Freehold Estates and Future Interests

Question 1

Fee simple absolute

Answer 1

Fee simple absolute conveys absolute ownership of potentially infinite duration. It is the most unrestricted and longest estate.

Question 2

Fee tail

Answer 2

Fee tail allows an owner of land to ensure that the property remains within the family. It lasts only as long as there are lineal blood descendants of the grantee. Modernly, it is virtually abolished.

Question 3

Fee simple defeasible

Answer 3

Fee simple defeasible allows a property to be held or conveyed to another; however, the property is subject to a stated limitation. There are three types:

1. Fee Dimple Determinable
2. Fee simple subject to condition subsequent
3. Fee simple subject to an executory limitation

Question 4

Freehold estates

Answer 4

Freehold estates offer a present possessory interest in the estate. They are:

1. FSA
2. Fee tail
3. Fee Simple Defeasible (determinable executory and condition subsequent)
4. Life Estate

Question 5

Fee simple determinable

Answer 5

Fee simple determinable automatically terminates at the occurrence of a specified event. If the specified event occurs, the property automatically reverts back to grantor.

1. Possibility of reverter is the future interest the grantor retains.
2. Created by words of duration such as “so long as,” “during,” “while,” “until,” or “unless.”

Question 6

Fee simple subject to condition subsequent

Answer 6

Fee simple subject to condition subsequent has the potential to terminate an estate at the occurrence of a stated event, but the termination is not automatic.

1. Right of reentry is the future interest the grantor retains, but it is not automatic and must be exercised to have effect.
2. Created by words that carve out a right of reentry in the grantor and includes conditional language such as “but it,” “provided that,” or “upon the condition that” to identify the conditional event.

Question 7

Life estate

Answer 7

Life estate is an interest that lasts for the lifetime of a person.

a. A life estate per autre vie is similar to a life estate but lasts for the lifetime of an identified third party.
b. Defeasible: A life estate may be defeasible like a fee simple.
c. Conveyable: A life estate holder may convey his interest, but not an estate greater than what is held.
d. Waste: A life tenant has a duty not to commit waste on the property. (See IV.C below.)

Question 8

Future interests (FI)

Answer 8

Future interests offer the potential for a future interest in an estate.

Question 9

Possibility of reverter (FI)

Answer 9

Possibility of reverter follows a fee simple determinable.

Question 10

Right of reentry (FI)

Answer 10

Right of reentry follows a fee simple subject to a condition subsequent.

Question 11

Reversion (FI)

Answer 11

Reversion is created when the holder of an estate transfers to another something less than the entire estate.

Question 12

Remainder (FI)

Answer 12

Remainder is a future interest that can only become possessory upon the expiration of a prior possessory estate created by the same instrument. A remainder never follows a defeasible fee.

a. Vested remainder is one created in an ascertained person and that is not subject to a condition precedent.
b. Contingent remainder is one created in an unascertained person, or one that is subject to a condition precedent, or both.
c. Alternative contingent remainder occurs where both contingent parties have the capacity to take over and it pivots on the same condition (e.g., to A for life, then to B and his heirs if B marries C, otherwise to D).

Question 13

Executory interest (FI)

Answer 13

Executory interest follows a fee simple subject to an executory limitation. There are two types:

a. Shifting executory interest always follows a defeasible fee and cuts short the prior interest.
b. Springing executory interest becomes possessory at some point in the future, without cutting short a prior interest.

Question 14

Absolute restraints on alienation

Answer 14

Absolute restraints on alienation are void , such as a condition that a property may never be sold. However, reasonable restraints on alienation will be upheld, such as a condition that a property only be used for a certain purpose.

Question 15

Rule of destructibility of contingent remainders l

Answer 15

a. At common law , a contingent remainder was destroyed if it was still contingent at the time the preceding estate ended.
b. Modernly, the rule is mostly abolished, so the remainderman’s interest would be converted to a springing executory interest.

Question 16

Rule Against Perpetuities (RAP)

Answer 16

Provides that 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. RAP is easier to work with once the interests to which it can be applied are identified.

a. RAP applies to
1. Contingent remainders
2. Executory interests
3. Options “in gross” or right of first refusal to purchase land
b. RAP does not apply to certain types of interests because it is not possible for them to violate RAP.
1. Vested remainders (vest at creation)
2. Reversion (vests at creation)
3. Possibility of reverter (vests at creation)
4. Right of reentry (vests at creation)

Question 17

Five- step technique to assess RAP issues

Answer 17

1. Classify the future interests to determine if RAP applies
2. Identify the measuring life
3. Identify the triggering event (when an interest must vest or fail)
4. Analyze the possibilities of what could possibly happen (postpone the triggering event 21 years after the lives in being are dead)
5. Reclassify the interest