Real Property Ownership

1. Rule Against Perpetuities

"No interest is good unless it must vest, if at all, not later than 21 year after some life in being at the creation of the interest." Strikes out (voids) selected future interests, regardless of the grantor's intentions.

i. RAP Basic Steps

1. Is there a future interest to which the RAP applies? · Contingent remainders? Executor interests? Vested remainders subject to open 2. What are the conditions precedent? What is the "mystery"? · Be clear on what has to happen before an interest will either vest or fail to vest, or before a class will close 3. Find a validating life · Can this person solve the mystery in time? (Within their life plus an additional 21 years after their death.) · There might not be a validating life! If not, the interest is void · To be a validating life, the person must be alive at the time the conveyance becomes irrevocable 4. Test each interest

Condition precedent

A condition precedent is an event or state of affairs that is required before something else will occur.

Fee Simple Determinable (FSD)

A fee simple determinable is a present fee simple estate that is limited by specific durational language (e.g., "so long as," "while," "during," "until"), such that it terminates automatically upon the happening of a stated condition, and full ownership of the property is returned to the grantor. The fee simple determinable is freely alienable, devisable, and descendible, but always subject to the stated condition. Upon the occurrence of the stated condition, the estate automatically reverts back to the grantor. The grantor's retained future interest is called a "possibility of reverter." A possibility of reverter is freely alienable by the grantor, both during his life and upon his death. Example: A conveys Blackacre "to B and his heirs, until B gets married." The estate reverts back to A if B gets married. Therefore, B has a fee simple determinable in Blackacre, with a possibility of reverter in A.

Vested Remainder

A remainder is "vested" when: First, it is granted to a person who (A) is born, and (B) whose identity is presently ascertainable (i.e. capable of being found out). Second, there must be no conditions precedent to the complete vesting of rights in the remainderman. That is to say, there must be no future event that needs to happen before the remainderman will be recognized as having all the rights of a remainderman in the subject property.

Remainder

A remainder is a future interest created in a grantee that can become possessory upon the expiration of a prior possessory estate of known fixed duration that is created in the same conveyance in which the remainder is created. A remainder can either be vested or contingent.

Contingent Remainder

A remainder is contingent if it is created in a grantee that is unascertainable, or if it is subject to an express condition precedent to a grantee's taking. Example: A conveys "to B for life, remainder to C's heirs." If C is alive at the conveyance, C's heirs are not yet ascertainable, and the remainder is contingent.

Reversion

A reversion (or "reverter") is the future interest held by the grantor who grants a life estate or estate for years but does not convey the remaining future interest to a third party.

Right of Reentry

A right of reentry (also called "right of entry" or "power of termination") is a future interest held by the grantor after a fee simple on condition subsequent is granted.

Shifting executory interest

A shifting executory interest divests the interest of the grantee by cutting short a prior estate created in the same conveyance. The estate "shifts" from one grantee to another on the happening of the condition. Example: A conveys "to B and his heirs, but if C returns from Paris, then to C." This conveyance creates a fee simple subject to an executory limitation in B, and a shifting executory interest in C

Springing executory interest

A springing executory interest divests the interest of the grantor or fills a gap in possession in which the estate reverts to the grantor. Example: A conveys "to B for life, and one year after B's death to C and his heirs." This conveyance creates a life estate in B, a one-year reversion in A (in fee simple subject to an executory limitation), and a springing executory interest in C.

Executory Interests

An executory interest is a future interest in a third party that is not a remainder and that cuts the prior estate short upon the occurrence of a specified condition. Executory interests are transferable. EXAM NOTE: Any interest held by a third party that follows a fee is always an executory interest because a remainder never follows a fee. The two types of executory interests are shifting executory interest and springing executory interest.

Descendible

Property can be transferred through the laws of intestacy if the owner dies without a will.

Devise

Real Property transferred through a will

Ameliorative waste

Results from an affirmative act that leads to a substantial change in the property and increase its value (e.g., building a swimming pool)

Affirmative waste

Results from an affirmative act that significantly reduces the value of the property (e.g., demolishing a valuable house)

Permissive waste

Results from failure to take responsible care to protect the estate (e.g., failing to make minor repairs or to pay property taxes)

Heirs

The beneficiaries of a person's property when the person dies without a will.

Decedent

Deceased

1. Rule in Shelley's Case

If (1) one instrument (will, deed or other writing) (2) creates a life estate in land in A, and (3) purports to create a remainder in persons described as A's heirs (or the heirs of A's body), then the remainder becomes a remainder in fee simple (or fee tail) in A. Example: O to A for life, then to A's heirs. Rule gives A a vested remainder in fee. Under Merger Rule, the interests merge and A has a present possessory interest in a fee simple.

1. The Doctrine of Merger

If a life estate and the next vested estate in fee simple come into the hands of one person, the lesser estate is merged into the larger. Example: O grants to A for life, then to B. If A sells her life estate to B, then the life estate and the remainder merge giving B a fee simple absolute now (rather than just a future interest).

Escheat

If the Decedent has no living relatives, the property belongs to the state.

Freehold Rights Vs. Nonfreehold Rights

Nonfreehold rights Fixed amount of time (e.g., a lease) Freehold rights Non-fixed amount of time. Freehold estates include fee simple absolute, life estate, fee tail, fee simple determinable, fee simple subject to a condition subsequent, and fee simple subject to an executory limitation

Fee Simple Subject To Condition Subsequent (FSSCS)

A fee simple subject to a condition subsequent is a present fee simple that is limited in duration by specific conditional language (e.g., provided that, but if, and on condition that). Upon the occurrence of the condition, the grantor (or his successor interest) has the right to terminate this estate In the conveyance, the grantor must explicitly retain the right to terminate the fee simple subject to a condition subsequent (known as the "right of entry," "right of reentry," or the "power of termination"). This right is devisable and descendible, but it cannot be transferred during the owner's lifetime. The owner may waive this right, but the mere failure to assert it does not constitute a waiver. Example: A conveys Blackacre "to B and his heirs, but if B gets married, then A can reenter Blackacre." B will retain ownership until A exercises his right to reenter. B has a fee simple subject to a condition subsequent in Blackacre, and A has a right of reentry. (Even if B gets married, B will retain his current possessory estate in Blackacre until A exercises his right to terminate B's estate.)

Fee Simple Subject To Executory Limitation (FSSEL)

A fee simple subject to an executory interest is a present fee simple estate that is limited in duration by either conditional language or durational language, such that it will terminate upon the occurrence of the specified condition, and title will pass to a third party (i.e., someone other than the grantor). Upon occurrence of the stated condition, the present fee simple terminates automatically. The future interest held by the third party is an executory interest. Example: A conveys Blackacre "to B for as long as the property is used as a hospital, then to C." In Blackacre, B has a fee simple subject to an executory interest, C has an executory interest, and A does not have an interest.

Fee Tail

A fee tail is a freehold estate that limits the estate to the grantee's lineal blood descendants by a specific words or limitation (e.g., "heirs of the body"). Once the bloodline is done, it goes back to O or O's heirs if they are dead. The fee tail estate has been eliminated in most states because it is treated as a fee simple absolute. Fee tail can be created in only four states: Delaware, Maine, Massachusetts and Rhode Island Example: O conveys Greenacre "to B and the heirs of his body." B has a fee tail if this occurred in Delaware, Maine, Massachusetts and Rhode Island, and B's heirs have a remainder. Otherwise, this is treated as a fee simple absolute.

Future Interest

A future interest is an interest in presently existing property, or in a gift or trust, which may commence in use, possession, or enjoyment sometime in the future.

Vested Subject To Complete Divestment

A future interest that has vested, but which may be destroyed by an event that could occur after the vesting of the interest but before the interest becomes possessory. Example: A conveys "to B for life, and then to C; but if C has no children, then to D's children." C has a vested remainder interest, but if he is not survived by his children at the time of B's death, then C's interest will be divested.

Vested Subject To Open

A future interest that vests in a class of beneficiaries, where the class has the potential to increase. Example: A conveys "to B for life, and then to B's children as they turn 18." B has three children upon death, X (10 years old), Y (15 years old), and Z (20 years old). Z has a vested remainder subject to open because the property interest may be shared if Y and/or X become vested (i.e., reach age 18).

1. Doctrine of Destructibility of Contingent Remainder

A legal remainder in land is destroyed if it does not vest at or before the termination of the preceding freehold estate. Example: O conveys to A for life, then to B and her heirs if B reaches 21. If B is 15 when A dies, then B's contingent remainder is destroyed. The land reverts back to O.

Life Estate

A life estate is a present possessory estate that is limited in duration by a life. The language must be clear, and the duration must be measured in terms of a life, not a number of years (e.g., "to A for life"). Upon the end of the measuring life, title reverts to the grantor or specified remainderman. This future interest is known as a "reversion." A life estate is usually not devisable or inheritable. Example: O conveys Greenacre "to B for the life of B." B has a life estate in Greenacre, which terminates upon B's death. O has a reversion. The duration of a life estate is measured by the lifetime of a particular person. When that person dies, the estate terminates. Unless otherwise specified, the measuring life is the grantee. A life estate is fully transferable during the life of the person by whom the life estate is measured. Because the interest terminates at the death of the person by whom the life estate is measured, a life estate is generally neither devisable nor descendible.A life estate measured by the life of a third party is also called a life estate pur autre vie.

Descendants

A person's children, grandchildren, and so on.

Issue

A person's children, grandchildren, and so on.

Possibility of Reverter

A possibility of reverter is automatically retained by a grantor when a fee simple determinable is conveyed.

Defeasible Fees

As with a fee simple absolute estate, a defeasible fee is ownership of potentially infinite duration. But, unlike a fee simple absolute estate, a defeasible fee may be terminated by the occurrence of an event. Three defeasible fee that you will encounter are (i) fee simple determinable, (ii) fee simple to a condition subsequent, and (iii) fee subject to an executory interest

Fee Simple Absolute

Fee simple absolute is the most common form of property ownership and the broadest ownership interest recognized by law. It is absolute ownership of potentially infinite duration, is freely alienable (i.e., easily bought or sold), and has no accompanying future interest. The estate is capable of being transferred at death or during life. Although common law required words of limitation (e.g., "and heirs"), conveyances that are ambiguous are now considered fee simple by default (e.g., "to B"). The fee simple absolute is a present estate that does not terminate unless the owner dies intestate without heirs, in which case the property escheats to the state. Example: A conveys Blackacre "to B and his heirs." C conveys Whiteacre to "B." Both conveyances give B a fee simple absolute estate in the property.

Indefeasibly Vest Remainder

The instrument of conveyance does not specify anything that needs to take place in order for grantee's remainder to vest, so it is deemed vested from the moment of its creation. Example: A conveys Blackacre "to B for life, and then to C and his heirs." Here, the grantee, C, is ascertainable.

Estate in Land

The nature and duration of a person's interest in property

Waste

The rights of a holder of a life estate are limited by the doctrine of waste. Under this doctrine, a life tenant must deliver the property in essentially the same condition that it was in when she took possession. Although the doctrine of waste typically arises in the context of a life estate, it comes into play with abuse or alteration of real property by any person who is holds a property interest that is not a fee simple interest

Transferability of Remainders and Executory Interests

Vested remainders are fully transferable inter vivos, devisable by will, and descendible by inheritance. Today, executory interests and contingent remainders are transferable inter vivos in most jurisdictions; both are devisable and descendible.

1. Doctrine of Worthier Title

Where there is an inter vivos transfer of land by a grantor to a person, with a limitation over the grantor's own heirs either by way of remainder or executory interest, no future interest in the heirs is created. Rather, a reversion is retained by the grantor. Example: O to A for life, then to O's heirs. Without this rule, there is a contingent remainder in O's heirs. With the rule, there is no remainder anymore and O has a reversion.