Present Estates and Future Interests

Question 1

estates in land are…

Answer 1

• possessory interests in land
• these interests can be possessory now (present estates) or in the future (future interests)

Question 2

3 categories of PRESENT possessory freehold estates

Answer 2

1. fee simple absolute
2. defeasible fee (3 types)
3. life estate

*remember that concurrent and leasehold estates are also present estates!

Question 3

fee simple absolute

Answer 3

• to A and his heirs, to A
• absolute ownership of possibly INFINITE duration
• freely transferable, devisable by will, and descendible through intestacy

Question 4

defeasible fees

Answer 4

• fee simple estates that can be terminated upon happening of an event
• think of it as three types of fee simple (to A… with a catch – a condition attached)

Question 5

fee simple determinable (and possibility of reverter)

Answer 5

• fee simple determinable terminates upon happening of stated event and automatically goes back to grantor
• “to A for so long as…”; “to A during…”
• transferable, devisable by will, and descendible through intestacy (but always subject to condition)
• estate automatically reverts back to grantor upon happening of event

NOTE: reasonable person would not buy property with where there’s a possibility of reverter

Question 6

fee simple subject to condition subsequent (and right of entry)

Answer 6

• estate in which grantor reserves right to terminate estate upon happening of stated event (doesn’t automatically terminate – grantor has to take action)
• look for conditional words –> “upon condition that”; “if it happens that”
• look for explicit statement of grantor’s right to re-enter
• most courts hold that rights of entry are not transferable

e.g., to A but if X event occurs, grantor reserves right to re-enter and re-take

Question 7

fee simple subject to executory interest

Answer 7

• if fee simple estate ends [upon happening of stated event] and then passes to third party (rather than reverting to grantor or giving grantor right to terminate), 3rd party has executory interest
• to A, but if X event occurs, then to B

*the shifting executory interest accompanies the fee simple subject to an executory interest

Question 8

rules of construction for defeasible fees

Answer 8

• words of hope, desire, is not enough to render estate a defeasible fee

Question 9

restraints on alienation of fee simple

Answer 9

• VOID
• example: “I give my house in the city to my son, but if he ever tries to sell it while he’s alive, I want it taken away from him and given to my grandson” (grandson gets nothing!)

Question 10

fee tail

Answer 10

• estate where inheritability is limited to heirs
• example: “to A and the heirs of his body”

Question 11

life estate

Answer 11

• life estate is one measured by life or lives of one or more persons
• “to A for life”; “to A for the life of B”
• life tenant is entitled to all ordinary uses and profits from land (life tenant cannot commit waste)
• renunciation of life estate: if a life tenant who gets estate by will or intestacy renounces their interest, future interest following life estate is accelearted so it becomes immediately possessory

Question 12

future interest

Answer 12

• gives its holder right/possibility of FUTURE possession of an estate (it’s a present, legally protected right in prop)
• six categories

if future interest is held by grantor, it must be
- possibility of reverter (grantor transfers a fee simple determinable)
- right of entry (grant of an estate subject to condition subsequent)
- reversion (occurs when granted estate is absolutely vested in grantor; O grants Blackacre to A for life; A is going to die eventually, at which point Blackacre will return to O)

if future interest is held by a third party, it’s called a remainder!

reversion occurs when a finite estate ends, and there are no other grantees with a future interest in the property

if future interest is held by someone OTHER THAN grantor, it must be
- contingent remainder
- vested remainder (3 types)
- executory interest (2 types)

Question 13

remainders

Answer 13

• remainder is a future interest in 3rd person that can become possessory on natural expiration of preceding estate (remainder won’t take until present life estate/term of years comes to its end)
• remainder must be expressly created in the instrument creating preceding possessory estate (can be vested or contingent)
• alienable, devisable, and descendible

Question 14

contingent remainder

(SUBJECT TO RAP)

Answer 14

remainder is contingent if:

1) it’s created in unborn/unascertained persons (until remainderman is figured out, no one is ready to take possession if preceding estate ends; example: to “A for life, then to B’s first child”), or

2) subject to a condition precedent (a condition is precedent if it must be fulfilled before remainderman has right to possession; example: to “A for life, then, if B graduates from college, to B”) –> remainderman must do something in order to succeed in taking possession

or both 1 and 2

Question 15

doctrine of worthier title

Answer 15

remainder in grantor’s heirs is invalid

e.g., “to A for life, then to O’s heirs”

Question 16

vested remainders

Answer 16

• remainder that AUTOMATICALLY becomes possessory upon natural expiration of preceding estate
• CANNOT be subject to any condition precedent, or vest in unknown person
• vested remainders are fully transferable, descendible, devisiable

Question 17

indefeasibly vested remainder

Answer 17

• becomes possessory immediately upon termination of prior estate
• to A for life, then to B

Question 18

vested remainder subject to total divestment

Answer 18

• subject to some condition subsequent, such that remainderman could be divested after taking possesion
• example: to A for life, remainder to B; but if B weds, to C

Question 19

vested remainder subject to open

Answer 19

• remainder vested in a described class of takers, at least one of whom is capable of taking possession (i.e., they are alive)
• example: to A for life, remainder to children of B and their heirs
  (B has one child, who has vested remainder subject to open (b/c B may have more children!)

Question 20

remainders are…

Answer 20

sociable and patient!

Question 21

when the class closes

Answer 21

• class is open when it’s still possible for others to join in
• it’s closed when no others can join in
• rule of convenience: class closes whenever any member can call for distribution of her share … after-born class members get nothing

example:
to A for life, then to B’s children
A is alive; B has 2 children, C and D
when does class close?
- B’s death (B can no longer have children)
- A’s death (under rule of convenience, class closes when any member can call for distribution; if A dies, then they can assume possession because it says to A for life and then to B’s children)

Question 22

executory interests

shifting and springing: subject to RAP

Answer 22

• executory interests are future interests in third parties that (1) either divest a grantee’s preceding estate (shifting) or (2) cut short a grantor’s estate (springing)

shifting executory interest: “to A, so long as the property is used for storage. But if used for any other purpose, to B”
- A has a fee simple subject to an executory interest
- B has a shifting executory interest

springing executory interset: to A and heirs when A marries B
- A has a springing executory interest

*devisable, descendible and usually transferrable

Question 23

rule against perpetuities

Answer 23

• any future interest that isn’t certain to vest/fail within a life in being PLUS 21 years is VOID
• steps to analyzing a conveyance subject to the RAP

1. determine interest being granted
2. What has to happen for future interest holder to take?
3. find measuring life (look for people alive at date of conveyance whose lives and or deaths are relevant to what has to happen for future interest holder to take)
4. will we know within 21 years of the measuring life’s DEATH whether there will be someone qualified to take? figure out whether we’ll know for sure within 21 years of death of a measuring life if future interest holder can take
5. if conveyance violates RAP, strike only the violating future interest (what remains = new conveyance)

If there’s any chance that it could vest beyond the period, it’s void

Question 24

examples of RAP violation

Answer 24

• age contingency beyond 21 – conveyance to open class is contingent on members reaching age over 21 (void under RAP b/c it can’t vest within 21 years of a life in being at time of creation)
  Example: “To A for life, then to those of A’s children who attain age of 25.” A is alive. She has one child, B, who is 30. Remainder in A’s kids violate RAP.

YES — we don’t know today (at time of the grant’s creation) whether A will have a child to reach 25 years old within 21 years of A’s death.

• executory interest with no time limit (to A for so long as no liquor is consumed on the premises, then to B)

Question 25

rule against restraints on alienation/transferability
types of restraints

Answer 25

Generally, any restriction on the transferability of a legal interest is VOID

• disabling restraints (these restraints make attempted transfers ineffective) - VOID
• forfeiture restraints (under which attempted transfer forfeits the interest)
• promisorry restraints (under which attempted transfer breaches a covenant)

promisorry and forfeiture restraints MAY be valid - depending on nature of restraint and interest involved (need to be for a limited time and reasonable purpose)

Question 26

Reform of RAP

Answer 26

1. Wait and see - validity determined per facts as they come to be
2. USRAP - codifies CL RAP rule / provides alternative 90 year vesting period
3. Cy pres - as near as possible (gives court equitable powers to take out a marker and redraft the otherwise infirm grant to avoid RAP violation)