Present Estates and Future Interests

Question 1

Present possessory estate

Answer 1

An interest that gives the holder the right to present possession

Three categories of present possessory freehold estates
- fee simple absolute
- Defeasible fee (there are three of these)
- Life estate

Question 2

Fee simple absolute generally

Answer 2

“to A” or “o A and his heirs”

Fee simple is presumed in the absence of express contrary intent

Question 3

Fee simple absolute distinguishing characteristics

Answer 3

Absolute ownership of indefinite or potentially indefinite duration

Freely transferable, devisable by will, and descendible through intestacy

IF given to A and her heirs, the heirs have nothing because living person has no heirs

Question 4

Defeasible fees generally

Answer 4

Fee simple estates that can be terminated upon the happening of a stated event

Three types of fee simple with a catch - condition attached - that renders the estate subject to the risk of forfeiture
- defeasible means to be capable of forfeiture

Question 5

Fee simple determinable

Answer 5

Terminates upon the happening of a stated event and automatically reverts to the grantor
- if stated event occurs, it automatically goes back to grantor

To create this, words limiting the duration of the estate must be used
- “To A . . . for so long as; while; during; until
- words like for the purpose of and to be used for are merely expressions of motive

Question 6

Fee simple determinable - distinguishing characteristics

Answer 6

Transferable, devisable by will, and descendible through intestacy
- but always subject to the attached condition so grantee would take subject to the estate’s being terminated by specified event

Question 7

Fee simple determinable and future interest

Answer 7

Reversionary future interest in the grantor from the condition that automatically reverts back to grantor is called a possibility of reverter

Whenever a grantor conveys a fee simple determinable, they automatically retain a possibility of reverter
- possibility of reverter is transferable, devisable by will and descendible by intestacy

Question 8

Fee simple subject to condition subsequent

Answer 8

Estate in which the grantor reserves the right to terminate the estate upon the happening of a stated event
- doesn’t automatically terminate, the grantor must take some action

Question 9

How to create fee simple subject to condition subsequent

Answer 9

Two main ingredients
- the use of conditional words (like upon condition that, provided that, but if, and if it happens that), and
- an explicit statement of the grantor’s right to re-enter (and retake)

Question 10

fee simple subject to condition subsequent - distinguishing characteristics

Answer 10

Fee simple subject to condition subsequent is not automatically terminated if the stated condition occurs
- grantor has the right to cut the estate short at their perforative if the condition occurs

Question 11

fee simple subject to condition subsequent - accompanying future interest in grantor

Answer 11

A right of entry must be expressly reserved - does not arise automatically

• most courts hold that rights of entry are not transferable
• most states agree that they are devisable
• all states agree they are descendible through intestacy

Question 12

Fee simple determinable or fee simple subject to condition subsequent

Answer 12

Contains both durational language and a power of termination will likely be construed as creating a fee simple subject to a condition subsequent and not a fee simple determinable

Because forfeiture policy is optional at the grantor’s election and policy disfavors forfeiture of estates

So construe in favor of fee simple subject to condition subsequent

Question 13

Fee simple subject to an executory interest

Answer 13

Terminates upon the happening of a stated event, the estate passes to a third party, rather than reverting to the grantor or giving grantor right to terminate

“To A, but if X event occurs, then to B”

Question 14

Fee simple subject to an executory interest - third party interest

Answer 14

Third party has a shifting executory interest

Accompanying future interest

Question 15

Fee simple subject to an executory interest - distinguishing characteristics

Answer 15

Just like fee simple determinable but if the condition occurs, the estate is automatically forfeited in favor of someone other than the grantor

Question 16

Words of mere desire, etc

Answer 16

Words of mere desire, hope, aspiration, expectation, or motivation are insufficient to render an estate a defeasible fee
- merely an expression of motive rather than a limit on duration

Courts disfavor restrictions on free land use and won’t find a defeasible fee unless clear, durational language is used

Question 17

Absolute restraints on alienation

Answer 17

Conditions that purport to restrict the transferee’s ability to transfer a fee simple

Absolute restrain on alienation is an absolute ban on the power to sell or transfer that is not linked to any reasonable time-limited purpose

Question 18

Conditions and limitations violating public policy

Answer 18

Conditions or limitations that violate public policy generally are struck down, and the grantee takes free of the restraint

If purpose of condition is to penalize marriage or encourage divorce, will likely be struck down
- but if purpose is to give support until mortgage or in the event of divorce, it will likely be upheld

Question 19

Life estate

Answer 19

One measured by the life or lives of one or more persons

Must be in explicit lifetime terms, never in terms of years

Usually measured by the life of the grantee but can be grantor

Grantee is known as a life tenant

Once party dies, reverts back to grantor

Question 20

Life estate pur autre vie

Answer 20

Measured by a life other than the grantee’s

Also results when the life tenant conveys their life estate to another

Question 21

Life estate - accompanying future interest

Answer 21

If the future interest is held by the grantor, it is called a reversion

If the future interest is held by a third party, it is called a remainder

Question 22

Life tenant and doctrine of waste

Answer 22

Life tenant is entitled to all ordinary uses and profits from the land but must not commit waste
- voluntary
- permissive
- ameliorative

Thus cannot do anything that injures the interests of a remainder man or holder of the reversion
- future interest holder may sue for damages or to enjoin such acts
- if spend money to perform the life tenant’s obligations, they are entitled to reimbursement

Question 23

Affirmative / voluntary waste - life tenant

Answer 23

Actual, overt conduct that causes a drop in value

Natural resources could constitute voluntary waste

Question 24

Life tenant and natural resources

Answer 24

Exploitation of natural resources by a life tenant is generally limited to situations when
- necessary for repair or maintenance of the land
- the land is suitable only for such use, or
- it is expressly or impliedly permitted by the grantor

Open mines doctrine - if mining was 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 25

Permissive waste - life tenant

Answer 25

Life tenant fails to comply with their duties like allowing land to fall into disrepair or by failing to reasonably protect the land

anonymous with neglect

Obligations

Question 26

Life tenant - repair

Answer 26

Life tenant is obligated to preserve the land and structures in a reasonable state of repair

Question 27

Life tenant - taxes

Answer 27

Life tenant is obligated to pay ordinary taxes on the land

But duty to pay takes is limited to the extent of the total income or profits generated from the land since the life tenant acquired ownership
- if no income or profit, life tenant is required to pay all ordinary taxes only to the extent of the premises’ fair rental value

Question 28

Life tenant - mortgage and special assessments

Answer 28

Life tenant is obligated to pay interest on mortgages, not the principal

And is obligated to pay special assessments for public improvements of short duration
- improvements of long duration are apportioned between the life tenant and future interest holder

Question 29

Life tenant - insurance and responsibility from third parties

Answer 29

Life tenant is not obligated to insure the premises for the benefit of the future interest holders and is not responsible for damages caused by a third-party tortfeasor

Question 30

Ameliorative waste - life tenant

Answer 30

Change that benefits the property economically

Life tenant cannot engage in acts that will enhance the property’s value, unless all future interest holders are known and consent
- honors the future interests holders’ reasonable expectations and sentimental value

Exception

Question 31

Life tenant exception to alter or demolish existing buildings

Answer 31

Notwithstanding the common law’s recognition of ameliorative waste, a life tenant today can alter or even demolish existing buildings if
- the market value of the future interests is not diminished, and either
- the remainder men do not object, OR
- a substantial and permanent change in the neighborhood conditions has deprived the property in its current form of reasonable productivity or usefulness

Question 32

Grantors’ future interests

Answer 32

Only three future interests capable of creation in the grantor
- possibility of reverter (with fee simple determinable)
- right of entry (with the fee simple subject to condition subsequent)
- reversion

Question 33

Reversion

Answer 33

Estate left in a grantor who conveys less than they own - lesser duration than what they started with

All reversionary interests are vested and not subject to rule against perpetuities

Question 34

Future interests in transferees generally

Answer 34

If a future interest is held by someone other than the grantor, has to be either
- contingent remainder, or
- vested remainder (3 types), or
- executory interest (shifting and springing)

Question 35

Remainder generally

Answer 35

Future interest in a third party that can become possessory on the natural expiration of the preceding estate
- cannot divest a prior state
- cannot follow a time gap after the preceding estate

Must be expressly created in the instrument creating the preceding possessory estate
- always accompany a preceding estate of known, fixed duration

Either vested or contingent

Question 36

Contingent remainder

Answer 36

Remainder is contingent if
- its created in unborn or unascertained persons, or
- its subject to a condition precedent

Contingent as to a person or as to an event

Transformed automatically to a indeafesibly vested remainder on the condition happening

Question 37

Unborn or unascertained persons - contingent remainder

Answer 37

A remainder created in a unborn or unascertained persons is contingent because until the remainder man is ascertained, no one is ready to take possession if the preceding estate ends

Question 38

Subject to condition precedent - contingent remainder

Answer 38

Must be satisfied before the remainder man has a right to possession
- condition appears before the language creating the remainder or for it to be woven into the grant to the remainderman

An event that is a prerequisite to the remainderman’s admission - must do in order to succeed in taking possession

Question 39

Technical rules of common law

Answer 39

Just know that its all abolished and all the below on an mc choice will be wrong answer
- destructibility of contingent remainders
- shelley’s case - rule against remainders in grantee’s heirs
- doctrine of worthier title - rule against remainders in grantor’s heirs

Question 40

Vested remainders generally

Answer 40

One created in an existing and ascertained person, and not subject to a condition precedent

Three types of vested remainders
- indefeasibly vested remainder
- vested remainder subject to total divestment / complete defeasance, and
- vested remainder subject to open

Question 41

Indefeasibly vested remainder

Answer 41

Vested remainder that is not subject to divestment or diminution

Certain to acquire an estate in the future, with no strings or conditions attached

“To a for life, remainder to B”

Question 42

Vested remainder subject to total divestment

Answer 42

Also called vested remainder subject to complete defeasance

Vested remainder that is subject to a condition subsequent

Remainderman exists and his taking is not subject to any condition precedent but his right to possession could be cut short because of a condition subsequent

Question 43

Condition subsequent vs. precedent

Answer 43

If condition precedent, then contingent remainder. But if condition subsequent, then its vested remainder subject to total divestment

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 subsequent
- for condition precedent, the condition appears before the language introducing the remainderman

If language is ambiguous, preference is for vested remainders

Question 44

Vested remainder subject to open

Answer 44

Created in a class of persons that is certain to become possessory, but is subject to diminution

Group of persons, at least one of whom is qualified to take possession but each group member’s share could get smaller because additional takers may join the class

“To A for life, then to B’s children”

Question 45

Class open - vested remainder subject to open

Answer 45

A class is open when it’s still possible for others to join

Class is closed when no others can join

To figure out whether class has closed, apply the rule of convenience

Question 46

Rule of convenience - vested remainder subject to open, when closes

Answer 46

In the absence of express contrary intent, a class closes (so no one born after that time may share in the gift) when some member of the class can call for distribution of their share of the class gift

So it closes when any member of the class can demand possession

Womb rule

Question 47

Womb rule - vested remainder subject to open

Answer 47

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

Question 48

Executory interests generally

Answer 48

Future interests in third parties that either
- divest a transferee’s preceding freehold estate (shifting interests), or
- follow a gap in possession or cut short a grantor’s estate (springing interests)

Executory interests distinguished from remainders because must take effect by cutting short some interest either in another person (shifting) or in the grantor (springing)

Question 49

Shifting executory interest

Answer 49

Always follows a defeasible fee and cuts short someone other than the grantor

“To A, but if B returns from Canada, to B” B has a shifting exactor interest

Question 50

Springing executory interest

Answer 50

Cuts short the interest of the grantor

“To A, if and when she becomes a lawyer”