PRESENT POSSESSORY ESTATES



PRESENT POSSESSORY ESTATES

I. FEE SIMPLE ABSOLUTE, FEE SIMPLE OR FEE (FSA)

A. How is it created?

O A and his heirs

Words of purchase Words of limitation (only limits estate; no rights given)

(gift or purchase)

B. A has:

• Present possession

• Future possession until A dies

• A’s heir has possession upon A’s death (but they have nothing till then because you cannot have an heir until you die)

• The heirs of A’s heirs have possession upon the death of A’s heir (but have nothing until then because you cannot have an heir until you die)

• Ad infinitum (in theory you can always find an heir)

C. O has:

No future interest is retained.

D. Characteristics:

• Alienable

• Inheritable (if it has not been alienated or devised)

• Devisable

II. FEE TAIL (FT)

The fee tail will pass only to the lineal heirs of A. Thus there may be a time at which on one is eligible to own BA – Expiration. In contrast, the fee simple does not expire. While A’s line may die out, at least theoretically we should always be able to find an heir of A.

A. How is it created?

O A and the heirs of his body

• Fee Tail Special

O A and the heirs of his body by W

• Fee Tail Male/Female

O A and the male heirs of his body

O A and the female heirs of his body

• NO GOs

O A and the Harvard-grad heirs of his body

B. A has:

• Present possession

• Future possession until A dies

• Upon A’s death only A’s children are entitled to inherit (no heirs until death)

• Upon the death of A’s child who inherited from A, the children of A’s child who inherited from A are entitled to inherit (no heirs until death)

• Ad infinitum until Expiration

C. O has:

O retains a reversion. The reversion kicks in at the expiration of the previous fee tail estate (no more lineal descendants of A).

D. Characteristics:

• Not freely alienable

• Inheritable in a modified way (lineal descendants of A)

• Not devisable

III. LIFE ESTATE, ESTATE FOR LIFE (LE)

At common law it was presumed that a life estate was created by any grant that did not fit one of the other estates.

A. How is it created?

O A for life

O A forever

O A in fee simple absolute

O A

B. A has:

• Present possession

• Future possession until A dies

• A’s heir are entitled to inherit nothing

• A can only alienate the right to possession of BA during A’s life

C. O has:

O retains a reversion. The reversion kicks in at the expiration of the life estate (A’s death).

D. Characteristics:

• Alienable but the alienation expires at A’s death (life estate per autre vie)

• Not inheritable

• Not devisable

E. Life Estate Per Autre Vie

An alienated life estate. Only lasts as long as the one that alienated remains alive. It is inheritable and can be devised for the life of the original alienator.

F. Waste

Doctrine used at common law to balance the interests of a life tenant and a future tenant.

IV. FEE SIMPLE DETERMINABLE (FSD)

A. How is it created?

O A and his heirs as long as the land is farmed

O A and his heirs until the land is no longer farmed

O A and his heirs while the land is farmed

B. A has:

• Fee simple + self-executing limitation that if broken removes the possession of BA from A

C. O has:

O has a possibility of reverter. The possibility of reverter kicks in the moment the limitation is breached.

D. Characteristics:

• Conditional possession (e.g. might have to always use for farmland)

• Alienable

• Inheritable

• Devisable

E. FSD and Adverse Possession

Since the limitation is self-executing, the SOL for an action on ejectment begins to run the moment the limitation is breached (O gets possession immediately).

V. FEE SIMPLE ON CONDITION SUBSEQUENT (FSSCS)

A. How is it created?

O A and his heirs but if the land is not farmed then O and his heirs may enter and claim the land

Provided that if . . . then . . .

On the condition that if . . . then . . .

But if . . . then . . .

Right to enter and claim must always be stated.

B. A has:

• Fee simple + condition that if broken allows the grantor to enter BA and reclaim it from A (right can be passed to grantor’s heirs).

C. O has:

O has a power of termination The power of termination can be exercised the moment the condition is breached – IT IS NOT AUTOMATIC.

C. Characteristics:

• Conditional possession

• Alienable

• Inheritable

• Devisable

D. FSSCS and Adverse Possession

Since the condition merely gives the grantor the power to enter and reclaim, the SOL for an action on ejectment does not begin to run until the grantor exercises his power (O is not entitled to possession until he demands it).

FUTURE INTERESTS BEFORE 1536

I. FUTURE INTEREST IN THE GRANTOR

A. FSA

O A and his heirs

All that O owns is granted. No future interest is retained.

B. FT

O A and the heirs of his body

O retains a reversion. The reversion kicks in at the expiration of the previous fee tail estate (no more lineal descendants of A). A reversion is,

▪ Alienable

▪ Inheritable

▪ Devisable

▪ Protected by the law of waste

C. FSD

O A and his heirs as long as the land is farmed

O has a possibility of reverter. The possibility of reverter kicks in the moment the limitation is breached. A possibility of reverter is,

▪ Not alienable

▪ Inheritable

▪ Not certain whether devisable

▪ Not certain whether protected by the law of waste

D. FSSCS

O A and his heirs but if the land is not farmed then O and his heirs may enter and claim the land

O has a power of termination The power of termination can be exercised the moment the condition is breached – IT IS NOT AUTOMATIC. The power of termination is,

▪ Not alienable

▪ Inheritable

▪ Not devisable

▪ Not certain whether protected by the law of waste

II. FUTURE INTEREST IN THE GRANTEE

A. DETERMINING IF A REMAINDER IS CREATED – RULES OF LAW

1. Only expirable estates can be followed by a future interest in a grantee.

Fee tail

Life estate

Why not FSD and FSSCS? Because the future interest that O retains after creating either a FSD (possibility of reverter) or a FSSCS (power of termination) cannot be conveyed to a third party (inalienable).

Since the future interest that O retains after creating either a FT or a LE (reversion) can be alienated, the common law allowed replacement by a future interest in a third party – remainder

2. The future interest created in B must be capable of taking effect immediately upon expiration of the preceding estate.

• GO – one estate immediately follows another

O A for life, then to B and his heirs

• NO GO – time gaps

O A for life, one year later to be and his heirs

O A for life, then to B ten years after A’s death if B is still

solvent

• GO – condition verifiable at expiration of prior estate

O A for life, then if B survives A, to B and his heirs

O A for life, then if B has married C, to B and his heirs

• NO GO – condition not verifiable at expiration of prior estate

O A for life, then if B marries C either before or after A’s

death, to B and his heirs

• GO – ambiguous

O A for life, then if B marries C, to B and his heirs

If it can be read to be verifiable at A’s death, then it should be read that way.

3. The future interest created in B must not take effect before the expiration of the preceding estate.

• GO – remainder follows particular

O A for life, then if B marries C, to B and his heirs

• NO GO – remainder cuts-off particular

O A for life, then if B marries C while A is living,

immediately to B and his heirs

“But if” indicates an intention to cutoff

O A for life, but if B ever becomes President, to B and his

heirs

B. DETERMINING PRESENT ESTATE REMAINDER WILL BECOME

To determine what present estate remainder will become (FSA, FT, LE, FSD, FSSCS) just look for the same clues used to classify them.

C. CLASSIFYING REMAINDERS BY TYPE

1. VESTED REMAINDERS

(a) B is a person born and ascertainable, and

(b) at expiration of the particular there is no condition that must be met for B’s interests becomes possessory (automatic)

O A for life, then to B and his heirs

Vested remainders are

alienable,

inheritable

devisable

2. CONTINGENT REMAINDERS

(a) B is unborn or unascertainable, and

(b) there is a condition that must be met before B can come into possession – condition precedent

O A for life, then if B survives A, to B and his heirs

When a remainderman is unascertainable, those who might become the remainderman only have expectancies

O A for life, then to B’s oldest child living at the time of A’s

death and that child’s heirs

If S is B’s oldest child and B is still living, S only has an expectancy because S could die before B does.

O still has a reversion. If the contingency is not satisfied the estate goes back to O.

Contingent remainders are

Not alienable,

Inheritable (except when the condition calls for survivorship)

devisable

3. ALTERNATIVE CONTINGENT REMAINDERS

(a) B has a contingent remainder, and

(b) B’s remainder is followed immediately by C’s remainder which will only take effect if B does not meet the contingency.

O A for life, then if B marries X, to B and his heirs, but if B

does not marry X, then to C and his heirs.

Notice: “but if” here does not cut-off because it introduces a condition precedent that is the opposite of the first condition precedent.

O still has a reversion.

Alternative contingent remainders are

Not alienable,

Inheritable (except when the condition calls for survivorship)

devisable

4. VESTED REMAINDERS SUBJECT TO OPEN

(a) a class of persons has a contingent remainder, and

(b) there are in existence some ascertainable members of the class or a member that has met the condition precedent imposed on the class.

O A for life, then to the children of A who reach 21 and their

heirs

A has a child, Y, that reaches 21. Y has a vested remainder subject to open. It is subject to open because for some period of time, the class is open, can increase in number, and Y’s share might diminish in size.

Rule of convenience – a class closes as soon as a member of that class is entitled to demand distribution of his or her share (e.g. A dies in the example above, Y can go cash in even if he has a little brother who would turn 21 the day after A’s death)

REMAINDER CHECKLIST

✓ ALWAYS MAKE SURE THE FUTURE INTEREST IS A REMAINDER – A.K.A. APPLY THE THREE RULES OF LAW!

✓ WHETHER A REMAINDER IS CONTINGENT OR VESTED DEPENDS ON INFORMATION NON INCLUDED IN THE GRANT

E.g. did B marry C before A died?

✓ CONTINGENT REMAINDER CAN CHANGE INTO VESTE REMAINDERS

✓ ALWAYS ACCOUNT FOR ALL FUTURE INTERESTS

O A for life, then to B and his heirs as long as the land is farmed

B has a vested remainder in FSD and O has a possibility of reverter

III. DESTRUCTIBILITY OF REMAINDERS

A. VESTED REMAINDERS

Vested remainders are indestructible. The taker is born and identifiable, and there is no condition precedent to taking – there is no way that the vested remainderman can fail to take (hence no reversion).

A contingent remainder can become vested:

O S for life, then to A and his heirs if A marries S and if A

fails to marry S, then to B and his heirs

A marries S. A’s contingent remainder becomes vested (condition fulfilled).

B. CONTINGENT REMAINDERS

A contingent remainder is destroyed unless it vests at or before the termination of the preceding estate.

If a remainder is destroyed, then, at the expiration of the preceding estate, the next vested estate comes into possession – usually the reversion.

1. EXPIRATION

O A for life, then to the first son of A who reaches 21 and his

heirs

A dies leaving a son of 16. The contingent remainder is destroyed. O’s reversion becomes possessory.

2. MERGER

The doctrine of merger provides that if successive vested estates come into the same hands, the two estates are transformed into the largest possible interest.

Why?

At common law the contingent remainder was closer to what we would call an expectancy. While it could be devised and it was inheritable (so long as the condition was not survivorship) it could not be alienated. Thus, destructibility does not seem inconsistent with its alienability.

O A for life, then to B and his heirs if B marries C

While A is living and B is unmarried O conveys the reversion to A

A’s life estate + O’s reversion = A in FSA

3. FORFEITURE

O A for life, remainder to B and his heirs if B marries C, and if

B does not marry C, then to D and his heirs

If A has forfeits the property involuntarily or voluntarily, the life estate ends prematurely and the contingent remainder is destroyed.

However, if the remainder had vested prior to forfeiture the remainderman takes.

IV. FEE SIMPLE ON EXECUTORY LIMITATION & EXECUTORY INTERESTS (Post-1536)

A. DIFFERENCE BETWEEN

O A and his heirs, but if the land is ever not farmed, to B and his heirs

Before the “but if” would have been a NO GO. The only way to leave a future interest in a grantee was to leave a remainder and remainders can only follow a life estate or a fee tail (an expirable estate).

Now, the addition of the but if following the FSA sets out a limitation and creates a future interest that becomes effective if the limitation is breached (executed)

Thus, A has a fee simple on executory limitation and B has an executory interest in fee

The fee simple on executory limitation is a present interest. It was,

Alienable

Inheritable

Devisable

The executory limitation is a future interest in a grantee. It was,

Not alienable

Inheritable

Devisable

B. EXECUTORY INTERESTS: SHIFTING VS. SPRINGING

1. SHIFTING EXECUTORY INTEREST

O A and his heirs, but if the land is ever not farmed, to B and his heirs

Interests that before would have resulted in a cut-off (violation of Rule 3).

2. SPRINGING EXECUTORY INTEREST

O A for life, then one year after A’s death, to B and his heirs.

O B and his heirs upon his marriage

Interests that before would have failed because they do not take effect immediately after the previous estate (violation of Rule 2).

In the first case O has a reversion subject to an executory limitation.

In the second case O has a fee simple with an executory limitation

B. VESTED REMAINDERS: INDEFESIABLE VS. DEFEASIBLE

When dealing with life estates and fee tails, remainders may be subject to executory limitations.

1. INDEFEASIBLE VESTED REMAINDERS

The executory limitation only kicks-in after the remainder becomes possessory (true vested remainder)

O A for life, then to B and his heirs, but if B ever farms the land, then to C and his heirs

B can only breach (execute) the limitation after he has the land in possession.

2. DEFEASIBLE VESTED REMAINDER

• The executory limitation could kick-in before the remainder becomes possessory (contingent remainder in disguise)

O A for life, then to B and his heirs, but if A ever farms the land, then to C and his heirs

Here A can defeat B’s remainder by breaching (executing) the limitation before B takes possession

• The same result can happen without volitional human conduct

O A for life, then to B and his heirs, but if B dies under 21, then to C and his heirs

Here B’s remainder can be defeated by B dying and thus breaching (executing) the limitation.

• It is possible for situation in which the limitation may be breached either before or after the remainder becomes possessory

O A for life, then to B and his heirs, but if B joins the Church, then upon A’s death to the Church forever

B could join the Church before A dies and when A dies the Church gets it. B could join the Church after A dies and A being dead already the Church gets it.

• The limitation that makes a remainder in B defeasible (because if breached before B’s possession leaves B with nothing) can become an executory limitation after B takes possession

O A for life, then to B and his heirs, but if A joins the Church,

then upon A’s death to the Church, its successors and assigns.

If A forfeits his life estate, B comes into possession. But A is still alive and could still join the Church (maybe he forfeited as part of his vow of poverty!). In this case, B’s possession is subject to A’s breaching or non-breaching of the limitation.

Instead of the fee simple he would otherwise have taken, B takes a fee simple with an executory limitation.

RULE AGAINST PERPETUITIES

I. PERIOD

A. LENGTH

Lives in being and twenty-one years plus applicable periods of gestation

B. BEGINNING OF PERIOD

• Deed – delivery time

• Will – time of T’s death

II. TO FIGURE OUT IF AN INTEREST WILL VEST WITHIN THE PERIOD

CONSIDER ALL THE POSSIBILITIES

A. INTEREST MUST BE CERTAIN TO VEST

No interest is good unless it must vest, if at all, within 21 years following a life or lives n being at the creation of the interest.

• Must = certainties, not probabilities

• An interest must vest and it must vest soon enough.

• All present possessory estates satisfy the rule because they are vested

• Future interest in the grantor – reversion, possibility of reverter, power of termination - are vested

• Vested remainders are, obviously, vested

• Contingent remainders are subject to RAP

• Executory interests are subject to RAP

• All possibilities existent at the beginning of the period must be considered. Any combination of events then possible that may result in vesting beyond the period above renders the interest invalid under RAP.

B. IF A’S INTEREST CANNOT LAST LONGER THAN PERIOD RAP

CANNOT BE VIOLATED

E.g. A has an estate measured by the lives of B, C, and D. No limitation that A may choose to make out of this estate can be invalid under RAP.

C. EVERYONE CAN HAVE MORE KIDS AS LONG AS THEY ARE ALIVE

D. FOR THE PURPOSE OF THE RULE, “SPOUSE” REFERS TO A PERSON TO WHOM B IS MARRIED AT THE TIME THE INSTRUMENT SPOKE

E. PERMISSIBLE PERIOD IS DEFINED BY MEASURING UNITS

1.

Lives of persons who are

(a) in being at the commencement of the period and

(b) neither so numerous nor so situated that evidence of their deaths is likely to be reasoned difficult to obtain

+

Twenty-one years (minority)

+

Any period or periods of gestation involved in the situation to which the limitation applies

2. Measuring lives have to be alive when period begins

T children and grandchildren, corpus to group not ascertained

until the death of the surviving grandchild.

Invalid as to the gift of the corpus because it is possible for a grandchild to be born after T dies, thus violating the rule of lives in being

Remember presumption – if alive = reproduce

3. Measuring life does not have to be mentioned in the instrument creating the interest

4. Lives in being cannot be so numerous as to make proof of their death unreasonably difficult

5. Permissible period includes period in gross of twenty-one years

6. Permissible period includes period of gestation

STEPS

(1) Determine when the interest will vest or fail, and upon what contingencies.

(2) List all persons during whose lifetime, or at whose death, (or within 21 years of whose death) the contingencies will occur, causing the interest to vest or fail. This list is a list of persons who satisfy the first criterion for measuring lives

(3) Check to see whether any of the persons on the list were certain to be alive at the creation of the interest. That is, check to see which of the persons on the list satisfy the second criterion for measuring lives. If any of the people on the list satisfy the second criterion, the interest is valid under RAP. If none of the persons on the list satisfy the second criterion, the interest is invalid under RAP.

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