PROPERTY FRANZESE SPRING 2017
Three types of Property –
Real Property – realty and land
The System of Estates:
The Fee Simple (Absolute) – A fee simple may endure forever, and is a complete ownership of the estate with no conditions attached à “To A and his heirs”
Fee Absolute has limitless duration, is freely devisable, and descendible, and freely alienable (transfer of land inter vivos) which makes it the most sought after
If a tenant dies without conveying, it goes to their heirs
But heirs have no interest unless A dies with possession (no future interest)
If nobody to give to à escheat (to the state)
The Fee Tail – A fee tail passes to the lineal descendants, terminating only when all of the lineal descendants are dead. At this point the land will revert back to the grantor or their heirs. A Fee Tail is an aristocratic construct to ensure lineal land ownership and is only available in Delaware, Maine, Mass., and Rhode Island à “To A and the heirs of his body”. It is usually substituted by a life estate today.
Defeasible Fees – There are 3 Fee Simples with a condition (Defeasible Fee) that if manifested, the holder suffers defeasance
The Fee Simple Determinable – A fee simple so limited that it will end automatically when a stated event occurs. Upon such an occurrence, the forfeiture is automatic because the grantor has the possibility of reverter as a future interest. à “To A, so long as it be used for residential purposes”
The Fee Simple Subject to Condition Subsequent – A fee simple that does not automatically terminate but maybe cut short or divested at the transferor’s election when a stated condition occurs. Upon such an occurrence, the grantor has a right of re-entry, but forfeiture only occurs if the grantor exercises the option to re-take à “To A, but if the premises are not used for school purposes, the grantor has a right to re-enter and retake the premises”
A Fee Simple Subject to Condition Subsequent must have: (1) clear, durational language; and (2) a clear statement on right to re-enter
The future interest is a right or entry or power of termination
The Fee Simple Subject to Executory Limitation – The estate created when a grantor transfers a fee simple subject to condition subsequent and the same interest creates a future interest in a third party rather than himself à “To A, but if X occurs, then to B”
Forfeited immediately if the condition is met similar to a FSD
The law abhors forfeiture, so construe against it
The Life Estate- Grantor conveys a life estate to A, and can either have a reversion, or create a remainder interest in another party
Sale – a life tenant cannot sell a fee simple unless all other persons having an interest in the property consent or unless a court of equity orders sale and reinvestment of the proceeds
Common Law Doctrine of Waste – A life tenant cannot use property in a manner that unreasonably interferes with the expectation of the remaindermen
Affirmative Waste – injurious acts that substantially reduce the value of the property
Permissive Waste – failure to take reasonable care of property. ie.) negligent care of the property
Ameliorative Waste – use by a tenant that increases rather than decreases the market value of the land
Needs to be returned in same condition
A life tenant is under no duty to insure buildings on land, if a life tenant does insure buildings and they are destroyed, the life tenant has been held entitled to the whole proceed and the remainderman nothing – Ellersburch v. Myers 683 N.E.2d 1352 (Ind.App. 1997).
Remainders –
Remainders follow life estates and term of years
Remainders cannot cut short the preceding interest and must wait for the preceding interest holder’s forfeiture or defeasance
Interests retained by the transferor:
Reversion (A has FSA, O has reversion)
The interest left in an owner when he carves out of his estate, a lesser estate, and doesn’t provide who takes when the lesser estate expires
i.e. O conveys to A for life (life is shorter than forever)
Possibility of reverter (A has FSD, O has POR)
Right of entry or power of termination (A has FSSCS, O has ROE/POT)
Interests created in a transferee (can still be transferred back to the grantor though)
Remainders are future interests that wait until termination of the prior estate
Follow life estates or term of years and wait its turn à “To A for life, then to B”
Contingent Remainders – created in a yet unknown taker or subject to an as yet unmet condition precedent à “To the heirs of B” if B doesn’t have any heirs yet
Vested Remainders – When a known remaindermen exists and is not subject to any prerequisite not yet met that would need to be satisfied for the remainder to take
Indefeasibly vested remainder – remainder is certain of becoming possessory in the future and cannot be divested à “To A for Life, then to B”
Vested remainder Subject to Complete Defeasance – Remaindermen is known, no prerequisite is obligated to take. After Remainderman has taken, Remainderman can suffer d
stead, a tenancy in common is created (some states have abolished the four unities through statute)
Joint tenants can change their interests into a tenancy in common by a mutual agreement or destroying one of the four unities
Congress has provided that when a joint tenant dies, his share of jointly held property is subject to federal estate taxation, and in a tenancy by the entirety, one-half is subject to taxation upon spouse’s death. However, no taxes are paid because property passing to a surviving spouse qualifies for the marital deduction and is tax-free
Ouster – Two fact situations constituting an Ouster
The beginning of the running of the statute of limitations for adverse possession, and
The liability of an occupying cotenant for rent to other cotenants
Ouster in adverse possession is a claim of absolute ownership
Ouster in occupying tenant’s liability occurs when a cotenant refuses a demand of other cotenants to be allowed into use of the land
Majority View à unless there has been an ouster, the cotenant in possession does not have to pay a proportionate share of the rental value to the cotenants out of possession
Minority View à A cotenant in exclusive possession must pay rent to cotenants out of possession even in the absence of ouster
Remedies of Ouster – Remedies allow an ousted cotenant to recover from the lease one-half, or their fair share, of the rental value
Accounting – an equitable proceeding to recoup expenditures of a cotenant made in various forms concerning the land including:
Rents and profits – rents and other payments arising from co-owned land must account to cotenants for the amount received, not expenses
Taxes, Mortgage payments and other carrying charges – a cotenant paying more than his fair share has a right to contribution from other cotenants
Transfer of a Joint Tenancy –
Direct Transfer – Minority Opinion – A joint tenancy conveyance may be made from a “sole owner to himself and others,” or from joint owners to themselves and others as specified in the code
