Property Outline Spring 2004
Future Interests
I. Reversion and Remainders
a. Overview
i. A future interest in property is a legally recoginzed, presently existing right to the future possession of property that can be enforced in court
1. May or may not materialize
a. Certain: reversion or remainder will become possessory at the end of a life estate
b. Uncertain: possibility of reverter, right of entry, or executory interest only become possessory upon the happening of a triggering event
2. Under English common law, all types of future interests were inheritable; reversions and some remainder interests were devisable and alienable as well
3. Under modern American law, all types of future interests are freely transferrable by sale, gift, will, and inheritance
b. Table from book
Present Estate
Future Interest in Grantor
Future Interest in 2nd Grantee
Fee simple absolute
None
None
Fee simple subject ot a condition subsequent
Right of entry (a.k.a. Power of termination)
None
Fee simple determinable
Possibility of reverter
None
Fee simple subject to executory limitation
None
Executory interest
Fee tail
Reversion and/or Remainder
Reversion and/or Remainder
Life estate
Reversion and/or Remainder
Reversion and/or Remainder
Leasehold
Reversion and/or Remainder
Reversion and/or Remainder
c. Reversion: Future interest left over after the holder of a greater estate in real property (i.e. fee simple absolute) transfers a lesser estate in the property that is certain to end (i.e. life estate or a term of years) without specifying in the deed or will who is to receive that future interest
i. For a deed, the reversion remains in the grantor
ii. For a will, the reversion remains in the successor in interest of the testator
iii. Example: O owns property in fee simple, and says “to A for life”
d. Remainder: Future interest left over after the holder of a greater estate in real property transfers a lesser estate in the property through deed or will specifying some second grantee who is to receive the leftover future interest
i. Example: From O “to A for life, then to B and her heirs”
ii. Two types:
1. Vested: A remainder that is held by an ascertained person and that will become possessory upon the natural termination of the preceding estate—can identify a person who will get the estate
a. I.e. “from O to A for life, then to B and her heirs” creates a vested remainder in B.
b. Example from class: To A for life, then to B for life, then to C and her heirs
2. Contingent: A remainder that is held by an unascertained person or subject to a condition precedent other than the natural termination of the preceding estate
a. I.e “from O to A for life, then to B if B is then alive” creates a contingent remainder in B (if B dies, the property reverts to O)
b. Examples from class:
i. To A for life, then to the first woman who becomes president of the U.S.
ii. To A for life, then to B’s heirs (can only be determined upon B’s death)
iii. To A for life, then to A’s surviving children and their heirs
e. Characteristics of reversions and remainders
i. Follow estates that end naturally (“wait patiently” until the underlying present estate terminates)—Neither can interrupt a life estate by causing it to end earlier than it otherwise would
ii. Freely transferrable
iii. Retain the same name even after they are transferred
f. Class gift: A conveyance to a described group
i. So long as additional members can be added to the class, it is characterized as a vested remainder subject to open or a vested remainder subject to partial divestment or defeasance
g. Doctrine of merger: A possessory or vested life estate merges into the next vested future interest in fee simple (whether a reversion or a vested remainder) when both are held by the same person (unless they were created in the same document)
i. Occurs when there
iv. Swanson v. Swanson: Man conveyed life estate to wife that would go to their nine children if she did not exercise her POA. The children had a vested remainder interest in the property and when one of them died without children when his mother had not used her POA, the interest passed to his wife through his estate.
l. Miscellaneous ideas
i. Words of purchase: “and her heirs”
ii. Words of limitation: “for life” or “so long as”
iii. Defeasance: the possibility that a vested remainder would be diminished by some subsequent event
II. Possibility of Reverter and Right of Entry
a. Overview
i. Possibility of reverter: Future interest retained by grantor who creates fee simple determinable
ii. Right of entry: Future interest retained by grantor who creates fee simple subject to a condition
iii. The present estates may last forever (unlike life estate)
iv. The holder of these interests has current, legally recognized property rights, but they are considerably less extensive than those possessed by a holder of a reversion or remainder interest.
b. Traditional v. Modern law
i. Under English common law, holder of these interests could not convey or devide them (except by way of release to the fee owner), but they were inheritable by his heirs
ii. Under modern American law, holder is permitted to convey and devise all future interests
c. When the state condemns a defeasible fee, traditionally the holder of these interests receives nothing
Doctrine of waste applies to defeasible estates
