Ownership Flashcards
(23 cards)
Freehold Estate
To be categorized as a freehold estate, the estate must be:
i. Immobile (either land or some interest derived from or affixed to land); and
ii. For an indeterminate duration (as opposed to a leasehold, which has limited duration).
The owner of a present estate has the right to currently possess the property.
Alienable
When a property interest is alienable, the interest (or a portion of the interest) can be transferred without restriction during life (i.e., inter vivos), by will, or by intestacy.
Profit
A profit is a right to take natural resources from the land (e.g., oil, gas, minerals, timber).
Doctrine of Waste
Under the doctrine of waste, a life tenant generally must deliver the property to the future interest holder in substantially the same condition that it was in when she took possession, with allowance for normal wear and tear.
Repairs
A life tenant has a duty to prevent permissive waste by making reasonable repairs.
Ameliorative Waste
Ameliorative waste occurs when the life tenant’s affirmative action substantially changes the condition of the property but does not diminish the value of the property
Future interest
A future interest is an ownership interest in presently existing property, which may commence in possession or enjoyment sometime in the future.
Remainder
A remainder is a future interest created in a grantee that can become an estate presently possessory upon the natural expiration of a prior estate (e.g., a life estate) and is created in the same conveyance in which the remainder is created.
Vested Remainder
A vested remainder is an interest that is:
i) Not subject to any conditions precedent; and
ii) Created in an ascertainable grantee.
Example: Party A conveys Blackacre “to B for life, then to C and his heirs.” Party C has a vested remainder. There are no preconditions on C’s entitlement to his remainder interest, and C, as the designated individual, is an ascertainable grantee.
Vested Remainder Subject to Open
A vested remainder subject to open (or a “vested remainder subject to partial divestment”) exists when:
i) A remainder interest is transferred to a group rather than named individuals (e.g., children, grandchildren); and
ii) At least one member of the group is individually ascertainable and entitled to the remainder interest; but
iii) That person might be required to share the interest with other members of the group (i.e., “subject to partial divestment”).
Example 1: Party A conveys Blackacre “to my son for life and, on his death, to his children.” When A conveys Blackacre, his son is alive and has one child. That child has a vested remainder subject to open. The child’s remainder is vested because his possession is not subject to a condition precedent and he is an ascertained grantee. But the child’s interest is “subject to open” because if A’s son has other children, the child will be required to share the interest in Blackacre.
Example 2: Party A conveys Blackacre “to my son for life and, on his death, to his children who attain 21 years of age.” When A conveys Blackacre, his son is alive and has one child who is 30 years of age. That child has a vested remainder subject to open because his interest in Blackacre may be subject to being shared if A’s son has other children who attain 21 years of age.
Vested Remainder Subject to Complete Divestment
A vested remainder subject to complete divestment indicates that the occurrence of a condition subsequent will completely divest the remainder interest.
Example: Party A conveys Blackacre “to B for life and then to C but, if C has no children, then to D’s children.” Party C has a vested remainder, but if C is not survived by C’s children at the time of B’s death, then C’s interest will be divested in favor of D’s children. Consequently, C has a vested remainder subject to complete divestment.
Note that D’s children have an executory interest (discussed in § 5. Executory Interests, below).
Contingent Remainder
A remainder is contingent if:
i) It is created in a grantee that is unascertainable; or
ii) It is subject to an express condition precedent to a grantee’s taking.
Example 1: Party A conveys Blackacre “to B for life and, on his death, to his children.” When A conveys Blackacre, B does not have any children. Party B’s unborn children have a contingent remainder because their identities are not yet known.
Executory Interest
An executory interest is a future interest in a third party that is not a remainder and that generally cuts the prior estate short upon the occurrence of a specified condition.
Class Gifts
A class gift is a donative transfer during life or at death by will to persons as members of a group (e.g., children, heirs).
Rule Against Perpetuities
Under the Rule Against Perpetuities (RAP; “Rule”), specific future interests are valid only if they must vest or fail by the end of a life in being plus 21 years.[i]
Example 1: Party A conveys Blackacre “to B for life and then to the first male descendant of B, then to C.” This provision violates the Rule because it may be many generations before there is a male descendant of B, if at all.
Special rule for transfer to class (class gifts)
If the transfer of a future interest is made to a class and the Rule voids a transfer to any member of a class, then the transfer is void as to all class members, even those whose interests are already vested (i.e., “bad as to one, bad as to all”).
Concurrent Estate
A concurrent estate (i.e., cotenancy) arises when two or more persons own real property simultaneously. The most common concurrent estates are tenancy in common, joint tenancy, and tenancy by the entirety.
Tenancy in Common
A tenancy in common exists when two or more co-owners have an equal right to possess property (unity of possession) but do not have a right of survivorship regarding the property interest held by another co-owner.
Joint Tenancy
A joint tenancy exists when two or more persons own property with the right of survivorship.
Tenancy by the Entirety
Tenancy by the entirety is a joint tenancy between married persons with a right of survivorship.
Fair Housing Act
The federal Fair Housing Act (FHA) prohibits discrimination in the sale, rental, and financing of homes and in other housing-related transactions (such as advertising, homeowner’s insurance, and zoning).
