Real Property MBE Flashcards
Fee Simple Absolute
Absolute ownership of potentially infinite duration
“To A” or “to A and his heirs” * Freely alienable, devisable, and descendible; no accompanying future interest
Defeasible fee
potentially infinite duration, subject to termination by the occurrence of an event; alienable, devisable, and descendible
Fee Simple Determinable
Limited by specific durational language (e.g., “so long as,” “while,” “during,” “until”)
o Automatically terminates upon happening of the stated event
o Future interest: Grantor (or his successor in interest) retains possibility of reverter; or if the future interest is in a third party, it is an executory interest
Fee Simple Subject to Condition Subsequent
o A present fee simple that is limited by specific conditional language (e.g., “upon condition that,” “provided that,” “but if,” or “if it happens that”)
o Will terminate only if the grantor affirmatively demonstrates intent to terminate
o Future interest: Grantor reserves right to terminate estate upon happening of a stated event; grantor must specifically retain right to reenter
Fee Simple Subject to Executory Interest/Limitation
o A present fee simple that is limited by specific conditional language
o Automatically terminates upon happening of the stated event, and title passes to a third party
o Future interest: Executory interest held by the third party (i.e., someone other than the grantor)
Life Estate
—present possessory estate fully transferable during measuring life
- If third party: “to A for life,” “to B after the life of A,” or “to B for the life of C” (pur autre vie); “to A for life, but if he drinks, then to B” (defeasible)
- If measured by the grantee’s life, not devisable/descendible by the grantee; if measured by another’s life, LE may be devisable/descendible
- LE may be cut short by specified event (defeasible life estate)
- Life tenant’s (LT) rights: o Right to possess o Right to collect rents, lease/sell/mortgage (must pay taxes on financial benefit from the land)
Life Estate Waste
Waste—limits the rights of a holder of a LE, LT must deliver property to future interest holder in substantially the same condition as when LT took possession
o Permissive—occurs when LT permits the premises to deteriorate through neglect, failure to preserve, or a failure to reasonably protect the property; LT must make reasonable repairs (up to amount of income produced by property or, if LT is in actual possession, the fair rental value)
o Voluntary— occurs when the condition of the property is substantially changed due to LT’s affirmative action Decrease in property value—not permitted
No decrease in property value—ameliorative waste; permitted when the change results in a reasonable use of the property unless future interest holders have reasonable objection
o Holder of any future interest—may bring suit against LT for an injunction
LE Allocation of Burdens
LT must pay property taxes to the extent LT receives a financial benefit from the land; pre-existing mortgage obligations and assessments for public improvements are allocated between LT and future interest holder
Future Interests
—an ownership interest in presently existing property which may commence in possession or enjoyment sometime in the future
Reversion
held by a grantor who transfers a LE or estate for years without conveying the remaining FI to a third party; not subject to RAP; alienable, devisable, and descendible
Possibility of Reverter
a FI retained by a grantor when a FSD is conveyed; alienable, devisable, and descendible
Right of reentry
(right to terminate; right of entry; power of termination) a FI retained by a grantor after a FSSCS is granted; alienable, devisable, and descendible in most states
Remainder
a FI that becomes possessory upon the natural expiration of a prior estate that is created in the same conveyance in which the remainder is created
- Vested—not subject to any conditions precedent; ascertainable grantee
o Vested remainder subject to open If at least one class member is qualified to take possession at the time of the conveyance (but less than all of them), each class member’s share is subject to partial diminution because additional takers not yet ascertained can still vest
o Vested remainder subject to complete divestment—the occurrence of a condition subsequent will completely divest the remainder
- Contingent—created in an unascertainable grantee or is subject to an express condition precedent to grantee’s taking (because of unknown beneficiary or known beneficiary subject to condition precedent that has not yet occurred)
Executory interests
—a FI in a third party (not a remainder) that cuts the prior estate short upon the occurrence of a specified condition; transferable and subject to RAP
- Shifting—cuts short a prior estate created in the same conveyance, so the estate shifts from one grantee to another grantee upon the happening of a condition
- Springing—divests the grantor’s interest or fills a gap in possession in which the estate reverts to the grantor
Future Interests Transferability
remainders/executory interests are transferable inter vivos and devisable/descendible
Class gifts
—transfer to members of a group; beneficiaries and amount of gift are subject to change
Survival Contingency
when ambiguous, majority applies at termination of interest that precedes remainder; minority requires surviving only grantor, not LT
RAP
Specific FIs are valid only if they must vest or fail by the end of a life in being plus 21 years
RAP Affected FIs
—RAP applies to contingent remainders, vested remainders subject to open, executory interests, and powers of appointment; rights of first refusal and options may be unless commercial; RAP does not apply to FIs that revert to the grantor (reversion, possibility of reverter, right of reentry)
RAP Measuring Lives
must be human; there can be more than one; if not specified, then the measuring life is the life directly related to the FI that is subject to RAP
RAP Creation Events
—RAP tests the FI as of the time that it is created
RAP “Vest or Fail” Requirement
—if there is any possibility that it will not be known whether the interest will vest or fail within the applicable period, then RAP has not been satisfied
RAP Effect of Violation
except in rare cases when voiding the FI undermines the grantor’s intent, only the offending interest fails
RAP special rule for class gifts
(“bad as to one, bad as to all”)—if RAP voids a transfer to any class member, then the transfer is void as to all class members, even those whose interests have already vested
o Rule of convenience—can operate to prevent application of RAP to a class transfer, but the application of the rule of convenience to a class transfer does not automatically forestall the application of RAP
o Exceptions—transfers of a specific dollar amount to each class member; transfers to a subclass that vests at a specific time