Present Estates and Future Interests Flashcards
Indefeasible Interests
Not Subject to Early Termination
- Fee Simple Absolute
- Life Estate
Fee Simple Absolute
Of potentially limitless duration.
Devisable, descendible, alienable.
Language: “To A”; “to A and his heirs.”
Life Estate
Measured in lifetime terms
Language: “To A for life”
Life Estate por autre vie
Life estate defined by another’s life
“Madonna gets this from O for as long as David Letterman lives”
O has a reversion
Life Tenant’s Rights and Duties
- All ordinary uses/profits from land
- Pay Taxes attributed to the fair rental value, not the full value
- Must pay interests on outstanding mortgages, but not the principal
- No Waste
- Ameliorative Waste: Life tenant can’t do this either unless all future interest holders are known and consent
- However, can alter/demolish if:
a. the market value of the future interests is not diminished; and either:
b. the remaindermen do not object; or
c. a substantial and permanent change in the negiborhood conditions has deprived the property in its current form of reasonable productivity or usefulness
Defeasible Interest
Condition Attached
Allows a fee simple or life estate to terminate if something occurs
- Fee Simple Determinable
- Subject to Condition Subsequent
- Subject to Executory Interest
Fee Simple Determinable
Terminates automatically upon the happening of the stated offense
If the thing happens, the forfeiture is AUTOMATIC
Devisable, descendible, alienable
Language: “So long as,” “while,” “during,” “until”
Example: Paul conveys X “to Ringo as long as the premises are used as a recording studio.”
So Paul has the possibility of reverter
Subject to Condition Subsequent
Subject to the grantor’s right of entry, which must be exercised
Look for Two Conditions:
1. Conditional Language: “But if,” “upon condition that,” “provided that”
2. Explicit Right to Reenter. Synonymous with the power of termination.
Example: Britney conveys “to Selena, but if Selena ever serves alcohol on site, Britney reserves the right to re-enter and retake.”
Difference between
Fee Simple Determinable, and
Subject to Condition Subsequent
Subject to Condition Subsequent is not automatically terminated upon the condition; it’s the grantor’s prerogative whether to assert the right to enter.
Subject to an Executory Interest
Divests in favor of a third party
Language: ““To Perry so long as he remains a lawyer, and if he leaves the legal profession, then to Tina.”
Perry has a fee simple [1] subject to Tina’s executory interest [3]
Tina has a shifting executory interest
If the condition is betrayed, the third party automatically takes
Absolute Restraints on Alienation
VOID!
You can’t say, “I’m giving this to A as long as A never sells/transfers again.”
Devisable
Capable of passing by will
Descendible
Capable of passing by intestacy (no will)
Alienable
Capable of transfer inter vivos (during lifetime)
Future Interests in Grantor
- Possibility of Reverter. Accompanies fee simple determinable.
- Right of Entry/Power of Termination. Accompanies Subject to Condition Subsequent.
- Reversion. Accompanies when grantor conveys an estate for less duration than how long they have the right to it. E.g., O, holder of a fee simple absolute, conveys “To A for life.” O has a reversion, because she carves out an interest for A that is less than what she has.
Future Interests in Grantees
-
Remainders
a. Contingent Remainder.
b. Vested Remainder -
Executory Interest
a. Shifting Executory Interest
b. Springing Executory Interest
Remainders
A future interest in a third person that can become possessory on the natural expiration of the prior estate.
It’s always a tag-along. Accompanies another conveyance.
Example: O transfers to A then B. B is a tag-along. They have to wait patiently.
Types:
- Contingent Remainder
a. Unborn Person
b. Subject to Condition Precedent - Vested Remainder
a. Indefeasibly Vested Remainder
b. Subject to Total Divestment
c. Subject to Open
Contingent Remainders
The Taker is as yet unascertainble or subject to a condition precedent. IOW, the preceding power is unknown/shaky.
a. Unborn Person.
E.g. “O conveys to A for life, then to B’s first child.” A is alive, but B. has no children yet.
E.g. “O conveys to A for life, then to B’s heirs.” A and B are alive, but B has no “heirs.” So the remainder is contingent.
b. Subject to Condition Precedent. Must be satisfied before the remainder has right to possession.
E.g. “To A for life, then, if B graduates from college, B.”
Note: The condition has to appear before the language creating the remainder.
Vested Remainder
Not subject to a condition precedent and owned by an existing, ascertained person.
a. Indefeasibly Vested Remainder:
b. Subject to Total Divestment:
c. Subject to Open:
a. Indefeasibly Vested Remainder:
The Person is certain to acquire an estate in the future. No strings attached.
E.g. To A for life; remainder to B.
b. Subject to Total Divestment:
The right to possession could be cut short due to a condition subsequent.
E.g. “To A for life, then to B and his heirs, but if B dies unmarried, then to C and his heirs.”
→ B has a vested remainder subject to total divestment by C’s executory interest
Subject to Open
Created in a class (e.g. “children”) that is certain to become possessory, but the share is subject to diminution, because the class could increase or decrease.
E.g. “To A for life, then to B’s children.” A is alive. B has two children, C and D. C and D have a vested remainder subject to open.
i. When does a Class Close? The Rule of Convenience: When any member can demand possession, the class closes. In the above example, the class closes when A dies, because C and D can demand possession then.
Executory Interest
Future interests in third parties that either divest a transferee’s preceding estate (“shifting interests”) or follow a gap in possession or cut short a grantor’s estate (“springing interests”)
- Shifting Executory Interest
- Springing Executory Interest
Shifting Executory Interest
Always follows a defeasible fee and cuts short someone other than the grantor. INTERRUPTING!!
E.g. “To A, but if B returns from Canada, to B and his heirs.”
A has a fee simple subject to B’s shifting executory interest.
