Free Hold Estates - Estates in Land: Freehold v Non-Freehold Estates

Question 1

Law To Follow

Answer 1

Common Law Rules unless there has been a Majority Change

Question 2

Types of Freehold Estates

Answer 2

1. Fee Simple - including defeasable fees
2. Life Estate
3. Fee Tail

Question 3

Fee Simple Absolute (FSA)

Answer 3

• potentially infinate duration
• must be fully alienable
  
  • conditions may be imposed on a fee simple, but any attempt to limit the right of transfer is void
  • Rights of First Refusal are VALID form of restraint
• courts will presume FSA was granted unless language shows a clear intent to grant otherwise

Question 4

Creation of a FSA: Common Law and Majority Change

Answer 4

Common Law required very precise language

• “To A and her heirs”

Majority Approach presumes FSA was granted unless language of the grant shows a clear intent otherwise

Question 5

Estates with future rights of possession are called:

Answer 5

Future Interests

Question 6

Non-freehold estates are called:

Answer 6

Landlord-tenant estates

Question 7

Fee Tail

Answer 7

• almost completely abolished
• at common law this would lock the property into the grantee’s family with language:
  
  • “To A and his bodily heirs”
• Today that language presumes a Fee Simple

Question 8

Life Estate

Answer 8

• may be granted expressly or arise by implication
• not measured by time, only by Life
• where a life estate is created by implication it is usually created by necessary implication from the terms of Testator’s will

Question 9

Life Estate Pur Autre Vie

Answer 9

A life estate measured by another

• If the life tenant dies before the measuring life dies, the life estate passes to the estate of the deseaced life tenant and continues in place until the measuring life dies

Question 10

Life Esates & Restraint Upon Alienation

Answer 10

Modern rules allow a provision that terminates a life estate if the life tenant attempts to convey away the life estate

Question 11

The Law of Waste & Types of Waste

Answer 11

The general rule is that the life tenant maintains the estate. “Maintain” is the maximum and minum required of the the Life Tenant

Types of Waste:

1. Voluntary Waste
2. Permissive Waste
3. Amerliorative Waste

Question 12

Voluntary Waste

Answer 12

• Voluntary waste is any affirmative action beyond the right of maintenance that causes harm to the property
• Maintain means life tenant continues the normal use of the land
• Open Mines Doctrine
  
  • Depletion of natural recourses constitutes waste unless consumption of such resources constitutes normal use of the land

Question 13

Open Mines Doctrine

Answer 13

Depletion of natural recourses constitutes waste unless consumption of such resources constitutes normal use of the land

Question 14

Permissive Waste

Answer 14

Permissive waste involves the failure to maintain - The Life Tenant must do the following to avoid liability under permissive waste:

1. Repairs
2. Taxes
3. Mortgage Debt
4. Insurance

Question 15

Permissive Waste - Life Tenant’s duty to make Repairs

Answer 15

• LT has obligation to make ordinary repairs, but not to replace
• LTs repair obligation is limited to the rents and profits received from the land
• If there are no rents and profits from the land, then the LTs repair obligation is limited to reasonable rental value of the land if the life tenant is using the land
• If LT is not recieiving income from the land and is not using the land then he has no duty to make any repairs

Question 16

Permissive Waste - Life Tenant’s duty to pay taxes

Answer 16

• The tenant must pay all taxes on the property
• The obligation to pay taxes is subject to the same limitations as with repairs
• Holder of future interest must make sure the taxes are paid because otherwise a tax sale will eliminate the future interest
  
  • the buyer at the tax sale takes the property free and clear of any future interests

Question 17

Permissive Waste - Life Tenant’s duty on Mortgage-Debt

Answer 17

• LT must pay interest on any mortgage indebtedness on the property but is not required to make any principal payments
  
  • the holder of the future interest generally must make the principal payments
• The interest obligation is subject to the same limitations as repairs

Question 18

Permissive Waste - Life Tenant’s duty on Insurance

Answer 18

• LT does not have to insure the property
• But LT does have an insurable interest

Question 19

Ameliorative Waste

Answer 19

• Ameliorative Waste occurs when the LT alters the property substantially but the LTs activity actually increases the value of the land
• So if circumstances have rendered the property relatively worthless, the LTs will not be liable to the holder of the future interest for any improvements

Question 20

Seisin

Answer 20

• All freehold estates carry with them the concept of seisin, which means that the holder of the seisin is the taxpayer
• Everytime a conveyance is made, we want to know who has Seisin
• No Gaps in Seisin

Question 21

Three Future Interests in Grantor

Answer 21

1. Reversion
2. Possibility of Reverter
3. Right of Entry

Question 22

Reversion

Answer 22

Arises whenever the Grantor conveys away less than the full durational estate that the grantor had

Question 23

Possibility of Reverter

Answer 23

• Whenever the Grantor conveys a Fee Simple Determinable (FSD), the grantor automatically retains a possibility of reverter
• The FSD will determine (or end) automatically on the occurance of the stated event
• Magic Words to Identify FSD
  
  • so long as
  • while
  • during
  • until

Question 24

Right of Entry (power of termination)

Answer 24

• Title does not go back to the grantor automatically when the condition is broken
• Title stays with the grantee until the owner exercises the right of entry
• Grantor keeps a right of entry whenever he grants a Fee Simple Subject to Condition Subsequent (FSCS)
• Magic words for an FSCS
  
  • provided however
  • but if
  • on condition that
• To create an FSCS, the magic words must be followed by language where Grantor expressely reserves the right of entry to retake the property

Question 25

Transferability of Future Interests in a Grantor

Answer 25

* All future interests in the Grantor are vested and thus not subject to the Rule Against Perpetuities (RAP) * All are freely transferrable on death and intervivos * Right of Entry cannot be transferred intervivos

Question 26

Two Future Interests in the Grantee

Answer 26

1. Remainders 2. Executory Interests

Question 27

Whats a Remainder

Answer 27

* A remainder is a future interest in 3rd person grantee that comes naturally and immedietly on the termination of the preceeding estate

Question 28

Types of Remainders

Answer 28

1. Vested 2. Contingent

Question 29

Vested Remainder

Answer 29

* A remainder is vested if nothing stands in the way of its becoming possessroy at the natural experation of the preceeding estate -2 criteria 1. Taker must be ascertainable 2. no conditions to the taking

Question 30

Contingent Remainder

Answer 30

Arises where there is a condition (such as a sruvivorship clause) that the grantee must satisfy before his interest will become possessory

Question 31

Class Gifts & Vested Remainders Subject to Open

Answer 31

* A class gift is a gift to a group of unamed persons * Where the remiander is a class gift to unamed persons **whose members are not fully known**, the class remains open to allow for future persons to qualify for the gift - this is know as: * **Vested Remainder Subject to Open** to allow for the birth of a future sibiling * Sometimes called Vested Remainder Subject to Prior Divestment

Question 32

Time for Vesting of Class Gifts and the Rule of Convenience

Answer 32

* Under the rule of convenience, the class closes for a class gift whenever any class member is entitled to a distribution * Members of a class who predecease the Testator are eliminated * Their gifts lapses (unless they were in gestation at the time of Testators death)

Question 33

Executory Interests

Answer 33

* An exutory interest operates to cut short the estate that comes before it * If a future interest in a grantee is not a remainder, the it is an executory interest * A vested remainder subject to an executory interest is sometimes called: * Vested Remainder subject to Complete Divestment * Vested Remainder Subject to Executory Limitation *

Question 34

In Sum - Deafeasable Fees are:

Answer 34

* Fee Simple Determinable * Fee Simple Subject to Condition Subsequent * Fee Simple Subject to Executory Interest

Question 35

Future Interests and the law of Wastes

Answer 35

* Holders of executory interests do not have standing to sue for waste * holder of a remainder does have standing to sue for waste

Question 36

The Rule Against Perpetuities

Answer 36

* No interest will be valid unless it must vest, if it is going to vest at all, within 21 years after the death of some life in being who was alive at the moment the conveyance was made * Applies to: * Executory Interests * Contingent Remainders * and Vested Remainders Subject to Open * Ask: * is it possible that everyone dies at the creation of the interest dies, plus 21 years, before that interest might vest? * If Yes - interest is void * cross out the language of the interest * If no - Interest is valid * Rule kicks in at creation of the interest * Will - death of Testator * Deed - when deed takes effect

Question 37

Use of Perpetuities Savings Clause

Answer 37

Saves the grant from violating the RAP by having it vest before the time period

Question 38

Right of First Refusal and the Rule Against Perpetuities

Answer 38

Contingent interests in property and rights of first refusals are subject to the RAP and violate if they could become exercisable outside the 21 year period

Question 39

Exception to RAP

Answer 39

Charity to Charity

Question 40

Fertile Octogenarian Rule

Answer 40

Grantor may have a child regardless of age or medical condition

Question 41

Class Gifts & the RAP

Answer 41

Bad as to one, bad as to all * make sure no member of the class' gift vests outside the time period for the RAP