Dividing Rights by Time Flashcards
(161 cards)
1
Q
Future interests
A
Interests that might become possessory in the future
2
Q
What do the authors mean when they say “a future interest is a presently existing interest”, that it exists soon or now?
A
It exists now
3
Q
O conveys Greenacre “to A for life, then to B and his heirs.” B is a spendthrift. B borrows money from C and spends it and does not repay C. C wins a judgment against B. Today, C can attach all of B’s property to satisfy C’s judgment. Does B have an interest in Greenacre that C can reach?
A
Yes. After O’s conveyance, B has some interest- title to a future interest in fee simple- and because he has something, C could get it
4
Q
What does a conveyance “to A for life” mean?
A
gives A a life estate that lasts for the duration of A’s life.
5
Q
If a conveyance is “to A for life” and A transfers his life estate to B, how will the estate be measured?
A
B would then have a life estate pur autre vie — that is, an estate that is measured by A’s life span, not B’s.
6
Q
If a conveyance is “to A for life” and A transfers his life estate to B and B dies during A’s lifetime, who would the estate go to?
A
the life estate would pass to Bs heirs or devisees until A dies.
7
Q
According to White v. Brown (1977), will a fee simple absolute be passed through a will, if said will’s terms are ambiguous?
A
Yes. When the terms of a will are ambiguous, said will shall be determined to have passed a fee simple absolute.
8
Q
In White v. Brown (1977), Ms. Jesse Lide left land to Ms. Evelyn White but did not make it clear what estate. The two possible options were either a life estate or fee simple estate. According to the court, which freehold must White get if Lide’s intended restriction on sale (for the property to not be sold) is to be effective?
A
a life estate
9
Q
Can there be a restriction on sale for a fee simple estate?
A
No
10
Q
Are restraints on alienation of a fee simple estate void or valid?
A
Void
11
Q
A disabling restraint, forfeiture restraint, and promissory restraint are all types of restraints on?
A
alienation (alienation refers to the process of a property owner voluntarily giving or selling the title of their property to another party)
12
Q
What does a disabling restraint withhold?
A
It withholds from the grantee the power of transferring his interest (e.g., O conveys Blackacre “to A and his heirs but any transfer hereafter in any manner of an interest in Blackacre shall be null and void”). A
disabling restraint was involved in White v. Brown. This estate cannot be alienated
13
Q
What is a forfeiture restraint?
A
It provides that if the grantee attempts to transfer his interest, it is forfeited to another person (e.g., O conveys Blackacre “to A and his heirs, but if A attempts to transfer the property by any means whatsoever, then to B and her heirs”). This estate is forfeited if the holder attempts to alienate
14
Q
What is a promissory restraint?
A
It provides that the grantee promises not to transfer his interest (e.g., O conveys Blackacre “to A and his heirs, and A promises for himself, his heirs and successors in interest that Blackacre will not be transferred by any means”). The holder is in breach of promise if she alienates
15
Q
What type of restraint is acceptable for a fee simple estate, and under what circumstances?
A
The Restatement provides that a partial restraint (e.g., limiting conveyance to certain persons or putting a time limit on the restraint) is valid if, under all the circumstances of the case, it was not imposed with spite or malice
16
Q
In White v. Brown (1977), Ms. Jesse Lide left land to Ms. Evelyn White but did not make it clear what estate. What kind of estate do the 12 nieces and nephews of Lide (the grantor) want White (the grantee) to get?
A
A life estate. If Lide transfers to White only a life estate then Lide has only transferred some of her interest to White but would keep the rest and keep the rights to take possession after the death of White. The nieces/nephews will inherit what she didn’t give away by intestate succession.
17
Q
Are restraints on alienation allowed on a life estate?
A
Sometimes
18
Q
Are restraints on alienation allowed on a fee simple estate?
A
No
19
Q
For a life estate, which restraint is not allowed in most states? Which restraint might be enforced?
A
A disabling restraint is not allowed in most states (but allowed in TN)
A forfeiture restraint might be enforced
20
Q
What are 2 economic reasons to restrain restraints on alienation? Why do we like alienability?
A
- exchange efficiency, changing owners
- productive efficiency, changing uses (less likely to a develop land you can’t sell; can’t borrow to develop land you can’t sell)
21
Q
What are nonfreeholds?
A
Leaseholds, estates without seisin. Nonfreehold estates are not inheritable and are said to exist “without seisin.” Seisin denotes ownership: An individual who is “seised” of an estate is the owner of the estate. A nonfreehold estate is created through a lease or rental agreement that can be either written or oral.
22
Q
What are the 2 future interests in a transferee?
A
- Remainder (RM)- an estate which vests after the termination of the prior estate (Ex: life estate); It is the right to own and possess the land after the fixed interest of current holder expires. Thus, a remainder can follow a life estate or a term of years. It is created by the use of the phrase “then to” or similar language. For example both “to A for life, then to B” and “to A for 10 years, then to B” give B a remainder.
- Executory Interest (EI)- a future interest in property that will be triggered on the happening of a stated event, and will pass the property to a third party; they are non-vested meaning the beneficiary of the right or property interest is not certain to receive a specific amount, either now or in the future.
23
Q
What are the 2 kinds of remainders and what is the rule regarding them?
A
Remainders are vested or contingent
They are vested if not Contingent
- Vested means a remainder with an ascertained taker and with no condition precedent.
- Contingent means it is a future estate with some uncertainty - either in the identity of the possessor (“then to my children” leaves uncertainty as to how many children there will be) or if the person will actually take the estate (“to my son, unless he moves away”). They are subject to the rule against perpetuities.
24
Q
What are the 3 kinds of vested remainders?
A
- Indefeasibly vested (refer to a future interest in property that does not have any condition precedent or future contingency; normally use language such as “to (insert name) and their heirs” in a will or other document to clearly show that the person stated is supposed to get the property in the future no matter what)
- Vested subject to open (might have more people sharing in that remainder)
- Vested subject to complete divestment (even though it’s vested now, events may change it to being divested)
25
What was an Executory interest in the past?
One person held legal title for the benefit of another person: O to T for the use of B.
26
Do equitable interests have seisin and need to obey rules of seisin?
No
27
What was the Statute of Wills (1540)?
it gave landholders the right to devise their property to whomever they pleased in a written will (testament).
28
What is the Statute of Uses exception?
"active duty" exception- for trusts, the Stat of Uses applied to any person seised to the “use” or “trust” of
another person, however, if the person who had legal title had some active duties to perform (manage the land, turn over profits, etc.), then the statute does not apply
29
What is a trustee?
A legal title holder with active duties
30
What is a beneficiary?
Equitable title holder
31
In Baker v. Weedon (1972), John devised to Anna “during her natural life and upon her death to her children, if she has any, and in the event that she dies without issue then . . . to my grandchildren . . .” What do Anna and her children have?
Anna has a life estate and her kids have a contingent remainder (because she has no children right now- the taker is not ascertainable) and John's grandchildren have a contingent remainder
32
In Baker v. Weedon (1972), Anna is getting $1300 income per year.
• Anna (LE) asks court to sell land and pay her interest on the proceeds, $168,500. (A 5-yr treasury bill at the time would pay 6% interest, about $10,000/yr, a lot more than $1300.) John’s grandchildren (CRMen) say don’t sell. What does the court rule?
SC of Mississippi says a sale of all the property will result in “great financial loss to the remaindermen”. A sale would provide immediate relief to Anna, the life tenant, who needs the money to pay her expenses and taxes. However, such a sale would cause great financial loss to the Bakers, the remaindermen, who seek to sell the property at a higher price after their interests vest. They both have an interest in the land. The court later said to sell some of the land.
33
What is the doctrine of waste?
a future interest (FI) holder can sue a present interest (PI) holder if PI holder is doing something FI holder does not like to the land.
34
When does the waste doctrine apply?
when there are multiple owners of same realty (usually present and future, maybe concurrent)
35
What are the 2 kinds of waste?
1. Permissive waste- involves doing nothing. (Not fixing hole in roof.)
2. Active or affirmative waste- involves taking some action. (Axing hole in roof.)
36
What are the 3 remedies for waste?
1. Forfeiture (the court could take away the property)
2. Injunction
3. Damages (present estate holder pays to the future estate holder)
37
What are the 4 situations in which a court will find waste?
If the present interest holder's action or inaction:
1. Diminishes value of the future interest (FI),
2. Impairs evidence of title (moving the boundaries of the land)
3. Destroys identity, or
4. Substantially changes character of the realty (even a change of character that does not diminish and may even increase the value)
38
What is ameliorative waste?
When the present interest holder substantially changes character but does not reduce value or
even adds to market value
39
What is a "determinable" interest"? When does it terminate?
If the interest includes a “special” (durational) limitation. It terminates automatically if it terminates. Established by durational language, determinable estates are followed by the future estates of a possibility of reverter.
For example: To A for as long as the property is used for a museum. A has a fee simple determinable, and will hold the land for as long as it is a museum; the grantor holds a possibility of reverter. If the museum is shut down, the land will automatically be transferred to the grantor.
40
When is an interest “subject to a condition subsequent”? When does it terminate?
It has a condition attached. Established by conditional language, these estates are followed by a right of entry. If the triggering event occurs, the holder must take steps to establish possession of the land. It terminates when right of entry is exercised, not automatically.
Example: To A, but if A does not use the land for a museum, then the grantor has a right of entry. A has a defeasible fee simple estate subject to a condition subsequent, and the grantor has a right of entry. If the land is not used for a museum, then the grantor must take action to recover the land. If the grantor does not take action, the land will remain with A, even after it is not being used as a museum.
41
When is an interest “subject to an executory limitation”? When does it terminate?
If the interest is followed by an executory interest. It terminates automatically if it terminates. An interest with a stated event, which if it happens, is automatically divested by an executory interest in a transferee (if the event happens, the land automatically goes to a THIRD PARTY).
For example: To A so long as the land is used for a museum, but if used for anything else, to B. A holds a defeasible fee simple subject to an executory condition, B holds an executory interest. If the land is not used for a museum, it is automatically transferred to B.
42
What is fee simple determinable?
| What words are used to indicate that an estate is this kind?
It is land ownership subject to a special limitation where such ownership automatically reverts to the grantor if a specified event occurs or doesn't occur. Established by durational language, determinable estates are followed by the future estates of a possibility of reverter.
"so long as", "while", "until"
For example: To A for as long as the property is used for a museum. A has a fee simple determinable, and will hold the land for as long as it is a museum; the grantor holds a possibility of reverter. If the museum is shut down, the land will automatically be transferred to the grantor.
43
What is a fee simple subject to a condition subsequent?
| What words are used to indicate that an estate is this kind?
it's land ownership subject to a condition where the grantor can take back the land if a specified event occurs or doesn't occur. Once a specified condition occurs, the grantor CAN take it back- it is NOT automatic, steps must be taken but now the grantor CAN if he wants to. Before the condition occurred, the grantor couldn't take it back, even if he wanted to.
"upon the condition", "provided that"
Example: To A, provided that A uses the land for a museum. A has a defeasible fee simple estate subject to a condition subsequent, and the grantor has a right of entry. If the land is not used for a museum, then the grantor must take action to recover the land. If the grantor does not take action, the land will remain with A, even after it is not being used as a museum.
44
In Mahrenholz v. County Board of School Trustees (1981), can a "fee simple subject to a condition subsequent followed by a right of reentry" or a "fee simple determinable followed by a possibility of reverter" be alienated inter vivos?
No. Neither can be alienated
45
According to Mahrenholz v. County Board of School Trustees (1981), if O transfers land subject to a fee simple determinable to A, then O conveys the reversionary interest to B, then A stops the condition, and O dies and has a child C, who gets the land- C or B?
C, the child of O gets the land because you cannot alienate inter vivos a "fee simple determinable followed by a possibility of reverter". Therefore, the reversionary interest was never conveyed to B- O had the reversionary interest the whole time. In addition, once A stopped abiding by the condition, the ownership automatically reverted to O. Since O is dead, it therefore goes to his child, C.
It would've gone to B if it was an interest “subject to an executory limitation” because those can go to 3rd party's.
46
What did the Statute of Uses 1536 do? What was the exception?
It made it impossible to pass land by will.
The exception: the courts decided that the Statute of Uses did not apply to some uses (including those where the legal title holder had active duties to perform (active duty exception)).
47
What is waste?
When possessors of land behave in ways that create negative externalities for other owners of the same realty (in the future or concurrent). Waste is a cause of action that might internalize those negative externalities.
48
Will a court always apply waste to the holder of a defeasible fee (a DF is a simple interest in land that can be taken away from the holder by the occurrence or non-occurrence of a specified event) on the ground
that the defeasible fee holder has “all the incidents of a fee simple.”
Not always. This is because a defeasible fee simple is supposed to have all the rights of ownership of a fee simple (should have full control of the land) and therefore even though it might end early, the court will not recognize that future interest for an action of waste.
49
What is a defeasible estate?
```
Any estate (freehold/nonfreehold) ends early/before natural end based on nature of estate because it is subject to:
(1) Durational limitation
“During” “as long as” “until”
EX: “To A as long as A doesn’t drink alcohol”
```
(2) Conditional language
“If” “but if” “provided” “on condition that”
EX: “To A if A doesn’t drink alcohol”
50
What is a defeasible interest that is "determinable"?
An interest that might end automatically by a special (durational) limitation.
51
What is a defeasible interest that is “Subject to a condition subsequent”?
It is an interest that is followed by a right of
| entry- it is not automatic; the right of entry must be exercised.
52
What is a defeasible interest that is “Subject to an executory limitation"?
It is an interest followed by an executory
interest. An interest with a stated event, which if it happens, is automatically divested by an executory interest in a transferee (if the event happens, the land automatically goes to a THIRD PARTY).
So, once we know the names of those future interests, we can look back to the present interests
53
Why do we have both, a possibility of reverter and a right of entry option, when they are both so similar?
Having both gives transferors more freedom, creates a greater need for lawyers
54
Are all future interests descendible (they can pass by intestate succession to the next owner when someone dies) and releasable (released to the present estate holder) everywhere?
Yes
55
Are reversions and vested remainders completely transferrable everywhere?
Yes
Reversion- a future interest that the grantor keeps. Follows fee tail estates, life estates, and terms of years.
Remaider- A future estate, possession of which will not be taken until the end of a current estate.
Example. O grants Blackacre from A to B for life, and then to C. B has a life estate (present estate), and C has a remainder (future estate).
56
In Mountain Brow Lodge No. 82, Independent Order of Odd Fellows v. Toscano (1967), Toscanos give Fee Simple Subject To Condition Subsequent to Lodge, retaining Right of Entry. Toscanos can terminate if Lodge tries to transfer or fails to use. Lodge sues to quiet title. The condition allowing Toscanos to
terminate if Lodge tries to transfer is a forfeiture restraint on sale. Is it valid?
It is void because you can't restrict alienation on a fee simple and this is a form of fee simple
57
In Mountain Brow Lodge No. 82, Independent Order of Odd Fellows v. Toscano (1967), Toscanos give "Fee Simple Subject To Condition Subsequent" to Lodge. Toscanos can terminate if Lodge fails to use. Is this use limitation valid- does it make the land inalienable?
Yes, it is valid. Although this condition may make the land unmarketable because no one would want to buy land that the lodge uses, the condition did not make it "inalienable"
58
According to Falls City v. MO Pacific RY, If an estate is unmarketable, should the court treat it as being inalienable?
Yes (minority view). This is counter to the ruling in Mountain Brow Lodge No. 82, Independent Order of Odd Fellows v. Toscano (1967). The court here reasoned that if an estate becomes so unmarketable due to the effect of a condition, it will be considered to place a restriction on alienation, and therefore the condition will be void.
59
Are all restrictions that reduce marketability invalid because they serve as a restraint on alienation?
If courts are going to allow the argument that a. . .
60
What is the modern law and common law view on Restrictions on uses (not direct restraints on alienation) of fee simple?
– Common law: valid
| – Modern law: less certain
61
Under modern law, are fee simple estate restrictions requiring a person to live on land often void or valid?
void
62
Under modern law, are fee simple estate restrictions that look like spite often void or valid?
void
63
Under modern law, are fee simple estate restrictions that have the purpose of discouraging marriage or remarriage often void or valid? What's the exception?
void.
But maybe ok if the purpose is to provide support until marriage.
64
Does a holder of a possibility of reverter get some of
| condemnation award?
Majority say no; some say yes (Ink v. City
| of Canton)
65
According to Ink v. City of Canton (1965), when a portion of land donated for a specific purpose, subject to a right of reverter, is taken by eminent domain, is the grantor entitled to any portion of the compensation?
Yes. The general rule is that a grantee who holds land for restricted use subject to a reverter is not? entitled to keep the full amount of compensation if the land is taken by eminent domain
66
Ink v. City of Canton (1965), when the land that the Ink's gave to the city was taken by the state through eminent domain, what remedy did the court give?
The money was divided by the city and the Inks- the Inks got cash for their possibility of reverter in the 27 acres and the city got a value for the park use; the court also gave the Inks a possibility of reverter in the city's money
67
In Broadway National Bank v. Adams (1882), Charles brother had a will that gave Charles a trust that granted him income for life, and specified that it shall be free from creditors. Charles racked up debt, and the creditors tried to reach Charles income. Did the wills attempted restraint on alienation (can't sell or give to creditors) work?
Yes. Because Adams did not have absolute ownership of the trust principal, he had no access to it, and it would frustrate the intent of the will to permit him to access the funds to pay off Broadway National Bank.
68
What is the modern rule for spendthrift trust and creditors? What is the exception?
If the trust is set up in a way to protect it from creditors, creditors will not be able to reach the money in the trust. The exception is that the creditors can reach the assets in the trust if the trust is a self-settled trust. The transfer to a trust in order to avoid creditors must be done prior to obtaining debt.
69
What is a merger?
If one person holds a vested legal life estate (or term of years) in land and a remainder or reversion in fee simple, they might merge together into a single estate.
70
O conveys “Blackacre to A for life then to B and his heirs.” What do A and B have?
– from O, A gets a life estate; B gets a remainder in fee simple absolute
71
O conveys “Blackacre to A for life then to B and his heirs.” Then B conveys “all my interest to A.” What does A have?
from B, A gets a remainder in fee simple absolute
72
O conveys “Blackacre to A for life then to B and his heirs.” Then B conveys “all my interest to A.” What would A have in merger?
A has a fee simple absolute in possession
| life estate + remainder= fee simple absolute
73
What are 2 ways in which contingent remainders WERE destructible in the old common law but sometimes in modern law when courts forget that contingent remainders are now indestructible?
1. if the remainder failed to vest in interest in time to vest in possession
2. if the contingent remainder is in-between 2 interests that are merging together
74
O transfers Blackacre “to A for life, then to B if B has reached 21.” If B gets a contingent remainder in fee simple and A dies while B is 18. What does B get- what's the outcome in the old common law but sometimes in modern law when courts forget that CR's are now indestructible? ?
B doesn't get it because he hasn't satisfied the condition precedent. His interest get's destroyed- even after B turns 21, he can't get anything. Therefore, O’s reversion becomes possessory.
75
O transfers Greenacre “to A for life, then to B for life if B buys Blackacre.” What do A, B, and O have in the old common law?
A has a life estate. B gets contingent remainder for life. O keeps a reversion in fee simple.
76
O transfers Greenacre “to A for life, then to B for life if B buys Blackacre.” Before B buys Blackacre, O sells reversion in fee simple to A. What happens to A, B, and O in the old common law but sometimes in modern law when courts forget that CR's are now indestructible?
Because A has a life estate and now a reversion, they may merge together forming a present interest in fee simple absolute and destroying B’s contingent remainder
77
According to the merger doctrine, If one person holds a vested legal life estate (or term of years) in land and a remainder or reversion in fee simple, they merge together into a fee simple unless they are separated by what 4 things?
1. a vested remainder (reversion or vested remainder) ( Refers to a remainder with an ascertained taker and with no condition precedent)
2. an executory interest (Executory interests are non-vested/contingent interests and are subject to the Rules Against Perpetuities; A fee simple subject to executory interest is a type of defeasible fee in which, on the happening of a stated event, automatically divests in favor of a third party that is not the transferor)
3. an indestructible contingent remainder (Contingent remainders can come in two forms: a remainder is created in an unknown person or a remainder that has a condition precedent to possession; Contingent remainders are non-vested, future interests of a grantee that are subject to the Rules Against Perpetuities- A common-law doctrine providing that a contingent remainder was destroyed if the prior estate terminated, for any reason, before the remainder became vested.)
4. a destructible contingent remainder and the merging interests are still held by the original taker.
78
```
What is the rule of convenience for class (a group- Ex: grandchildren) gifts; class closing?
(this is not a hard and fast rule- some courts apply it)
```
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If one member of the class is entitled to possession and enjoyment, the class closes and no more persons can enter the class (although the interest might later vest in those already in the class).
Ex: if the class is children and there are children who are alive and a child becomes entitled to possession, even if more children are born after that, they cannot join that class
```
79
What is the rule in Shelley's Case (RiSC)?
It will take an interest in A’s heirs and transfer it into an interest in A
80
O conveys Blackacre “to A for life, then to A’s heirs.” What do A's heirs have according to the rule in Shelley's Case (RiSC)?
Contingent remainder in A’s heirs becomes vested remainder in A (not in A's heirs- in A) by the RiSC. (then fee simple absolute by merger)
81
What are the 4 conditions required for the rule in Shelley's Case (RiSC) to apply?
(all 4 must be met)
1. One instrument
2. it has to create a life estate in A
3. a remainder in A’s heirs
4. both of those interests have to be legal or both equitable
... then A will take a life estate and takes the vested remainder in fee simple
82
According to the merger doctine, if one person holds a vested legal life estate (or term of years) in land and a remainder or reversion in fee simple, they merge together into a fee simple unless they are separated by what 4 things?
1. a vested interest (somebody else has a vested interest between the two that are merging)
2. an executory interest
3. an indestructible contingent remainder (most contingent remainders are this)
4. a destructible contingent remainder and the merging interests are still held as they were created. (if they are held by the same parties that originally held those interests in a transferee)
83
O conveys Blackacre “to A for life, then to A’s heirs. What does A take according to merger and the Rule in Shelley's Case (This was largely the rule in the past but today only a few states practice this)?
A takes fee simple absolute by merger and the Rule in Shelley's Case.
Even though we aren't doing what O wanted (O wanted an interest in A and then an interest in A's heirs), we are now saying both of those interests go to A. When A dies, A's heirs will get it.
84
What was the old rationale for merger and the Rule in Shelley's case?
People were avoiding estate taxes- feudal incidents- by giving an estate to A for life then to A's heirs. So these rules prevented people from avoiding taxes
85
What is the new rationale for merger and the Rule in Shelley's case?
X can now buy Blackacre from A. Before, by giving an estate to A for life then to A's heirs, A could not sell it because A's heirs had a future interest. Now, A has a fee simple absolute and can therefore sell it- there are no restraints on alienation for fee simple estate.
86
O conveys Blackacre “to A for life, then to O’s heirs.” According to the Doctrine of Worthier Title (might be only a rule of construction today, where it exists), what would the future interest be?
If O purports to create a contingent remainder in O’s heirs, the future interest is not a contingent remainder but is a reversion in O
87
What was the old rationale for the Doctrine of Worthier Title
(same as rational for Shelley's rule) O may have been avoiding his heir having to pay feudal incidents, this rule prevented people from avoiding taxes
88
What is the Rule against Perpetuities?
It invalidates some interests- "No interest is good unless it must vest, if at all, not later
than 21 years after some life in being at the creation of the interest"- “An interest is void if it might vest too late.”
89
In the Rule of Perpetuities- “An interest is void if it might vest too late,” what are the 3 interests?
1. remainder (contingent or vested)
2. executory interest
3. Option (and right of first refusal in some states) (even retained by the transferor)
4. In SOME states, a pre-emptive right
90
In the Rule of Perpetuities- “An interest is void if it might vest too late,” what interest does not apply?
an interest in a charity is not subject to the rule
| -Some people state this exception more broadly, saying that an interest in a charity is not subject to the Rule.
91
In the Rule of Perpetuities- “An interest is void if it might vest too late,” what portion of the interest applies?
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The whole interest created by some clause, not just the interest in one person. A class gift (e.g., to “children”) is one gift, not multiple gifts. One interest can vest in multiple persons at different times.
“Bad as to one, bad as to all.” We should say “the interest is bad”; rather than saying “one person’s interest is bad.” But often we slip into the latter usage. (this does not mean the whole instrument is void)
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92
In the Rule of Perpetuities- “An interest is void if it might vest too late,” what does "void" mean?
An interest is void, and the words creating it are void.
(same as for Gray)
- Strike out the words creating the invalid interest.
– This does not say the whole instrument is void. Just the interest that violated the rule against perpetuities is bad- there may be other interests in the will/trust that are good
93
In the Rule of Perpetuities- “An interest is void if it might vest too late,” "might" (what-might-happen (WMH) test) means as of what point in time? Does unlikelihood matter?
Might as of the time the perpetuities period starts to run (For this course: when interest is created. For Trusts and Estates, there are special rules for revocable trusts and powers of appointment.)
Unlikelihood does not matter; “what might happen” is the test.
94
In the Rule of Perpetuities- “An interest is void if it might vest too late.”
For "might" (what-might-happen (WMH) test) there are some exceptions. Certain sorts of events are not considered to be possibilities (even though they really are possibilities). We do not consider events made possible by what 2 things?
1. Modern medicine (people can have children long after death)
2. Future change in the law (changing the law might allow an interest to vest later)
95
In the Rule of Perpetuities- “An interest is void if it might vest too late.” For "vests," a remainder vests in a taker when what 2 things happen?
A remainder vests in a taker when
1. all conditions precedent are satisfied and
2. we have a taker that is ascertainable.
96
In the Rule of Perpetuities- “An interest is void if it might vest too late.” For "vests," an executory interest vests in a taker when what happens?
An executory interest vests in interest in a taker when it vests in possession in that taker.
97
In the Rule of Perpetuities- “An interest is void if it might vest too late.” What is "too late"?
After the end of lives in being plus 21 years plus a period of gestation
98
In the Rule of Perpetuities- “An interest is void if it might vest too late,” "too late" means after the end of lives in being plus 21 years plus a period of gestation. What are "lives in being"?
Lives in being are "persons in esse" (already born) when the perpetuities period starts to run (which is creation of the interest for us; but different for revocable trusts and powers of appointment (see Trusts and Estates)). “All the candles are lighted at once.”
99
For the Rule of Perpetuities, how do you prove that an interest will not vest too late, and will be either good or bad?
To prove an interest is:
– Good, find a validating life (alive at creation and alive near enough to vesting)
– Bad, find an invalidating scenario (vesting too late)
100
B is 2 years old. In a jurisdiction where contingent remainders are indestructible, O conveys “to A for life, then to B if B attains the age of 30.” Is the interest in B valid?
It is valid. We already know who B is so we have to satisfy the condition precedent for the interest to vest. The condition precedent will be satisfied when B turns 30. At that moment in time, the interest vests. B was alive when the interest was created, B is there when the interest vests. B serves as the validating life. We don't need the "21 years" portion. *It is based on what might happen in the future, not what does happen
101
O conveys “to A for life, then to A’s children for their lives, then to B if B is then alive, and if B is not then alive to B’s heirs.” Are the interests good (valid)? (assume no children unless they are mentioned). Remainder for life in A’s children: when will the remainder vest in each child of A? Who is the validating life?
No children are assumed to be alive right now. This is a contingent remainder in the children. It will vest as soon as A's children are born. That will happen within the life of A. Therefore, A serves as the validating life for the interest in A's children.
102
O conveys “to A for life, then to A’s children for their lives, then to B if B is then alive, and if B is not then alive to B’s heirs.” Are the interests good? Remainder in B: when will it vest if it vests?
That's a contingent remainder. It will vest, if it vests at all, when B is alive- "to B if B is then alive". That may come after the deaths of lots of people who are born but that doesn't matter- they're not lives in being- they can't serve as the validating life for B's interest. This doesn't mean that B can't serve as the validating life for B's interest. If B is alive at the time the interest is created, then B is alive at the time the interest vests so B is the validating life for B's interest. So, B's interest is good- if it vests at all, it vests within B's life
103
O conveys “to A for life, then to A’s children for their lives, then to B if B is then alive, and if B is not then alive to B’s heirs.” Are the interests good? Remainder in heirs of B:
when will it vest if it vests?
This is an alternative contingent remainder cause we don't know who the heirs of B are and there's an unsatisfied condition precedent (B is not alive at the end of the lives of A's children). When B dies, we know who the heirs of B are (not when B's heirs are born). It will vest at the time B dies, if it vests at all, because we will know who the heir/heirs is /are and whether B survived all the children. B is alive at the time the interest is created and B is alive at the time it vests. So, B serves as the validating life for interest in B's heirs.
104
O conveys “to A for life, then to A’s children for their lives, then to B if B is then alive, and if B is not then alive to B’s heirs.” How is it possible for O to have a reversion and when could O take possession?
– Note that different lives (A’s and B’s) were used as validating lives for different interests.
O has not transferred a vested interest in fee simple to anyone so O must've kept a reversion.
It's possible for O to take possession if A attempts to make a tortious
conveyance or perhaps if A commits waste
105
O, teacher of Property, declares that she holds in trust $1000 for “the first child of A to be admitted to the bar.” Is the interest good or bad, valid or void?
It is void because we can come up w/ a scenario where it vests too late (not that it won't vest at all- that it may vest too LATE): A and O have children after the interest is created, and A and O die and everyone dies from a meteor , 22 years pass and then the child of A passes the bar (too late).
106
How can you prove a trust's invalidity by an invalidating scenario?
```
– The interest is created
– Events occur, some people are born
– All die who were alive at creation (lives in being all come to an end)
– More events occur
– 22 years pass
– More events occur
– Interest vests
```
107
How can you prove a trust's validity by a validating life?
The proof of validity by a validating life
–Vesting will occur when some event (name it) occurs in the future (or
events occur in the future).
–That event will happen no later than 21 years plus a period of
gestation after the death of a person alive (name him or her or them)
at the time the interest is created.
–I.e., someone is alive at the time the period starts to run and still
alive (or dead for less than 21 years and a period of gestation) at
vesting.
108
O, teacher of Property, declares that she holds in trust $1000 for “the first child of A to be admitted to the bar.” What is one invalidating scenario?
– O makes the gift, creating the interest
– One year later, A has daughter D (and O has a daughter H).
– War kills all but D and H.
– 22 years pass.
– D is admitted to the bar.
109
A’s first child is 24. O conveys “to A for life, then
to A’s first child to reach 25.” In a jurisdiction where contingent remainders are destructible, as under the common law, the CRM is ____.
• A Valid
• B Void
Valid. This is because it is a contingent remainder for A's child (doesn't have to be the child already born, could be another child). A CRM that's not ready to take- not vested already- in time to take possession- is void. So, this is to A for life. If any child of A is going to take at the end of A's life, that child's interest must be vested before then. Cannot be vested after A dies. If it vests, it must do so before A dies. Therefore, A serves as validating interest in the first child of A to reach 25. Must reach 25 within the life of A.
110
A’s first child is 24. O conveys “to A for life, then
to A’s first child to reach 25.” In a jurisdiction where a statute makes contingent remainders indestructible, the CRM is ____.
• A Valid
• B Void
Void. Invalidating scenario: first a conveyance, then a child, C is born right after the conveyance (C is not a validating life), after that everyone gets killed off (including A's first child who is not yet 25) except for C, now all the lives in being have ended, it'll take 24 more years for C to reach 25, therefore void under Rule Against Perpetuities
111
A has a child that is 26. O conveys “to A for life,
then to A’s first child to reach 25.” In a jurisdiction where contingent remainders are indestructible, the interest is ____.
• A Valid
• B Void
Valid. As soon as the RM is created, it is already vested because there is no unsatisfied condition precedent. Because the event or vesting is already happening. Once the interest is created, it's vested in the child who is already 25. There is no unsatisfied condition precedent.
112
In Jee v. Audley (1787), Edward Audley’s will: 1000 pounds, interest to wife for life, then to “Mary Hale and the issue of her body . . . and in default of issue . . . to the daughters then living of my kinsman John Jee and his wife Elizabeth Jee.” – John and Elizabeth Jee are 70 years old. They will not have another daughter. But the court holds that, for purposes of the Rule Against Perpetuities, anyone alive can have a child. Obviously, the will referred to the daughters already born, but the court did not interpret it in this way. (Conversely, for the RaP it is impossible for a child to be conceived after the death of a parent, even though it is now possible, medically and legally.) Therefore, the interest in Jee's daughter is void. What is the invalidating scenario?
Mary has a child, Hope.
– The Jees have a daughter, Golly.
– Everyone dies in global war, except Hope and Golly. Hope takes possession. The candles have all burnt out.
– 22 years pass.
– Hope dies. As of that point, Mary has a “default of issue”, no more issue survive. Is there a “daughter” of the Jees “then living”?
– Yes, Golly qualifies as a member of the class and she satisfies the condition at that moment of survival. The interest vests in Golly Jee.
113
What does a saving clause do?
you can use this clause to save an interest from being void under the rule against perpetuities.
114
O conveys “to A for life, then to A’s widow, if any, for life, then to A’s issue then living.”
1. Is the interest in the widow good?
2. in issue of A living at death of A’s widow
What is the widow’s contingent remainder?
Yes. Because we'll know who the widow is at the end of A's life. A serves as the validating life for the interest in the widow
We don't know that the widow is a person who's alive today- what if the widow-to-be is born after the conveyance? The current spouse of A may not be the widow of A at the point of A's death- A may remarry by then. That could be a person who was not born at the time the interest was created and may not transfer within 22 years after the life of the people then existing at the time of conveyance.
... confused about this one. He said the widow's interest is good then he gave an invalidating scenario. SO not sure what the answer is ???
115
O conveys “to Greenpeace, but if they stop using
the land for educational films free to the public then to the Sierra Club.”
1. Could that happen far in the future?
2. Does Sierra Club have a shifting EI or nothing?
1. Of course, they could stop educational films in 1,000 years- which is way past lives in being + 21 years.
2. That does not wipe out the interest in the Sierra Club because it is an interest in the charity and therefore not under the Rule Against Perpetuities
116
If no humans are named, what is the time limit for the Rule Against Perpetuities?
If we don't name humans, then the RAP period- there's no lives in being- so the period is just 21 years
117
Firm conveys “Blackacre to the School Board, but
if the surrounding parcels are rezoned to allow non-residential use Firm may re-enter and retake possession.”
1. Could that happen a long time in the future, beyond lives in being plus 21 years? (Because no humans are named, the RAP period is 21 years.)
2. Is the interest in Firm valid or void in the USA?
1. Yes.
2. Valid. The interest in the firm is right of entry for condition broken- this is not an interest that is subject to the RAP (RAP interests are remainder, executory interest, and option)
118
Firm conveys “Blackacre to the School Board, but
if Firm pays $5000 to the Board, Firm may re-enter and retake possession.”
1. Could that happen a long time in the future, beyond lives in being plus 21 years?
2. Is the interest in Firm valid or void according to The Symphony Space v. Pergola Properties, NY 1996?
1. Yes
2. Void
It's an option (if $ is involved, it's an option) so it's subject to the Rule Against Perpetuities and since the $5,000 may not be paid within 21 years in the future (no human were named), it is void.
This is not optional to the school board, its an option in the hands of the firm and they can choose to say they are exercising their option, here's our money, ow we get the land.
119
Firm conveys “Blackacre to the School Board, but
if the School Board wishes to sell, Firm may purchase at the price set by the School Board.”
Is this a pre-emptive right or an option?
It's a preemptive right. Transferor can buy it at that price
The school board has already decided they are going to sell it and now the original transferor, the firm, gets to say they have the right of first refusal. the school board can set the price and the fir can choose to buy. Here, the school board can sell- they have a choice.
120
What is the Symphony Space dictum?
Whether or not a court will treat a preemptive right as an option and therefore subject it to the rule against perpetuities depends on how much it restrains development
121
In The Symphony Space v. Pergola Properties NY (1996), in 1978, Broadwest sold land on Broadway to Symphony Space for $10,010. Symphony Space granted Broadwest an option to repurchase the land for $15,000 in 1987 or $28,000 in 2003. In 1981, Broadwest sold the option to Pergola Properties, along with other land, for $4,800,000. In 1987, Pergola Properties tried to exercise its option.
• Symphony Space said the option its lawyer drafted 9 years earlier is void according to Rule Against Perpetuities.
• By the time of the case, the option was worth approximately $21,000,000; the price at which the option could be exercised was around one-thousandth of that.
Should the RaP apply to options?
Doctrinally, options retained by the grantor should be treated like other interests retained by grantors- like a right of entry ad rights of entry are not subject to the RAP.
122
In The Symphony Space v. Pergola Properties NY (1996), Broadwest may exercise its option during any of the following periods:
– (a) after 1979, if the Notice specifies a closing during any of 1987, 1993, 1998, and 2003;
– (b) any time after the debt is mature;
– (c) after the termination of the lease; or
– (d) after a default by Symphony on mortgage.
Are B, C, ad D valid or void?
The RaP period is 21 years if there are no humans in the transaction.
Option created in 1978. Exercised in 1987= PP tried to exercise within 21 years.
But, it's what might happen that will void an interest.
B, C, ad D are void because those are 24 or 25 years after creation of the interest.
123
In The Symphony Space v. Pergola Properties NY (1996), Broadwest may exercise its option during the following period, and the court must determine if this is valid or void: (a) after 1979, if the Notice specifies a closing during any of 1987, 1993, 1998,
and 2003; Are 1987, 1993, and 1998 too late (more than 21 years after 1979)?
They are all within 21 years of 1979, But 2003 is too late, so the court must apply the Split contingencies/ alternative contingencies/ separability doctrine.
124
What is the Split contingencies/ alternative contingencies/ separability doctrine?
Longhead v. Phelps KB 1770, applies if the different ways of vesting are set
out separately.
If there are different ways that an interest may vest and those interests are set out separately then we can deal with them separately under the rule against perpetuities.
125
In The Symphony Space v. Pergola Properties NY (1996), Broadwest may exercise its option during the following period, and the court must determine if this is valid or void: (a) after 1979, if the Notice specifies a closing during any of 1987 ($15K), 1993 ($20K), 1998 ($24K), and 2003 ($28K). Did the Option Agreement part 3(a) set out 4 different contingencies?
All four dates are separately stated and the prices are different for each of those four different dates therefore the doctrine of separability applies. Under that doctrine we can strike out the bad interest
(court didn't rule this way though)
126
What is the “wait and see” reform?
An interest is void if it does vest too late.”
127
According to the Wait-and-See [WAS] doctrine, an interest is good if?
– good under common law what-might-happen WMH or
| – it actually vests in interest in time.
128
According to the Wait-and-See [WAS] doctrine, what are the 3 versions of "in time"?
1. if it vests during life tenancy.
2. look at all relevant lives in being, wait out their lives plus 21 years plus gestation and if there's still not an interest that vests at that date, then it'll be struck down
3. USRAP: anything that vests within 90 years is good. (The permissible vesting period is 90 years.)
– USRAP specifically says also good under WMH.
– Half of states have adopted it.
129
What are some of the reforms to RAP?
fertile octogenarians, unborn widows, class gifts tat vest in some members too late does ot wipe out the whole class, options in grantors should not be subject to the RAP, commercial options in grantees should not be subject to the RAP, etc.
130
What is the Cy Pres reform?
Can reform the instrument so that it doesn't violate RAP.
131
What is seisin?
package of rights & responsibilities; the legal possession of an estate in land.
132
When is a person seised?
A person is seised if she has a present freehold estate (fee simple, fee tail, life estate), unless she’s been disseised by someone taking possession with better title
133
What are the Words of Limitation and the Words of Purchase in “To A and her heirs”?
(1) “To A” = Words of Purchase (who takes)
| 2) “And her heirs” = Words of Limitation (what type of estate
134
What is escheat?
When land goes back to the state; after it runs out of all possible interests (no reversion, no more succession interests)
135
What is a freehold estate?
holder has seisin- ownership (package of rights & responsibilities)
136
What are the 3 freehold estates?
fee simple, fee tail, life estate
137
What is a fee simple estate?
A fee simple is generally created when a deed gives the land with no conditions; Default; “To A” or “to A and his heirs” (“and his heirs” magic words are not necessary today); exists in all states (except Louisiana)
138
What are the 2 categories of fee simple estates?
(1) Fee simple absolute — as close to unlimited ownership as our law recognizes; descends through heirs; no reversion; Largest estate in terms of duration, may endure forever
(2) Fee simple defeasible — may end early based on durational or conditional requirement being met (see “Defeasible” above)
139
What are the 2 kinds of Fee simple defeasible estates?
1. Fee simple determinable (durational): grants a right in transferee (present interest), which is a fee simple determinable and grants a right in transferor (future interest), which is a possibility of reverter. It is automatic
2. Fee simple subject to condition subsequent (conditional): grants a right in transferee (present interest), which is a fee simple subject to condition subsequent and grants a right in transferor (future interest), which is a right of entry. This is NOT automatic, requires action
140
One of the ways to inherit a Fee Simple estate is through intestate succession. What is intestate succession?
Property descends to heirs - persons who survive the decedent and are designated as intestate successors under the state’s statute of descent.
141
What is the order of inheriting a Fee Simple estate through intestate succession?
Classes of kindred are usually preferred as heirs in this order: first issue (descendants - kids/grandkids); if no issue then parents; if no parents then collaterals (brothers/sisters, nieces/nephews, aunts/uncles, cousins); if no collaterals then escheats to state
(a) Issue >> Parents >> Collaterals >> Escheat (State)
142
A Fee Tail is another type of Freehold Estate. What is a fee tail? Who inherits it? What do the transferor/transferee receive?
“To A and the heirs of his body” (children, grandchildren, etc.) ; Tailored to medieval dynasts who wanted inheritance secured; Fee tail descends down (never out) through bloodline until it runs out and fee tail ends
(1) Every fee tail is followed by either a reversion back to transferor or a remainder given to a transferee (when designated bloodline eventually runs out)
143
A Life Estate is another type of Freehold Estate. What happens when a life estate is transferred? What future interests can come from a life estate?
(1) Person with life estate can transfer life estate —> BUT it is still in terms of duration of A’s life
(a) A transfers his life estate to B; B’s life estate is pur autre vie
(b) If B dies during A’s lifetime, the estate passes to B’s heirs or devisees until A dies
(2) Every life estate is followed by a future interest — either a reversion back to transferor or a remainder given to a transferee
144
What are the 3 types of Reversionary Interests (future interests) of the transferor?
Reversion, Possibility of Reversion, Right of Entry for Condition Broken
145
What is a reversion?
A reversion in property law is a future interest that is retained by the grantor after the conveyance of an estate of a lesser quantum that he has (such as the owner of a fee simple granting a life estate or a leasehold estate).
146
Is a Contingent remainder in Fee Simple on same level as original fee simple absolute?
No. A vested remainder in fee simple is on same level as original fee simple absolute?
147
Is a possibility of reverter, such as (a) “O —> A for life for so long as A does not drink alcohol”, called a reversion?
Yes
148
If a grantor gives the same level of an estate to a grantee, called a Possibility of Reversion?
yes but Durational language limits grantee’s interest
149
If a grantor gives the same level of an estate to a grantee, called a Right of Entry for Condition Broken?
Yes but Conditional language limits grantee’s interest
150
What type of reversionary interest characterizes: “O —> A for life, but if A drinks alcohol, O can reenter and retake”
Right of Entry for Condition Broken Incident to a Reversion
FS —> LE = reversion; Conditional Language = Right of Entry for Condition Broken
151
What are the 2 Future Interests of a transferee (what remains after initial transfer)?
Remainder and Executory Interests
152
What are the 2 rules regarding remainders (what can they not do)?
cannot spring in futuro and cannot shift
153
Describe the rule for remainders- "Cannot spring (in futuro)"
(i) A future interest that calls for seisin to spring at some point in the future from O (original grantor) to future interest holder IS NOT A REMAINDER
(ii) Ex: “to B for life, starting at A’s death.”
154
Describe the rule for remainders- "Cannot shift"
(i) Cannot be cut short before natural termination (“no conditions in strangers”)
(a) “To A for life, but if A becomes bankrupt to A’s children” (conditional language)
(b) Durational language IS OKAY; remainder stays intact (“To A for life or until A becomes bankrupt”)
(ii) Cannot come after vested fee simple
155
What makes a remainder "vested"?
1) ascertainable taker (someone who meets description; not necessarily “named”) AND (2) NOT subject to condition precedent
156
“to A for life, then to A’s children and their heirs.” A has child, B. What does B have?
B has vested remainder in fee simple subject to open. (vested in interest not in possession)
157
What is a vested remainder "subject to open"?
You could end up having to share with more people
158
“to A for life, then to B and B’s heirs, but if B does not marry C by the time A dies then to C and C’s heirs.” What does B have?
B has vested remainder in FS subject to complete divestment
159
What is a vested remainder "Subject to Complete Divestment"?
You could lose the whole thing; Vested Remainder w/ condition subsequent
160
“To A for life, but if A drinks alcohol then to B” What does B have?
B has contingent remainder in FS
161
What is a contingent remainder?
If no ascertainable taker, or if unsatisfied condition precedent (before or in same clause as estate)
