Ownership - Future Interests

Question 1

Reversion

Answer 1

Held by grantor who transfers LE or estate for years without conveying the remaining FI to a 3d party

• Not subj. to RAP

Question 2

Possibility of Reverter

Answer 2

Auto. reverts to grantor upon occurence of stated event when FSD conveyed

• Freely transferable

Question 3

Right of Reentry

Answer 3

Held by grantor after FSSCS is granted

• Right to take back prop.
• Grantor must exercise the right of reentry to take the prop. back from the grantee

Question 4

Executory Interest

Answer 4

FI in 3d party (not a remainder) that cuts the prior estate short upon the occurence of a specified condition b/f it would have naturally been terminated

• Transferable
• Subject to RAP
• Can be shifting or Springing

Question 5

Shifting Executory Interest

Answer 5

Cuts short prior estate created in same conveyance

• Estate shifts from 1 grantee to another grantee upon the happening of a condition

Question 6

Springing Executory Interest

Answer 6

Divests the grantor’s interest or fills a gap in possession in which the estate reverts to grantor

Question 7

Remainder

Answer 7

FI that becomes possessory upon the expiration of a prior estate of known fixed duration created in same conveyance in which the remainder is created

Question 8

Contingent Remainder

Answer 8

1. Created in an unascertainable grantee or
   
   • Remainder that is not vested
   • Remainder Interest that may not vestw
2. is subject to an express condition precedent to grantee’s taking (b/c of unknown beneficiary or known beneficiary subj. to cond. precedent that has not yet occurred)

Question 9

Vested Remainder

Answer 9

An interest that cant be taken away

1. Not subject to any conditions precedent
2. Created in an ascertainable person

Question 10

Vested Remainder Subject to Complete Divestment

Answer 10

Therer is a condition on a vested remainder

• The occurance of a cond. subseq. will divest the remainder
  
  • The vested remainder could be lost entirely after the ascertainable person receives the property

Question 11

Vested Remainder Subject to Open

Answer 11

Class Gifts

1. Group of unspecified persons whose number, identity, and share of the int. is determined in the future
2. If at least 1 class mem. is qualified to take poss. at the time of the conveyance,
   
   • then each class member’s share is subj. to partial diminution
   • b/c additional takers not yet ascertained can still vest
3. Once the class Closes
   
   • Any person who might otherwise have become a class member can’t claim an int. in the prop.as a class member

Question 12

How are class openings created?

Answer 12

A class is deemed open the moment the class opens

1. Inter vivos conveyance - when the conveyance is made, the class opens
2. Testamentary conveyance - when testator dies, the class opens

Rights don’t vest until the class is open

Question 13

When does a class close?

Answer 13

A class closes to new members as soon as at least one member of the class comes into immed. poss. of the land

Question 14

What is the rule of convenaience ?

Answer 14

A class closes as soon as at least one member of the class comes into immed. poss. of the land

• But if there is a potential member that is alive, but has to satisfy a cond. precedent to join the class, they are allowed to do so even after the class is closed

Question 15

Transferability

Answer 15

• Remainders & Executory Interests are transferable inter vivos and Devisable/Descendible

Question 16

Rules Against Perpetuities (RAP)

Answer 16

Spcific Future Interests are valid only if they must vest or fail by the end of a life in being plus 21 years

Question 17

If RAP applies, what is the analysis ?

Answer 17

Can someone come into existence more than 21 years after everyone currently alive is dead that will have a poss. interest?

Question 18

RAP Vest or Fail Requirement

Answer 18

• If there is any possibility that it will not be known whether the int. will vest or fail within the applicable pd.
  
  • RAP has not been satisfied

Question 19

At what time does the RAP analysis start?

Answer 19

At the time of creation of the prop. int.

• Is there a possibility of a RAP violation?

Question 20

RAP - Measuring Lives

Answer 20

• A mesauring life is a natural person alive when the interest was created
  
  • Measuring life must be human
  • Can be anyone so long as they are identifiable & connected w/ vesting or failing of the interest

Question 21

RAP - What if the measuring life is not specified?

Answer 21

The measuring life is the life directly related to the future int. that is subj to the rule

Question 22

RAP - If there is no measuring life, what is the effect?

Answer 22

The applicable vesting period is 21 years from the time that the future int. is created

Question 23

RAP only applies to what types of land interests ?

Answer 23

It doesn’t apply to present estates. It only applies to:

1. Future Interests
   
   • Executory Interests
   • Contingent Remainder
   • Vested Remainder Subj. to Open
2. Partial Restraints on Alienation
   
   • Purchase Options
   • Right of first refusals
   • Powers of Appointment

Question 24

What is the effect of a RAP Violation?

Answer 24

If a future interest violates RAP

• If it is possible that the fut. int. will not vest w/in 21 years of the measuring life THEN there is a violation
• Only the offending interest fails (future interest)
• Unless (rare case) the voiding of the future int. undermines the grantor’s intent THEN the entire transfer is voided

Question 25

RAP - When does a Contingent Remainder Vest?

Answer 25

Requires: * Identification of the taker and * Satisfaction of all the conditions precedent

Question 26

RAP - When does An Executory Interest Vest?

Answer 26

Vesting means the taking of possession * Did a contingent event occur?

Question 27

RAP - When does a Remainder Subject to Open Vest?

Answer 27

When the class closes * All or Nothing Rule * If any class members interest might vest beyond 21 years after the measuring life * all the cllass members interests are void * So, you can't have interest subj. to open beyond the perpetuities period

Question 28

What are the exceptions to the Rule of convenience ?

Answer 28

2 Exceptions 1. Transfer of a Specific Dollar amountto each class memebr OR 2. Transfer of Specific Dollar amount to a subclass that vests at a specific time Any pers. who is entitled to transferred interest is not prohibited from taking that interest just b/c there are other members of the class who are prohibited from taking the int.

Question 29

Common Violations of RAP

Answer 29

1. "Survival beyond age 21" Condition 2. Fertile Octogenarian 3. Unborn Spouse 4. Defeasible Fee followed by executory Interest 5. Conditional passage of interest

Question 30

Common Violation of Rap - Class Transfers "Survival Beyond age 21" Condition

Answer 30

The transfer to a class is violates the Rule: 1. If transfer to class is conditioned on the class members surviving to an age beyond 21 AND 2. The class is open

Question 31

Common Violation of Rap - Fertile Octogenarian

Answer 31

Anyone, regardless of age or physical condition (including 80 year old woman - "Octogenarian") is deemed capable of having children * Same states have set an age limit beyond which it is rebuttably presumed that a woman can't have a child

Question 32

Common Violation of Rap - Unborn Spouse

Answer 32

If an interest following a widow's life estate can't vest until the widow dies, then it violates the rule * Rule presumes that a grantor could subsequently marry a person who was not a life in being at the time interest was created

Question 33

Common Violation of Rap - Defeasible fee followed by executory interest

Answer 33

* Violates the rule unless there is a time limit on the vesting of the executory interest that satisfies the rule * If limit is durational * then striking of EI leaves grantor w/ Possibility of Reverter * If Limit is conditon subsequent * Striking of EI leaves holder of defeasible fee with FSA

Question 34

Common Violation of Rap - Slothful Executor

Answer 34

* Rule presumes that the executor of the estate might not probate the will for many years after the testator's death

Question 35

What is the doctrine of worthier title?

Answer 35

Rule of construction - applies in some states * Preference for prop. passing by descent instead of devise * Creates presumption that there is a reversion to grantor, rebuttable by showing of contrary intent * Prevents remainder's in the grantor's heirs

Question 36

What is total restraint on alienation ?

Answer 36

* A no sell provision * If grantee tries to sell, they lose the rights to the prop. * Can never have total restrain on a fee