Present Estates and Future Interests

Question 1

What are the three present possessory freehold estates?

Answer 1

• Fee simple absolute
• Defeasible fees (three types)
• Life estate

Question 2

Devisable

Answer 2

Capable of passing by will

Question 3

Descendible

Answer 3

Capable of passing by statutes of intestacy if no will

Question 4

Alienable

Answer 4

Transferable inter vivos (during one’s lifetime)

Question 5

Fee simple absolute

Answer 5

• “To A,” or “To A and his heirs”
• Potentially limitless in duration
• Devisable, descendible, alienable
• No accompanying future interest (a living person has no heirs)

Question 6

Defeasible fees

Answer 6

• Fee simples with a condition attached
• Defeasance = forfeiture; can be terminated upon the happening of a stated event
• Three types: (1) fee simple determinable; (2) fee simple subject to condition subsequent; (3) fee simple subject to an executory interest

Question 7

Fee simple determinable

Answer 7

A type of defeasible fee. Terminates automatically on happening of a stated event (reverts to grantor).

Created by clear durational language – so long as, while, during, until.

Devisable, descendible, alienable → BUT, always subject to the condition.

Future interest – possibility of reverter. Reversionary future interest in the grantor.

Question 8

Fee simple subject to condition subsequent

Answer 8

Grantor reserves right to terminate the estate upon happening of stated event. Does not happen automatically.

Use of conditional language* + *explicit reservation of right to re-enter.

Future interest – right of entry (power of termination). Right of entry is not transferable inter vivos, but it is devisable and descendible.

Question 9

Fee simple subject to an executory interest

Answer 9

• “To A, but if X event occurs, then to B”
• Third party*, not the grantor, *takes estate if condition betrayed
• Automatically forfeited
• Future interest – shifting executory interest (third party holds)

Question 10

Rules of construction for defeasible fees

Answer 10

• Words of mere desire, hope, or intention don’t create defeasible fees – requires clear durational language
• Absolute restraints on alienation are void
  
  • Must be linked to some reasonable, time-limited purpose
• Conditions or limitations that violate public policy are generally struck down
  
  • Ex: to penalize marriage or encourage divorce

Question 11

Life estate

Answer 11

Measured in lifetime terms (never in years). “To A for life” – A is a life tenant.

Future interest – grantor retains reversion (reverts back at end of A’s life). If held by third party, called a remainder.

Question 12

Life estate pur autre vie

Answer 12

Measured by a life other than the grantee’s. Ex: “To A for the life of B.”

Also results when a life tenant conveys their estate to another.

Question 13

Future interests capable of creation in the grantor

Answer 13

• Possibility of reverter
  
  • Fee simple determinable
• Right of entry / power of termination
  
  • Fee simple subject to condition subsequent
• Reversion
  
  • When grantor conveys estate of lesser duration (other than above) – anything less than infinity

Question 14

Future interests held by someone other than the grantor

Answer 14

• Remainder
  
  • Vested
  • Contingent
• Executory interest

Question 15

Remainder

Answer 15

• Future interest in a third person that can become possessory on the natural expiration of the preceding estate
  
  • Cannot follow a time gap after preceding estate
• Must be expressly created
• Sociable – never travels alone → always accompanies preceding estate of known, fixed duration
• Patient and polite – never cuts short or divests prior taker

Two kinds: contingent and vested

Question 16

Contingent remainder

Answer 16

Contingent as to a person or event. Contingent if:

(1) Created in unborn or unascertained persons; or
(2) Subject to a condition precedent (must be satisfied first)

Question 17

Vested remainder – three types

Answer 17

• (1) Indefeasibly vested
  
  • Not subject to divestment or diminution
  • Certain to acquire estate in the future – no conditions
• (2) Vested remainder subject to total divestment (or complete defeasance)
  
  • Subject to condition subsequent – right to possession could be cut short
• (3) Vested remainder subject to open
  
  • Created in a class of persons (ex: children) certain to become possessory, but subject to diminution
  • Class may be open (others can join) or closed (no others can join)
    
    • Rule of convenience: Class closes when any existing member or members could demand possession (distribution of shares)
    • Womb rule – persons in gestation at time the class closes are included in the class

Question 18

Executory interest

(shifting vs. springing)

Answer 18

• Benefits from cutting short the prior taker
• Shifting – always follows defeasible fee, cuts short someone other than grantor
• Springing – follows a gap in possession, cuts short a grantor’s estate

Question 19

What is the rule against perpetuities?

Answer 19

Certain future interests are void if there is any possibility they might vest more than 21 years after a person alive at the time of the grant has died.

Measuring life – a person whose lifetime is relevant to the given triggering condition’s occurrence

Question 20

What does the rule against perpetuities apply to?

Answer 20

• Contingent remainders
• Executory interests
• Vested remainders subject to open
• Options to purchase
• Rights of first refusal

Question 21

Reform of RAP – Wait and See

Answer 21

Validity determined on the basis of the facts as they actually come to be. Majority rule.

Rather than prospectively invalidating, we wait for the measuring life to end.

Question 22

Reform of RAP – USRAP

Answer 22

Statute providing an alternative 90-year vesting period

Question 23

Reform of RAP – Cy pres

Answer 23

Court can redraft “as near as possible” to the grantor’s intent to avoid RAP violation.

Question 24

Rule against restraints on alienation

Answer 24

Complete restraints on alienation are never allowed. Repugnant to public policy.

Question 25

Types of restraints on alienation

Validity?

Answer 25

• Disabling – absolute ban on transfer (void)
• Forfeiture – attempted transfer forfeits interest (valid if reasonable/limited time period)
• Promissory – attempted transfer breaches covenant (valid if reasonable/limited time period)
• Discriminatory – based on race, religion, ethnicity (void)