Real Property: Freehold Estates Flashcards
Devisable
The estate can pass by will
Descendible
The estate will pass by the statutes of intestacy if its holder dies intestate (without a will)
Alienable
The estate is transferable inter vivos, or during the holder’s lifetime
Fee Simple Absolute
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
Fee Tail
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
Defeasible Fees: Fee Simple Determinable
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
Defeasible Fees: Fee Simple Subject to Condition Subsequent
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
Defeasible Fees: Fee Simple Subject to Executory Limitation
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)
Defeasible Fees: Rules of Construction
(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
Life Estate: How to create
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
Life Estate: Distinguishing Characteristics
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
Life Estate: Distinguishing Characteristics - Types of Wast
(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
Life Estate: Future Interest
If held by O, the grantor, it is called a reversion.
If held by a third party, it is a remainder.
Present Interests
Four categories:
1) Fee simple absolute
(2) Fee tail
(3) Defeasible fees (3
(4) Life estate
Future Interests
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
Possibility of Reverter
Created in the grantor
Accompanies fee simple determinable
Right of Entry
A.k.a. Power of termination
Created in the grantor
Accompanies the fee simple subject to condition subsequent
Reversion
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”
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
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
Vested Remainder
A remainder is vested if it is both created in (a) an ascertained person and (b) is not subject to any condition precedent
Contingent Remainder
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”
Contingent Remainders and the Rule of Destructibility
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
The Rule in Shelley’s Case
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
The Doctrine of Worthier Title
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.
Types 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.
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.”
Vested Remainder Subject to Complete Defeasance
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.
Vested Remainder Subject to Open
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
Executory Interest
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
Shifting Executory Interest
(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
Springing Executory Interest
(1) Cuts short the grantor’s possession
E.g., “To A, if and when he marries;” A is unmarried
The Rule Against Perpetuities
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.
Rule Against Perpetuities: 4-step Technique
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
Additional Common Law RAP Rules
(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
RAP Reform: Wait and see” or “second look”
Majority reform that determines validity on basis of facts as they exist at the end of the measuring life
RAP Reform: Uniform Statutory Rule Against Perpetuities
Codifies common law RAP and provides an alternative 90 year vesting period
Cy Pres Doctrine
“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
Joint Tenancy: Definition
2 or more own with the right of survivorship
Joint Tenancy: Distinguishing Characteristics
(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
Joint Tenancy: Creation
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
Joint Tenancy: Severance
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
Tenancy by the Entirety: Definition
Between married partners with the right of survivorship
Tenancy by the Entirety: Creation
In most states that recognize tenancy by the entirety, it arises presumptively in any grant to married partners, unless stated otherwise
Tenancy by the Entirety: Distinguishing Characteristics
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
Tenancy in Common: Definition
Two or more own with no right of survivorship
Tenancy in Common: Distinguishing Charateristics
(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.
Tenancy in Common: Co-Tenants’ Rights and Duties - Posession
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
Tenancy in Common: Co-Tenants’ Rights and Duties - Rent from co-tenant in exclusive possession
Absent ouster, a co-tenant in exclusive possession is not liable to the others for rent
Tenancy in Common: Co-Tenants’ Rights and Duties - Rent from Third Parties
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
Tenancy in Common: Co-Tenants’ Rights and Duties - Adverse Possession
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
Tenancy in Common: Co-Tenants’ Rights and Duties - Carrying Costs
Each co-tenant is responsible for his fair share of carrying costs (e.g. taxes, mortgage interest payments) based proportionally upon his undivided share
Tenancy in Common: Co-Tenants’ Rights and Duties - Repairs
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.
Tenancy in Common: Co-Tenants’ Rights and Duties - Improvements
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.
Tenancy in Common: Co-Tenants’ Rights and Duties - Waste
A co-tenant must not commit waste (voluntary, permissive, or ameliorative)
Tenancy in Common: Co-Tenants’ Rights and Duties - Partition
A co-tenant has a right to bring an action for partition (result may be voluntary, partition in kind, or forced sale)
