Property - LIFE ESTATES Flashcards
The Present Estates - there are four categories of Freehold estates, so named because they grew out of the English Feudal System
(1) Fee Simple Absolute
(2) Fee Tail
(3) Defeasible Fee (of which there are 3 species)
(4) The Life Estate
What does it mean for an estate to be “devisable” ?
Devisable - means it can pass by will
What does it mean for an estate to be “Descendible” ?
Descendible - means it will pass by the statutes of intestacy if its holder dies intestate (i.e. without a will)
What does it mean for an estate to be “Alienable” ?
Alienable - means it is transferable inter vivos, or during the holder’s lifetime
Fee Simple Absolute
How to create: “To A” or “To A and his heirs”
Distinguishing characteristics:
This is ABSOLUTE OWNERSHIP of potentially infinite duration. It is freely DEVISABLE, DESCENDIBLE, and ALIENABLE
Accompanying Future Interest: NONE - if give to A - A has absolute ownership, nothing left over
Fee Tail
How to create: “To A and the heirs of his body”
Distinguishing characteristics: the Fee Tail is virtually abolished in US today, including NY (virtually never tested) - Historically, fee tail would pass directly to grantees lineal blood descendants no matter what
TODAY any attempted creation of a fee tail creates instead a FEE SIMPLE ABSOLUTE
Accompanying future interest:
if goes back to grantor, O - REVERSION
If goes to 3rd party - REMAINDER
Defeasible Fees
Fee Simples with a catch
3 kinds:
(1) Fee Simple Determinable (NY** calls it “fee on limitation”)
(2) Fee Simple Subject to Condition Subsequent (NY** “Fee on Condition”)
(3) Fee Simple Subject to Executory Interest
Fee Simple Determinable (1st of the defeasible fees)
in NY, fee simple determinable is called a “fee on limitation”
How to create: “To A for so long as…” “To A During”…“To A until”
Grantor must use CLEAR DURATIONAL LANGUAGE. If the stated condition is violated, FORFEITURE IS AUTOMATIC
Distinguishing Characteristics: Devisable, Descendible, Alienable BUT ALWAYS SUBJECT TO A CONDITION
Accompanying Future Interest: Possibility of Reverter
Frank Sinatra Didn’t Prefer Orville Redenbacher (FSDPOR - fee simple determinable, possibility of reverter)
Fee Simple Subject to Condition Subsequent
in NY, fee simple subject to condition subsequent is called a “fee on condition”
How to create: “To A, but if X event occurs, grantor reserves the right to reenter and retake.”
Grantor must use (1) CLEAR DURATIONAL LANGUAGE AND (2) carve out the right to re-enter
Distinguishing characteristics:
Estate is NOT automatically terminated, but it can be cut short at the Grantor’s option if the stated condition occurs
Accompanying Future Interest: RIGHT OF REENTRY, synonymous with the “power of termination”
(in NY, the “right of reacquisition”)
Fee Simple Subject to Executory Limitation
How to create: “To A, but if X event occurs, then to B”
Distinguishing Characteristics: just like the fee simple determinable, only now, if the condition is broken, the estate is automatically forfeited in favor of someone OTHER THAN GRANTOR
Accompanying Future Interest: a SHIFTING EXECUTORY INTEREST
2 important rules to remember about defeasible fees
(1) Words of mere desire, hope, or intention are insufficient to create a defeasible fee (e.g. “for the purpose of”…“with the hope that”…“with the expectation that”.. NO GOOD) - NEED clear durational language
- if try it, you transfer a fee simple absolute
(2) Absolute restraints on alienation are VOID (aka absolute restraints on power to sell or transfer that is not linked to any reasonable time-limited purpose)
- again, results in giving a fee simple absolute
The Life Estate (the “romantic estate”)
How to create: “To A for life.”
A is known as a “life tenant”
This is an estate that must be measured in explicit lifetime terms and NEVER in terms of years
Distinguishing characteristics: The Life Tenant’s entitlements are rooted in the important doctrine of WASTE. The Life Tenant is entitled to all ordinary uses and profits from the land. Life Tenant must not commit WASTE - i.e. he must not do anything to hurt the future interest holders
Accompanying Future Interest: O has a REVERSION, or if for 3rd person, REMAINDER
Life Estate Pur Autre Vie
Life estate measured by a life other than the Grantees
e.g. - “To A for the life of B”
A has a life estate pur autre vie
Distinguishing characteristics same as Life Estate
Accompanying future interest:
O has a REVERSION, if in favor of 3rd party has a REMAINDER
WASTE (3 types)
(1) Voluntary or Affirmative Waste - overt conduct that causes a drop in value (willful destruction)
(2) Permissive Waste (i.e. neglect) - occurs when land falls into disrepair - Life tenant must simply MAINTAIN the premises in reasonably good repair
- also obligation to pay all ordinary taxes on land to extent of income or profits from the land - if there is no income or profit, life tenant is required to pay all ordinary taxes to the extent of the premises fair rental value
(3) Ameliorative Waste - Life tenant must not engage in acts that will ENHANCE THE PROPERTY’s VALUE, unless all future interests holders are known and consent
***NY DISTINCTION: in NY, by statute, the life tenant MAY make reasonable improvements unless the remainderman objects
Voluntary Waste and Natural Resources
General Rule is that the life tenant must not consume or exploit natural resources on the property unless one of four exceptions applies,
acronym for 4 exceptions is PURGE
4 exceptions where life tenant is allowed to exploit natural resources on the property
PURGE
PU - Prior Use - meaning that prior to the grant, the land was used for exploitation
R - Repairs - life tenant may consume natural resources for repairs and maintenance
G - Grant - life tenant ay exploit if granted that right
E - Exploitation, meaning the land is suitable ONLY to exploit (e.g. a rock quarry)
Future Interests
p.11
Possibility of Reverter
It accompanies a fee simple determinable
Right of Entry (aka “the power of termination”)
accompanies the fee simple subject to condition subsequent
Reversion
a reversion is the future interest that arises in a grantor who transfers an estate of lesser quantum than she started with, other than fee simple determinable or a fee simple subject to condition subsequent
Future Interests in Transferees - future interests held by someone other than grantor, it has to be either:
(1) A Vested Remainder (3 types)
(2) Contingent Remainder
(3) Executory Interest
What is a “remainder” ?
A REMAINDER is a future interest created in a grantee that is capable of becoming possessory upon the expiration of a prior possessory estate created in the same conveyance in which the remainder is created
remainderman is patient and polite (just hangs out till the other guy’s interest runs out and collects) - usually comes with a “life estate” or “term of years”
remainderman NEVER follows a DEFEASIBLE FEE
When is a remainder “vested” ?
it is VESTED if both created in an ascertained person and is NOT subject to any condition precedent
When is a remainder “contingent” ?
remainder is CONTINGENT if it is created in an unascertained person OR is subject to a condition precedent, or BOTH
NOTE: on NY, any future interest in a transferee that is subject to a condition precedent is called a “remainder subject to a condition precedent”
Condition Precedent
A condition is a condition precedent when it a appears BEFORE the language CREATING THE REMAINDERMAN or is woven into the grant to remainderman (note: first we say, ok this guy only takes after the life estate or term of years runs its courts…so he is a remainderman..then we ask what KIND of remainderman he is - contingent or vested)
e.g. “To A for life, then, if B graduates from college, to B.” A is alive, B is not in high school. Before B can take, he must graduate from college. He has not yet satisfied this condition precedent
B therefore has a CONTINGENT REMAINDER
O has a REVERSION (if B never graduates, O or O’s heirs take)
If B graduates from college during A’s lifetime B’s contingent remainder is transformed automatically into an INDEFEASIBLY VESTED REMAINDER
The Rule of Destructibility of Contingent Remainders
At common law, a contingent remainder was destroyed if it was still contingent at the time the preceding estate ended
e. g. “To A for life, and if B has reached the age of 21, to B.” Now, A has died, leaving behind B, who is still only 19 years old.
- Under common law B’s contingent remainder was destroyed and O or O’s heirs would take in fee simple absolute
TODAY: Rule of Destructibility has been abolished. Thus, if B is still under 21 when A dies, O or O’s heirs hold the estate subject to B’s SPRINGING EXECUTORY INTEREST. Once B reaches 21, B takes
The Rule of Destructibility of contingent remainders has been abolished in NY***
The Rule in Shelley’s Case
At common law, the rule would apply in one setting only:
O conveys “To A for life, then, on A’s death, to A’s heirs.” A is alive.
—Historically, the present and future interests would merge giving A a FEE SIMPLE ABSOLUTE
(why? to promote alienability - i.e. free land transfer)
Note: The Rule in Shelley’s Case is a rule of law, and not a rule of construction - i.e. it would apply EVEN in the face of contrary grantor intent
Today: rule of Shelley’s Case has been virtually abolished. Thus, today, when O convey’s “To A for life, then to A’s heirs” - A has a life estate, and A’s as of yet unknown heirs have a CONTINGENT REMAINDER. O has a REVERSION, since A could die without heirs.
Rule of Shelley’s Case has been ABOLISHED IN NEW YORK
Doctrine of Worthier Title
also known as the rule against a remainder in grantor’s heirs - Doctrine is still viable in most states today. It applies when O, who is alive, tries to create a future interest in his heirs (similar to rule in Shelley’s case except in this case, O wants the future interest in his OWN Heirs)
E.g. O, who is alive, conveys “to A for life, then to O’s heirs.”
If doctrine did NOT apply - A would have life estate, and O’s heirs would have a contingent remainder, because O is still a living person and therefore has no heirs (living ppl dont have heirs)
Doctrine of Worthier Title - makes the contingent remainder in O’s heirs VOID and thus A has life estate and O has a reversion
-doctrine promotes free transfer of land bc if O changes his mind, he and A can sell to 3rd party without a clouded title in fee simple absolute
BUT - DWT is a rule of construction, and not a rule of law - so grantor’s intent controls and can create a contingent remainder in his heirs if he clearly intends
DWT ABOLISHED IN NY*** with respect to transfers taking effect after Sept. 1, 1967
Note: in Doc of W Title, and Shelley’s case - if apply the rule, the future interest in the heirs is void and just becomes a fee simple (in shelley case) and a reversion (in doct of W title case)
3 kinds of vested remainders
(1) indefeasibly vested remainder
(2) vested remainder subject to complete defeasance
(3) vested remainder subject to open
Indefeasibly vested remainder
the holder of this remainder is certain to acquire an estate in the future, with NO STRINGS ATTACHED
e.g. “To A for life, remainder to B.” - A and B are alive.
If B predeceases A, B’s future interest passes by intestacy
Vested Remainder Subject to Complete Defeasance
(also known as the vested remainder subject to total divestment) - in NY, this remainder is called a “Remainder vested subject to complete defeasance.”
Remainderman exists. His taking is NOT subject to a condition precedent. However, his right to possession could be cut short because of a condition subsequent (aka STRINGS ATTACHED)
EG - To A for life, remainder to B, provided however, that if B dies under the age of 25, to C.
NOTE: difference between condition precedent, which creates a CONTINGENT REMAINDER, and a condition subsequent, which creates a vested remainder subject to complete defeasance
Vested Remainder Subject to Open
Here, a remainder is vested in a GROUP of takers, at least one of whom is qualified to take - but each class member’s share is subject to partial diminution because additional takers can still join
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 vested remainders subject to open
To know whether a class is still open or if it has closed apply the "COMMON LAW RULE OF CONVENIENCE" - the class closes whenever any member can demand possession -so in our e.g. if A dies or if B dies, the class is closed
exception: The WOMB RULE -A child of B in the womb at A’s death will share with C & D
if C or D predecease A, at common law their shares go to their devisees and heirs (take this up in WIlls)
What is an EXECUTORY INTEREST? (as distinguished from a REMAINDER)
An EXECUTORY INTEREST is a future interest created in a transferee (third party), which is not a remainder and which takes effect by either CUTTING SHORT some interest in another person (“shifting”) or in the grantor or his heirs (“springing”)
SHIFTING EXECUTORY INTEREST
A Shifting Executory Interest ALWAYS FOLLOWS A DEFEASIBLE FEE and cuts short someone other than grantor
e. g. “To A and her heirs, but if B returns from Canada sometime next year, to B and his heirs.”
- B has a SHIFTING EXECUTORY INTEREST
- A has a fee simple subject to B’s shifting executor interest
note**: not waiting for a life estate or term of years to run its course like a remainderman - cutting A’s interest short via the condition if it happens
SPRINGING EXECUTORY INTEREST
A Springing Executory Interest again follows a defeasible fee but the interest it is cutting short is that of the grantor or his heirs
e. g. O conveys “To A, if and when he marries.” A is unmarried.
- A has a springing executor interest
- O has a fee simple subject to A’s springing executor interest
e. g. 2 - O conveys: “To A, if and when he becomes a lawyer.” A is in high school.
- A has a springing executory interest
- O has a fee simple subject to A’s springing executory interest
**NY has abolished the distinction between executory interests and contingent remainders. Instead contingent remainders AND executory interests are called “remainders subject to condition precedent”
(NOTE: this simply means in NY there is just stuff that is VESTED, and everything else is remainder subject to condition precedent)
Rule Against Perpetuities (RAP)
Certain kinds of future interests are void if there is any possibility, however remote, that the given interest may vest more than 21 years after the death of a measuring life.
(measuring life = “some life in being at the creation of the interest”)
RAP potentially applies ONLY to
(1) contingent remainders
(2) executory interests
(3) certain vested remainders subject to open
RAP does NOT apply to:
(1) any future interest in O, the grantor, or to
(2) indefeasibly vested remainders subject to complete defeasance
2 - e.g.s - one valid under RAP, one violates RAP
e.g.1) - To A for life, then to A’s children. - VALID
e.g.2) - “To A for life, then to the first of her children to reach the age of 30.” A is 70, Her only child, B, is 29 years old — INVALID
parade of horribles, A could have a child tomorrow, and B could die that same day, then A dies the next day. So A has only one child who is a baby…could take that baby 30 years after A’s death to qualify for this interest - that is more than 21 years after death of A (the measuring life) - so INVALID CONYEYANCE
Fertile Octogenarian Rule - presumes a person is fertile no matter what age
NY** makes this rule fertile till 55 yrs old
How to modify conveyances that violate RAP
just rid yourself of the invalid part
but remember, if you invalidate part of it and the rest is left with a reversion to O or Os heirs, it is good even if it could vest 21 years after death of measuring life bc RAP doesn’t apply to O and O’s heirs.
so
“To A for life, then to the first of her children to reach the age of 30.” A is 70, Her only child, B, is 29 years old.
Turns into … “To A for life” - A has life estate, and O has a reversion
Two Bright Line Rules for RAP
(1) A gift to an open class that is conditioned on the members surviving to an age beyond 21 violates the common law RAP (“Bad as to one, Bad as to all”)
(2) Many shifting executory interests violate the RAP. An executory interest with no limit on the time within which it must vest VIOLATES THE RAP
- makes sense
e.g. -“To A and his heirs so long as the land is used for farm purposes, and if the land ceases to be so used, to B and his heirs.” - violates RAP
revise. ..To A and his heirs so long as the land is used for farm purposes”
- A has a fee simple determinable, O and his heirs have a possibility of reverter (bc RAP doesn’t apply to the grantor, O, and his heirs)
note if instead said "To A and his heirs, but if the land ceases to be use for farm purposes, to B and his heirs." -revise (bc of grammar) "To A and his heirs" - A gets a fee simple absolute
Charity-to-Charity Exception
EXCEPTION TO RAP: A gift from one charity to another will not violate the RAP
e. g. “To the American Red Cross, so long as the premises are used for Red Cross purposes, and if they cease to be used, then to the YMCA.”
- would normally violate bc YMCA has a shifting executory interest, but OK here bc charity-to-charity exception
Reform of RAP:
“Wait and See” and “Second Look” Doctrine
“Wait and See” or “Second Look” doctrine: - Under majority reform effort, the validity of any suspect future interest is determined on the basis of the facts as they now exist, AT THE END OF THE MEASURING LIFE
- this eliminates the “what if” or “anything is possible” line of inquiry
- e.g. “ To A for life, and on her death to such of her children as attain the age of 35.” under WAIT AND SEE, cts wait till 21 years after A’s death and see if IN FACT, a child of A reached the age of 35, if none do, the remainder is void.
Uniform Statutory Rule Against Perpetuities (USRAP): Codifies the common law RAP and, in addition, provides for an alternative 90 year vesting period - ie takes a “wait and see” approach to see if the interest actually vested within 90 years.
USRAP also includes:
(1) “Cy Pres” doctrine - (“as near as possible”) - if a given disposition violates the rule, ct may reform it in a way that most closely matches grantor’s intent, while complying with the RAP
(2) reduction of an offensive age contingency to 21.
NY Perpetuities Reform Statute
NY applies the common law RAP, and has rejected the “wait and see” and “cy pres” except for charitable trusts and powers of appointment, to be taken up in trusts
also 55 yr limit on fertile octogenarian rule
-all offensive age contingencies reduce to 21
NY “suspension” rule – applies the common law RAP to restrictions on power to sell or transfer - thus an interest is void if it suspends the power to sell or transfer for a period longer than lives in being plus 21 years.
–aka for conveyance to be valid under SUSPENSION RULE, there must be persons in being who can join together in a conveyance of the full fee simple title within lives in being plus 21 years.
