Present Estates and Future Interests Flashcards
What are the three present possessory freehold estates?
- Fee simple absolute
- Defeasible fees (three types)
- Life estate
Devisable
Capable of passing by will
Descendible
Capable of passing by statutes of intestacy if no will
Alienable
Transferable inter vivos (during one’s lifetime)
Fee simple absolute
- “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)
Defeasible fees
- 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
Fee simple determinable
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.
Fee simple subject to condition subsequent
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.
Fee simple subject to an executory interest
- “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)
Rules of construction for defeasible fees
- 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
Life estate
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.
Life estate pur autre vie
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.
Future interests capable of creation in the grantor
-
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
Future interests held by someone other than the grantor
- Remainder
- Vested
- Contingent
- Executory interest
Remainder
- 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
Contingent remainder
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)
Vested remainder – three types
-
(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
Executory interest
(shifting vs. springing)
- 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
What is the rule against perpetuities?
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
What does the rule against perpetuities apply to?
- Contingent remainders
- Executory interests
- Vested remainders subject to open
- Options to purchase
- Rights of first refusal
Reform of RAP – Wait and See
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.
Reform of RAP – USRAP
Statute providing an alternative 90-year vesting period
Reform of RAP – Cy pres
Court can redraft “as near as possible” to the grantor’s intent to avoid RAP violation.
Rule against restraints on alienation
Complete restraints on alienation are never allowed. Repugnant to public policy.
Types of restraints on alienation
Validity?
- 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)
