Property II Outline
PROF. WILLIAMS
Burkhard – Dukeminier & Krier
I. Future Interests—Review from last semester
FI is not a mere expectancy. It gives legal rights to its owner now. It’s a presently existing property interest and is protected by the courts as such.
– can sell or give away her remainder
– enjoin someone, like the life tenant, from committing waste
– may be able to sue 3rd parties who are injuring the land or who are claiming the title hostilely (potential adverse possessor)
Correlative Estates
Life Estate → Reversion
Fee Simple Determinable → Possibility of Reverter
Fee Simple on Condition Subsequent → Right of Entry
types of Future Interests
In the Grantor
In a Grantee
·1 Reversion
·2 Possibility of Reverter
·3 Right of Entry
·4 Vested Remainder
·5 Contingent Remainder
·6 Executory Interest
Future Interests in the Transferor (Grantor)
· Can only be created thru a will, deed, or trust
3 Types of Future Interests
· All three are freely transferable in most jurisdictions.
1. Reversion– The interest left in an owner when he carves out a lesser estate from the one he has and does not provide for who is to take the property when the lesser estate expires. (FT and LE and Leasehold)
· When an owner conveys an estate deemed “smaller” than the estate he holds, he retains a reversion
· Does not have to expressly state a reversion; arises as a matter of law.
· Future interest in land arising when an estate owner grants to another an estate but does not dispose his entire interest.
· Example: O owns fee simple absolute in Wolfe Creek and conveys a life estate to A. Even though the language of O’s conveyance does not expressly reserve any future interest in O, it arises as a matter of law. Once A’s life estate ends, O automatically receives fee simple absolute without taking any action.
-More technical def – A rev is the interest remaining in the grantor, or in the successor in interest of a testator, who transfers a vested estate of a lesser quantum than that of the vested estate which he has.
-Greater estate to lesser estate:
FSA > Fee Tail or Fee Simple Conditional > Life Estate > Lease Hold
– If a remainder is contingent, there is a reversion.
– A reversion is transferable during life and descendible and devisable at death (deed, intestate succession, and will).
– A reversion may not necessarily become possessory.
“to A for life” is certain to become possessory to O or his heirs
BUT “to A for life, then to B and her heirs if B survives A” is not certain b/c it depends on who dies first
B then A – O will get it at A’s death
A then B – O’s reversion will be divested on A’s death and will never become possessory
The values may differ, but the name of the interest is the same.
“to A for life then to B and the heirs of her body”
A= life estate
B = FSC in SC
or fee tail in some states
it’s a lesser estate than what O had.
Is it vested? Yes, but there’s only a possibility of reverter so in SC it wouldn’t be a reversion.
O conveys “to A for life then to B and her heirs if B attains the age of 21 before A dies.”
B = FSA contingent not vested b/c there’s a condition. At the time of conveyance, there is a reversion.
At the time of the deed, B is 15. What happens when B is 21?
No reversion b/c facts have changed – it’s eliminated.
Had rev. to begin w/ but now it’s gone – Is there one and what might happen to it?
“to A for 20 years”
yes rev b/c it’s a lesser estate
“to A for life then to B for life”
O subsequently dies devising all his property to C. When A and B die, who owns it?
? C does b/c you can devise a reversion
2. Possibility of Reverter – The interest when an owner carves out of his estate a determinable estate of the same quantum. (FSD and FSC)
– Cannot be transferred by will or deed, only intestate succession
– Automatic
· When a transferor creates a fee simple determinable, the future interest retained is a possibility of reverter.
· Can be expressly stated or arise as a matter of law merely b/c the grantor has not conveyed his entire interest.
· Automatically reverts as a matter of law without any action by O
· Example: “to L so long as property used as a golf course (then to me)”
3. Right of Entry – When an owner transfers an estate subject to condition subsequent and retains the power to cut short or terminate the estate. (FSSCS)
– Cannot be transferred by will or deed, only intestate succession
– Grantor must exercise
· When a transferor creates a fee simple subject to condition subsequent, future interest retained is right of re-entry
· Fundamentally different from the other 2 types.
· Must take affirmative action to retake the land; whereas in the other 2 types, O had to take no action at all.
· Example: “O to L, but if L fails to use as a golf course, O may re-enter and retake the premises.”
Future Interests in Transferees (grantee)
· Recognizes 2 broad categories of future interests- remainder and executory interest
A life estate can end before the death of the life tenant (artificially):
1) Forfeiture
-when a life tenant made a tortious conveyance by trying to sell more than he had, the life estate would simply end and seisin was passed on to the holder of the next vested estate
2) Merger
-not by the same instrument for this would defeat the intent of the grantor
-only when one person later acquires immediately successive estates
Which one is which?
Remainder
Executory
·1 must follow a preceding estate
·2 must follow a fee tail/fee simple conditional, life estate, or term of years
·3 must be capable of becoming possessory on the natural termination of the preceding estate (no divesting – can’t cut off prior estate)
·4 must not follow a preceding estate
·5 must follow a fee simple
·6 must not follow the natural termination of the preceding estate (it must divest – will cut off prior estate)
1. Remainders– a future interest capable of becoming possessory at the termination of the prior estate (VESTED OR CONTINGENT).
· (1) Created in a transferee, not retained by transferor (2) remainder and prior estate must be created in the same instrument (3) must be capable of becoming a possessory estate when the prior estate naturally ends
· Waits patiently; cannot divest or cut short the prior estate. Thus, a remainder can only follow a life estate, fee tail, or a term of years.
· There can be no time gap between the end of the prior estate and the point when the remainder becomes possessory
[A] Vested Remainder
1 – Created in a living, ascertainable person AND
2 – Not subject to a condition precedent (other than the natural
termination of the preceding estates like the death of a person w/ a life estate or the passage of time w/ a term of years b/c those things ≠ conditions)
*A remainder is vested if, at every moment during its continuance, it becomes a present estate, whenever and however the preceding freehold estate terminates
3 types of vested remainders:
(1) Indefeasibly Vested (not subject to divestment)
certain to acquire and retain permanently
· Certainty
· The identity of the holder is certain and the remainder is certain to become a possessory estate
· Remainder in a presently identifiable person that is not subject to any condition or limitation.
· A conveys Wolfe Creek to “B for life, then to C and her heirs.” C has an indefeasibly vested remainder.
· EX. “to A for life, then to B and her heirs”
(2) Vested Remainder Subject to Divestment
· Simply a vested remainder that is subject to a condition subsequent.
· Identity of the interest holder is certain and the remainder is certain to become a possessory estate, unless some specified event occurs.
(3) Vested Remainder Subject to
ee and not the transferor (Possibility of reverter and right of entry can only be created in transferor. An executory interest can only be created in transferee.)
· Exec. interests are ordinarily treated as cont interests b/c they’re subject to a condition precedent and do not vest until they become possessory.
· Any future interest in a possessory estate created in a transferee other than a remainder is an executory interest
· Must “cut short” or “divest” another estate or interest in order to become a possessory estate.
[1] Shifting Executory Interest
· One that divests another transferee
· Example: “O to B and his heirs, but if C returns from France, to C and her heirs.” (C holds a shifting executory interest b/c it would cut short B’s estate (divest B’s fess simple estate), another transferee)
[2] Springing Executory Interest
· One that divests the transferor, following a gap in time during which no other transferee has the right to possession.
· Example: “O to C and her heirs if C returns from France” (C’s interest must cut short the estate held by O, the transferor. In order to become possessory, B’s interest must divest the estate held by O.)
– Fee simple subject to an executory limitation – FS that, on the happening of
some event, is automatically divested by an executory interest in a transferee.
They are ordinarily treated like contingent interests b/c they are subject to a
condition precedent and do not vest until they become possessory.
An oddity
“to Board of Ed. so long as used for school purposes then to Red Cross”
it’s a remainder b/c it doesn’t divest on the preceding estate BUT can’t have a remainder that follows a fee simple (determinable) so this is called executory – arbitrary – had to break one of the rules so the courts just picked one
[Ex. 1] “O to A for life, then to B if B gives A a proper funeral”
-remainder or executory interest?
-can’t be a remainder b/c it can’t be possessory until B’s given a proper funeral
– there is a gap in time (1 minute or 3 days, doesn’t matter)
-executory
– who will it divest?
O b/c it will go back to the grantor temporarily and then B will divest O’s right
[Ex. 2] “to A for life, then to A’s children and their heirs, but if at A’s death he is not survived by any children, then to B and his heirs”
-At the time of creation, A is alive and has no children.
A – life estate
A’s kids – FS w/ contingent remainder b/c they are unborn = unascertained
B and B’s heirs – alternate cont rem
O – reversion b/c it’s not vested
-What if C and D are born to A?
A’s kids – vested remainder (ascertained and not subject to a cond pre)
B’s heirs – squat b/c they are words of limitation
B – executory b/c C and D are alive (divest or cut short) and kids interest is vested,
it would execute if C and D died and there were no more kids of A
O – no longer has a reversion b/c it went from cont to vested so it vanished
property interests can change dramatically with births
-What if C dies and then A dies? B and D are alive.
D and then heirs would share in FSA and B’s interest would vanish b/c it can’t divest anything at this point – the condition of 1 child being alive at the time of A’s death has been met. C’s estate will get half and D will get half.
