Property 2: Future Interests

Vested remainder subject to open

- A remainder is vested in a GROUP of takers, at least one of whom is QUALIFIED to take, BUT - each class member's share is subject to partial diminution because additional takers can still join in.

Future interests in transferees

1) Vested remainder, which could be: a) indefeasible vested remainder; b) vested remainder subject to complete defeasance; c) vested remainder subject to open 2) Contingent remainder 3) Executory interest, which could be: a) shifting; b) springing

What is a remainder?

A future interest created in a grantee that is capable of becoming possessory upon the expiration of a prior possessory estate created in the same conveyance in which the remainder is created (remainder has interest in the same bit of land currently possessed by someone else)

What sorts of estates to remainders accompany?

A preceding estate of known fixed duration, like a life estate or a term of years

For the purposes of a vested remainder subject to open, how will you know when a class is closed?

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

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

At B's death AND at A's death regardless of whether B is still alive. This is because, according to the rule of convenience, upon A's death, C and D can demand possession.

"To A for life, then to B's children." A is alive. B has two children, C and D. What happens if C and D predecease A?

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

"To A for life, then, if B graduates from college, to B." A is alive. B is now in high school. What does B have? What does O have? Why?

B has a contingent remainder because it is subject to an as yet unmet condition precedent. B needs to graduate from college before he can take the land. O has a reversion. O conveyed to A a life estate, which is less than what O owns. Therefore, if A dies and B does not graduate college, the land goes back to O.

"To a for life, then to B." What if B predeceases A?

B's future interest (indefeasibly vested remainder) passes by will or intestacy to her heirs.

"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?

C and D have a vested remainder subject to open because the remainder is vested in a group (B's children) and at least one member is qualified to take.

"To A for life, then to those children of B who survive A." A is alive. We don't know which, if any, of B's children will survive A. What future interest is created in B's children?

Contingent remainder because it is created in an unknown/unascertained class of people

"To A for life, then to B's first child." A is alive and B, as yet, has no children. What future interest is created in B and why?

Contingent remainder because it is created in an unknown/unascertained person.

A shifting executory interest always follows a....

Defeasible fee

Executory interests

Executory interests are future interests created in a transferee, which is not a remainder and which takes effect by either cutting short some interest in another person ("shifting") or in the grantor or his heirs ("springing")

Vested remainder subject to complete defeasance

Existing remainderman with a taking NOT subject to a condition precedent, BUT could be cut short because of a CONDITION SUBSEQUENT

Which present estate does the possibility of reverter accompany?

Fee simple determinable

Which present estate does the right of entry accompany?

Fee simple subject to condition subsequent

The womb rule

If child is in womb at the time the class closes, the child will get to join in the gift

Three types of vested remainders

Indefeasibly vested remainder Vested remainder subject to complete defeasance Vested remainder subject to open

A remainder is vested if...

It is created in a known taker who is NOT subject to a condition precedent.

A remainder is contingent if...

It is created in an unascertained/unknown person or is subject to a condition precedent, or both.

O has a fee simple absolute and conveys "to A for life". What does O have and why?

O has a reversion because she conveyed less than what she started with. She started with a FSA, which can endure forever, and conveyed to A a life estate, which endures only as long as A is alive.

O has a fee simple absolute and conveys "to A for life then to B for 99 years." What does O have and why?

O has a reversion because she still has conveyed less than what she started with. O's FSA can endure forever, whereas the estate conveyed to A and B endure only for A's lifetime and then for 99 years.

For the purposes of a vested remainder subject to open, a class is either...

Open or closed.

For the purposes of a vested remainder subject to open, when is a class open?

Open when others can still join

Future interests capable of creation in the grantor

Possibility of reverter Right of entry (aka power of termination) Reversion

"To A, but is B returns from Canada, to B and his heirs." What does B have? What doesn't B have a remainder? What does A have?

Shifting executory interest because he is cutting short A's interest and not O's interest. Remainders NEVER follow defeasible fees! A has a fee simple subject to B's shifting executory interest

Who does a shifting executory interest cut short?

Someone other than the grantor!

Reversion

The future interest that arises in a grantor who transfers an estate of lesser duration than she started with OTHER THAN fee simple determinable or fee simple subject to condition subsequent

Who does a springing executory interest cut short?

The grantor!

Indefeasibly vested remainder

The holder of this remainder is certain to acquire an estate in the future, with no strings or conditions attached

What are the 2 types of remainders?

Vested and contingent

For the purposes of a vested remainder subject to open, when is a class closed?

When no others can join

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

A has a springing executory interest because it divests O, the grantor. O has a fee simple subject to A's springing executory interest.

"To A for life, then to B." What does A have? What does B have? Why?

A has a life estate B has a indefeasibly vested remainder because there are no conditions attached to B's interest

"To A for life, then to B, but if B dies under the age of 25, then to C." A is still alive. B is 20 years old. What does A have? What does B have? What does C have?

A has a life estate B has a vested remainder subject to complete defeasance. He is an existing remainderman and his taking may be cut short by the condition subsequent. C has a shifting executory interest.