Real Property - Ownership

Question 1

What is a fee simple?

Answer 1

In present estates, fee simple is the default estate. A fee simple is created when the grantor uses any of the following language:
“O to A”
“O to A and his/her heirs”
“O to A forever”

Question 2

A defeasible fee is…

Answer 2

… a conveyance in fee simple in which the grantor places express conditions on the conveyance (e.g., “O to A on the condition that . . .”). A defeasible fee is capable of lasting forever, but may be terminated by the occurrence of an event.

Question 3

A defeasible fee gives the grantee a _____ interest in the property, but reserves a _____ in the property in the favor of the grantor or a third party.

Answer 3

present possessory

future interest

Question 4

There are three main types of defeasible fees:

Answer 4

1. Fee simple determinable
2. Fee Simple Subject to Condition Subsequent
3. Fee Simple Subject to Executory Interest

Question 5

Fee Simple Determinable.

Answer 5

A fee simple determinable is a conditional conveyance in which the grantor retains a possibility of reverter. The possibility of reverter vests automatically when the condition fails (i.e., the grantor does not have to reclaim the property, the interest automatically vests back to him). A fee simple determinable is created when the grantor uses durational language, such as:

“While the property is used for farming”
“During the property’s use as a farm”
“Until the property is no longer used as a farm”

Question 6

Fee Simple Subject to Condition Subsequent.

Answer 6

A fee simple subject to condition subsequent is a conditional conveyance in which the grantor retains a right of entry. The right of entry does NOT vest automatically when the condition fails (i.e., the grantor must reclaim the property). A fee simple subject to condition subsequent is created when the grantor uses conditional language, such as:

“Provided that the property is used for farming”
“On the condition that the property is used as a farm”

Question 7

Fee Simple Subject to Executory Interest.

Answer 7

A fee simple subject to executory interest is a conditional conveyance in which a third party (not the grantor) is granted an executory interest in the property. An executory interest is a future interest that divests (i.e., terminates) an earlier interest. For example:

“O conveys Greenacre to A and his heirs, but if Greenacre is no longer used as a farm, then to B and her heirs.”

A has a fee simple subject to an executory interest. B has an executory interest, because B is a third party (not the grantor) and her interest divests A’s interest.

Question 8

A life estate is

Answer 8

a present possessory estate that is limited by a person’s life (terminates when the measuring life dies). A life estate is created when the grantor uses the following language:

“O to A for A’s life” (A is the measuring life – life estate terminates when A dies)
“O to A for B’s life” (B is the measuring life – life estate terminates when B dies)

Question 9

Is a life estate transferable?

Answer 9

Yes, a life estate is transferable. The transferee’s interest in the property terminates upon the death of the measuring life.

Question 10

A life tenant has the obligation to pay…

Answer 10

all current charges, including property taxes, mortgage interest, and the cost of maintenance. Restatement (First) Property, § 129.

This is a personal liability, entitling the holder of the future interest to a damages award. However, the life tenant’s obligation to pay current expenses is limited to the income produced by (or that could reasonably have been produced by) the land, such as rents that could have been obtained.

Question 11

In a will or device, what does “issue” mean?

Answer 11

Direct descendants (eg, children or grandchildren

Question 12

What is a reversion?

Answer 12

If possession of the land goes back to the grantor after the life estate terminates, then the grantor retains a reversion.

Question 13

What is a remainder?

Answer 13

If possession of the land goes to a third party after the life estate terminates, then the third party takes a remainder.

Question 14

A remainder can be…

Answer 14

… vested or contingent.

Question 15

A vested remainder is a future interest that is both:

Answer 15

1. Given to an ascertained (i.e., readily identifiable) grantee;

AND

2. NOT subject to a condition precedent (i.e., a condition that must be satisfied in order for the interest to vest).

Question 16

A contingent remainder is a future interest that

Answer 16

…fails either of the two elements for a vested remainder (given to an ascertained grantee and not subject to a condition precedent.

For example:

“O conveys Greenacre to A for life, then to A’s firstborn child. At the time of conveyance, A has no children.” A’s firstborn child has a contingent remainder, because the firstborn child is not an ascertainable grantee.

“O conveys Greenacre to A for life, then to B on the condition that B survives A.” B has a contingent remainder. B is an ascertainable grantee; however, B’s interest is subject to a condition precedent (B must survive A).

Question 17

If testator gives to “children of A in fee simple” what did testator give?

What about children who might be born to the A after the testator’s death?

Answer 17

A class gift.

the class is deemed to close at the moment the gift takes effect (ie, when testator dies) and all children of A born thereafter are excluded. Only surviving grandchildren at time of testator’s death receive the fee simple.