Rights in Land/Classification of Estates

Question 1

Fee Simple Absolute

Answer 1

Largest estate recognized by law.

It can be sold, divided, devised, or inherited.

Has an indefinite or potentially infinite duration.

Modernly, a fee simple is presumed in the absence of express contrary intent (words of inheritance are no longer necessary).

Question 2

Fee Simple Determinable

Answer 2

Terminates upon the happening of a stated event and automatically reverts to the grantor.

Look for words like “for so long as,” “while,” “during,” or “until.”

A FS determinable can be conveyed, but the grantee takes subject to the estate being terminated by the specified event.

Future Estate: Possibility of Reverter

Question 3

Fee Simple Subject to Condition Subsequent

Answer 3

An estate in which the grantor reserves the right to terminate the estate upon the happening of a stated event.

Look for words like “upon condition that,” “provided that,” “but if,” and “if it happens that.”

Future Estate: **Right of Entry. **

Question 4

Fee Simple Subject to an Executory Interest

Answer 4

The happening of a stated event automatically divests the estate in favor of a third person rather than the grantor.

Question 5

Conditions and Limitations Violating Public Policy

(Marriage/Divorce)

Answer 5

Conditions or limitations that violate public policy generally are struck down, and the grantee takes free of the restraint.

If the purpose of the condition is to penalize marriage or encourage divorce, it likely will be struck down. However, if the purpose is to give support until marriage or in the event of divorce, it likely will be upheld.

Question 6

Fee Tail

Answer 6

The fee tail is an estate where inheritability is limited to lineal heirs. It is created by the words “to A and the heirs of his body.” Most jurisdictions have abolished the fee tail, and an attempt to create one results in a fee simple.

Question 7

Life Estate

Answer 7

A life estate is one measured by the life or lives of one or more persons. It may be created by operation of law or by conveyance.

Question 8

Duties of a Life Estate Holder

Answer 8

Duty to:

Repair

Pay Interest on a mortgage

Pay Ordinary Taxes

Pay Special Assessments

Question 9

Life Estate Pur Autre Vie

Answer 9

A life estate “pur autre vie” is measured by a life other than the grantee’s. A life estate pur autre vie also results when the life tenant conveys his life estate to another.

Question 10

Renunciation of Life Estate

Answer 10

If a life tenant who receives the estate by will or intestacy renounces his interest, the future interest following the life estate is generally accelerated so that it becomes immediately possessory.

Question 11

Possibility of Reverter

Answer 11

Whenever a grantor conveys a fee simple determinable, he automatically retains a possibility of reverter. A possibility of reverter is transferable, descendible, and devisable.

Question 12

Rights of Entry

Answer 12

A future interest in the grantor that can follow a fee simple or a life estate subject to a condition subsequent

The right to terminate, reserved by the grantor, is called a right of entry. It must be expressly reserved. Some courts hold that rights of entry are not transferable inter vivos, but most states agree that they are devisable, and all states agree they are descendible.

NOTE: Courts favor fee simple subject to condition subsequent over fee simple determinable so there is not the automatic forfeiture.

Question 13

Reversions

Answer 13

A reversion is the estate left in a grantor who conveys less than she owns. It arises by operation of law; it does not have to be expressly reserved.

A reversion is alienable, devisable, and inheritable.

Its holder can sue for waste and for tortious damage to the reversionary interest.

[All reversionary interests are vested and, thus, not subject to the Rule Against Perpetuities].

Question 14

Executory Interests

Answer 14

A future interest created in favor of a third party, which cuts short the preceding estate before it would have naturally terminated.

Executory interests are not considered vested and thus are subject to the Rule Against Perpetuities, but executor interests are not destructible.

Question 15

Types of Executory Interests

Answer 15

Shifting executory interest: Property passes from one third party to another

Springing executory interest: Property passes from the grantor to a third party

Question 16

Remainder

Answer 16

A remainder is a future interest in a third person that can become possessory on the natural expiration of the preceding estate. It cannot divest a prior estate, and it cannot follow a time gap after the preceding estate. A remainder must be expressly created in the instrument creating the preceding possessory estate.

Question 17

Indefeasibly Vested Remainder

Answer 17

A vested remainder is one created in an existing and ascertained person, and not subject to a condition precedent. The remainderman has a right to immediate possession upon normal termination of the preceding estate. An indefeasibly vested remainder is a vested remainder that is not subject to divestment or diminution.

Question 18

Contingent Remainder

Answer 18

Contingent remainders are those created in unborn or unascertained persons, or subject to a condition precedent.

Question 19

Vested Remainder Subject to Open

or

Vested Remainder Subject to Partial Divestment

Answer 19

A reminder made to a class (class gift – to my children, nephews, grandchildren) and one member has vested (ascertainable and has satisfied all condition) but there is always a possibility for the class opening further

Question 20

Class Gifts

Answer 20

A class is a group of persons having a common characteristic. The share of each member is determined by the number of persons in the class.

A class gift of a remainder may be vested subject to open (where at least one group member exists) or contingent (where all group members are unascertained).

Question 21

Under the Rule of Convenience

Answer 21

In the absence of express contrary intent, a class closes when some member of the class can call for distribution of her share of the class gift.

If the class is closed at the time of conveyance - exisiting class members will take, later concieved or born will not.

If the class has no members at the time the gift is made, all 
members of the class, whenever born, will be included and may 
take. **The class stays open until all possible members are born.**

Question 22

Vested Remainder Subject to Total Divestment

Answer 22

This is a vested remainder that could be lost.

[Where language is ambiguous, the preference is for vested remainders subject to divestment rather than contingent remainders or executory interests. Policy favors early vesting of estates.]

Question 23

Doctrine of Merger

Answer 23

When one persons acquires all of the present and future interests in land except a contingent remainder, under the common law, the contingent remainder is destroyed.

[When considering whether estates merge to destroy a contingent remainder, remember that if the life estate and the next vested estate were created by the same instrument, there is no merger. Merger may occur when one person later acquires immediately successive estates.]

Question 24

Rule in Shelley’s Case

Answer 24

At common law, if the same instrument created a life estate in A and gave the remainder only to A’s heirs, the remainder was not recognized and A took the life estate and the remainder.

This rule has been abolished in most states.

Question 25

Doctrine of Worthier Title

Answer 25

Under the Doctrine of Worthier Title, a remainder in the grantor’s heirs is invalid and becomes a reversion in the grantor. DOWT is generally treated as a rule of construction (i.e. it does not apply if an intent to create a remainder in heirs has been clearly manifested). DOWT applies only to inter vivos transfers (not wills), and only if the word ‘heirs’ is used.

Question 26

Doctrine of Waste

Answer 26

A life tenant is entitled to any ordinary uses and profits of the land but cannot do anything that injures the interests of a remainderman or reversioner.

A future interest holder may sue for damages or to enjoin such acts, and if she spends money to perform the life tenant’s obligations, she is entitled to reimbursement.

Question 27

Affirmative (Voluntary) Waste

Natural Resources

Answer 27

Exploitation of natural resources by a life tenant is generally limited to situations when:

(i) necessary for repair or maintenance of the land;
(ii) the land is suitable only for such use; or
(iii) it is expressly or impliedly permitted by the grantor.

Under the open mines doctrine, if mining was done on the land prior to the life estate, the life tenant can continue mining _ but is limited to the mines already open.

Question 28

Permissive Waste

Answer 28

A life tenant is obligated to:

(i) preserve the land and strutures in a reasonable state of repair;
(ii) pay interest on mortgages;
(iii) pay ordinary taxes on the land; and
(iv) pay special assessments for public improvements of short duration.

Permissive waste occurs when a life tenant fails to do so. However, this duty is limited to the extent of the income or profits generated from the land (or to its reasonable rental value, if there is no income or profit).

A life tenant is not obliged to insure the premises for the benefit of remiandermen and is not responsible for damages caused by third-party tortfeasors.

Question 29

Ameliorative Waste

Answer 29

Ameliorative waste is a change that benefits the property economically. This waste was actionable at common law, but now a life tenant may alter or even demolish existing buildings if the market value of the future interests is not diminished; and either

(a) the remaindermen do not object; or
(b) a substantial and permanent change in the neighborhood conditions has deprived the property in its current form of reasonable productivity or usefulness.

Question 30

Destructibility of Contingent Remainders

Answer 30

At common law, a contingent remainder was destroyed if it failed to vest before or upon the termination of the preceding freehold estate. Most states, however, have abolished the destructibility rule and created a reversionary interest until the condition is fulfilled.

Question 31

Transferability of Remainders and Executory Interests

Answer 31

Vested remainders are fully transferable, descendible, and devisable. At common law, contingent remainders and executory interests were not transferable inter vivos, but most courts today hold that they are freely transferable.

Contingent remainders and executory interests are descendible and devisable, provided survival is not a condition to the interests taking. [Any future interest that is transferable is subject to involuntary transfer and is reachable by creditors].

Question 32

The Rule Against Perpetuities

Answer 32

No interest in property is valid unless it must vest, if at all, not later than 21 years after some life in being (“measuring life”) at the creation of the interest.

If there is any possibility that the interest might vest more than 21 years after a life in being, the interest is void.

The Rule applies to contingent remainders, executory interests, vested remainders subject to open, options to purchase, rights of first refusal, and powers of appointment.

**Vested Remainders are not subject to the rule.

Question 33

When Perpetuities Period Begins to Run

Answer 33

The time the interest is created and the perpetuities period begins to run depends on the instrument and the interest created:

for interests granted by will, it runs from the date of the testator’s death, for deeds, it is the date of delivery.

The period runs on an irrevocable trust from the date it is created;

it runs on a revocable trust from the date it becomes irrevecoable.

Question 34

Vesting of an Interest

Answer 34

An interest vests for purposes of the Rule when it becomes:

(i) possessory, or
(ii) indefeasibly vested remainder or a vested remainder subject to total divestment.

Question 35

Lives in Being Requirement

Answer 35

Unless other measuring lives are specified, one connected with the vesting of the interest is used. Any lives may be denominated measuring lives, provided they are human and of reasonable number.

Question 36

Interests Exempt from the Rule of Perpetuities

Answer 36

Except for vested remainders subject to open, the Rule Against Perpetuities does not apply to vested interests.

Other Exceptions:

Charity-to-charity

Options to purchase held by a current tenant.

[Remember that the Rule Against Perpetuities applies only to contingent remainders, executory interests, vested remainders subject to open, and in most states, options to purchase. Thus, the grantor’s interests are safe from the Rule.]

Question 37

Fertile Octogenarian Rule

Answer 37

A woman is conclusively presumed to be capable of bearing children, regardless of her age or medical condition.

Question 38

Bad-as-to-One, Bad-as-to-All Rule

Answer 38

If the interest of any class member may vest too remotely, the whole class gift fails. For the class gift to vest, the class must be closed and all conditions precedent must be satisfied for every member. However, a gift to a subclass may be treated as a separate gift and a gift of a fixed amount to each member of a class is not treated as a class gift under the Rule.

Question 39

Types of Restraints on Alienation

Answer 39

There are three types of restraints on alienation:

(i) disabling restraints, under which attempted transfers are ineffective;
(ii) forfeiture restraints, under which an attempted transfer forfeits the interest, and
(iii) promissory restraints, under which an attempted transfer breaches a covenant.

A disabling restraint on any legal interest is void.

Question 40

Restraints on Fee Simple

Answer 40

All absolute restraints on fee simple estates are void; thus, the grantee may freely transfer the property.

However, restraints on fee simple estates for a limited time and reasonable purpose may be upheld.

Question 41

Discriminatory Restraints

Answer 41

Judicial enforcement of restraints prohibiting the transfer or use of property to or by a person of a specified racial, religious, or ethnic group is discriminatory state action forbidden by the Fourteenth Amendment.

Discriminatory restrictions may also violate the Fair Housing Act.

Question 42

Restraints on a Life Estate

Answer 42

Forfeiture and promissory restraints on life estates are valid, but disabling restraints are void.

Question 43

Restraints on Future Interests

Answer 43

Restraints on vested future interests generally are valid to the extent that restraints on present interests of the same type are valid.

Question 44

Concurrent Estates

Answer 44

A concurrent estate exists when two or more persons share concurrently an interest in real property. A concurrent owner is called a co-tenant.

Question 45

Joint Tenancy

Answer 45

A joint tenancy’s distinguishing feature is the right of survivorship. When one joint tenant dies, the property is freed from her concurrent interest (her survivors do not succeed to it).

Question 46

Creation of a Joint Tenancy

Answer 46

The common law requires four unities: time, title, interest, and possession” to create a joint tenancy.

Modern law requires a clear expression of a right of survivorship; otherwise a conveyance to two or more persons is presumed to be a tenancy in common.

[If the bar examiners tell you in the questions that the parties are joint tenants, take it as given that they are joint tenants with the right of survivorship.]

Question 47

Severance of the Right of Survivorship

Answer 47

Inter Vivos Conveyance. A voluntary or involuntary conveyance by a joint tenant of her undivided interest destroys the joint tenancy. The transferee takes as a tenant in common. When there are more than two joint tenants, conveyance by one destroys the joint tenancy only to the extent of the conveyor’s interest.

Contract to Convey. Severance results if one joint tenant contract to convey her interest.

Question 48

Tenancy by the Entirety

Answer 48

A tenancy by the entirety is a marital estate akin to joint tenancy. In some common law jurisdictions, it arises presumptively in any conveyance to a husband and wife. Only death, divorce, mutual agreement, or execution by a joint creditor of both husband and wife can sever a tenancy by the entirety. An individual spouse cannot convey or encumber tenancy by the entirety property.

Question 49

Tenancy in Common

Answer 49

A tenancy in common is a concurrent estate with no right of survivorship. Tenants can hold different interests in the property, but each is entitled to possession of the whole. Interests are alienable, devisable, and inheritable. Today, multiple grantees are presumed to take as tenants in common, not as joint tenants.

Question 50

Co-Tenant Right to Possession

Answer 50

Each co-tenant has the right to possess all portions of the property but has no right to exclusive possession of any part. A co-tenant out of possession cannot bring a possessory action unless she is ousted (another co-tenant claims right to exclusive possession).

Question 51

Co-Tenants Right to Rents and Profits

Answer 51

In most states, a co-tenant in possession has the right to retain profits from her own use of the property. She need not share profits with other co-tenants. However, she must share net rents from third parties and net profits gained from exploitations of land.

Question 52

Co-Tenant Encumbrance of Interest

Answer 52

A joint tenant or tenant in common may encumber her interest, but may not encumber the interest of other co-tenants.

Question 53

Co-Tenant Remedy of Partition

Answer 53

Any co-tenant has a right to judicial partition, either in kind (physical division of land among co-tenants) or by sale and division of the proceeds.

Courts prefer partition in kind but will permit partition by sale when a fair and equitable physical division of the property cannot be made.

Although generally this right may be exercised at any time, restraints on partition by co-tenants are valid, provided they are limited to a reasonable time.

Question 54

Co-Tenant Share of Cost of Repairs

Answer 54

A co-tenant who pays more than her pro rata share of necessary repairs is entitled to contribution form the other co-tenants, provided she has notified the other co-tenants of the need for repairs.

Question 55

Co-Tenants Improvements

Answer 55

There is no right of contribution for the cost of improvements unless there is a partition.

Question 56

Taxes and Mortgages

Answer 56

Contribution can be demanded for taxes or mortgage payments paid on the entire property. However, reimbursement to a co-tenant in sole possession is limited to the extent that expenditures exceed the rental value of her use.

Question 57

Duty of Fair Dealing

Answer 57

A confidential relationship exists among co-tenants that establishes a duty of fair dealing.