Property Present and Future Interests

indefeasibly vested future interest

1. indefeasibly vested if its beneficiary must (legally) eventually take possessory ownership.

vested subject to divestment

2. vested subject to divestment: if something could occur that would divest the remainder of an interest. For example, "From O to A for life, then to B, but if A stops growing corn, then to C": B would have a vested remainder subject to divestment because he could be divested of his interest by an act of A before the interest becomes possessory.

1. O owns a fee simple and makes the following transfers. In which case is there a reversion? a. O conveys "to A for life, then to B and her heirs." b. O conveys "to A for life, then to B and her heirs if B attains the age of 21 before A. dies." At the time of the conveyance B is 15 years old. (If there is a reversion, what happens to it if B reaches 21 during A's life?) c. O conveys "to A for 20 years."

3. a. No reversion after a vested remainder in fee simple. b. B has a contingent remainder. O has a reversion because O has not conveyed a vested remainder in fee simple. The reversion will disappear (be divested by the vesting of the contingent remainder) if B reaches 21 during A's life. c. O has a reversion. Easy!

vested subject to open

3. vested subject to open if it belongs to a class of beneficiaries, where that class can expand. A common example is a grant from O "to A's children", where A is a man: the class of A's children can't be closed until approximately thirty eight weeks after A dies, so any children alive at the time of the grant are vested subject to open. This interest is also sometimes referred to as being vested subject to partial divestment.

O conveys blackacre "to A for life, then to B for life." O subsequently dies with a will devising all of O's property to C. Then A dies and B dies. Who owns Blackacre?

4. O had a reversion, which O devises to C. C owns Blackacre upon the death of A and B. This problem shows that a reversion is devisable. It is also transferable inter vivos (during one's lifetime).

O conveys "to A for life, and in the event of A's death to B and her heirs." Is B's remainder vested or contingent? If B subsequently conveys here interest back to O, what does O have?

6. B's remainder is vested. The words "in the event of A's death" are surplusage, merely referring to the ordinary ending of the life estate. But striking them out as surplusage means B's remainder will vest however and whenever the life estate ends, before death or after death. If the courts did not construe these words as surplusage, a lot of remainders would be contingent because the quoted words are common in drafting. Courts prefer vested remainders. If B conveys her vested remainder to O, O has a vested remainder. The name of a future interest depends upon whether it is initially created in a transferee or the transferor. Here it is created in a transferee, B. Once created, the name does not change when it is transferred to O.

O conveys "to A and B for their joint lives, then to the survivor in fee simple." Is the remainder vested or contingent?

A and B have a joint life estate, expiring when one of them dies. The survivor has a remainder. It is contingent because we do not know who the survivor will be.

O conveys "to A for life, then to B for life, then to C and her heirs." What interests are created? Suppose the remainder to C had been "then to C and her heirs if C survives A and B." What interests are created?

A has a life estate, B has a vested remainder for life, C has a vested remainder in fee simple. B's life estate is vested because there is no condition precedent attached to it (the expiration of the preceding estate is not condition precedent). The fact that B's life estate in remainder will terminate if B dies before A does not make the interest contingent; this risk is inherent in a life estate. If the remainder had been "to C and her heirs if C survives A and B," C has a contingent remainder and O has a reversion.

O conveys "to A for life, then to A's children and their heirs, but if at A's death he is not survived by any children, then to B and her heirs." At the time of the conveyance, A is alive and has not children. What is the state of the title? Two years after the conveyance, twins, C and D, are born to A. What is the state of the title?

At the time of the conveyance the state of the title is life estate in A, contingent remainder in fee simple in A's children, contingent remainder in fee simple in B, reversion in fee simple in O. When C and D are born the state of the title becomes life estate in A, vested remainder in fee simple in C and D subject to open and also subject to complete divestment by the executory interest in fee simple in B. The reversion in O is divested when C and D are born.

O conveys Blackacre "to A for life, remainder to B and her heirs." B then dies intestate without heirs. A then dies. Who owns Blackacre?

B has an indefeasibly vested remainder in fee simple. Upon B's death intestate the remainder escheats to the state in which Blackacre is located. Upon A's death the state's remainder becomes a possessory fee simple absolute. The state owns Blackacre.

Future interests

Does not Include present right to enjoy property. Either retained by grantor or in a third party.

O conveys Blackacre "to A for life, then to B if B gives A a proper funeral." Does B have a remainder or an executor interest? If it is an executor interest, whose interest will be divested if B gives A a proper funeral?

Executory interest. O's interests are divested. B has a remainder only if B's interest can become possessory immediately upon A's death. IF there is a certain gap in time between A's death and A's "proper funeral," then B does not have a remainder but rather has an executory interest. It's hard to imagine a proper funeral that ends at the moment of death! Thus, B almost certainly has an executor interest; it will divest O if B gives A a proper funeral. To be clear: The fee simple will revert to O upon A's death. O will be divested of the fee simple when and if the funeral occurs.

Executory Interest

Interest by third party that isn't a remainder. Executory interests usually arise when a grantor gives property to one person, provided that they use it a certain way. If the person fails to use it properly, the property transfers to a third party. Future interest in a transferee that divests or cuts short a previous interest 1. Shifting: A shifting executory interest cuts short someone other than the grantor. For example, if O conveys property "To A, but if B returns from Florida within the next year, to B"; here, B has a shifting executory interest, and A has a fee simple subject to this shifting executory interest. 2. Springing: A springing executory interest cuts short the grantor's own interest, in favor of the grantee. For example, O conveys to A for life, and one year after A's death to B and his heirs. O will have a one-year interest, that will spring/be cut short one year after A's death, and will go to B, the grantee.

Remainder

Interest created in third party, follows life estate. "to Homer for life, then to Bart, Lisa, and Maggie and their heirs" 1) Indefeasibly vested: identity of takers is known and no other contingency has to be fulfilled before the interest is ready to become possessory 2) Contingent remainder: "to Homer then to his children and their heirs" "to homer than to Bart if he goes to college"

Reversion

Reverts back to grantor automatically, follows natural end of life estate and other instances when owner has not disposed of entire fee ex. "to Marge for life, then to O" O has a reversion.

O conveys "to A for life, then to A's children who shall reach 21." A's oldest child, B, is 17. Is the remainder vested or contingent?

The remainder is contingent because the condition precedent "who shall reach 21" is not satisfied. When B reaches 21, the remainder vests in B subject to partial divestment/open by B's siblings who reach 21.

O conveys "to A for life, then to such of A's children as survive him, but if none of A's children survives him, to B and her heirs." At the time of the conveyance, A is alive and has two children, C and D. What is the state of the title?

The state of the title is life estate in A, contingent remainder in fee simple in C and D, alternative contingent remainder in fee simple in B, reversion in fee simple in O. Where you have alternative contingent remainders, if one remainder vests, the other cannot.

O conveys "to A for life, then to B and her heirs, but if A is survived at his death by any children, then to such surviving children and their heirs." At the time of the conveyance, A is alive and has two children, C and D. What is the state of the title?

The state of the title is life estate in A, vested remainder in fee simple in B, subject to divestment by the executor interest in fee simple in C and D.

O conveys Greenacre "to A and her heirs." A's only child, B, is a spendthrift and runs up large, unpaid bills. B's creditors can attach B;s property to satisfy their claims. Does B have an interest in Greenacre, reachable by B's creditors? Suppose A wishes to sell Greenacre and use the proceeds to take a trip around the world. Can B prevent A from doing this?

The words "and her heirs" simply mean "in fee simple." B has no interest in Greenacre that B's creditors can reach. Nor can B prevent A from doing whatever A wants to do with A's property. B has a hope of inheritance (a "mere expectancy"), but an expectancy is not recognized as a legal interest.

Life Estate

comes to natural end when person dies, you can still rent out the property if you want, but when you die it goes back to TO

defeasible fees

end on happening of named contingency so future interests become possessory: 1. Fee simple determinable 2. fee simple subject to condition subsequent 3. fee simple subject to executory limitation

Fee simple determinable

ends automatically upon occurrence of named event, then TO or TO's heirs take the property: ex. O grants Blackacre to Springfield Law so long as it is used for instruction in the law, then to O"

Fee simple subject to condition subsequent

fee continues indefinitely except that, upon happening of the named event, the interest does not automatically end but can be ended by action (self help or lawsuit) by the grantor or the grantor's sucessor: Ex. O grants Blackacre "to springfield law, but if it is not used for instruction in the law, then O has the right to reenter and take the premises;"

Vesting

granting a person an immediate right to present or future enjoyment of property. One has a right to a vested asset that cannot be taken away by any third party, even though one may not yet possess the asset. A vested interest may be one of three types: 1. indefeasibly vested if its beneficiary must (legally) eventually take possessory ownership. 2. vested subject to divestment: if something could occur that would divest the remainder of an interest. For example, "From O to A for life, then to B, but if A stops growing corn, then to C": B would have a vested remainder subject to divestment because he could be divested of his interest by an act of A before the interest becomes possessory. 3. vested subject to open if it belongs to a class of beneficiaries, where that class can expand. A common example is a grant from O "to A's children", where A is a man: the class of A's children can't be closed until approximately thirty eight weeks after A dies, so any children alive at the time of the grant are vested subject to open. This interest is also sometimes referred to as being vested subject to partial divestment.

Fee Simple Subject to Executory Limitation

if defeasible fee is followed by an interest not reserved to the grantor (goes to third party) -Ex. O grants Blackacre to Springfield law as long as it is used for instruction in the law, then to Springfield Animal Hospital;

Possibility of reverter

interest reserved to the grantor that follows a fee simple determinable: O will automatically get the property back if the limitation built into the fee simple determinable occurs Ex. O grants "to springfield law school as long as is it used for instruction in the law, then to O"; O has a possibility of reverter.

Right of entry/Power of termination

interest retained by the grantor that follows fee simple subject to condition subsequent: i. Ex. O grants "to Springfield law, but if it is not used for instruction in the law, then O has the right to reenter and take the premises" If it occurs O has the right but it doesn't automatically transfer

Fee simple absolute

largest package of ownership rights, from which others are carved. Indefinite in time, no natural end. Owner can designate successor owner; fee simple is largest package of rights;

Fee tail

nontransferable life estate, followed by same interest in blood descendants only when bloodline ends does fee tail end; property reverts to grantor or those who received the grantor's interests via will or intestacy