Estates and Interests

Question 1

Types of Defeasible Estates (and future interests created)

Answer 1

-Fee Simple Determinable (possibility of reverter)
-Fee Simple Subject to Condition Subsequent (default) (right of re–entry)
-Fee Simple Subject to Executory Limitation (executory interest)

Question 2

CL Fee Simple Absolute vs. Modern

Answer 2

Common Law–needed to say “To A and his heirs”
Modern–default, “to A” enough
Grants all rights one can have in land, forever
Can’t really destroy–closest if if die w/out will or heirs, escheats to the state

Question 3

Devisee

Answer 3

Person who takes by will

Question 4

Heir

Answer 4

Person who takes by law of intestacy (also used colloquially)

Question 5

Grantee

Answer 5

Person who takes by inter vivos (“b/tween the living”) transfer

Question 6

Defeasible

Answer 6

Estate that can end before its maximum duration before max duration occurs (ex. life estate–before end of life; FSA; not forever)

Question 7

Future Interests created w/ life estate, term of years

Answer 7

Not to third party = interest in reversion (NOT reverter) to grantor + heirs
-NOT subject to RAP, b/cause vests at execution of instrument (like all future interests in grantor)
-Devisable, descendible transferable

To third party–future executory interest
Subject to RAP

Question 8

Fee Simple Determinable (FSD)

Answer 8

“To A as long as she lives in the state”

Can ONLY have if “magic words”: “as long as/for so long as,” “during” “until” “while”–durational

Automatically terminates if event happens, returns to grantor/heirs

Possibility of reverter in grantor + heirs

Question 9

Default/Preferred Defeasible Estate

Answer 9

Fee Simple Subject to Condition Subsequent (but often courts just interpret ambiguous as FSA rather than FSSC–really like FSA)

Question 10

Future interest created w/ Fee Simple Determinable

Answer 10

Possibility of reverter in grantor + heirs

NOT SUBJECT to RAP–vested when instrument executed

Freely transferable, devisable, AND descendible

Question 11

Magic words for FSD

Answer 11

Fee Simple Determinable–durational language
-“As long as/for so long as”
-“Until”
-“While”
-“During use as”

Question 12

Language for FSSCS

Answer 12

Fee Simple Subject to Condition Subsequent–
conditional language
Ex. -unless, provided, however
,on condition that, in the event that
AND
Generally need to express reserve a power of termination in grantor [“then A can retake,” etc.]
W/out–court may say is just a FSD

Question 13

Fee Simple Subject to Condition Subsequent

Answer 13

“From A to Y, unless Y gets a cat, then A has the power to terminate Y’s estate.”

Generally need conditional language (unless, on the condition that, etc.) AND expressly reserved power of termination in grantor/heirs

Right of reentry in grantor/heirs if condition met–but not auto, must enter/use** to activate** (condition meet alone = still belongs to grantee–need condition + action to reclaim)

Question 14

Future Interest Created w/ Fee Simple Subject to Condition Subsequent

Answer 14

Right of Reentry/Power of Termination
In grantor/heirs, but not auto upon breaking, MUST activate to take effect–take affirmative steps

NOT SUBJECT to RAP–vests at time document executed (like all future interests in grantor)

Devisable and descendible, but NOT transferable intra vivos

Question 15

Failure of creation of future interest

Answer 15

If don’t use right words–can just be FSA
Becomes covenant—Can still sue on damages/breach of covenant–but don’t get land

Question 16

Executory Interest

Answer 16

Always what is created when create interest letting third person cut short previous estate before ends (vs. remainder–natural end)

Cut short + Third person getting= executory

Fee simple subject to executory limitation, life estate subject to executory limitation, etc.

Auto termination upon happening of event
Subject to RAP

Question 17

Future Interest created w/ FSSEL

Answer 17

Executory interest (automatic)
Can be shifting (auto to 3rd party) or springing (auto back to grantor for X time, then to 3d party)
Subject to RAP

Question 18

Unclear Grants of Land

Answer 18

General Principles if ambiguous:
-FSA preferred, forfeiture avoided
1) Covenant preferred over defeasible estate (b/cause award is damages vs. forfeiture)
2) FSSCS preferred over FSD (because forfeiture not auto)

Question 19

Freehold Estates vs. Non-Freehold

Answer 19

Non-freehold–limited in duration, basically landlord/tenant (term of years–“for 50 years” “for 1 month”)

Question 20

Life Estate

Answer 20

Lasts for duration of grantee’s life

Default: after grantee dies, returns to grantor + G’s heirs

G + heirs have interest in reversion–life estate does actually have some duties to them

Question 21

Life Estate Per Autre Vie

Answer 21

Life estate measured by someone else’s life (ex. “From X to Y, for the life of C”)

Question 22

Life Estate Duty re: Repair

Answer 22

Duty to maintain property in reasonable state of repair (ordinary wear and tear N/A)
Limit–only extent of income derived from or (if living on) r. rental value of land
Can be liable to people who will hold for waste

Question 23

Tenant for Years/Periodic Tenant Duty re: Repair

Answer 23

Duty to maintain property in reasonable state of repair (ordinary wear and tear N/A)
Not limited by income derived or r. rental value (but now most states have statutes)

Question 24

Life Estate Duty re: Mortgages

Answer 24

Have to pay interest to extent of profits derived from property

Question 25

Tenant for Years/Periodic Tenant Duty re: Mortgages

Answer 25

No CL duty to pay

Question 26

Life Estate Duty re: Taxes

Answer 26

Pay all ordinary taxes, to extent of profits derived from prop.

Question 27

Tenant For Years/Periodic Duty re: Taxes

Answer 27

No duty, UNLESS 1) Lease "perpetual" or long-term w/ option for tenant *and successors* to renew "forever” OR 2) Tenant holds w/out any duty to pay rent OR 3) Tenant has put improvements on premises for his own benefit

Question 28

Reversionary Interest

Answer 28

Created **in grantor** when grantor transfers less than a fee interest to a person (ex. life estate, term of years) Can be silent, temporary (ex. "To Y for life, then to Grantor for 1 year, then to Z--silent reversionary interest in G) Transferable, devisable, descendible NEVER SUBJECT to RAP

Question 29

Remainder

Answer 29

A **future interest** created in **third person** intended to happen **after natural termination** (i.e. not conditional) of preceding estate (Ex. "To B for life, then to C") Subject to RAP

Question 30

Vested Remainder

Answer 30

Remainder vests when: 1) Ascertainable person AND 2) Not subject to any condition precedent, except termination of preceding estate

Question 31

Contingent Remainder

Answer 31

**Key Q**--do we ***know who this person is?*** Remainder that has not vested, b/cause either 1) NOT ascertainable person(s) to ID OR 2) Subject to condition precedent that hasn't occurred (ex. "to X, then to X's oldest child living"--until X die, don't know who will be oldest child alive)

Question 32

Things to look out for re RAP, contingent remainders

Answer 32

Children--generally assume people can have children even if old ("fertile octogenarian") Just because has children now, doesn't mean all will survive, all have been born--tricky if "oldest child living," "all grandchildren"

Question 33

Vested Remainder Subject to Total Divestment

Answer 33

Vested, but *can terminate if x event happens* Ex. FSSCS, FSSE "To B, unless she buys a ferret"

Question 34

Vested Remainder Subject to Open

Answer 34

Remainder made **to class** where there is **at least one member** whose rights **have vested** (i.e. is: 1) ascertainable; and 2) not subject to conditions precedent beyond end of prior estate), but the **class may have other members join** in the future Ex. "then to the children of C"--even if C already has kids, might be more "to the children of C who reach 21"--not only might there be more kids, but some might not meet the condition precedent

Question 35

Open Class

Answer 35

Class of people with remainder, but who **haven't all been determined yet** either b/cause don't meet condition yet or don't exist (ex. "the children of X," "the children of x who are over 16")

Question 36

Class Opening for Remainder Interest

Answer 36

***Inter vivos*** transfer = opens at time of conveyance (write + convey "to children of C = if one child dies a day later, goes to child's heirs) **Testamentary** transfer = opens at time of death of testator (NOT when written, NOT when clears probate) (X writes + conveys to kids of C in will, one child dies a day before X--child's heirs out of luck)

Question 37

Closing of Class

Answer 37

-If RAP violated by class--voids future interest -Can save via rule of convenience -Class closes = afterborn children cannot join

Question 38

RAP + Open Classes

Answer 38

CL-- if **any member** of class could **potentially** claim in way that violates RAP = **entire class gift invalid** Modern--Rule of convenience--class **closes to afterborn children** once **one member entitled to immediate possession** -"Too bad rule"

Question 39

Rule of Convenience

Answer 39

Way to save class that might violate RAP--"too bad rule" -Once **one member** of class **meets conditions + entitled to immediate possession** class closes--**afterborn children cannot join** Ex: B for life then children of C who are 25--C has X + Y + Z before B's death, X turns 25, B dies, C has child W--class closed since X met conditions--Y + Z will share once hit 25, W out of luck)

Question 40

Types of Executory Interests

Answer 40

1) **Shifting** = **immediate transfer** from prior person--> third person (**grantee--> grantee**) (Ex. "To X, unless X gets ferret, then to Y") 2) **Springing** executory interest = **pause between** when goes to 3rd person--goes back to grantor + **3rd person cuts grantor off** (**grantee A->grantor-->grantee B) (Ex. "To X for life, then to grantor for 2 years, then to Y"--grantor had 2 year reversion in fee)

Question 41

Persons subject to waste rules

Answer 41

Fee = can do anything (even if possibile fee could be cut short in future, ex. FSSCS, FSSEL) Less than fee = cannot commit waste (ex. life, term of years, etc.)

Question 42

Waste

Answer 42

Harming property at expense of person who **will** (not might) hold after them Only applies re: non-fee interests (ex. life estate, tenant, **mortgagor/mortgagee**) 3 types: voluntary, permissive, ameliorative

Question 43

Voluntary Waste

Answer 43

Intentionally or negligently damage property--liable

Question 44

Permissive Waste

Answer 44

Fail to take reasonable steps to avoid damage (ex. know in hurricane area, don't get hurricane-proof doors)--liable

Question 45

Ameliorative waste

Answer 45

Make improvements to land CL = **can't do w/out permission,** may have to pay to restore Modern = **can't UNLESS** 1) Market value of remainderman interest not impaired AND 2) Permitted by remainderman OR 3) Sub and permanent change in neighborhood justifies

Question 46

Waste exception

Answer 46

Only re: ameliorative waste, only if modern rule applies OK if 1) **Market value** of remainderman **interest not impaired** AND 2) **Permitted **by remainderman OR 3) **Sub. and permanent change** in neighborhood **justifies**--basically, can't enjoy property anymore

Question 47

RAP applies to

Answer 47

1) Executory Interests 2) Contingent Remainder 3) Vested Remainder Subject to Open 4) Purchase Option 5) Right of First Refusal

Question 48

Rule Against Perpetuities

Answer 48

**"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."** Key q--is there *any* scenario where someone could claim over 21 years after everyone now alive + connected to deed dead? If clause violates RAP--knock out

Question 49

Total Restraint on Alienation

Answer 49

Completely prevents transfer of property--"if B ever tries to sell her interest then to C" Fee estate--usually invalid Less than fee--OK if *reasonable*

Question 50

Partial Restraint on Alienation

Answer 50

-Purchase Option -Right of First Refusal Valid if *reasonable*: Consider: 1) **limited** in **scope and time**? (subject to RAP) 2) **Purpose** of restraint? 3) **Interests** of parties? 4) Supported by **consideration?**

Question 51

Purchase Option

Answer 51

Reservation of right to buy--ex. "A to B and heirs, but reserve right to buy *back during my lifetime*" -**Subject to RAP**

Question 52

Right of First Refusal

Answer 52

Partial restraint on alienation--gives right to match legit offer ("if sell, must first offer to X at same price") **Subject to RAP**

Question 53

Restraints on Alienation re: inheritable future interests

Answer 53

Void where restraint may continue in effect after the future interest becomes possessory Simpler way to phrase: if future interest will result in fee simple, restraint void from start as against public policy