Real Property 2: Future Interests
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What are the THREE future interests capable of creation in the grantor?
1. Possibility of Reverter
2. Right of Entry (a.k.a. Power of Termination)
What present estate does the POSSIBILITY OF REVERTER accompany?
Fee Simple Determinable
What present estate does the RIGHT OF ENTRY (aka POWER OF TERMINATION) accompany?
fee simple subject to condition subsequent
What is a REVERSION?
It is the future interest that arises in a grantor who transfers an estate of lesser quantum than she started with, other than a fee simple determinable or a fee simple subject to condition subsequent.
What are future interests that may be held by someone other than the grantor?
1. Vested remainder
2. Contingent remainder
3. Executory remainder
What are the THREE types of vested remainders?
1. Indefeasibly vested remainder
2. Vested remainder subject to complete defeasance (a.k.a. vested remainder subject to total divestment)
3. Vested remainder subject to open
What are the TWO types of executory interests?
1. Shifting executory interest
2. Springing executory interest
What is a REMAINDER?
A future interest created in a grantee that is capable of becoming possessory upon the expiration of a prior possessory estate created in the same conveyance in which the remainder is created.
What are TWO types of remainders?
Vested remainder: it is both created in an ASCERTAINED person and is NOT SUBJECT to any condition precedent
Contingent remainder: it is created in an UNASCERTAINED person OR is SUBJECT to a condition precendent, or both
In NY, what is a future interest in a transferee subject to a condition precedent called?
Remainder subject to a condition precedent
In the context of contingent remainders, how do you identify a CONDITION PRECEDENT?
A condition is a condition precedent when it appears BEFORE the language creating the remainder or is woven into the grant to remainderman.
e.g., "To A for life, then, if B graduates from college, to B."
When the condition on a contingent remainder is met, it automatically transforms into:
an indefeasibly vested remainder
What is the RULE OF DESTRUCTIBILITY OF CONTINGENT REMAINDERS?
- A contingent remainder was destroyed if it was still contingent at the tim the preceding estate ended.
- The Destructibility Rule has been abolished including in NY. Once the condition is met, the remainderman takes the estate back from the grantee (or his heirs) via a springing executory interest.
What is the RULE IN SHELLEY'S CASE?
O conveys "To A for life, then, on A's death, to A's heirs." A is alive.
- The present and future interests would merge, giving A a fee simple absolute, even in the face of contrary grantor intent.
- Rule in Shelley's Case has been virtually abolished. A has a life estate. A's heirs have a contingent remainder. O has a reversion (A could die without heirs).
- Rule in Shelley's Case has been abolished.
What is the DOCTRINE OF WORTHIER TITLE?
It is a rule of construction (grantor intent reigns SUPREME) that voids contingent remainders in the grantor's heirs.
e.g., O, who is alive, conveys "To A for life, then to O's heirs."
If the Doctrine did NOT apply, A has a life estate and O's heirs have a contingent remainder.
If the Doctrine DID apply, the contingent remainder in O's heirs is void. A has a life estate and O has reversion.
NY: Doctine of Worthier Title has been ABOLISHED with respect to transfers taking effect after September 1, 1967.
What are the THREE kinds of vested remainders?
1. Indefeasibly vested remainder: the holder is certain to acquire an estate in the future with NO STRINGS ATTACHED.
- 2. Vested remainder subject to complete defeasance (a.k.a. vested remainder subject to total divestment): remainderman exists, and though his taking is NOT subject to a condition PRECEDENT, it IS subject to a condition SUBSEQUENT.
- NY: Remainder vested subject to complete defeasance
3. Vested remainder subject to open: remainder is vested in a grou pof takers, at least one of whom is QUALIFIED to take.However, additional takers can still join in.
What is the difference between an OPEN and CLOSED class?
A class is OPEN if it is possible for others to enter.
A class is CLOSED when its maximum membership has been set so that persons born later are shut out.
What law allows you to determine whether a class is open or closed?
The common law rule of convenience: "the class closes whenever any member can demand possession."
What is the EXCEPTION to the common law RULE OF CONVENIENCE?
The womb rule: A there is a child in the womb at the time a class member can demand possession, and this unborn child is a future class member, then he will share with the other class members.
What is an EXECUTORY INTEREST and its TWO types?
It is a future interest created in a transferee (third partY), which is not a remainder and which takes effect by either cutting short some interest in another person ("SHIFTING") or in the grantor or his heirs ("SPRINGING").
What does a SHIFTING EXECUTORY INTEREST always follow?
a defeasible fee
In NY, what is the difference between executory interests and contingent remainders?
There is no difference. They are both called "REMAINDERS SUBJECT TO A CONDITION PRECEDENT."
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