Present Estates and Future Interests

Question 1

Indefeasible Interests

Answer 1

Not Subject to Early Termination

1. Fee Simple Absolute
2. Life Estate

Question 2

Fee Simple Absolute

Answer 2

Of potentially limitless duration.

Devisable, descendible, alienable.

Language: “To A”; “to A and his heirs.”

Question 3

Life Estate

Answer 3

Measured in lifetime terms

Language: “To A for life”

Question 4

Life Estate por autre vie

Answer 4

Life estate defined by another’s life

“Madonna gets this from O for as long as David Letterman lives”

O has a reversion

Question 5

Life Tenant’s Rights and Duties

Answer 5

• 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

Question 6

Defeasible Interest

Answer 6

Condition Attached

Allows a fee simple or life estate to terminate if something occurs

1. Fee Simple Determinable
2. Subject to Condition Subsequent
3. Subject to Executory Interest

Question 7

Fee Simple Determinable

Answer 7

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

Question 8

Subject to Condition Subsequent

Answer 8

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.”

Question 9

Difference between

Fee Simple Determinable, and

Subject to Condition Subsequent

Answer 9

Subject to Condition Subsequent is not automatically terminated upon the condition; it’s the grantor’s prerogative whether to assert the right to enter.

Question 10

Subject to an Executory Interest

Answer 10

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

Question 11

Absolute Restraints on Alienation

Answer 11

VOID!

You can’t say, “I’m giving this to A as long as A never sells/transfers again.”

Question 12

Devisable

Answer 12

Capable of passing by will

Question 13

Descendible

Answer 13

Capable of passing by intestacy (no will)

Question 14

Alienable

Answer 14

Capable of transfer inter vivos (during lifetime)

Question 15

Future Interests in Grantor

Answer 15

1. Possibility of Reverter. Accompanies fee simple determinable.
2. Right of Entry/Power of Termination. Accompanies Subject to Condition Subsequent.
3. 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.

Question 16

Future Interests in Grantees

Answer 16

1. Remainders
   a. Contingent Remainder.
   b. Vested Remainder
2. Executory Interest
   a. Shifting Executory Interest
   b. Springing Executory Interest

Question 17

Remainders

Answer 17

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:

1. Contingent Remainder
   a. Unborn Person
   b. Subject to Condition Precedent
2. Vested Remainder
   a. Indefeasibly Vested Remainder
   b. Subject to Total Divestment
   c. Subject to Open

Question 18

Contingent Remainders

Answer 18

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.

Question 19

Vested Remainder

Answer 19

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:

Question 20

a. Indefeasibly Vested Remainder:

Answer 20

The Person is certain to acquire an estate in the future. No strings attached.
E.g. To A for life; remainder to B.

Question 21

b. Subject to Total Divestment:

Answer 21

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

Question 22

Subject to Open

Answer 22

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.

Question 23

Executory Interest

Answer 23

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”)

1. Shifting Executory Interest
2. Springing Executory Interest

Question 24

Shifting Executory Interest

Answer 24

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.

Question 25

Springing Executory Interest

Answer 25

Cuts short the interest of O, the grantor.

O conveys “to A, if and when she becomes a lawyer.” A is in high school.

A → springing executory interest, because she cuts off O’s time with the land.

O → fee simple subject to A’s springing executory interest.

Question 26

The Rule Against Perpetuities

Answer 26

…provides that certain future interests are void if there’s any possibility they might vest more than 21 years after a person alive at the time of the grant has died.

Question 27

The Rule Against Perpetuities Test

Answer 27

1. Determine the Future Interest
   a. RAP applies only to contingent remainders, executory interests, and sometimes vested remainders subject to open. Does not apply to vested interests (other than subject to open.)
2. What has to happen for future interest holder to take?
3. Find measuring life. Look for person alive at the date of conveyance whose life and/or death is relevant for what has to happen for future interest holder to take
4. When will we know if the future interest holder can take? At the time of the grant’s creation, will we know within 21 years of that relevant person’s lifetime whether the future interest holder is certain or not certain to take?

Yes → Valid
No → Invalid

Question 28

Most Commonly Tested:

Executory Interest Without a Time Limit

Answer 28

Violates RAP

Hypo 4C: “To A and his heirs [fee simple] so long as the land is used for farm purposes [so a defeasible fee] and if the land ceases to be so used, to B and his heirs.”
B INTERRUPTS, so they have a shifting executory interest
The problem here is that we will NOT know if the condition is satisfied within 21 years of A and her heirs deaths, because the contract could be violated—the land could be used for non-farm purposes—thirty, fifty, even hundreds of years afterward!! And then it would have to go to B!!