Present Estates and Future Interests

Question 1

Estates in land are possessory interests in land. These interests may be possessory now (____ estates), or they may become possessory in the future (____ interests).

Answer 1

present; future

Question 2

Three categories of present possessory freehold estates:

Answer 2

• Fee simple absolute
• Defeasible fee (of which there are three types)
• Life estate

Question 3

Fee Simple Absolute - How to create

Answer 3

“To A” or “To A and his heirs.”

• Today, a fee simple is presumed in the absence of express contrary intent (that is, the common law words “and his heirs” are not necessary)

Question 4

Fee Simple Absolute - Distinguishing Characteristics

Answer 4

absolute ownership of indefinite or potentially infinite duration. It’s freely transferable, devisable by will, and descendible through intestacy.

Question 5

What interest do A’s heirs have in fee simple absolute conveyed “to A and his heirs” if A is still alive?

Answer 5

Nothing! A living person has no heirs

Question 6

Defeasible fees are fee simple estates (that is, they are of uncertain or potentially infinite duration) that ____

Answer 6

can be terminated upon the happening of a stated event.

Question 7

Type of defeasible fees

Answer 7

1. Fee Simple Determinable (and Possibility of Reverter)
2. Fee Simple Subject to Condition Subsequent (and Right of Entry)
3. Fee Simple Subject to an Executory Interest

Question 8

A fee simple determinable ____

Answer 8

terminates upon the happening of a stated event and automatically reverts to the grantor.

Question 9

A fee simple determinable - how created

Answer 9

A fee simple determinable is created by durational language, such as “to A for so long as…,” “to A while…,” “to A during…,” or “to A until….”

Question 9

Statements of ____ do not create a determinable fee

Answer 9

mere desire, hope, aspiration, expectation, or motivation
–> Words limiting the duration of the estate must be used

Question 10

The fee simple determinable, like all of the defeasible fees, is transferable, devisable by will, and descendible through intestacy, but ____

Answer 10

always subject to the attached condition.

Question 11

For fee simple determinable if the
stated condition is violated, forfeiture is ____

Answer 11

automatic.

Question 12

Accompanying Future Interest in Grantor for fee simple determinable is:

Answer 12

Possibility of Reverter

Question 13

re alienability = a possibility of reverter is ____

Answer 13

transferable, devisable by will, and descendible by intestacy.

Question 14

A fee simple subject to a condition subsequent is an estate in which the grantor ____

Answer 14

reserves the right to terminate the estate upon the happening of a stated event, meaning the estate doesn’t automatically terminate—the grantor must take some action.

Question 15

A fee simple subject to a condition subsequent - how created

Answer 15

(1) the use of conditional words, such as “upon condition that,” “provided that,” “but if,” and “if it happens that,” and
(2) an explicit statement of the grantor’s right to re-enter.

Question 16

The fee simple subject to condition subsequent is ____ terminated if the stated condition occurs.

Answer 16

not automatically

Question 17

Accompanying Future Interest in Grantor for fee simple subject to condition subsequent

Answer 17

Right of Entry

Question 18

Most courts hold that rights of entry are
____ inter vivos, but most states agree they are ____, and all states agree they are ____

Answer 18

not transferable; devisable by will; descendible through intestacy.

Question 19

A conveyance that contains both durational language and a power of termination will likely be construed as creating a ____, because ____

Answer 19

fee simple subject to a condition subsequent

the forfeiture is optional at the grantor’s election rather than automatic = Policy disfavors forfeiture of estates.

Question 20

Fee Simple Subject to an Executory Interest

Answer 20

If a fee simple estate terminates upon the happening of a stated event (because it is determinable or subject to a condition subsequent) and then passes to a third party rather than reverting to the grantor or giving the grantor a right to terminate, the third party has an executory interest.

Question 21

Fee Simple Subject to an Executory Interest - how created

Answer 21

Look for a third party who will take upon forfeiture of a fee simple estate

Question 22

Fee Simple Subject to an Executory Interest - Distinguishing Characteristics

Answer 22

This estate is just like the fee simple determinable, only now, if the condition occurs, the estate is automatically forfeited in favor of someone other than the grantor.

Question 23

Fee Simple Subject to an Executory Interest - Accompanying Future Interest

Answer 23

shifting executory interest

Question 24

Courts disfavor restrictions on free land use and won’t find a defeasible fee unless ___

Answer 24

clear, durational language is used.

Question 25

An absolute restraint on alienation is an _____ that is not linked to any reasonable time-limited purpose.

Answer 25

absolute ban on the power to sell or transfer

Question 26

Absolute restraints on alienation of a fee simple are ____

Answer 26

void.

Question 27

Conditions or limitations that violate public policy generally are ____ and the grantee takes ____

Answer 27

struck down; free of the restraint.

Question 28

If the purpose of the condition is to ____, it likely will be struck down. However, if the purpose is to give support until ____, it likely will be upheld.

Answer 28

penalize marriage or encourage divorce; marriage or in the event of divorce

Question 29

The fee tail is an estate where inheritability is limited to ____.
It’s created by the words “to A and the heirs of his body.” Most jurisdictions
have abolished the fee tail, and an attempt to create one results in ___

Answer 29

lineal heirs; a fee simple.

Question 30

A life estate is one measured by ____

Answer 30

the life or lives of one or more persons.

Question 31

Life estate - how created

Answer 31

The life estate is an estate that must be measured in explicit lifetime terms, and never in terms of years.

Question 32

Life Estate Pur Autre Vie (Life of Another)

Answer 32

A life estate “pur autre vie” is measured by a life other than the grantee’s

Question 33

A life estate pur autre vie also results when the life tenant ____

Answer 33

conveys their life estate to another

Question 34

Life tenant - Accompanying Future Interest (Grantor vs. third party)

Answer 34

• If the future interest is held by O = called a reversion
• If held by a third party = called a remainder.

Question 35

The life tenant is entitled to all ___ uses and profits from the land.

Answer 35

ordinary

Question 36

The life tenant must not commit

Answer 36

waste (all three types)

Question 37

A life tenant thus can’t do anything that injures the interests of a remainderman or holder of the reversion. A future interest holder may ____, and if they spend money to perform the life tenant’s obligations, they are entitled to reimbursement.

Answer 37

sue for damages or to enjoin such acts

Question 38

A life tenant depleting a property’s natural resources could constitute ____

Answer 38

voluntary waste.

Question 39

Exploitation of natural resources (for example, minerals) by a life tenant is generally limited to situations when:

Answer 39

(1) necessary for repair or maintenance
of the land;
(2) the land is suitable only for such use; or
(3) it’s expressly or impliedly permitted by the grantor

Question 40

For life estates under the open mines doctrine, if mining was ____

Answer 40

done on the land prior to the life estate, the life tenant can continue mining—but they’re limited to the mines already open.

Question 41

A life tenant is obligated to:

Answer 41

• Preserve the land and structures in a reasonable state of repair
• Pay ordinary taxes on the land.
• Pay interest on mortgages (not principal) AND
• Pay special assessments for public improvements of short duration (improvements of long duration are apportioned between the life tenant and future interest holder)

Question 42

A life tenant is not obligated to: to and is ____

Answer 42

• insure the premises for the benefit of remaindermen
• Pay for damages caused by a third-party tortfeasor

Question 43

For a life tenant the obligation to oay “ordinary” taxes is limited to the extent of the ____ generated from the land since the life tenant acquired ownership

Answer 43

total income or profits

Question 44

If there’s no income or profit, the life tenant is required to pay all ordinary taxes only to the extent of the premises’ ____.

Answer 44

fair rental value

-> when no income or profits are coming in from the land, the life tenant’s tax liability for the parcel will be computed not on the basis of Blackacre’s fair market value but instead on the basis of its mere fair rental value (a considerably lesser sum).

Question 45

The life tenant can’t engage in acts that will enhance the property’s value, unless ____

Answer 45

all future interest holders are known and consent

Question 46

Notwithstanding the common law’s recognition of ameliorative waste, note that today a life tenant may alter or even demolish existing buildings if:

Answer 46

1. The market value of the future interests is not diminished; and either
   –> A. The remaindermen do not object; or
   –> B. A substantial and permanent change in the neighborhood conditions (for example, change from residential to 90% industrial) has deprived the property in its current form of reasonable productivity or usefulness.

Question 47

Unlike life estate holders Leasehold tenants ____ even if the neighborhood has changed and the market value of the premises was increased.

Answer 47

remain liable for ameliorative waste

Question 48

If the land is practically worthless in its present state, the life tenant may seek a ____, the proceeds of which are put in trust with income paid to the life tenant.

Answer 48

partition sale

Question 49

If a life tenant who receives the estate by will or intestacy renounces their interest, the future interest following the life estate is generally ____

Answer 49

accelerated so that it becomes immediately possessory.

Question 50

Despite the fact that possession is in the future, a future interest is a ____, legally protected right in
property.

Answer 50

present

Question 51

If a future interest is held by a transferor, it must be:

Answer 51

(1) a possibility of reverter; (2) a right of entry; or (3) a reversion

Question 52

If a future interest is held by someone other than the transferor,
it must be:

Answer 52

(1) a contingent remainder; (2) a vested remainder (of which
there are three types, discussed below); or (3) an executory interest (of which there are two types)

Question 53

A ____ is the estate left in a grantor who conveys less than they own

Answer 53

reversion

Question 54

The reversion arises by ____; it does not have to be expressly reserved.

Answer 54

operation of law

Question 55

re alienability: A reversion is ____

Answer 55

transferable, devisable by will, and inheritable.

Question 56

Types of vested remainders

Answer 56

(1) the indefeasibly vested remainder,
(2) the vested remainder subject to complete defeasance (also known as the vested remainder subject to total divestment), and
(3) the vested remainder subject to open

Question 57

Types of executory interest

Answer 57

(1) the shifting executory interest, and
(2) the springing executory interest

Question 58

A remainder is a future interest in a ____ that can become possessory on ____

Answer 58

third person; the natural expiration of the preceding estate.

Question 59

A remainder must be ____ in the instrument creating the preceding possessory estate.

Answer 59

expressly created

Question 60

Remainders are either ____

Answer 60

vested or contingent.

Question 61

A third party doesn’t have a remainder where there is

Answer 61

a gap in time between the shorter estate and the third parties interest

Ex: O conveys “to A for life, then to B and his heirs one day after A’s death.” B does not have a remainder (because there is a gap).

Question 62

Eemainders always accompany a _____

Answer 62

preceding estate of known, fixed duration

Question 63

A remainder ____ cuts short or divests the prior taker.

Answer 63

never

Question 64

Because a remainder cannot “cut short” a preceding estate, it can never follow a _____ estate, which is of potentially infinite
duration.

Answer 64

fee simple

Question 65

A remainder is contingent if:

Answer 65

(1) it’s created in unborn or unascertained persons, or
(2) it’s subject to a condition precedent, or both.

-> In other words, a remainder may be contingent as to person or as to event

Question 66

A remainder created in unborn or unascertained persons is contingent because ____

Answer 66

until the remainderman is ascertained, no one is ready to take possession if the preceding estate ends.

Question 67

A condition is precedent if it must be ____

Answer 67

satisfied before the remainderman has a right to possession.

Question 68

For condition subsequents look for the condition to appear ____ the language creating the remainder or for it to be ____ to theremainderman.

Answer 68

before; woven into the grant

Question 69

If there is an alternative future interest if a condition subsequent is not met it is called

Answer 69

alternative contingent remainders

Question 70

Technical Rules of the Common Law that have been abolished in most jurisdictions inlclude:

Answer 70

• Destructibility of Contingent Remainders: a contingent remainder was destroyed if it
  failed to vest before or upon the termination of the preceding
  freehold estate.
• Rule in Shelley’s Case (Rule Against Remainders in Grantee’s Heirs): if the same instrument created a life estate in A and gave the remainder only to A’s heirs, the remainder was not recognized, and A took the life estate and the remainder.
• Doctrine of Worthier Title (Rule Against Remainders in
  Grantor’s Heirs): Under the Doctrine of Worthier Title (“DOWT”), a remainder in the grantor’s heirs is invalid and becomes a reversion in the grantor.

Question 71

A vested remainder is one created in an ____ person, and not subject to a ____.

Answer 71

existing and ascertained; condition precedent

Question 72

Types of vested remainders

Answer 72

(1) the indefeasibly vested remainder;
(2) the vested remainder subject to total divestment (also known as
the vested remainder subject to complete defeasance); and
(3) the vested remainder subject to open.

Question 73

An indefeasibly vested remainder is a vested remainder that is ____

Answer 73

not subject to divestment or diminution.

-> diminution. The holder of this remainder is certain to acquire an estate in the future, with no strings or conditions attached.

Question 74

Vested Remainder Subject to Total Divestment/Condition Subsequent the remainderman is not subject to any condition precedent but his right to possession ____

Answer 74

could be cut short because of a condition subsequent.

Question 75

It’s important to know the difference between a condition
precedent, which creates a ____, and a condition subsequent, which creates a ____

Answer 75

contingent remainder; vested remainder subject to total divestment

Question 76

To tell the difference between a condition subsequent/precedent apply the ____

Answer 76

Comma Rule

Question 77

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 _____, and you have a _____.

Answer 77

subsequent; vested remainder subject to complete defeasance

Question 78

Where language is ambiguous, the preference is for vested remainders subject to divestment rather than
_____

Answer 78

contingent remainders or executory interests.

Question 79

c. Vested Remainder Subject to Open

Answer 79

This is a vested remainder created in a class of persons (for example, “children”) that is certain to become possessory, but is subject to diminution

Question 80

A class gift of a remainder may be ____ (where at least one group member exists) or ___ (where all group members are unascertained).

Answer 80

vested subject to open; contingent

Question 81

A “class” is a group of persons having a ___

Answer 81

common characteristic

Question 82

A class is open when it’s _____ in. A class is closed when ____

Answer 82

still possible for others to join; no others can join in.

Question 83

To figure out whether a given class has closed, we apply the ____

Answer 83

rule of convenience

Question 84

Under the rule of convenience, in the absence of express contrary intent, a class closes (that is, no one born after that time may share in the gift) when ____

Answer 84

some member of the class can call for distribution of their share of the class gift.

Question 85

The womb rule

Answer 85

persons in gestation at the time the class closes are included in the class

Question 86

T’s will devises the residue of his estate “to those of A’s children who attain age 21.” If any of A’s children is 21 at T’s death, the class closes at that time. Otherwise it closes when ____

Answer 86

one of A’s children reaches age 21.

Question 87

Survival of a class member to the time of closing is usually ____ to share in a future gift—unless survival was ____

Answer 87

unnecessary; made an express condition

Question 88

Executory interests are future interests in ____

Answer 88

third parties

Question 89

Executory interests are future interests in third parties that either
divest a transferee’s preceding freehold estate (“_____”),
or follow a gap in possession or cut short a grantor’s estate
(“____”).

Answer 89

shifting interests; springing interests

Question 90

You can distinguish executory interests by remembering they must take effect by cutting short some interest– either in another person (____) or in the grantor or the grantor’s heirs (____)

Answer 90

shifting; springing

Question 91

A shifting executory interest always follows a ____ and cuts short someone other than the grantor.

Answer 91

defeasible fee

Question 92

A springing executory interest cuts short the interest of ____

Answer 92

the grantor.

Question 93

Re alienability: Vested remainders are _____

Answer 93

fully transferable, descendible by intestacy, and devisable by will.

Question 94

At common law, contingent remainders and executory interests were not transferable _____, but most courts today hold that they are freely transferable.

Answer 94

inter vivos

Question 95

Contingent remainders and executory interests are descendible and devisable, provided ____

Answer 95

survival is not a condition to the interest’s taking.

Question 96

Any future interest that is transferable is subject to involuntary transfer; that is, it is reachable by ____

Answer 96

creditors.

Question 97

The Rule Against Perpetuities (“RAP”) provides that certain kinds of future interests are void if ____

Answer 97

there is any possibility, however remote, that the interest might vest more than 21 years after a person alive at the time of the grant has died.

Question 98

The Rule Against Perpetuities applies only to ____

Answer 98

contingent remainders, executory interests, vested remainders subject to open, options to purchase, and rights of first refusal.

Question 99

The grantor’s interests (reversions, possibilities of reverter, rights of entry) are safe from the _____

Answer 99

Rule Against Perpetuities

Question 100

The time the interest is created and the perpetuities period begins to run depends on ____

Answer 100

the instrument and the interest created.

Question 101

When the RAP time starts running:

For interests granted by will, it runs from the date of ____

Dor deeds, it is ____.

The period runs on an irrevocable trust from ____; it runs on a revocable trust from the date _____.

Answer 101

the testator’s death

the date of delivery

the date it is created; it becomes irrevocable

Question 102

An interest vests for purposes of the Rule when it becomes:

Answer 102

(1) possessory, or
(2) an indefeasibly vested remainder or a vested remainder subject to total divestment.

Question 103

In analyzing Rule Against Perpetuities problems, keep in mind that the key is when the interest could ____—not when it’s likely to vest or even when it did

Answer 103

possibly vest

-> If there’s any possibility that it could vest beyond the period, it’s void.

Question 104

For the RAP you must examine the grant as of the time of ____ and be sure that if the interest vests it will be within the period of the Rule

Answer 104

its creation

Question 105

Unless other measuring lives are specified, one connected with the ____

Answer 105

vesting of the interest is used.

Question 106

Except for vested remainders subject to open, the Rule Against
Perpetuities does not apply to ____

Answer 106

vested interests.

Question 107

Other exceptions to the RAP (not future interests in the grantor/vested)

Answer 107

• charity-to-charity exception
• options to purchase held by a current tenant.

Question 108

Violation of the RAP destroys only ____

Answer 108

the offending interest.

Question 109

FOUR STEP TECHNIQUE FOR ASSESSING POTENTIAL RULE AGAINST PERPETUITIES PROBLEMS

Answer 109

• Step 1 – Determine the Interests
• Step 2 – How Does the Future Interest Holder Take?
• Step 3 – Find the Measuring Life
• Step 4 – When Will We Know If the Future Interest Holder Can Take?

Question 110

Bright Line Rule: An executory interest that follows a defeasible fee, with ____ violates the Rule Against Perpetuities, and the executory interest is stricken.

Answer 110

no limit on the time within which it must vest

Question 111

When a void interest is stricken, the interests are classified as if ____

Answer 111

the void interest were never there.

Question 112

A gift to an open class conditioned on members surviving beyond ____ violates the Rule.

Answer 112

age 21

-> Some states have enacted perpetuities reform legislation that
reduces such age contingencies to 21.

Question 113

If the interest of any class member may vest too remotely, the ____ fails.

Answer 113

whole class gift

–> For the class gift to vest, the class must be closed and all conditions precedent must be satisfied for every member.

Question 114

Fertile Octogenarian for RAP

Answer 114

A woman is conclusively presumed to be capable of bearing children, regardless of her age or medical condition.

-> Note, some states alter by statute or medical testimony regarding a woman’s childbearing
capacity is admissible in these states.

Question 115

Unborn Widow or Widower

Answer 115

Because a person’s widow (or widower) is not determined until their death, it may turn out to be someone who was not in being at the time of the disposition.

-> Note, Where necessary to sustain a gift, a few state statutes raise a presumption that any reference to a person’s spouse, widow, or widower is to a person in being at the time of the transfer.

Question 116

A gift conditioned on an administrative contingency (for example, admission of will to probate) ____ the RAP.

Answer 116

violates

Question 117

Options or rights of first refusal that are not personal to the holder (that is, which are extended to the holder’s heirs and assigns) will ___ the RAP because ____

Answer 117

violate; they might be exercised later than the end of the perpetuities period.

Question 118

Rule Against Perpetuities does not apply to options to purchase held by the ____

Answer 118

current lessee

–> but it does apply to a former
tenant and to any party to whom the current tenant might transfer the option separately from the lease

Question 119

Under modern authorities, the ___ is applied to options and rights of first refusal rather than the Rule
Against Perpetuities. An option or right of first refusal will thus be
valid if _____

Answer 119

Rule Against Restraints on Alienation; it does not impose an unreasonable restraint on alienation.

Question 120

A significant minority of courts will also construe an option or right of
first refusal as ____ to avoid invalidating the interest.

Answer 120

lasting only for a reasonable time

Question 121

Each gift to a ____ may be treated as a separate gift under the RAP

Answer 121

subclass

Question 122

A gift of a ____ to each member of a class is not treated as a class gift under the Rule.

Answer 122

fixed amount

Question 123

A trust is a fiduciary relationship with respect to specific property (res) wherein the ____ holds legal title to the property subject to _____

Answer 123

trustee; enforceable equitable rights in a beneficiary.

Question 124

The creator of a trust is
the settlor, who must _____

Answer 124

own the property at the time of trust creation and must have had the intent to create the trust.

Question 125

The Rule Against Perpetuities applies to the equitable future interests of the ____ just as it does to “legal” future interests.

Answer 125

beneficiaries in a private trust

Question 126

A trust can be created by _____

Answer 126

will (testamentary trust), inter vivos transfer of the trust res, or inter vivos declaration that the settlor is holding property in trust.

Question 127

All trusts of ____ must be in writing

Answer 127

real property

Question 128

A charitable trust must have a ____ purpose

Answer 128

charitable

Question 129

The rules governing charitable trusts differ from those applicable to private trusts in three important ways:

Answer 129

(1) a charitable trust must have indefinite beneficiaries;
(2) it may be perpetual (that is, the Rule Against Perpetuities does not apply); and
(3) the cy pres doctrine, which allows a court to select an alternative charity when the purpose of the settlor becomes impracticable or impossible, applies.

Question 130

REFORM OF THE RAP

Answer 130

1. “Wait and See” or “Second Look” Doctrine
2. The Uniform Statutory Rule Against Perpetuities (USRAP)
3. Cy Pres Doctrine (“As Near As Possible”)

Question 131

“Wait and See” or “Second Look” Doctrine

Answer 131

Under this majority reform effort, the validity of any suspect future interest is determined on the basis of the facts as they exist at the conclusion of our measuring life.

Question 132

The Uniform Statutory Rule Against Perpetuities (USRAP)

Answer 132

This codifies the common law RAP and, in addition, provides for an alternative 90-year vesting period.

Question 133

Cy Pres Doctrine (“As Near As Possible”)

Answer 133

Some reform measures allow a court to reform invalid interests. If a
given disposition violates the rule, a court may reform it in a way that most closely matches the grantor’s intent, while still complying with the RAP.

Question 134

Generally, any restriction on the transferability of a legal (as opposed to equitable) interest is ____

Answer 134

void.

Question 135

There are three types of restraints on alienation:

Answer 135

(1) disabling restraints, under which attempted transfers are ineffective; (2) forfeiture restraints, under which an attempted transfer forfeits the interest; and
(3) promissory restraints, under which an attempted transfer breaches a covenant.

Question 136

A disabling restraint on any legal interest is ___

Answer 136

void.

Question 137

Forfeiture and promissory restraints may be ___, depending on the nature of the restraint and the interest involved.

Answer 137

valid

Question 138

All absolute restraints on fee simple
estates are ____.

Answer 138

void
–> thus, any such restriction falls away and the grantee may freely transfer the property.

Question 139

Forfeiture or promissory restraints on fee simple estates for a ____ may be upheld

Answer 139

limited time and reasonable purpose

Question 140

Disabling restraints

Answer 140

attempted transfers are ineffective

Question 141

Forfeiture restraints

Answer 141

an attempted transfer forfeits the interest

Question 142

Promissory restraints

Answer 142

an attempted transfer breaches a covenant.

Question 143

Judicial enforcement of restraints prohibiting the transfer or use of property to or by a person of a specified ____ is discriminatory state action forbidden by the Fourteenth Amendment.

Answer 143

racial, religious, or ethnic group

Question 144

____ restraints on life estates are valid, but ____ restraints are void.

Answer 144

Forfeiture and promissory; disabling

Question 145

The Rule Against Restraints on Alienation applies only to ___ interests. Restraints on the alienation of ____ interests are valid.

Answer 145

legal equitable

Question 146

Restraints on vested future interests generally are valid to the extent that restraints on ____

Answer 146

present interests of the same type are valid.

Question 147

The following are valid restraints on alienation:

Answer 147

• Reasonable restrictions in commercial transactions
• Reasonable options and rights of first refusal
• Restrictions on assignment and sublease of leaseholds (for example, requiring landlord’s consent)