ESTATES & FUTURE INTERESTS THE SHADOW OF THE PAST:

ESTATES & FUTURE INTERESTS

THE SHADOW OF THE SHADOW OF THE PAST:THE PAST:

SPOT BUTCH

LEARN THEIR NAMES

RECURRING ISSUES

• Grantor’s Intent v. Dead Hand Control

RECURRING ISSUES

• Grantor’s Intent v. Dead Hand Control

• Grantor’s Intent v. Alienability

PRESENT

POSSESSORY

ESTATES

PRESENT POSSESSORY ESTATES

• Present v. Future

(Tenant v. Landlord)

PRESENT POSSESSORY ESTATES

• Present v. Future

• Possessory v. Non-Possessory:

(Tenant v. Trust Beneficiary)

FEE SIMPLE ABSOLUTE

• Right to possess and use forever

FEE SIMPLE ABSOLUTE

• Right to possess and use forever

• Right to transfer all present and future rights (inheritable/devisable)

FEE SIMPLE ABSOLUTE

• Right to possess and use forever

• Right to transfer all present and future rights (inheritable/devisable)

• Right to liquidate assets

FEE SIMPLE ABSOLUTE

• Right to possess and use forever• Right to transfer all present and future rights

(inheritable/devisable)• Right to liquidate assets

• Default estate today

FEE SIMPLE ABSOLUTE

FEE SIMPLE ABSOLUTE

Lloyd grants Redacre “to Mimi and her heirs.”

FEE SIMPLE ABSOLUTE

Lloyd grants Redacre “to Mimi and her heirs.”

“WORDS OF PURCHASE”:

Who Gets the Estate?

FEE SIMPLE ABSOLUTE

Lloyd grants Redacre “to Mimi and her heirs.”

WORDS OF PURCHASE: WHO GETS THE ESTATE?

“WORDS OF LIMITATION”:

What Estate do they Get?

RELEVANT TIME FRAMES

• “At Common Law”: Dates prior to modern streamlining of the rules. (e.g., 1600-1800)

RELEVANT TIME FRAMES

• “At Common Law”: Dates prior to modern streamlining of the rules. (e.g., 1600-1800)

• “Today”: Dates after modern streamlining of the rules.

(e.g., 1950-present)

RELEVANT TIME FRAMES

• “At Common Law”: Dates prior to modern streamlining of the rules. (e.g., 1600-1800)

• “Today”: Dates after modern streamlining of the rules. (e.g., 1950-present)

• Precise line between varies from state to state and from issue to issue, so you don’t need to know where it is.

FINITE ESTATES

TERM OF YEARS

LIFE ESTATE

FEE TAIL

FINITE ESTATES

TERM OF YEARS: TO ANN FOR 10 YEARS

LIFE ESTATE:

FEE TAIL:

TERM OF YEARS

• Finite period specified

• Can alienate, devise, inherit (until term ends)

• Need explicit time language to create: (“for 99 years”)

FINITE ESTATES

TERM OF YEARS: TO ANN FOR 10 YEARS

LIFE ESTATE:TO BEA FOR LIFE

FEE TAIL:

ISSUE v. HEIRS

• Issue = Direct Descendants (Children, Grandchildren, etc.)

ISSUE v. HEIRS

• Issue = Direct Descendants

• Heirs = People who inherit your property at the time of your death under the relevant Intestacy Statute

ISSUE v. HEIRS

• Issue = Direct Descendants

• Heirs = People who inherit your property at the time of your death under the relevant Intestacy Statute

• You cannot have heirs until the moment of death

FINITE ESTATES

TERM OF YEARS: TO ANN FOR 10 YEARS

LIFE ESTATE: TO BEA FOR LIFE

FEE TAIL: TO CAL & THE HEIRS OF HIS BODY

FUTURE INTERESTS THAT FOLLOW FINITE ESTATES

•REVERSION

•REMAINDER

FUTURE INTERESTS THAT FOLLOW

FINITE ESTATES

REVERSIONREVERSION

Future interest retained by grantor when s/he conveys a finite estate without indicating who will have rights when it expires.

FUTURE INTERESTS THAT FOLLOW FINITE ESTATES

REVERSIONREVERSION

Future interest retained by grantor when s/he conveys a finite estate without indicating who will have rights when it expires. E.g.:

Ceci conveys Greenacre “To Didi for life.”

Ceci retains a reversion.

FUTURE INTERESTS THAT FOLLOW FINITE ESTATES

REMAINDERREMAINDER

Future interest in a third party that follows naturally upon the termination of a finite estate. It is always expressly conveyed by the grantor.

FUTURE INTERESTS THAT FOLLOW FINITE ESTATES

REMAINDERREMAINDER

Future interest in a third party that follows naturally upon the termination of a finite estate. It is always expressly conveyed by the grantor. E.g.:

Fifi grants Tanacre:

“To Gigi for life, then to J.J.”

J.J. has a remainder. Fifi retains nothing.

• Right to possess and use forever

• Right to transfer all present and future rights (inheritable/devisable)

• Right to liquidate assets

• Default estate today

FEE SIMPLE ABSOLUTE

• Right to possess and use only for lifetime of original grantee

LIFE ESTATE

• Right to possess and use only for lifetime of original grantee

• Right to transfer only rights for lifetime of original grantee (not inheritable/ devisable)

LIFE ESTATE

What if a living person transfers a life estate?

• Opal conveys Gemacre “to Ruby for life”, retaining a reversion herself.

• Ruby then conveys her life estate “to Esmeralda.”

• What does Esmeralda have?

What if a living person transfers a life estate?

• Opal conveys Gemacre “to Ruby for life”, retaining a reversion herself.

• Ruby then conveys her life estate “to Esmeralda.”

• Esmeralda has a life estate pur autre vie (for the life of another). The duration of the interest is still measured by Ruby’s life.

• Right to possess and use only for lifetime of original grantee

• Right to transfer only rights for lifetime of original grantee (not inheritable/devisable)

• Right only to present income; can’t liquidate capital (Doctrine of Waste)

LIFE ESTATE

• Right to possess and use only for lifetime of original grantee

• Right to transfer only rights for lifetime of original grantee (not inheritable/devisable)

• Right only to present income; can’t liquidate capital• Default Estate at Common Law

LIFE ESTATE

DEFAULT ESTATE (“To Bill.”)

• Common Law: Default was Life EstateBill gets Life EstateGrantor keeps Reversion

DEFAULT ESTATE (“To Bill.”)

• Common Law: Default was Life Estate– Bill gets Life Estate– Grantor keeps Reversion

• Today: Default is Fee Simple– Bill gets Fee Simple Absolute– Grantor keeps nothing

DEFEASIBLE FEES

DEFEASIBLE FEESRestatement Terms

•FEE SIMPLE DETERMINABLE

•FEE SIMPLE ON CONDITION SUBSEQUENT

•FEE SIMPLE ON EXECUTORY LIMITATION

FEE SIMPLE DETERMINABLE

• OPERATION: Self-Executing

FEE SIMPLE DETERMINABLE

• OPERATION: Self-Executing

• KEY LANGUAGE: “So long as”, “While”, “Until”

FEE SIMPLE DETERMINABLE

• OPERATION: Self-Executing

• KEY LANGUAGE: “So long as”, “While”, “Until”

• FUTURE INTEREST: Possibility of Reverter (in GRANTOR)

FEE SIMPLE DETERMINABLE

• OPERATION: Self-Executing

• KEY LANGUAGE: “So long as”, “While”, “Until”

• FUTURE INTEREST: Possibility of Reverter

• EXAMPLE: To Estelle and her heirs so long as asparagus is not grown on the property.

FEE SIMPLE ON CONDITION SUBSEQUENT

• OPERATION: Grantor must act

FEE SIMPLE ON CONDITION SUBSEQUENT

• OPERATION: Grantor must act

• KEY LANGUAGE: – “But if”, “provided that if”, “on condition that

if” PLUS– “O may [re]enter and [re]claim the land”

FEE SIMPLE ON CONDITION SUBSEQUENT

• OPERATION: Grantor must act

• KEY LANGUAGE: – “But if”, “provided that if”, “on condition that if”

PLUS– “O may [re]enter and [re]claim the land”

• FUTURE INTEREST: Right of [Re]Entry (in GRANTOR)

FEE SIMPLE ON CONDITION SUBSEQUENT

• OPERATION: Grantor must act

• KEY LANGUAGE: – “But if”, “provided that if”, “on condition that if” PLUS– “O may [re]enter and [re]claim the land”

• FUTURE INTEREST: Right of [Re]Entry

• EXAMPLE: To Estelle and her heirs, but if asparagus is grown on the property, I can reenter and claim the land

FEE SIMPLE ON EXECUTORY LIMITATION

• OPERATION: Either self-executing or grantee has to act.

FEE SIMPLE ON EXECUTORY LIMITATION

• OPERATION: Either self-executing or grantee has to act.

• KEY LANGUAGE: Creates interest in 2d grantee if condition violated

FEE SIMPLE ON EXECUTORY LIMITATION

• OPERATION: Either self-executing or grantee has to act.

• KEY LANGUAGE: Creates interest in 2d grantee if condition violated

• FUTURE INTEREST: Executory Interest (in 2d grantee)

FEE SIMPLE ON EXECUTORY LIMITATION:

EXAMPLES

• To Estelle and her heirs so long as asparagus is not grown on the property, otherwise to Bob

FEE SIMPLE ON EXECUTORY LIMITATION:

EXAMPLES

• To Estelle and her heirs so long as asparagus is not grown on the property, otherwise to Bob

• To Estelle and her heirs, but if asparagus is grown on the property, Bob can reenter and claim the land

DEFEASIBLE FEESRestatement Terms

•FEE SIMPLE DETERMINABLE (to grantor; automatic)

•F.S. ON CONDITION SUBSEQUENT (to grantor; must act)

•F.S. ON EXECUTORY LIMITATION (any to grantee)

VESTED v. VESTED v. CONTINGENT CONTINGENT REMAINDERSREMAINDERS

FUTURE INTERESTS THAT FOLLOW FINITE ESTATES

REMAINDERREMAINDER

Future interest in a third party that follows naturally upon the termination of a finite estate. It is always expressly conveyed by the grantor.

VESTED REMAINDER

• Grantee is living ascertainable person

(Presumed if granted to a named individual)

VESTED REMAINDER

• Grantee is living ascertainable person AND

• Clause creating the remainder contains no condition on grantee taking the property except expiration of prior estate

VESTED REMAINDER

• Grantee is living ascertainable person AND

• Clause creating the remainder contains no condition on grantee taking the property except expiration of prior estate

• Example: To Aaron for life, then to Oona and her heirs.

CONTINGENT REMAINDER

• Grantee is presently unborn or unascertainable

*OR*

• Clause creating the remainder contains a condition on grantee taking the property

CONTINGENT REMAINDER:EXAMPLES

• “To Fred for life, then to Fred’s firstborn child.” Fred presently has no children. (Not born)

Suppose Fred has a Child…

CONTINGENT REMAINDER:EXAMPLES

• “To Fred for life, then to Fred’s firstborn child.” Fred presently has no children.

• “To Fred for life, then to Fred’s oldest child living at Fred’s death.”

(not ascertainable)

CONTINGENT REMAINDER:EXAMPLES

• “To Fred for life, then to Fred’s firstborn child.” Fred presently has no children.

• “To Fred for life, then to Fred’s oldest child living at Fred’s death.”

• “To Fred for life, then to Wilma and her heirs if Dino survives Fred. (condition precedent)

ANALOGY

Vested Remainder

Theater Ticket

Contingent Remainder Lottery Ticket

Life Estate + Vested Remainder

To Fred for Life, then to Wilma and her heirs

Life Estate + Contingent Remainder

Barney “to Fred for Life, then to Wilma and her heirs if Dino survives Fred.”

Life Estate + Contingent Remainder

Barney “to Fred for Life then to Wilma and her heirs if Dino survives Fred.”

Barney retains a reversion.

REMAINDERS “IN …” :

• “To Fred for life, then to Wilma for life.”

Wilma has a vested remainder in life estate

• “To Fred for life, then to Wilma and her heirs if Dino

survives Wilma.

Wilma has a contingent remainder in fee

simple