails to survive A, then to B”
C has a vested remainder subject to divestment and B has a shifting executory interest

45
Q

What is a vested remainder subject to open?

A

When a remainder is created in a class of persons, and other members may still join the class and share in the gift.

A remainder created in a class is vested if one member if ascertained and there is no condition precedent.

46
Q

What is a contingent remainder?

A

A remainder given to an unascertained person OR that is contingent on some event occurring other than the natural termination of the preceding estate.

AKA: a remainder subject to a condition precedent.

47
Q

What is an alternative contingent remainder?

A

When the same property is subject to two contingent remainders with opposite conditions precedent such that one of them will always take effect.

48
Q

What is a technical reversion?

A

The type of reversion that follows an alternative contingent remainder.

The reversion has no legal significance.

49
Q

What is an executory interest? What estate does it follow?

A

A fee simple.

A future interest in a transferee that can take effect ONLY by divesting another interest

O to “A, but if A dies before B, then to B”.

50
Q

What is a shifting executory interest?

A

An executory interest that divests or cuts short some interest in another transferee.

51
Q

What is a springing executory interest?

A

An executory interest that divests or cuts short the transferor.

O to “C if C graduates law school”

52
Q

What are the steps to analyzing a remainder?

A
  1. Is there an ascertainment issue?
  2. Is there a condition precedent?

If NO to both: vested remainder
If YES to either: contingent remainder

53
Q

If there is a LE with two future interests and the first is a CR, then what is the second?

A

Contingent remainder

54
Q

If there is a LE with two future interests and the first is a VR, then what is the second?

A

Executory interest

55
Q

What is a condition precedent?

A

A condition that must happen BEFORE in order to vest possession.

56
Q

What is a condition subsequent?

A

A condition that must happen AFTER the transfer, to take possession away / divest the party’s possession.

57
Q

What is the Rule Against Perpetuities?

A

No interest is good unless it must vest, if at all, no later than 21 years after some life in being at the creation of the interest.

If there is any logical possibility that the FI could still be contingent after one life + 21 years, then the RAP is not satisfied.

58
Q

What future interests are considered contingent (and must abide by the RAP)?

A
  1. Contingent remainders
  2. Vested remainders subject to open
  3. Executory interests
59
Q

If a contingent FI violated the RAP, when is it considered void?

A

Ab initio - from the date it was created.

We do not “wait and see” if it will violate the RAP.

If a condition violates the RAP, it is removed from the conveyance.

60
Q

What is the “all or nothing” rule for class gifts?

A

If a gift to one member of the class might vest too remotely, the whole class gift is void.

A class gift is not vested in ANY member until the interests of ALL members have vested.

61
Q

When is a class considered closed?

A
  1. When no new members can be added (usually due to the death of an ancestor)
  2. Under the rule of convenience, when any class member is entitled to possession of their share after the prior estate ends
62
Q

What are the steps for analysis under the RAP?

A
  1. Identify all future contingent interests
  2. Ascertain the vesting event for each future interest
  3. Find the validating life or lives for each vesting event
63
Q

What is a validating life for the RAP?

A

A person who will enable you to prove that the contingent interest will either vest or forever fail to vest within their lifespan plus 21 years

Members of an open class cannot be their own validating lives.

64
Q

When does the perpetuity window start?

A

Deed: when the deed is delivered
Will / trust: when the grantor dies

Property (9 decks)

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