Property Flashcards
10 Present Possessory Estates (Freehold Estates)
[present and future interests]
- Fee Simple Absolute
- Fee Tail
- Fee Simple Determinable
- Fee Simple Subject to a Condition Subsequent
- Fee Simple Subject to an Executory Limitation
- Life Estate
- Life Estate Determinable
- Life Estate Subject to a Condition Subsequent
- Life Estate Subject to an Executory Limitation
- Lease (Non-Freehold)
Future interests created in Fee Simple Absolute
[present and future interests]
Future interests in grantor: none
Future interests in grantee: none
Future interests created in Fee Tail
[present and future interests]
Future interests in grantor: none
Future interests in grantee: none
Future interests created in Fee Simple Determinable
[present and future interests]
Future interests in grantor: Possibility of Reverter
Future interests in grantee: none
Future interests created in Fee Simple Subject to a Condition Subsequent
[present and future interests]
Future interests in grantor: Right of Entry (i.e., Power of Termination)
Future interests in grantee: none
Future interests created in Fee Simple Subject to an Executory Limitation
[present and future interests]
Future interests in grantor: none
Future interests in grantee: Executory Interest
Future interests created in Life Estate
[present and future interests]
Future interests in grantor: Reversion
Future interests in grantee: Remainder
Future interests created in Life Estate Determinable
[present and future interests]
Future interests in grantor: Possibility of Reverter/Reversion
Future interests in grantee: none
Future interests created in Life Estate Subject to a condition Subsequent
[present and future interests]
Future interests in grantor: Right of Entry/Reversion
Future interests in grantee: none
Future interests created in Life Estate Subject to an Executory Limitation
[present and future interests]
Future interests in grantor: none
Future interests in grantee: Executory Interest/Remainder
Future interests created in Lease (non-freehold)
[present and future interests]
Future interests in grantor: Reversion
Future interests in grantee: Remainder
Alienability
[present and future interests]
All present possessory interests and future interests are transferrable inter vivos and at death (testate and intestate), except for rights of entry, which are not transferable inter vivos in a majority of jurisdictions. In addition, all present and future interests are subject to the claims of creditors.
Rules of Construction
[present and future interests]
- No new (or hybrid) estates will be recognized.
- A deed conveys the grantor’s entire estate, unless expressly limited.
- A grantor may not convey a greater estate than he or she possesses.
- If a conveyance is ambiguous and may reasonably be construed as more than one estate, there is a presumption in favor of the larger possessory estate and a presumption against finding a future interest
- Read and analyze the interests in a conveyance in sequence—from left to right
If a conveyance could be construed as both a Fee Simple Absolute or Defeasible Fee Simple, what is the preferred estate?
[present and future interests]
Fee Simple Absolute
If a conveyance could be construed as both a Fee Simple Absolute or Life Estate, what is the preferred estate?
[present and future interests]
Fee Simple Absolute
If a conveyance could be construed as both a Fee Simple Determinable or Fee Simple Subject to a Condition Subsequent, what is the preferred estate?
[present and future interests]
Fee Simple Subject to a Condition Subsequent
If a conveyance could be construed as both a Contingent Remainder or Vested Remainder Subject to Total Divestment, what is the preferred estate?
[present and future interests]
Vested Remainder Subject to Total Divestment
Present Interest Flowchart
[present and future interests]
- Does the present interest—by its terms—last indefinitely? If so, it’s a FSA.
- Does it potentially last forever but may be cut short by an event? If so, it’s a defeasible fee simple (FSD, FSSCS, or FSSEL).
- Does the present interest end at someone’s death? If so, it’s a life estate.
- Is the present interest measured by a calendar period (e.g., one year)? If so, it’s a lease.
Required language to create Fee Simple Determinable
[present and future interests]
“Durational” language, such as:
- So long as (or as long as)
- During
- While
- Unless
- Until
Required language to create Fee Simple Subject to a Condition Subsequent
[present and future interests]
“Conditional” language, such as - But if - On the condition that - Provided that - If it happens that - If, however (or however, if) PLUS express re-entry/termination language
Required language to create Fee Simple Subject to an Executory Limitation
[present and future interests]
Durational language OR conditional language (any language sufficient to create Fee Simple Determinable or Fee Simple Subject to a Condition Subsequent)
Future Interests in a Grantee—Flowchart
[present and future interests]
- Does the future interest follow immediately after the natural termination of a life estate or a lease (i.e., a tenancy for years)? If so, it is a remainder.
- If not, is it an executory interest (i.e., a future interest that cuts short a fee simple subject to an executory limitation, life estate subject to an executory limitation, or vested remainder subject to total divestment).
- If the defeasing event causes the property to pass from the original grantor to a grantee, it is a springing executory interest.
- If the defeasing event causes the property to pass from one grantee to another grantee, it is a shifting executory interest.
Duties/Rights of a Life Tenant
[present and future interests]
LT is entitled to all ordinary uses and profits from land (e.g. LT may live on the property and continue to operate a business or farm on the property)
But LT must not commit WASTE. Remaindermen (and holders of reversions) may sue for waste; holders of executory interests may not. Vested remaindermen may obtain equitable relief and/or damages; contingent remaindermen may only obtain equitable relief. There are three types of waste.
- Voluntary Waste
- Permissive Waste
- Ameliorative Waste
Voluntary waste
[present and future interests]
“Voluntary Waste” is affirmative or overt conduct that causes damage to the property
- Examples: breaking a window playing baseball; hitting the garage wall with a vehicle
—
It is also considered voluntary waste for a life tenant to consume or exploit natural resources (oil, gas, coal, timber, etc.) on the property, except in the following situations:
1. Prior Use Doctrine (subject to the Open Mines Rule)
- If the prior use exploited natural resources (e.g., operated two coal mines), the LT may continue to operate these two mines but may not open any new mines
2. Resources needed to repair property (e.g., timber for a log home)
3. Specific grant in deed or will for LT to exploit resources
4. Exploitation of resources is only suitable use of property (e.g., life estate in rock quarry)
Permissive waste
[present and future interests]
In addition, LT is required to pay ordinary expenses (or otherwise will be liable for waste), including:
1. Mortgage interest payments
2. Annual real estate taxes
3. Home Owner Association (HOA) dues
—
But NOT: mortgage principal or property insurance (the remainderman must pay these)
—
BUT: LT’s obligation to make repairs and to pay taxes and mortgage interest is limited to amount of income received from the land or, if none, the land’s fair rental value
Ameliorative waste
[present and future interests]
“Ameliorative Waste” is a change to the property that increases its value
Rule: An action may NOT be brought for ameliorative waste if the remainderman does not timely object or the neighborhood has changed so much that the prior use deprived the property of reasonable value.
Remainder Flowchart
[present and future interests]
- Is the remainderman known and are all conditions for taking satisfied? If so, it is an indefeasibly vested remainder.
- Is the remainder given to an open class in which at least one class member has satisfied all conditions of taking? If so, it is a vested remainder subject to open.
- Is the remainderman known but the taking subject to a condition subsequent (i.e., one that follows the grant to the remainderman and is separated from the grant by punctuation)? If so, it is a vested remainder subject to total divestment.
- Is the (a) remainder subject to a condition precedent that must be satisfied prior to vesting; (b) taker not in existence; or (c) exact taker unknown? If so, it is a contingent remainder.
The Rule Against Perpetuities (“RAP”)
[rule against perpetuities]
Common Law: An interest is void if there is any possibility, however remote, that the interest may vest more than 21 years (plus a gestation period) after some life in being at the “creation” of the interest.
- For wills, an interest is created at the testator’s death.
- On the UBE, a grantor transfers property by will if she “devises” the property. - For deeds, an interest is created at the time the deed is delivered.
- On the UBE, a grantor transfers property by deed (inter vivos) if she “conveys” the property. - For revocable trusts, an interest is created at the settlor’s death, unless—before death—the settlor amended the trust making it irrevocable.
- For irrevocable trusts, an interest is created on the date the trust is created.
Common law RAP flowchart
[rule against perpetuities]
B. Common Law (MBE) RAP Flowchart
- QUESTION ONE: Is this a RAP question? There will be one or two RAP questions on the MBE. In most of the MBE RAP questions, the question will state: “The common law Rule Against Perpetuities is unmodified in the jurisdiction” (or similar language). But beware: this statement is often provided when there are no RAP issues in the question.
- QUESTION TWO: Are any of the interests involved in the question subject to RAP? Only five interests are subject to RAP:
- Contingent Remainders
- Vested Remainders Subject to Open
- Executory Interests
- Option Contracts (and Rights of First Refusal) to purchase real property (except options to extent the lease or purchase the property exercisable by a tenant during the leasehold)
- Powers of Appointment (unlikely to be tested on MBE) - QUESTION THREE: If there is an interest subject to RAP, what condition must be met for that interest to vest?
- Executory Interests vest in possessor when the event that terminates the prior estate occurs.
- Contingent Remainders vest when they become remainders or vest in possession, whichever is earlier.
- Vested Remainders Subject to Open vest when all of the class members have indefeasibly vested interests.
- Option Contracts vest when the option to purchase becomes exercisable. - QUESTION FOUR: Whose life is most relevant to the condition? If you are unable to determine the measuring life, assume all persons alive at the time of conveyance will die within one year of the conveyance. Tip: members of open classes (e.g., children with living parents) and widows and heirs of a living person cannot be measuring lives.
- QUESTION FIVE: Is the interest sure to vest or not vest within 21 years (plus a gestation period) of the death of the measuring life?
Uniform Statutory RAP Flowchart
[rule against perpetuities]
- STEP ONE: If an interest is valid under common law RAP, it is automatically valid under USRAP.
- STEP TWO: If an interest is invalid ab initio under common law RAP, USRAP adopts a wait-and-see approach to such interest and it will become invalid only if it actually fails to vest within 90 years of its date of creation.
- Under USRAP, courts also have cy pres power (i.e., if a conveyance violates RAP, the court may reform the conveyance to comply with RAP)
- Most jurisdictions have adopted USRAP (or similar rules).
- Option contracts and rights of first refusal are exempt from USRAP.
Concurrent Estates: general rule
[concurrent estates]
Only one present possessory interest may exist at a time, but multiple people may share that interest.
3 types of concurrent ownership
[concurrent estates]
The law recognizes three types of concurrent ownership:
- Tenants in Common
- Joint Tenants with Right of Survivorship (JTROS)
- Tenants by the Entirety (Minority of States)
Tenancy in common
[concurrent estates]
A tenancy in common is created by any language that does not create a joint tenancy with right of survivorship; if language is ambiguous, the law favors a tenancy in common (unless the conveyance is to a married couple in a tenancy by the entirety state).
If two or more people inherit property from a decedent who dies intestate they own as Tenants in Common.
O transfers Blackacre “to my sisters, A and B.” A and B own Blackacre as Tenants in Common.
Tenancy in common - unity of possession
[concurrent estates]
A tenancy in common is the most favored concurrent estate at law. Each co-tenant owns an individual part with the right to possess 100% of the property (i.e., unity of possession), regardless of that tenant’s proportional share or contribution to the purchase price.
Tenancy in common - equal shares of ownership interest
[concurrent estates]
Equal shares are not necessary for a tenancy in common. For example, one tenant may hold a 75% interest and the other a 25% interest. However, unless the grant clearly specifies unequal shares, the law presumes equal shares.
Tenancy in common - transferability of ownership interest
[concurrent estates]
Each tenant may transfer his or her interest during life and at death because there are no survivorship rights.
Each tenant’s creditors may attach his or her portion and force a partition and sale.
Joint Tenants with Right of Survivorship
[concurrent estates]
Creation (and continuance) of a JTROS requires the four unities (“TTIP”):
- Unity of Time (interests were acquired at the same time)
- Unity of Title (interests were acquired by the same title (e.g., deed or will)
- Unity of Interest (each tenant holds the same proportional interest—e.g., 50/50 or 1/3-1/3-1/3)
- Unity of Possession (each tenant has the right to possess 100% of the property)
Conversion of ownership interest into a JTROS at common law
[concurrent estates]
At common law, if an owner of land wished to convert individually-owned land into a JTROS with another person, the owner was required to use a strawperson so as to establish the four unities; by statute in most states, an owner may convert individually-owned land into a JTROS with a direct conveyance (i.e., no strawperson required).
