estates and such

Question 1

Externality (Def)

Answer 1

includes external costs, external benefits, and pecuniary and non-pecuniary externalities. What converts a harmful or beneficial effect to an externality is the cost of bringing the effect to bear on the decisions of one or more of the interacting persons is too high to make it worthwhile.

Question 2

Internalizing (def)

Answer 2

refers to a process, usually a change in property rights, that enables these effects to bear (in greater degree) on all the interacting persons

Question 3

escheat

Answer 3

if a person died intestate without any heirs, the person’s real property escheated to the overlord in feudal times. Now such property escheats to the state where the property is located. no surviving heirs can be found (even looking at collaterals) - goes to the state where located

Question 4

Issue

Answer 4

(synonym: descendants)- if the decedent leaves issue, they take to the exclusion of all other kindred. doesn’t refer just to children - but further descendants

Question 5

fee simple conditional

Answer 5

a fee simple conditional upon having issue

Question 6

fee tail

Answer 6

A’s lineal descendants (heirs of the body) generation after generation, and expires when the original tenant in fee tail, A, and all of A’s descendants are dead. When A’s bloodline runs out and the fee tail ends, the land will revert to the grantor of the grantor’s heirs by way of reversion or, will go to some other branch of the family. Every fee tail has a reversion or a remainder after that.

Question 7

Pur autre vie

Answer 7

when the duration of a life estate is measured by the life of a person other than estate holder

Question 8

Heirs

Answer 8

no living person has heirs. Only when s/o dies intestate

Question 9

ancestors

Answer 9

in prop law, it’s also parent, child, parent, child

Question 10

Fee simple construction

Answer 10

to a and his heirs

Question 11

collaterals

Answer 11

cousins, aunts and uncles, etc

Question 12

White v. Brown

Answer 12

(crytic language) The intention of the testator is to be ascertained from the language of the entire instrument when read in light of the surrounding circumstances

Per statute: Unless “words and context” clearly evidence an intention to convey only a life estate, the will should be construed as passing in fee (fee presumption)

Question 13

objections to restraint on alienation

Answer 13

1. Such restraints make property unmarketable - can’t collateralize, not efficient for economic purposes.
2. perpetuate the concentration of wealth -
3. discourage improvements on land.
4. restraints prevent the owner’s creditors from reaching the property

Question 14

Types of restraints on alienation:

Answer 14

1. disabling restraint - withholds from the grantee the power of transferring his interest
2. forfeiture restraint - provides that if the grantee attempts to transfer his interest, it is forfeited to another person
3. promissory restraint - provides that a grantee promises not to transfer his interest. If valid, it’s enforceable by contract remedies of damages or an injunction.

Question 15

Valuation of life estate

Answer 15

first figure out how many days they have to live. Then you say, what is the present value of what it woudl take to give aunt mary the value of the going interest rate for the remaining amount of time of her life. Should know the logic of the formula.

Question 16

Judicial response to inflexibility of legal life estate

Answer 16

construction (try to implement grantor’s intent, judicial sale (1)equitable necessity – best interest of all parties and most practical method to effectuate grantor’s intention to provide comfort for like tenant, and preserve asset value for remainderment (Baker v. Wheedon), 2)waste avoidance – deterioration or destruction of underlying property - best interest)

Question 17

waste

Answer 17

actions of the life tenant that permanently impair the property’s value or the interest of the future interest holders. Cases conceptualize as derived from grantor’s desire to give the life tenant reasonable use of the land, consistent with its preservation. Newer cases regard as device to prevent one person from unfairly reaping econ benefits from land possession and imposing econ losses on another who shares

Question 18

waste categories

Answer 18

affirmative waste - (voluntary) when a life tenant acts affirmatively to damage land permanently
permissive waste - when a life tenant fails to act reasonably to protect deterioration of the land
ameliorative waste - when life tenant acts affirmatively to change the use of the land. Actionable when 1)grantor intended no change in use, 2)prop may still be reasonably used in fashion grantor intended.

Question 19

Baker v. Weedon

Answer 19

They can tell that they really wanted the property to benefit her, not the grand kids. (again, acting as trustee). They take a “best interest” approach - split up the land - le ther keep the land that she lives on, and sells some of it so she could live.

Question 20

fee simple determinable

Answer 20

when grantor intends to grant a fee simple only until a specified future event happens “To a, for so long as [condition]”.

Retained interest is the possibility of a reverter. It’s automatic.

Magic words: so long as, until, during, while

Question 21

Fee simple subject to a condition subsequent

Answer 21

grantor intends to convey a fee simple absolute, but has attached a string to it so if a specified future event happens, grantor can pull the string ans get fee simple back. Almost sounds like an afterthought.

retained interest: right of reentry, power of termination. Requires action. If ambiguous, the courts prefer this.

Magic words: provided, however, but if, and on condition that

Question 22

Odd Fellows Case

Answer 22

House had to be used by odd fellows and when violated would revert Ds estate. Holding - fee simple subject to a condition subsequent. It’s valid, and no formal language is necessary to create a FSSTCS

Question 23

defeasible fee remedy and problems

Answer 23

remedy - forfeiture

problems - restraint on alientation, difficult to value

Question 24

executory interest

Answer 24

IF grantor uses words necessary to creat a fee simple determinable, but instead of retaining the possibility of a reverter, the grantor transfers to a 3rd party.

Question 25

fee simple subject to an executory limitation

Answer 25

a fee that is divested or shifted from one transferee to another upon occurrence of some future event.

Question 26

reversion

Answer 26

the conveyance of any estate that is less than the original estate owned by the grantor will create a reversion. Reversions are always vested.

Question 27

vested remainder and types

Answer 27

vested if it is created in a known person, and possession is not subject to any condition subsequent. It must necessarily become possessory whenever the prior possessory estate expires.

1) indefeasibly vested remainder - certain to become and remain possessory.
2) vested remainders subject to complete divestment - remainder created in a known person and not subject to any condition precedent, but is subject to a condition subsequent that if occurs will completely divest the remainderman of his interest
3) vested remainder subject to open or (partial divestment)- a remainder created in a class of grantees

Question 28

contingent remainder

Answer 28

remainder created in an unknown person or that has a condition precedent to possession.

Question 29

springing executory interest

Answer 29

a future interest created in a grantee that divests the grantor at some future time after the conveyance

Question 30

shifting executory interest

Answer 30

a future interest in a grantee that divests another another grantee upon the occurrence of some condition. The shifting interest cuts short the preceding estate prior to its natural expiration.

Question 31

Rule against perpetuities

Answer 31

applies to all contingent future interests to prevent uncertainty about future ownership and possession from continuing so far into the future that it becomes inalienable.

“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”

It requires you to identify some person living on the date of the grant to serve as the measuring life for the interest in question.

Question 32

USRAP w. opt-out permitted

Answer 32

perpetual trust - can put assets in a trust permanently