(2) Future Interests

What are the 3 types of restraints on alienation?

(1) disabling restraints, under which attempted transfers are ineffective; (2) forfeiture restraints, under which an attempted transfer foreiture the inters; and (3) promissory restraints, under which an attem[ted transfer breaches a covenant.

What must a charitble trust have?

A chartiable purpose

What is a condition precedent?

A condition is a condition precedent when it appears before the language creating the remainder or is woven into the grant to the remainderman.

What does O have?

A fee simple subject to A's springing executory interest

What is a future interest?

A future interest gives its holder the right or possibility of future possession of an estate. It is a present, legally protected right in property.

"To A for life, remainder to B." A is alive. B is alive. What does A have?

A life estate

You should also think of them as patient and polite, why?

A remainder never cuts short or divests the prior taker. Instead, it patiently waits its turn and won't take until the present life estate or term of years comes to its conclusion.

O conveys "to A for life, then to B and his heirs." What does B have?

A remainder.

O, the holder of a fee simple absolute, conveys: "To A for 99 years" (term of years). O has conveyed less than what she started with. What does O have?

A reversion

O, the holder of a fee simple absolute, conveys: "To A for life, then to B for 99 years." O has still conveyed less than that with which she started. (Remember that the fee simple absolute can endure forever.) So, what does O have?

A reversion

What does O have?

A reversion

What is a springing exectuory interest?

A springing executory interest cuts short the interest of O, the grantor.

What is an executory interest?

An executory interest is a future interest created ina transferee (a third party), which is not a remainder because it takes effect by either cutting short some interest in another person ("shifting") or in the grantor or his heirs ("springing").

In a vested remainder subject to complete defeasance, the remainderman is not subject to what?

Any condition precedent.

O conveys "to A for life, then to B and his heirs if B marries C, otherwise to D and his heirs." What interests to B and D have?

B and D have alternative contingent remainders.

In a grant from O "to A for life, then to B and his heirs; but if B predeceases A, then to C and his heirs" (A is alive; B is alive). What does C have? Why?

C has a shifting executory interest because if B predeceases A, C will take, thereby divesting B's estate of B's interest.

Which restraints on life estates are valid?

Forefeiture and promissory

DOWT applies only to what?

Inter vivos wills, and ONLY if the word "heirs" is used

Does the conveyance violate the Rule Against Perpetuities

No - we'll know by the end of A's life if she became a lawyer

O conveys "to A for life, then to B and his heirs one day after A's death." What does B have?

Nothing. B does not have a remainder (because there is a gap).

Which present estate does the possibility of reverter accompany?

ONLY FSD (remember: FSDPOR)

What if B predeceases A?

The common law result in the absence to a contrary to the statute B's estate passed by will or by intestacy to his heirs.

What if B graduates from college during A's lifetime?

Then the remainder is no longer contingent so you have a indefeasibly VESTED remainder.

A disabling restraint on any legal interest is what?

Void

When is a class open?

When others can join

Does REP apply to trusts?

Yes

What are some examples of remainders that are contingent b/c it is created in an unascertained or unknown person?

"To A for life, then to B's first child." A is alive. B, as yet, has no children. "To A for life, then to B's heirs." A is alive. B is alive. Because a living person has no heirs, while B is alive his heirs are unknown. "To A for life, then to those children of B who survive A." A is alive. We don't yet know which, if any, of B's children will survive A.

What type of future interests are capable of creation in the grantor?

(1) The possibility of a reverter (2) The right of entry (also known as Power of Termination) (3) The reversion

What 3 kinds of future interest is held by someone other than the grantor?

(1) a contigent remainder (2) a vested remainder (of which there are 3 types) (3) an executory interest (of which there are 2 types)

When might a remainder be contingent? (3 situations)

(1) it is created in an unascertained or unknown person; (2) it is subject to an unmet condition precedent; or (3) both.

How do the rules governing charitble trusts differ from those governing private trusts?

(1) it must have indefinite beneficiaries (2) it may be perpetual (i.e., REP does not apply, REP also doesn't applu to a shift from a private to charitbel use or a chativle to prive use) (3) the cy pres doctrine, which allows a court to select an alterantiev charity whenthe prupose fot eh settlor becoems impratiable or impossible applues. NOTE: charitble trusts may be enforece by an action of the AG of the state

What are three valid restraints on alienation?

(1) reasonable restrictions in commercial transactions (2) reasonable options and rights of 1st refusal (3) restrictions on assignment and sublease of leaseholds (e.g., requring landlord's consent.)

What are the 3 types of vested remainders?

(1) the indefeasibly vested remainder (2) the vested remainder subject to complete defeasance (synonymous with the vested remainder subject to total divestment) (3) the vested remainder subject to open.

In what two broad categories can future interests be classified?

(1) those capable of creation in the grantor (2) those capable of creation in 3rd parties

What different types of remainders to condition precedents and condition subsequent create?

A condition precedent creates a contingent remainder; A condition subsequent, creates a vested remainder subject to complete defeasance.

"To A for life, then, if B graduates from college, to B." A is alive. B is now in high school. Before B can take, he must graduate from college. He has not yet satisfied this condition precedent. What does B have?

A contingent remainder

What does A have?

A fee simple subject to B's shifting executory interest

What is a trust?

A fiduciary relationship with respect to specific property (res) wherein the trustee hold legal title to the property subject to enforceable equitable rights in a beneficiary.

O conveys: "To A for life, then to B, provided, however, that if B dies under the age of 25, to C." A is alive. B is 20 years old. What does A have?

A life estate

What is a remiander?

A remainder is a future interest created in a 3rd person that is capable of becoming possessory upon the natural expiration the preceding estate.

What is a vested remainder?

A remainder is vested when it is created in a known taker who is not subject to a condition precedent.

O, the holder of a fee simple absolute (which can endure forever), conveys: "To A for life." O has conveyed less than what she started with ( a life estate). What does O have?

A reversion

What is reversion?

A reversion is the future interest that arises in a grantor who transfers an estate of lesser duration than she started with, other than: (1) FSD (which gives the grantor the possibility of reverter); OR (2) a FSSCS (which gives the grantor the right of reentry)

DOWT is generally treated as what?

A rule of construction = it does not apply if an intent to create a remainder in an heir has been clearly mainfested

To A, but if B returns from Canada, to B and his heirs." What does B have?

A shifting executory interest

What does C have

A shifting executory interest

What is a shifting executory interest?

A shifting executory interest always follows a defeasible fee and cuts short someone other than the grantor.

O conveys: "To A, if and when she becomes a lawyer." A is in high school. What does A have? Why?

A springing executory interest b/c if A becomes a lawyers she cuts short O's time with the estate

What does B have?

A vested remainder subject to complete defeasance.

What is the doctrine of worthier title?

Also known as the rule against remainders in grantor heirs, it states that a remiander in the grantor's heir is invalid and becomes a rerversion in the grantor. E.g O grants Blackacre "to A for life, then to the hiers of O." Under DWT A has a life estate and O has a reversion.

What does B have? Why?

An indefeasibly vested remainder b/c B exists and there are no strings or conditions attached to his interest.

Once A dies, a child of B born or conceived thereafter will not share in the gift. The one exception: the womb rule. A child of B in the womb at A's death will share with C and D. What if C or D predeceases A?

At common law, their share goes to their devisees or heirs.

What result if B is under age 25 at the time of A's death?

B gets the estate. Note, however, that B must live to 25 for his estate to retain his interest. Otherwise, B's heirs lose it all, and C or C's heirs take

O conveys "to A for life, then to B and his heirs; but if B marries C, then to D and his heirs." What does B have?

B has a vested remainder (because there's no condition precedent) subject to divestment by D's executory interest.

O conveys "to A for life, then to B and his heirs; but if B dies un- married, then to C and his heirs." B is alive and unmarried. What does B have?

B has a vested remainder subject to total divestment by C's executory interest.

O conveys "to A for life, then to B if she reaches age 21." What happens is A dies before B reaches age 21?

B's remainder is destroyed.

However, in a vested remainder subject to complete defeasance remainderman's right to possession could still be cut off, how?

B/c of a condition subsequent.

"To A for life, then to B's children." A is alive. B has two children, C and D. When does the class close? Why?

B/c that's when C&D can demand possession = the class will close (rule of convenience) The class closes at B's death and also, because of the rule of convenience, at A's death—no matter that B is still alive. Why?

Juidicial enforcement of restrains prohibiting the transfer or use of propery to or by a specified racial, religioys, or ethnic group is what?

Discriminatory state action forbidden by the 14th amendment. Note: discriinatory retsrictions may also biolatethe FHA

A remainder MUST be created how?

Expressly in the instrument creating the preceding possessory estate.

Which present estate does the right of entry/power of termination accompany?

FSSCS

What is a vested remainder subject to open?

Here, the remainder is vested in a group of takers, at least one of whom is qualified to take possession. But each class member's share could get smaller because additional takers, not yet ascertained, can still join the class.

At common law, when is a contingent remainder destroyed?

If it failed to vest before or upon the termination of the preceding freehold estate.

How can a trust be created?

It can be created by will, inter vivos transwer of the trust res, or inter vivos declaration that the settor is holding property in trust. ALL trusts of real property must be in writing NOTEL a settlor may bequath (by will) property to a trust created during his lifetime i.e., he pay "pur it over" into the trust

Does the conveyance violate the Rule Against Perpetuities?

No - we'll know by the end of B's life whether B got back from Canada so no RAP problem

What is an example of merger?

O conveys "to A for life, then to B's children." If before B has any children, O purchases A's life estate, O will have a life estsate pur autre vie and a reversion. These interests merge and the contigent remainder in B's unborn children is then destroyed.

What is a partial restraint?

One that purports to restrict the power to transfer to specific persons, or by a specific method, or until a specified time.

Why doesn't B have a remainder?

Remainders NEVER follow defeasible fees. Remainders patiently wait their turns, following life estates or terms of years

You can think of remainders a 'sociable' why?

Remainders never travel alone. In other words, remainders always accompany a preceding estate of known fixed duration (such as a life estate or term of years).

O conveys "to A for life, then to B for life, then to the heirs of A." What interests are vested in who?

The Rule in Shelley's Case (rule against remainder in grantee's heirs), transforms the remainder in A's heirs into a remainder in A. (No merger, however, because the remainder for life in B is vested. IF it applies. REMEMBER it has been abolished in most jurisdictions. Since most jurisdictions have abolished the Rule in Shelley's Case, you will most likely encounter it on the MBE as a wrong answer choice that can be quickly eliminated.

T's will devises property to W for life, then to A's children. At the time the will is executed, A has two children, B and C. A then has another child, D. T dies. A has child E, then W dies. After W's death, A has another child, F. Who had what?

The class closed at W's death because it was time to make the distribution. Thus, B, C, D, and E share the property, and F is excluded.

Under common law, when one person acquires all of the present and future interest in land EXCEPT a contingent remainder, what happens?

The contingent remainder is destroyed. This is called merger. When considering whether estates merge to destroy a contingent remainder, remember that if the life estate and the next vested interest were created by the same instrument, there is no merger. (this would defeat the grantor's obvious intent). Merger MAY occur ONLY as when one person LATER acquires immediately successive estates

However, most states have abolished the common law destructibility rules, on those states what happens when a contingent remainder fails to vest before or upon termination of the preceding freshold estate?

The contingent remainder would be converted to an executory interest upon the person being known or the condition precedent being met.

At common law, if the same instrument created a life estate in A and gave the remainder ONLY to A's heirs what is the result?

The remainder was not recognized = A took the life estate AND the remainder. HOWEVER, this rule (the rule in Shellys case) has been abolished in most states.

In a vested remained subject to complete defeasance what exists?

The remainderman.

How will you know when the given class has closed?

The rule of convenience: The class closes when any member can demand possession.

Who the the creator a a trust?

The settor, who must own the property at the time of trust creation AND must have intent to create the trust.

How do you tell the difference between a condition precedent and a condition subsequent?

To tell the difference, apply the "Comma Rule": When conditional language in a transfer follows language that, taken alone and set off by commas, would create a vested remainder, the condition is a condition subsequent, and you have a vested remainder subject to complete defeasance.

Which remainders and executory interest are transferale?

Vested remainders = full transferable, descendible and devisable Contingent remainders & executory interests= freely transferable, and descendible/divisible provided survival is not a condition to the interests taking

"To A for life, then to B's children." A is alive. B has two children, C and D. What do C and D have? Why?

Vested remainders subject to open b/c the remainder is created in the group, at least one member of that group is eligible to take, BUT that is subject to partial dimunuiation.

All absolute restraints on fee simple estates are what?

Void; thus the grantee may freely transfer the property.

When are restraints on FUTURE interests valid?

When the future interest is VESTED they are valid to the extend that restrains on present interest of the same type are valud.

When are forretirue or promissory restraints on fee simple estates are valid?

When they are for a LIMITED time and REASONABLE purpose

The holder of an indefeasible vested remainder is what?

certain to acquire an estate in the future, with no strings or conditions attached

When is a class closed?

when no others can join

O conveys "to A for life, then to B's first child." A is alive. B, as yet, has no children. Who has what interest?

A has a life estate with a contingent remainder.

O grants Blackacre "to A for life, then to the heirs of O." Under DOWT, who has what?

A has a life estate, and O has a reversion. DOWT is generally treated as a rule of construction (that is, it does not apply if an intent to create a remainder in heirs has been clearly manifested). DOWT applies only to inter vivos transfers (not wills), and only if the word "heirs" is used.

O conveys "to A for life, then to B and his heirs if B marries C." What interests do each party have?

A has a life estate. B has a contingent remainder. B's remainder is contingent because he must marry C before he can take possession.

In a grant from O "to A and his heirs when A marries B" (A has not yet married B), what does A have? Why?

A has a springing executory interest because if and when she marries B she will divest O, the grantor.