Present Estates and Future Interests

Question 1

What does it mean for an estate to be devisable?

Answer 1

Capable of passing by will

Question 2

What does it mean for an estate to be descendible?

Answer 2

Capable of passing by intestacy (no will)

Question 3

What does it mean for an estate to be alienable?

Answer 3

Capable of transfer inter vivos (during lifetime)

Question 4

What is a present possessory estate? What are the 3 types?

Answer 4

A present possessory estate is an interest that gives the holder the right to present possession.

Types:
(1) Fee simple absolute

(2) Defeasible fee
(3) Life estate

Question 5

What are the distinguishing characteristics of a fee simple absolute?

Answer 5

(1) Absolute ownership
(2) Potentially limited duration
(3) Freely devisable, descendible, and alienable

Question 6

What language will create a fee simple absolute?

Answer 6

“To A”

“To A and his heirs”

Question 7

What are defeasible fees? What are the 3 kinds?

Answer 7

Defeasible fees are fee simple estates (e.g., of uncertain or potentially infinite duration) that can be terminated upon the happening of a stated event.

In other words, defeasible fees are fee simples with strings attached - capable of being terminated.

Types:
(1) Fee simple determinable

(2) Fee simple subject to a condition subsequent
(3) Fee simple subject to an executory interest

Question 8

What are the distinguishing characteristics of a fee simple determinable?

Answer 8

(1) Terminates automatically on happening of stated event
(2) Automatically reverts to the grantor
(3) Freely devisable, descendible, and alienable

Question 9

What language will create a fee simple determinable?

Answer 9

Clear durational language like:

“to A for so long as…”

“to A while…”

“to A during…”

“to A until…”

Question 10

What is a possibility of reverter?

Answer 10

The future interest retained by O in a fee simple determinable. If the condition in a fee simple determinable is violated, the estate automatically reverts back to O.

(Thus, there is always a “possibility” of reverter when a fee simple determinable estate is conveyed.)

Question 11

What is the distinguishing characteristic of the fee simple subject to a condition subsequent?

Answer 11

(1) Not terminated automatically; terminates upon grantor exercising right of entry (grantor’s prerogative)

Question 12

What language will create a fee simple subject to condition subsequent?

Answer 12

Clear conditional/durational language like:

“to A upon condition that…”

“to A provided that…”

“to A, but if…”

“to A, and if it so happens that…”

AND ALSO

Explicit recitation of the grantor’s right to re-enter in the event the condition is betrayed.

Question 13

What is the distinguishing characteristic of the fee simple subject to executory interest?

Answer 13

(1) Termination and forfeiture is automatic

(2) When terminated, rights pass to a third party rather than reverting to the grantor

Question 14

What language will create a fee simple subject to executory language?

Answer 14

Conditional language combined with assignment to someone else if condition is betrayed, like:

“to A, but if X occurs, then to B”

”

Question 15

Explain the 2 major rules of construction regarding the creation of defeasible fees.

Answer 15

(1) Words of mere desire, hope, intention, aspiration, etc., do not create a defeasible fee; clear durational language is required.
(2) Absolute restraints on alienation are void. Any condition that purports to indefinitely restrict the grantee’s right to alienate is stricken.

Question 16

What are life estates? What are the distinguishing interests/characteristics?

Answer 16

Ownership interests for life.

When the interest ends, the land either goes back (1) to the grantor (whose future interest is a reversion), or (2) to a third party (whose future interest is a remainder).

A life estate must be measured in lifetime terms, not in terms of years. The grantee is called a life tenant.

If the life estate is measured by the life of someone other than the life tenant, it is a life state pur autre vie.

Question 17

What language will create a life estate?

Answer 17

“to A for life”

“to A for the life of B” (pur autre vie)

Question 18

What are the rights and duties of a life tenant under the doctrine of waste? (high level)

Answer 18

A life tenant is entitled to any ordinary uses and profits of the land but can’t do anything that injures the interests of a remainderman or reversioner.

A future interest holder may sue for damages or to enjoin such acts, and if they spend money to perform the life tenant’s obligations, they’re entitled to reimbursement.

Question 19

What are a life tenant’s duties vis-à-vis affirmative (voluntary) waste (including exploitation of natural resources)?

Answer 19

A life tenant cannot engage in any actual overt conduct that causes a drop in value. Future interest holders can sue for liability.

A life tenant cannot consume or exploit natural resources on the property (e.g., timber, minerals, or oil).

Under the open mines doctrine, if mining was done on the land prior to the life estate, the life tenant may continue mining but is limited to the mines already open.

Question 20

What are a life tenant’s duties regarding permissive waste?

Answer 20

A life tenant is obligated to preserve the land and structures in a reasonable state of repair and pay certain carrying charges (e.g., mortgage interest and ordinary taxes). Permissive waste (neglect) occurs when a life tenant fails to do so.

Question 21

What are a life tenant’s duties regarding ameliorative waste?

Answer 21

(Ameliorative waste is a change that benefits the property economically.)

Generally, a life tenant is not permitted to unilaterally make any changes to the premises without the permission of the future interest holder(s), regardless of whether it would improve the property value.

A life tenant may alter or even demolish buildings if:
(1) the market value of the future interests is not diminished; and EITHER

(2) the remaindermen do not object; OR
(3) a substantial and permanent change in the neighborhood conditions (e.g., a change from residential to 90% industrial) has deprived the property in its current form of reasonable productivity or usefulness

Question 22

What is a future interest?

Answer 22

A future interest gives its holder the right or possibility of future possession of an estate. Despite the fact that possession is in the future, a future interest is a present, legally protected right in property.

Question 23

What are the 3 types of future interests in the grantor?

Answer 23

(1) Possibility of reverter (accompanies fee simple determinable)
(2) Right of entry / power of termination (accompanies fee simple subject to condition subsequent)
(3) Reversion (accompanies when grantor conveys estate of lesser duration)

Question 24

O, the holder of a fee simple absolute, conveys Blackacre “to A for life, then to B for 99 years.” What future interest does O have? Explain.

Answer 24

Reversion. O holds the property in fee simple absolute (meaning limitless in duration). O’s conveyance to A (for life) and to B (for 99 years) are less than the limitless duration of O’s interest. Thus, when A’s life estate and B’s term of years end, the estate will fall back to O.

Question 25

What are the 3 types of future interests held by someone other than the grantor?

Answer 25

(1) a contingent remainder, OR (2) a vested remainder; OR (3) an executory interest

Question 26

What is a remainder? What are the characteristics and limitations?

Answer 26

A remainder is a future interest in a THIRD PERSON that can become possessory on the natural expiration of the preceding estate. A remainder always follows life estates. The remainder cannot *divest* a prior estate, and it cannot follow a gap after the preceding estate. A remainder must be *expressly* created in the instrument creating the preceding possessory estate.

Question 27

What is the difference between a vested and a contingent remainder?

Answer 27

Vested remainders are either: (1) indefeasibly vested (cannot be taken away or devalued), (2) vested subject to total divestment (subject to a condition subsequent that could extinguish the interest entirely, e.g., "to A, provided that X...," where if X is betrayed, A's interest could be terminated), or (3) vested subject to open (a class gift) Remainders are contingent if they are in unborn or unascertained persons, or if they are subject to a condition precedent.

Question 28

O conveys Blackacre "to A for life, then to B's first child." A is alive. B, as yet, does not have any children. Who, if anyone, has a remainder? What kind?

Answer 28

B's "first child" has a contingent remainder, but it is unvested because B has no children. Thus, B's "first child" is unborn and unascertainable.

Question 29

O conveys Blackacre "to A for life, then to B's heirs." A and B are both alive. Who, if anyone, has a remainder? What kind?

Answer 29

There is a contingent remainder for B's heirs. Because B is still living, B has no heirs. Thus, the class of B's heirs is unascertainable until B's death.

Question 30

O conveys Blackacre "to A for life, then to those children of B who survive A." A is alive, as is B. Who, if any, has a remainder? What kind?

Answer 30

There is a contingent remainder because the class of transferees is unascertainable. The class will not be known until A dies, and the class itself may grow (should B have more children during A's lifetime), shrink (should any of B's children not survive A), or fail to manifest at all (should B have no children).

Question 31

When will a condition be deemed a condition precedent?

Answer 31

When it occurs before the language of grant and its satisfaction vests the grantee's remainder.

Question 32

O conveys Blackacre "to A for life, then if B graduates from college, to B." A is alive. B is only in high school. (1) What does B have? (2) What does O have? (3) What if B finishes college while A is still alive?

Answer 32

(1) B has a contingent remainder, subject to the condition precedent that B graduate from college. (2) O has a reversion. If B fails to satisfy the condition, Blackacre will fall back to O upon A's death. (3) B's contingent remainder automatically transforms to an indefeasibly vested remainder.

Question 33

O conveys Blackacre "to A for life, remainder to B." A is live. B is alive. (1) What does A have? (2) What does B have? (3) What if B dies before A?

Answer 33

(1) a life estate (2) an indefeasibly vested remainder (3) B's interest will pass by will or intestacy

Question 34

O conveys Blackacre "to A for life, then to B, provided, however, that if B dies under 25, to C." A is alive, and B is 20. (1) What does A have? (2) What does B have? Why? (3) What does C have? (4) What result if A dies before B turns 25? Why?

Answer 34

(1) a life estate (2) a vested remainder subject to complete defeasance. B exists, and is not subject to any condition precedent. However, he is subject to a condition subsequent (his death before 25) that, if it occurred, would totally divest his remainder. (3) a shifting executory interest (4) B takes. The only way his remainder is forfeited is if he dies before 25. There is no condition that he live to 25 before his remainder vests (which would make it a contingent remainder).

Question 35

O conveys Blackacre "to A for life, then to B's children." A and B are alive. B has two children, C and D. (1) What does A have? (2) What do C and D have? Why? (3) What if C or D predeceases A?

Answer 35

(1) life estate (2) vested remainder subject to open. C and D are ascertainable, but the class of "B's children" is still open. B could have more children, which would change C's and D's interests. The class will not close until either (i) B dies (and thus can have no more children) or (ii) A dies (because the remainder would indefeasibly vest in C and D at that point). (3) Their share(s) would go to their devisees or heirs.

Question 36

What is an executory interest?

Answer 36

An interest that *divests* the interest of another. REMEMBER: If it is not a remainder because the preceding estate is not a life estate or term of years, then it MUST be an executory interest.

Question 37

Explain the 2 kinds of executory interests.

Answer 37

(1) shifting: when the holder of the executory interest comes into possession having cut short another transferee. Always follows a defeasible fee. (2) springing: when the holder of the executory interest comes into possession having cut off or cut short O

Question 38

O conveys Blackacre "to A; but if B returns from Canada, then to B and his heirs." (1) What does A have? Why? (2) What does B have? Why?

Answer 38

(1) a fee simple subject to executory interest. If B returns from Canada, A will be divested. (2) a shifting executory interest. He can cut short A's defeasible fee by returning from Canada.

Question 39

O conveys Blackacre "to A, if and when she becomes a lawyer." (1) What does A have? Why?

Answer 39

(1) a springing executory interest. A will take possession upon becoming a lawyer, which will cut short O's interest.

Question 40

What is the Rule Against Perpetuities?

Answer 40

The Rule Against Perpetuities provides that, to be valid, an interest in property must vest or fail not later than 21 years after a life in being at the time of the creation of the interest. If there is any chance the interest will vest after that time, the interest is void and is stricken from the grant. In other words, an interest is void if there is any possibility, no matter how remote, that it might vest (or fail) more than 21 years after some life in being at the creation of the interest.

Question 41

To what does the Rule Against Perpetuities apply?

Answer 41

(1) Executory interests (2) Contingent remainders (3) Class gifts (4) Options and rights of first refusal (5) Powers of appointment

Question 42

O conveys Blackacre "to A for life, then to A's children." A is alive. She has no children. (1) What is the future interest? (2) What has to happen for the future interest holder to take? (3) Whose life and/or death is relevant to what has to happen for the future interest holder to take? (4) Will we know within 21 years of the death of that measuring life whether there will be someone eligible to take?

Answer 42

(1) A's unborn child or children have a contingent remainder (contingent on A having at least one child) (2) A must die leaving a child. (3) A is the measuring life (she must die for the remaindermen to take). (4) Yes. When A dies, she either will have surviving children or not. This would satisfy the Rule Against Perpetuities.

Question 43

O conveys Blackacre "to A for life, and if B becomes a veterinarian, to B." A is alive. B is 9 years old. (1) What is the future interest? Why? (2) What has to happen for the future interest holder to take? (3) Whose life is relevant to what has to happen for the future interest holder to take? (4) Will we know within 21 years of the measuring life's death if he is qualified to take?

Answer 43

(1) B has a contingent remainder (subject to the condition precedent that he become a veterinarian). (2) B has to become a veterinarian. (3) B. (4) Yes. We will know within 21 years of B's death whether or not B became a veterinarian.

Question 44

O conveys Blackacre "to A and his heirs so long as the land is used for farm purposes, and if the land ceases to be so used, to B and his heirs." (1) What is the future interest? Why? (2) What has to happen for B to take? (3) Who is the measuring life? (4) Will we know for sure, within 21 years of the death of our measuring life, if the future interest holder can take? (5) What does A have? (6) What does O have? (7) Is there a Rule Against Perpetuities problem now?

Answer 44

(1) B as a shifting executory interest. It follows a defeasible fee and it cuts short someone other than O. (2) A must cease to use Blackacre for farm purposes. (3) A. A is the one who, during her lifetime, has the power to abide by the condition. (4) No. There is no way to definitively answer whether A's heirs would continue to use the land for farming purposes. It could take multiple generations before one of A's heirs betrays the condition. (5) a fee simple determinable (6) the possibility of reverter (7) No. The RAP does not apply against future interests in O (the grantor).

Question 45

What are the 3 types of restraints on alienation? Explain.

Answer 45

(1) disabling: attempted transfers are ineffective; (2) forfeiture: an attempted transfer forfeits the interest; and (3) promissory: an attempted transfer breaches a covenant

Question 46

May the holder of a fee simple estate be restrained from alieantion?

Answer 46

Absolute restraints on fee simple estates are void. Partial restraints (forfeiture and promissory) may be upheld if they are for a limited time and a reasonable purpose.

Question 47

Which kinds of restraints on life estates are valid?

Answer 47

Forfeiture and promissory restraints are valid; disabling restraints are void.