1. PROPERTY: Present Possessory Estates and Future Interests
Home > Flashcards > Print Preview
The flashcards below were created by user
on FreezingBlue Flashcards
. What would you like to do?
FEE SIMPLE ABSOLUTE
the largest estate permitted by law; invests the holder of the fee with full possessory rights, now and in the future; holder can sell, divide, or devise; if she dies intestate, her heirs will inherit it; has an indefinate and potentially infinite duration.
a fee simple absolute is presumed unless it appears from the grant that a lesser estate was intended.
fee simple esttes of potentially infinite duration that can be terminated by the happening of a specified event.
FEE SIMPLE DETERMINABLE (AND POSSIBILITY OF REVERTER)
also called a determinable fee, an estate that automatically terminates on the happening of a stated event and goes back to the grantor; created by the use of durational, adverbial language, such as for so long as, while, during, or until;
example: O conveys land to A for so long as no alcoholic beverages are consumed on the premises
future interest in grantor is called possibility of reverter; in most jurisdictions, the possibility of reverter can be transferred inter vivos or devised by wil, and descends to the owner's heirs if she dies intestate
a possiblity of reverter arises only in the grantor, not in a third party, if a comparable interest is created in a third party, it is called an executory interest.
FEE SIMPLE SUBJECT TO CONDITION SUBSEQUENT
created when the grantor retains the power to terminate the etate of the grantee upon the happening of a specified event; if the event happens, the estate of the grantee continues until the grantor exercises her power of termination (right of entry) by bringing suit or making reentry; the following words are usually held to create conditions subsequent: upon condition that, provided that, but if, and if it happens that.
right of entry is the future interest retained by the transferor who conveys an estate on condition subsequent; it is necessary to expressly reserve the right of entry in the grantor -- language such as "and in the event that... then O or her heirs may enter and terminate the estate hereby conveyed".
Grantor may waive right of entry by express agreement or by her conduct; general rule is that doing nothing about breach of condition is not a waiver, but when there is any element of detrimental reliance by the fee holder, many courts will treat inaction as a waiver on an estoppel or laches theory.
in most jurisdictions, right of entry is not transferable inter vivos, but is devisable and will descend to heirs.
FEE SIMPLE SUBJECT TO AN EXECUTORY INTEREST
an estate that, upon the happening of a stated event, is automatically divested in favor of a third person rather than the grantor
typically created by the words "to A and the heirs of his body," limited inheritance to lineal descendants of the grantee; if no lineal descendants survived at the grantee's death, the property either reverted to the grantor or her successors or passed to a designated remainderman
in most US jurisdictions, fee tail has been abolished and any attempt to create one results in a fee simple
an estate that is not terminable at any fixed or computable period of time, but cannot last longer than the life or lives of one or more persons.
The usual life estate is measured by the life of the grantee. It may be indefeasible (ending only when tenant dies) or it may be made defeasible (ie, determinable, subject to a condition subsequent, subject to an executory interest).
LIFE ESTATE PER AUTRE VIE: measured by the life of someone other than tenant
RIGHTS AND DUTIES OF LIFE TENANT:AFFIRMATIVE WASTE
A tenant for life is entitled to all of the ordinary uses and profits of the land, but he cannot lawfully do any act that would injure the interests of the person who owns the remainder or reversion. If he does, the future interest holder may sue for damages and/or enjoin such acts.
- AFFIRMATIVE (VOLUNTARY) WASTE: life tenant may not consume or exploit natural resources on the property except in the following circumstances:
- (1) in reasonable amounts when necessary for repair and maintenance of the land;
- (2) when the life tenant is expressly given the right to exploit in the grant;
- (3) when prior to the grant, the land was used in exploitation of such natural resources, so that in granting the life estate, the grantor most likely intended the life tenant to have the right to exploit (open mines doctrine); and
- (4) where the land is suitable only for such exploitation.
OPEN MINES: if mining was done on the land before the life estate began, the life tenant may continue to mine, but is limited to only those mines already open.
RIGHTS AND DUTIES OF LIFE TENANT:
Permissive waste occurs when the life tenant allows the land to fall into disrepair or fails to take reasonable measures to protect the land.
--> a life tenant is obligated to preserve the land and structures in a reasonable state of repair, to the extent of the income or profits derived from the land or to the extent of the reasonable rental value of the rent if life tenant is living there; life tenant is under to obligation to make permanent improvements to the land.
--> life tenant is obligated to pay interest on any encumbrances on the land to the extent of income or profits from the land or reasonable rental value, but need not pay on principal
--> life tenant is obligated to pay all ordinary taxes to the extent of income/profits/rental value
--> costs of necessary improvements are usually apportioned using the ratio of market value of life estate over market value of property.
--> no obligation to insure, but both life tenant and remainderman have insurable interest
--> not responsible to remaindermen for damages caused by 3rd party tortfeasors; life tenant's damages in such a case are limited to damage to the life estate.
RIGHTS AND DUTIES OF LIFE TENANT:
consists of acts that economically benefit the property; occurs when use of the property is substantially changed increasing its value
- under the modern view, a life tenant may alter or even demolish existing buildings if:
- -- market value of the future interests is not diminished ; and EITHER
- -- the remaindermen do not object; or
- -- a substantial and permanent change in the neighborhood conditions have deprived the property in its current form of reasonable productivity or usefulness.
If property is worthless, life tenant may ask for a judicial sale in a partition proceeding with proceeds put in trust with income to the life tenant.
A life tenant who receives the land by will or intestacy may renounce it. If this occurs, the courts generally accelerate the future interest that follows the life estate, allwing it to become possessory immediately.
LIFE ESTATES BY MARITAL RIGHT:
DOWER AND CURTESY
DOWER: at common law, a surviving wife's dower right entitled her to a life estate in an undivided one-third of her husband's lands.
CURTESY: surviving husband's right of curtesy gave him a life estate in all of his wife's lands if issue were born.
Community property states don't recognize dower or curtesy.
For exam: remember that a conveyance by husband to a bona fide purchaser does not defeat dower unless the wife joins in the conveyance; likewise, husband's creditors cannot defeat a wife's dower rights. Most states have abolished both dower and curtesy and have instead given the surviving spouse a statutory right to take a portion of the deceased spouse's estate.
REVERSIONARY INTERESTS -- IN TRANSFEROR
A person owning real property can create and transfer a lesser estate (in the durational sense); the residual left in the grantor, which arises by operation of law, is a reversion. Reversions are transferable, devisable by will and descendible by inheritance. The owner of the reversion may sue the possessor for waste and may recover against 3rd party wrongdoers for damages to the property.
Although a reversionary interest becomes possessory in the future, it is a vested interest, not a contingent interest, because both the owner and the event upon which it will become possessory are certain. Because it is vested, a reversionary interest is not subject to the rule against perpetuities.
REMAINDERS -- GENERAL
A future interest created in a transferee that is capable of taking in present possession and enjoyment upon the natural termination of the preceding estates created in the same disposition. A remainder must be expressly created in the instrument creating the intermediate possessory estate. Remainders ALWAYS follow life estates.
A remainder can not cut short or divest a preceding estate prior to its normal expiration.
If a future interest cuts short a predeeding estate or follows a gap after it, it's called an executory interest.
INDEFEASIBLY VESTED REMAINDER
- a remainder that:
- -- can be created in and held only by an ascertained person or persons in being;
- -- must be certain to become possessory on termination of the prior estates (ie, there are no conditions that may operate to prevent);
- -- must not be subject to being defeated or divested; and
- -- must not be subject to being diminished in size.
"To A for life, and on A's death to B." A has a life estate, B has an indefeasibly vested remainder which is certain to take in possession on the termination of A's life estate. If B dies during A's lifetime, the indefeasibly vested remainder passes by will or intestacy to his successors.
VESTED REMAINDER SUBJECT TO OPEN
This is a vested remainder created in a class of persons that is certain to take on the temination of the preceeding estates, but is subject to diminution by reason of other persons becoming entitled to share in the remainder.
Once the remainder vests in one existing member of the class, the divesting interest in the unborn members of the class is called an executory interest.
Where there are outstanding interests in the unborn children, the vested remainderman and the life tenant cannot jointly convey good title.
VESTED REMAINDER SUBJECT TO TOTAL DIVESTMENT
Arises when the remainderman is in existence and ascertained and his interest is not subject to any condition precedent, but his right to possession and enjoyment is subject to being defeated by the happening of some condition subsequent.
"To A for life, and on A's death to B; but if B predecesases A, on A's death to C." B has a vested remainder subject to total divestment. Although B's taking is contingent on his surviving A, taht contingency is expressed as a condition subsequent -- meaning that B's remainder is vested subject to total divestment. (C has a shifting executory interest.)
CONTINGENT REMAINDER -- AS TO EVENT
A remainder will be classified as contingent if its taking in possession is subject to a condition precedent, ie, it is contingent as to an event.
So -- "to A for life, and on A's death to B if B survives A." B has a contingent remainder in fee simple. B's taking is subject to a contingency, stated as a condition precedent, that he must survive A in order to take.
CONTINGENT REMAINDER -- AS TO PERSON
A remainder is contingent if it is created in favor of unborn or unascertained persons because intil the remainderman is ascertained, there is no one ready to take possession should the preceeding estate come to an end.
DESTRUCTIBILITY OF CONTINGENT REMAINDERS AND MERGER
At common law, a contingent remainder had to vest prior to or upon termination of the preceding freehold estate or it was destroyed. Today, the rule of destructibility has been destroyed in all but a few states -- thus, the contingent remainder would give way to a springing executory interest while during the gap in time, after a reversion to the transferor.
Whenever the same person acquires all of the existing interests in land, present and future, a merger occurs. In those states where the rule of destructibility is still honored, the contingent remainder is destroyed upon merger.
RULE IN SHELLEY'S CASE
At common law, where a freehold estate (usually life estate) was given to A and in the same instrument a remainder was limited to the heirs or to the heirs of the body of A, the purported remainder was not recognized, and A took both the freehold estate and the remainder.
The rule in shelley's case is only triggered where there is an attempt to create a remainder in heirs. If O conveys land to "A and his heirs," A takes in fee simple and there is no remainder, the language denotes only that a fee simple has been conveyed.
NOTE: this rule has been abolished in most states, but still arises where a conveyance was executed prior to abolition of the rule.
DOCTRINE OF WORTHIER TITLE
A remainder limited to the grantor's heirs is invalid, and the grantor retains a reversion in the property. This doctrine is still applied to inter vivos transfers in most states, but most treat it as a rule of construction and not where a grantor has clearly manifested an intent to create a future interest in his heirs.
There are only two future interests that can be created in a transferee: remainders and executory interests. If it is not a remainder because the preceding estate is not a life estate, then it must be an executory interest.
An executory interest is an interest that divests the interest of another.
SHIFTING EXECUTORY INTEREST: divests the interest of another transferee, ie, cuts short a prior estate created by the same conveyance -- "to A and her heirs, but if B returns to B and her heirs"
SPRINGING EXECUTORY INTEREST: follows a gap or divests a transferor -- "to A when A marries B" or "to A for life and one year after A's death to B"
- Differences between executory interests and remainders:
- (1) EI's are not destructible, while contingent remainders are;
- (2) EI's are not considered vested, whereas CR's can be; and
- (3) the Rule in Shelley's Case does not apply to EI's, but it does apply to remainders limited to the heirs of a grantee.
REMAINDERS AND EXECUTORY INTERESTS
Vested remainders are transferable, devisable, and descendible.
Contingent remainders and EI's are transferable inter vivos and are usually devisable and descendible unless the holder's survival is a condition to the interest's taking.
The rule followed in nearly all states is this: if a future interest can, under the laws of the state, be transfered voluntarily by its owner, it is also subject to involuntary transfer, ie, can be reached by creditors.
In practice, future interests held by unborn or unascertained persons are not transferable because courts will not appoint a guardian for purposes of conveying land.
Includes persons in gestation.
Rule of Convenience: rule of construction which applies only when grantor doesn't express intent otherwise; a class closes when some member of the class can call for a distribution of her share of the class gift.
When a will makes an outright gift to a class, if any class members are alive at the testator's death, the class closes as of the date of his death.
If there are no members of the class living at tthe testator's death, all afterborn persons who come within the class are included regardless of any inconvenience.
When possession and enjoyment of a gift are postponed, as where the gift follows a life estate, the class remains open until the time fixed for distribution.
When there is a gift to a class conditioned upon the members attaining a certain age, the class closes when (1) the preceding astate, if any, terminates, and (2) the first class member reaches the specified age.
What would you like to do?
Home > Flashcards > Print Preview