Real Property: Freehold Estates

Question 1

Devisable

Answer 1

The estate can pass by will

Question 2

Descendible

Answer 2

The estate will pass by the statutes of intestacy if its holder dies intestate (without a will)

Question 3

Alienable

Answer 3

The estate is transferable inter vivos, or during the holder’s lifetime

Question 4

Fee Simple Absolute

Answer 4

How to create: “To A” or “To A and his heirs”

Characteristics:

• Absolute ownership of potentially infinite duration.
• Devisable
• Descendible
• Alienable

Accompanying future interests: No, i.e. while A is alive, he has only prospective heirs who are powerless

Question 5

Fee Tail

Answer 5

How to create: “To A and the heirs of his body”

Characteristics: virtually abolished but historically fee tail would pass directly to grantee’s lineal blood descendants no matter what (today use fee simple absolute)

Accompanying interests: Yes

• Reversion in the grantor
• Remainder in third party

Question 6

Defeasible Fees: Fee Simple Determinable

Answer 6

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

Characteristics:

• Devisable, subject to condition
• Defeasible, subject to condition
• Alienable, subject to condition

Accompanying interests: Yes, possibility of reverter in the grantor

FSDPOR - Frank Sinatra Didn’t Prefer Orville Redenbacher - Fee Simple Determinable Possibility of Reverter

Question 7

Defeasible Fees: Fee Simple Subject to Condition Subsequent

Answer 7

How to create: “To A, but if X event occurs, grantor reserves to right to re-enter and retake”

Characteristics: Estate does not automatically end, but it can be cut short at the grantor’s option if the stated condition occurs

Accompanying future interest: Grantor has a right of re-entry synonymous with the power of termination

Question 8

Defeasible Fees: Fee Simple Subject to Executory Limitation

Answer 8

How to create: “To A, but if X event occurs, then to B”

Characteristics: If the condition is broken, the estate is automatically forfeited in favor of someone other than grantor

Accompanying future interest: Shifting executory interest

(A has fee simple subject to B’s shifting executory interest and B has a shifting executory interest)

Question 9

Defeasible Fees: Rules of Construction

Answer 9

(1) Words of mere desire, hope, or intention are insufficient to create a defeasible fee
(2) Absolute restraints on alienation are void, i.e. absolute ban on the power to sell or transfer that is not linked to a reasonable time-limited purpose

Question 10

Life Estate: How to create

Answer 10

This is an estate that must be measured in explicit lifetime terms, and never in terms of years

(a) “O conveys to A for life” – A has a life estate, O has a reversion (reverts back to O or O’s heirs)
(b) “O conveys to A for the life of B” – Life estate pur autre vie, i.e. life estate measured by a life other than the grantee’s; A has a life estate pur autre vie, O (or O’s heirs) has a reversion at the end of B’s life

Question 11

Life Estate: Distinguishing Characteristics

Answer 11

Two general rules:

(1) Life tenant is entitled to all ordinary uses and profits from the land

(2) Life tenant must not commit waste (i.e. must not harm future interest holders)
(a) Voluntary waste
(b) Permissive waste, or neglect
(c) Ameliorative wast

Question 12

Life Estate: Distinguishing Characteristics - Types of Wast

Answer 12

(1) Voluntary waste: overt conduct that causes a drop in value
(a) Must not consume or exploit natural resources on the property unless one of four exceptions applies (PURGE)
(i) PU: prior use, meaning prior to grant land was used for exploitation – unless otherwise agreed or mine that has not yet been opened
(ii) R: repairs, can use natural resources for repairs and maintenance
(iii) G: grant, LT may exploit if granted that right
(iv) E: exploitation, land is suitable only for exploitation (E.g. quarry)

(2) Permissive waste or neglect: when land falls into disrepair; life tenant must maintain premises and pay ordinary taxes
(3) Ameliorative waste: must not engage in acts that will enhance value, unless all future interest holders are known and consent

Question 13

Life Estate: Future Interest

Answer 13

If held by O, the grantor, it is called a reversion.

If held by a third party, it is a remainder.

Question 14

Present Interests

Answer 14

Four categories:

1) Fee simple absolute
(2) Fee tail
(3) Defeasible fees (3
(4) Life estate

Question 15

Future Interests

Answer 15

Six Categories, classified based on whether they are retained by the grantor or a transferee

Future Interests Capable of Creation in the Grantor

(1) Possibility of Reverter
(2) Right of Entry
(3) Reversion

Future Interests in Transferees

(4) Vested remainder
(5) Contingent remainder
(6) Executory interest

Question 16

Possibility of Reverter

Answer 16

Created in the grantor

Accompanies fee simple determinable

Question 17

Right of Entry

Answer 17

A.k.a. Power of termination

Created in the grantor

Accompanies the fee simple subject to condition subsequent

Question 18

Reversion

Answer 18

Arises in a grantor who transfers an estate of lesser quantum than she started with, other than a fee simple determinable or a feel simple subject to condition subsequent

E.g., “To A for life,” “To A for 99 years,” or “To A for life, then to B for 99 years”

Question 19

Remainder

Answer 19

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

I.e., a remainder always accompanies a preceding estate of fixed duration, which is usually a life estate or a term of years (“To A for life, then to B”); it never follows a defeasible fee

Question 20

Vested Remainder

Answer 20

A remainder is vested if it is both created in (a) an ascertained person and (b) is not subject to any condition precedent

Question 21

Contingent Remainder

Answer 21

A remainder is contingent is it is created in (a) as yet unborn or unascertained persons or (b) is subject to condition precedent (i.e. comes before the language creating the remainder), or (c) both.

(a) “To A for life, then to B’s first child” (A is alive, B doesn’t yet have children); “To A for life, then to B’s heirs” (A is alive, B is alive, but living people don’t have heirs); “To A for life, then to those children of B who survive A” (A is alive, don’t know which children will survive A)
(b) “To A for life, then, if B graduates high school, to B”; “To A for life, and if B has reached 21, to B”

Question 22

Contingent Remainders and the Rule of Destructibility

Answer 22

At common law, a contingent remainder was destroyed if it was still contingent at the time the preceding estate ended

Today, the destructibility rule has been abolished

Question 23

The Rule in Shelley’s Case

Answer 23

At common law, the rule would apply only if “O conveys to A for life, then, on A’s death, to A’s heirs, and A is alive” – present and future interests would merge giving A fee simple absolute.

Today, this rule has been abolished, and A just has a life estate

Question 24

The Doctrine of Worthier Title

Answer 24

If O, who is alive, tries to create a future interest in his heirs (“To A for life, then to O’s heirs), it will be void (because a living person has no heirs) and instead A will have a life estate and O has a reversion.

Question 25

Types of Vested Remainders

Answer 25

(1) Indefeasibly vested remainder
(2) Vested remainder subject to complete defeasance
(3) Vested remainder subject to open

Question 26

Indefeasibly Vested Remainder

Answer 26

The holder of this remainder is certain to acquire an estate in the future, with no strings attached.

If the person with the vested remainder (B) dies before the person with the life estate (A), the future interest passes by will or intestacy.

e.g. “To A for life, remainder to B.”

Question 27

Vested Remainder Subject to Complete Defeasance

Answer 27

The right to possession could be cut short because a condition subsequent (i.e. something that happens after the person takes possession).

e.g., “To A for life, remainder to B, provided, however, that if B dies under the Age of 25, to C.” – A has life estate, B has vested remainder subject to complete defeasance, C has shifting executory interest.

Question 28

Vested Remainder Subject to Open

Answer 28

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 members can still join.

Class is closed when no others can join / any member can demand possession (so, in example below when either A or B dies)

E.g., “To A for life, then to B’s children;” A is alive, B has two children – the children have vested remainders subject to open

Question 29

Executory Interest

Answer 29

A future interest in a transferee (third party), which is not a remainder

This can happen either by (a) “shifting”: cutting short some interest in another person or (b) “springing”: in the grantor or his heirs

Question 30

Shifting Executory Interest

Answer 30

(1) Always follows a defeasible fee
(2) Cuts short someone other than the grantor

E.g., “To A and her heirs, but if B returns from Canada sometime next year, to B and his heirs” bar

Question 31

Springing Executory Interest

Answer 31

(1) Cuts short the grantor’s possession

E.g., “To A, if and when he marries;” A is unmarried

Question 32

The Rule Against Perpetuities

Answer 32

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 the measuring life.

Question 33

Rule Against Perpetuities: 4-step Technique

Answer 33

CIF 21

(1) Classify the interest:
(i) RAP can only apply to (a) contingent remainders, (b) executory interests, and (c) certain vested remainders subject to open.
(ii) RAP does not apply to: (a) future interest created in grantor, (b) indefeasibly vested remainders, or (c) vested remainder subject to complete defeasance

(2) Identify conditions precedent to the vesting of the suspect future interest
(3) Find a measuring life: look for a person alive at the date of the conveyance and ask whether that person’s life or death is relevant to the condition’s occurrence

(4) Ask: Will we know, with certainty, within 21 years of the death of our measuring life, if our future interest holder(s) can or cannot take?
(i) If yes, no RAP problem
(ii) If no, RAP problem and interest is void

Question 34

Additional Common Law RAP Rules

Answer 34

(1) A gift to an open class that is conditioned on the members surviving to an age beyond 21 violates RAP – if this happens, strike the future interest
e. g., “To A for life, then to such of A’s children as live to attain the age of 30,” A is alive – void by RAP

(2) Many shifting executory interests violate the RAP. An executory interest with no limit on the time in which it must vest violates RAP – if this happens, strike the future interest.
(a) Exception: gift from one charity to another will not violate RAP

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” –void by RAP

Question 35

RAP Reform: Wait and see” or “second look”

Answer 35

Majority reform that determines validity on basis of facts as they exist at the end of the measuring life

Question 36

RAP Reform: Uniform Statutory Rule Against Perpetuities

Answer 36

Codifies common law RAP and provides an alternative 90 year vesting period

Question 37

Cy Pres Doctrine

Answer 37

“As near as possible”: if a given disposition violates the rule, a court may reform it in a way that most closely matches grantor’s intent while complying with RAP

Question 38

Joint Tenancy: Definition

Answer 38

2 or more own with the right of survivorship

Question 39

Joint Tenancy: Distinguishing Characteristics

Answer 39

(1) Right of survivorship: when one joint tenant dies, his share goes automatically to the surviving joint tenant
(2) A joint tenant’s interest is alienable; it is not devisable or descendable (because of survivorship)
(3) As long as the joint tenancy is intact, when one co-tenant dies, the property is freed of the interests and claims on that tenant’s interest

Question 40

Joint Tenancy: Creation

Answer 40

T-TIP

T - Time: same time
T - Title: by the same title/instrument
I - Interests: with identical interests
P - Possession: rights to possess the whole

Grantor must clearly express right of survivorship

Question 41

Joint Tenancy: Severance

Answer 41

SPAM

S - Sale: (1) Joint tenant can sell or transfer her interest during her lifetime; can do so secretly. (2) In equity, entering contract for sale will sever (“equitable conversion”). (3) If more than one other joint tenant, joint tenancy is intact as between them.

P - Partition: (1) Voluntary agreement: peaceful; (2) Partition in kind: court action for physical division if in best interest of all; (3) Forced Sale: court action of sale, proceeds divided proportionally.

And

M - Mortgage: (1) Minority/Title Theory: One joint tenant’s execution of a mortgage or lien on his share will sever joint tenancy as to the encumbered share; (2) Majority/Lien Theory: execution of mortgage or lien will not sever joint tenancy

Question 42

Tenancy by the Entirety: Definition

Answer 42

Between married partners with the right of survivorship

Question 43

Tenancy by the Entirety: Creation

Answer 43

In most states that recognize tenancy by the entirety, it arises presumptively in any grant to married partners, unless stated otherwise

Question 44

Tenancy by the Entirety: Distinguishing Characteristics

Answer 44

Can’t touch this.

(1) Creditors of only one spouse cannot touch this tenancy
(2) Unilateral conveyance: neither tenant, acting alone, can defeat the right of survivorship by unilateral transfer to a third party

Question 45

Tenancy in Common: Definition

Answer 45

Two or more own with no right of survivorship

Question 46

Tenancy in Common: Distinguishing Charateristics

Answer 46

(1) Each co-tenant owns an individual part and has a right to possess the whole
(2) Each interest is devisable, descendible, and alienable. No survivorship rights.
(3) The presumption favors tenancy in common because no survivorship, so must go through probate.

Question 47

Tenancy in Common: Co-Tenants’ Rights and Duties - Posession

Answer 47

Each co-tenant is entitled to possess to whole

If one co-tenant wrongfully excludes another co-tenant from possession of the whole or any part, he has committed wrongful ouster

Question 48

Tenancy in Common: Co-Tenants’ Rights and Duties - Rent from co-tenant in exclusive possession

Answer 48

Absent ouster, a co-tenant in exclusive possession is not liable to the others for rent

Question 49

Tenancy in Common: Co-Tenants’ Rights and Duties - Rent from Third Parties

Answer 49

A co-tenant who leases all or part of the premises to a third party must account to his co-tenants, giving them their fair share of the rent income

Question 50

Tenancy in Common: Co-Tenants’ Rights and Duties - Adverse Possession

Answer 50

Unless he has ousted the other co-tenants, one co-tenant in exclusive possession for the statutory adverse possession period cannot acquire title to the exclusion of others

Question 51

Tenancy in Common: Co-Tenants’ Rights and Duties - Carrying Costs

Answer 51

Each co-tenant is responsible for his fair share of carrying costs (e.g. taxes, mortgage interest payments) based proportionally upon his undivided share

Question 52

Tenancy in Common: Co-Tenants’ Rights and Duties - Repairs

Answer 52

The repairing co-tenant enjoys a right to contribution for reasonably necessary repairs, provided she has told the other of the need.

Contribution is proportional to undivided share.

Question 53

Tenancy in Common: Co-Tenants’ Rights and Duties - Improvements

Answer 53

During the life of the co-tenancy, there is no right to contribution for improvements.

However, at partition, the improving co-tenant is entitled to a credit, equal to any increase in value that her unilateral efforts cause.

“Improver” also bears full liability for any drop in value he caused.

Question 54

Tenancy in Common: Co-Tenants’ Rights and Duties - Waste

Answer 54

A co-tenant must not commit waste (voluntary, permissive, or ameliorative)

Question 55

Tenancy in Common: Co-Tenants’ Rights and Duties - Partition

Answer 55

A co-tenant has a right to bring an action for partition (result may be voluntary, partition in kind, or forced sale)