Real Property Flashcards
How may ownership in real property be transferred?
by sale, by gift, or, upon death, by devise or intestate succession
The seller or donor is called the “grantor,” and the buyer or recipient is called the “grantee.”
Main Categories of Land Interests
Present and future possessory interests in land (which are subject only to the rights of others), and nonpossessory interests in land (which are subject to specific restrictions as to the use of the land).
What is a freehold?
To be categorized as a freehold, an estate must be (i) immobile (either land or some interest derived from or affixed to land) and (ii) for an indeterminate duration (as opposed to a leasehold, which is for a limited duration).
Present Estates
- Fee Simple Absolute
- Defeasible Fees
- Fee Tail
- Life Estate
The owner of a present estate has the right to currently possess the property.
What are the three main types of defeasible fees?
(i) fee simple determinable,
(ii) fee simple subject to a condition subsequent, and
(iii) fee simple subject to an executory interest.
Fee Simple Absolute
- Absolute ownership of potentially infinite duration
- Most common form of property ownership and the broadest ownership interest recognized by law
- “Freely alienable” because it is able to be transferred inter vivos, by will, or intestacy without restriction
- Has no accompanying future interest
Although common law required words of limitation (e.g., “and heirs”), conveyances that are ambiguous (e.g., “to B”) are now considered fee simple by default.
Ex. A conveys Blackacre “to B and his heirs.” C conveys Whiteacre to “B.” Both conveyances give B a fee simple absolute estate in the property.
Defeasible Fees
- Ownership of potentially infinite duration, but may be terminated by the occurrence of an event
- Freely alienable during life and upon death
- Three defeasible fee simples are (i) fee simple determinable, (ii) fee simple subject to a condition subsequent, and (iii) fee simple subject to an executory interest.
If a statement in a conveyance of real property merely indicates a grantor’s desire, intent, or purpose for which the property is to be used rather than imposing a condition on the ownership of the property itself, the property interest is treated as a fee simple absolute, rather than a defeasible fee.
Fee simple determinable
- A present fee simple estate that is limited by specific durational language (e.g., “so long as,” “while,” “during,” “until”).
- Terminates automatically upon the happening of the stated event.
- Future Interest mathc: possibility of reverter
Possibility of reverter
- Type of future interest retained by the grantor in a fee simple determinable
- Upon the occurrence of the stated event, the estate automatically reverts to the grantor or her successors.
- The grantor retains a future interest in the estate, even though the conveyance does not mention this future interest or the grantor as its owner, unless the conveyance provides otherwise.
- A possibility of reverter is freely alienable during the grantor’s life, and upon her death devisable and, if not devised, descendible.
Ex. A conveys Blackacre “to B and his heirs until B gets married.” The estate reverts back to A if B gets married. B has a fee simple determinable in Blackacre, and A has a possibility of reverter.
Executory Interest
- A future interest in a 3rd party that generally cuts the prior estate short upon the occurrence of a specified condition.
- Follows a Fee Simple subject to an executory interest
- Upon the occurrence of the stated event, the passage of the estate is automatic; the third party is not required to take any action in order to become the owner of the estate.
- Freely alienable during life, and upon death devisable and, if not devised, descendible.
- Two types of executory interests: shifting and springing.
Ex. A conveys Blackacre “to B and his heirs until B gets married, then to C.” B has a fee simple determinable in Blackacre, while C has an executory interest. A does not have an interest in Blackacre.
When the future interest is in a third-party grantee, some jurisdictions label the present defeasible fee interest as a “fee simple subject to an executory interest” rather than a “fee simple determinable.”
Fee simple subject to a condition subsequent
- A present fee simple that is limited in duration by specific conditional language (e.g., “provided that,” “on condition that,” “but if”)
- Upon the occurrence of the condition, the grantor (or his successor interest) has the right to terminate this estate, but the termination is not automatic. The present fee simple will terminate only if the grantor affirmatively demonstrates intent to terminate (e.g., by going to court).
- The grantor must explicitly retain the right to reenter. When the grantor fails to retain this right, a court may find that the condition constitutes only a covenant for which the owner may be entitled to damages or an injunction, but that the owner does not have the right to regain possession of the property.
Ex. A conveys Blackacre “to B and his heirs, but if B gets married, then A can reenter Blackacre.” B has a FS subject to a condition subsequent in Blackacre, and A has a right of reentry. If B gets married, B will retain his current possessory estate in Blackacre until A exercises his right to terminate B’s estate. Until A retakes Blackacre, B continues to own the land.
FS determinable v. FS subject to a condition subsequent
- Durational Laungauge v. Conditional Language
- In a FS determinable, the present interest automatically terminates upon the occurance of the stated event. Future Interest is a possibility of reverter.
- In a FS subject to a condition subsequent, the occurance of the stated event brings about a right to reentry, but does not automatically terminate without some further affirmative action by the grantor (or his sucessor in interest).
- If the language in the conveyance is ambiguous, courts typically adopt a preference for the FS subject to a condition subsequent over a FS determinable.
Right of Reentry
A.k.a. “right of entry,” “right to terminate,” “power of termination”
- A future interest retained by the grantor after a fee simple subject to a condition subsequent is granted.
- Must be explicitly retained in the covenant
- In most jurisdictions, this right is freely alienable during life, and upon death devisable and, if not devised, descendible.
- The owner may waive this right, but the mere failure to assert it does not constitute a waiver.
Fee simple subject to an executory interest
also known as a fee simple subject to an executory limitation
- A present fee simple estate that is limited by specific conditional language (e.g., “provided that,” “on condition that,” “but if”), such that, upon the occurrence of the specified event or condition, title will automatically pass to a third party (i.e., someone other than the grantor or the holder of the present fee).
- Future interest is an Executory Interest.
Fee Tail
- A fee tail is a freehold estate that limits the estate to the grantee’s lineal blood descendants by specific words of limitation (e.g., “heirs of the body”).
- The fee tail estate has been eliminated in most states; it is treated as a fee simple absolute estate.
Life Estate
- A present possessory estate that is limited in duration by a life.
- The language in the document must be clear (e.g., “to A for life”), and the duration must be measured in terms of a life, not a unit of time (e.g., years).
- Future Interest: Remainder (3rd party) ot Reversion (grantor) - If no future interest is specifically stated, ownership of the property reverts to the grantor on the death of the measuring life.
- Transferable while the person by whom the life estate is measured is alive, but the interest terminates at the death of the person by whom the life estate is measured.
Ex. A conveys Blackacre “to B for B’s life, and then to C.” B has a life estate in Blackacre, which terminates upon B’s death. C has a remainder. On B’s death, ownership of Blackacre vests in C.
Ex. A conveys Blackacre “to B for life.” B has a life estate in Blackacre, which terminates upon B’s death. A has a reversion; upon B’s death, ownership of Blackacre reverts to A.
Measuring life of a life estate
- Unless the conveyance specifies otherwise, the life of the grantee (i.e., the life tenant) is the measuring life. A life estate measured by the grantee’s life is transerable inter vivos but is neither devisable nor descendible by the grantee.
- May be measured by the life of an individual other than the grantee; known as a “life estate pur autre vie.” When the measuring life survives the life tenant, the life estate may be devised by the life tenant or inherited by the life tenant’s heirs.
Ex. A conveys Blackacre to “B for life.” B has a life estate that is measured by his own life.
Ex. O conveys Blackacre to “A for the life of B, with a remainder to C.” A has life estate for the life of B. A dies before B and devises the life estate to D. D has a life estate until B dies, at which time C’s remainder becomes possessory.
Defeasible life estate
also known as a determinable life estate
- A life estate subject to a condition that may cut it short of the duration of the measuring life
- Qualified by language that specifies one or more events that might cause the life estate to terminate before the death of the individual who serves as the measuring life.
- Future Interest: Executory Interest
Example: A conveys Blackacre “to B for life, but if B remarries, then to C.” B has a defeasible life estate. C has an executory interest.
Rights of a Life Estate Grantee
- Right of Alienation: A life tenant has the right to possess the property, as well as the right to lease, sell, or mortgage his interest in the property.
- Right to Rents: Generally, rents generated from the lease of the property belong to the life tenant.
- Right to Profit: The life tenant may have the right to profit (take natural resources from the land) when the grantor expressly or impliedly gives the life tenant this right. When this right is not expressly or impliedly given, exploitation of natural resources can constitute waste.
- Right to Sale the Property: Generally, a life tenant can only sell her life estate when the future interest holders agree to the sale of the property in fee simple. However, in a majority of jurisdictions, a life tenant may seek a court order compelling the sale of the property in fee simple when future interest holders cannot be ascertained or are unwilling to sell the property. Courts consider equitable factors, such as whether the income generated by property is insufficient to meet the life tenant’s obligations with respect to the property, when deciding whether to compell a sale. The proceeds from the sale are distributed based on the present value of each interest.
Right to Profit in the context of estates
a right to take natural resources from land (e.g., oil, gas, minerals)
“Open Mines” doctrine
When resources are being taken (mined) from the land when an estate becomes possessory, there is a presumption that the grantor intended the grantee to have the right to profit from the resources (mining).
Doctrine of Waste
- A life tenant generally must deliver the property to the future interest holder in substantially the same condition that it was in when she took possession, with allowance for normal wear and tear.
- The owner of property in fee simple absolute who divides ownership of the property into a life estate and one or more future interest may alter or eliminate the applicability of this doctrine to the life tenant. In addition, the future interest holders may consent to the life tenant’s conduct.
- Two kinds of waste, permissive and voluntary.
Permissive waste
- Occurs when the life tenant “permits” the premises to deteriorate through neglect or a failure to preserve or protect the property.
- A life tenant has a duty to make reasonable repairs. This constitutes a personal obligation of the life tenant only to the extent that the life tenant receives a financial benefit from the property (i.e., the amount of income generated by the property, or, if the life tenant uses the property (e.g., farms the land, occupies the residence), its fair rental value).
- In most jurisdictions, the life tenant is not responsible for damage caused by natural forces or 3rd parties that the life tenant could not prevent. For damage to the property caused by a 3rd party, the life tenant and the future interest holder each have the right to sue the 3rd party for damages.
- In most jurisdictions, the life tenant is not under an obligation to insure the land for the benefit of the future interest holder.
Voluntary (affirmative) waste
- Occurs when the condition of the property is substantially changed due to the life tenant’s affirmative action.
- Generally, a life tenant’s affirmative action that results in the diminution in value of the property is prohibited by the doctrine of waste.