PROPERTY Flashcards
DEFEASIBLE FEES
A fee simple estate of potentially infinite duration that can be terminated upon the occurrence of some specified event
-i.e., an estate with a remainder vested in some person, who may lose the vested interest upon the occurrence of some event
-Requires clear words of intent for the remainder to vest
—-> Words of desire, hope, or aspiration are insufficient
Three types of defeasible fees:
(1) Fee Simple Determinable – Property automatically reverts back to the grantor upon the happening of a given event
—->Accompanying future interest = possibility of reverted (retained by the grantor)
(2) Fee Simple subject to condition subsequent – grantor retains power to terminate grantee’s estate (grantor must take action to terminate; does not occur automatically)
—-> Accompanying future interest = right of reentry (retained by grantor)
(3) Fee Siple Subject to an Executory Interest – property automatically transfers to a third party (i.e., someone other than the grantor) upon the happening of a given event
—>Accomapnying future interest = shifting executory interest (retained by the third party)
FEE SIMPLE DETERMINIBLE
Property automatically terminates and reverts back to the grantor upon the happening of a given event or condition
Characteristics:
>Automatic forfeiture - Upon the occurrence of the given event or condition, the grantee automatically forfeits the estate
>Potentially Infinite - duration can be infinite so long as the event or condition does not occur
>Transferability - alienable, devisable, and descendible
—-> Absolute restraints on alienation are void
Creation - requires clear durational language
>Phrases such as “for so long as,” “while,” “during,” “until,” etc.
—>E.g., “to A for so long as he practices law”
> If A stops practicing law, the property automatically reverts back to the grantor
>Words of desire, hope, or aspiration are insufficient
Accompanying future interest = possibility of reverted
>Grantor retains the possibility of reverter
FEE SIMPLE SUBJECT TO CONDITION SUBSEQUENT
The grantor retains the power to terminate the grantee estate upon the happening of some given event or condition
Characteristics:
>Forefeiture not automatic - if the event or condition occurs, the grantee still retains title until the grantor takes some action to exercise his right of reentry
—>Distinguish from fee simple determinable
>Potentially infinite - duration can be infinite so long as the event or condition does not occur
>Transferability - alienable, devisable, and descendible, subject to the occurrence of the given event or condition
—> Absolute restraints on alienation are void
Creation - Clear durational language must carve out a right of reentry for the grantor
> E.g., “to A, but if he wins the lottery, grantor reserves the right to reenter and retake”
>Words of desire, hope, or aspiration are insufficient
Accompanying future interest = right of reentry
>Grantor retains the right of reentry
FEE SIMPLE SUBJECT TO AN EXECUTORY INTEREST
Property automatically transfers to a third party upon the happening of a given event or condition
Characteristics:
>Automatic forfeiture - upon the occurrence of the event or condition, the estate automatically transfers to a third person
—>similar to a fee simple determinable, but ownership automatically transfers to a third person, not grantor
>Potentially infinite - duration can be infinite so long as the event or condition does not occur
>Transferability - alienable, devisable, and descendible, subject to the occurrence of the event or condition
—> Absolute restraints on alienation are void
Creation - clear durational language is required
>E.g., “To A, but if A is ever arrested, then to B”
>Words of desire, hope, or aspiration are insufficient
Accompanying future interest = shifting executory interest
>The third party holds the shifting executory interest
LIFE ESTATE
An interest that lasts only for the life of the interest holder
>i.e., does not terminate at a fixed or computable time
>Typically measured by the life of the grantee
—>E.g., O grants “To A for life”; A, the life tenant has an estate in the land until A dies; then reverts to O
>Life estate pur autre vie - life estate measured by the life of another person (i.e., one other than the life tenant)
—->E.g., O grants “To A for the life of B”
Doctrine of Waste - Concerns rights/duties of life tenant (LT)
>LT cannot injure interests of remainder/reversion-holder
>Affirmative (voluntary) waste - LT cannot consume or exploit natural resources, except:
(a) Where necessary for repairs or maintenance of land
(b) When the grant expressly gives the right to exploit
(c) If the land was used for exploitation before grant
—->Opoen mines doctrine - if extraction of materials was done on land before life estates began, LT may only extract from mines already open.
>Permissive waste - LT must repair/maintain property up to the extent of income/profits derived from land or rental value of the land; failure to do so is a permissive waste.
>Ameliorative waste - acts that economically benefit land’s value; usually permitted under modern authorities.
FUTURE INTERESTS
Two categories of future interests:
(1) Future interests in the grantor
(d) Possibility of reverter
> Accompanies a fee simple determinable
(e) Right of reentry/power of termination
> Accompanies a fee simple subject to a condition subsequent
(f) Reversion
> Default future interest for grants of an estate smaller than a fee simple, such as life estates
> E.g., “to A for life” or to A for 99 years”
(2) Future interests in grantees or third person
(a) Vested remainder – Three types:
i. Indefeasibly vested remained
ii. Vested remainder subject to total divestment
iii. Vested remainder subject to open
(b) Contingent remainder
(c) Executory interest
REMAINDERS
A future interest in a third person arises immediately upon the termination of the preceding estate.
Characteristics:
>Expressly created in the same conveyance in which the preceding estate is created
>Cannot cut off or divest an interest held by a prior transferee
>Alienable, devisable, and descendible
Categories of remainders:
(1) Vested remainders - three types:
(a) Indefeasibly vested remainders
(b) Vested remainder subject to total divestment/executory limitation
(c) Vested remainder subject to open
(2) Contingent remainders - arise if:
(a) There is a condition precedent to the future interest becoming possessory
(b) The future interest vests in an unascertained taker
(c) both (a) and (b)
VESTED REMAINDER
A reminder that automatically becomes possessory upon the natural expiration of the preceding estate
>Limitations - vested remainders cannot:
(a) Be subject to any condition precedent
(b) Vest in an unknown or ascertained person
Three types of vested remainders:
(1) Indefeasibly vested remainder - becomes possessory immediately upon termination of the prior estate
(2) Vested remainder subject to total divestment - subject to some subsequent condition, such that the remainderman could be divested after taking possession
—>E.g., “to A for life, remainder to B; but if B weds, to C”
(3) Vested remainder subject to open (class gift) - remainder vested in a described class of takers, at least f one whom is capable of taking possession (i.e., by virtue of being alive)
—> Not subject to any condition precedent
—> Open vs. closed class - class remains open to allow for future class members (anyone who satisfies class description e.g., “children of A”) and closes when additional class members are impossible
—>Rule of convenience - class closes whenever any class member can call for distribution of her share; does not apply if it conflicts with the grantor’s expressed intent
CONTINGENT REMAINDERS
A remainder will be contingent if it is either (a) subject to a condition precedent, or (b) created in favor of an unascertained or unborn person.
Subject to condition precedent - remainder’s taking subject to a condition precedent, i.e., contingent as to an event
>Once the grantee satisfies the contingency, the interest automatically becomes an indefeasibly vested remainder
>E.g., “to A for life, then to B and his heirs when B gets married”
—> If B is unmarried at the time of the conveyance, A has a life estate, B has a contingent remainder (b/c marriage is a condition precedent), and the grantor has a reversion in case B is not married when A dies
Subject to unborn or unascertained persons - the remainder is contingent if created in favor of unborn or unascertained persons
>The remainder is contingent on the grantee becoming born or ascertained
>E.g., “to A for life, then to B’s heirs”
—>if B is alive upon conveyance, the remainder is contingent b/c heirs of B cannot be ascertained until B dies
RULE OF DESTRUCTIBILITY, MERGER (SHELLY’S RULE), & THE DOCTRINE OF WORTHIER TITLE
Rule of destructibility - at common law, a contingent remainder is destroyed if it remains contingent (i.e., the condition is not satisfied) when the preceding estate ends
>E.g., O grants “to A for life, then to B once he goes to law school.: A dies and B has not gone to law school
—>At common law, B gets nothing upon A’s death
>Modern rule - gives a reversion to the grantor or grantor’s heirs until the grantee satisfies the condition
Merger (Shelly’s Rule) - O grants “to A for life, then to A’s heirs” and A is alive
>At common law, the remainder merges and A has a fee simple absolute
>Modern rule - A has a life estate and A’s heirs have contingent remainders
—>O has a reversion b/c A could die without heirs
The doctrine of worthier title - O conveys “to A for life, then to O’s heirs”
>The contingent remainder in O’s heirs is void; A instead has a life estate and O has reversion
EXECUTORY INTEREST
A future interest in a third party that takes effect by cutting short some interest - two types: shifting and springing
>Includes any future interest that is not a remainder
>Look for phrases like “but if,” “then to,” “for so long as,” etc.
>Executory interest holders lack standing to sue for waste
Shifting executory interest - always follow a defeasible fee
> Cuts short someone other than the grantor
>E.g., “to A and his heirs, so log as the property is used for storage. But if used for any other purpose, to B and his heirs
—->A has a fees simple subject to an executory interest
—>B has a shifting executory interest - if A stops using the property for storage A’s interest is cut short (not the grantors)
Springing executory interest - cuts short the interest of the grantor or his heirs
>E.g., “ to A, if and when he gets married
—>A has an executory interest
—>Grantor has a fee simple subject to an executory interest; if A gets married, possession springs from grantor to A
RULE AGAISNT PERPETUITIES (RAP)
No property interest is valid unless it must vest, if at all, no later than 21 years after the death of a life in being at the time the interest was created.
>i.e., a future interest is void if there is any possibility, no matter how remote, that it will vest more than 21 years after the death of the measuring life
–> The measuring life = a life “in being” at the time the interest was created
> RAP applies to:
(a) Contingent remainders
(b) Executory interests
(c) Vested remainders subject to open
(d) Options and rights of first refusal
(e) Powers of appointment
Analyzing a conveyance subject to RAP
(1) Determine the interest being granted
(2) Apply RAP to any interest for which RAP applies
(3) If the conveyance violates RAP, strike only the violating portion
–>What remains = the new conveyance
**Many states have reformed the common law RAP, providing for an alternative vesting period greater than 21 years
> Unless instructed otherwise, apply common law RAP
SPECIAL CONSIDERATIONS REGARDING RAP
Rights of first refusal - contingent interests in property (i.e., options and rights of first refusal) violate RAP if they could be exercised outside the time allowed by RAP
Class gifts & RAP - for class gifts to satisfy RAP, class must be closed with all conditions precedent satisfied for every member
>Rule of convenience for class gifts may save a class conveyance that would otherwise violate RAP
> Examples of RAP violations:
(1) Age contingency beyond 21 - if the class conveyance is contingent on members reaching 21 it violates RAP
(2) Fertile octogenarian- presumption that women are capable of having children regardless of her age
TENANCY IN COMMON
An estate with multiple tenants in which co-tenants own an individual part and each has a right to possess the whole
Characteristics:
>Freedly transferable - each interest is freely descendible, devisable, and alienable
>Co-tenants only share the right to possession
>No survivorship rights - co-tenants rights can be transferred to heirs upon their death
>Partition - a co-tenant can force partition at any time and take sole ownership of her share in the estate while remaining parties hold their interest as tenants in common
>Modern law favors tenancy in common; it is the default concurrent estate.
JOINT TENANCY
Creation - four conditions must concurrently exist when the tenants take their interest:
(1) Time - JT must take interest at the same time
(2) Tile - JT must receive conveyance through the same instrument
(3) Interest - JT must take equal and identical interests
(4) Possession - JT must have equal possessory rights
> Express intent required - grantor must expressly intend to create a JT; otherwise, a tenancy in common is presumed
Right of survivorship - if one JT dies, surviving JTs automatically take equal possession of deceased JTs share
Transferability - alienable, but not advisable or descendible
Severance & Transfer of Interests:
>Severance - severance by any JT creates a tenancy in common with respect to severed interest
>Transfer of interest - a JT interest becomes a tenancy in common upon transfer; this does not destroy the entire joint tenancy if two or more JTs remain
>Mortgaging a JT - lien their (majority) v. title theory (minority
—>Lien theory Jurisdiction - JT can take a mortgage on her interest without severing JT (b/c no title passes to mortgagee)
—>Title theory jurisdiction - JT is severed if any JT takes a mortgage on her interest because title passes to the mortgagee
