Present Estates and Future Interests

Question 1

indefeasible interests

Answer 1

not subject to early termination

• fee simple absolute = “to A and his heirs” or “to A”
• life estate = “to A for life” or “to A for life then life B”

Question 2

defeasible interests

Answer 2

allows a fee simple or life estate to be terminated if a stated event occurs

1. determinable - automatically reverts to the grantor = “for so long as” “until” “while” “during”
2. subject to condition subsequent - subject to the grantors right of entry which must be exercised = “but if” “upon condition that” “provided that”
3. executory interest - divest in favor of third party = “to A for so long as…., and if not…., to B” “to A, but if…, to B”

Question 3

future possessory interests = interest retained by grantor

Answer 3

1. reversion = grantor transfers a shorter estate than she owns (ex: grantor with fee simple transfers life estate)
2. possibility of reverter = grantor transfers a determinable estate
3. right of entry (power of termination) = reserved on the grant of an estate subject to a condition subsequent

Question 4

future possessory interests = interest created by transferee

Answer 4

RAP may apply

1. executory interest - cut short the prior estate
2. remainders - possessory only on the natural termination of the prior estates (ex: death of life tenant)
3. class gifts - remainders in a class are contingent if no member of the class yet exists, vested if all possible members exist, and vested subject to open if more member might come to exist

Question 5

Rule Against Perpetuities

Answer 5

1. any future interest that is not certain to vest or fail within a life in being plus 21 years is void
2. applies to contingent remainders, executory interests, class gifts, options and rights of first refusal and powers of appointment
3. does not apply to vested interests, grantors’ reversionary interests, or gifts between charities
4. only the interest that violates the Rule is stricken
5. at common law, a woman in conclusively presumed capable of bearing children

Question 6

cases that ALWAYS violate RAP

Answer 6

1. executory interest following a defeasible fee
2. gift to an open class conditioned on members surviving to an age beyond 21 - entire class gift is stricken
3. remainder to A’s children living at his widow’s death (unborn widow problem) - contingent remainder is stricken
4. gift conditioned on an administrative contingency is stricken
5. options or rights of first refusal that extend to the holder’s heirs and assigns are stricken

Question 7

RAP departures from common law rule

Answer 7

1. “wait and see” statutes = validity of interest determined by actual future events
2. uniform statutory rap = 90 year vesting period - wait and see approach
3. cy pres approach = invalid interests reformed to match grantor’s intent