Real Property

Fee simple absolute

“To A & Her Heirs” or “To A”

Provides absolute ownership. Freely devisable, freely descendible, freely alienable, NO future interest (no interest for heirs).

Devisable

the owner is free to pass her interest by will

Descendible

owner’s interest is free to pass via intestate succession testamentary instrument.

Alienable

owner’s interest is transferable inter vivos (during the owner’s lifetime)

Fee Tail

“to A & Heirs of her Body”

Abolished

Any attempt to create a fee tail creates a fee simple absolute.

Defeasible fees

Interests in land have the possibility of being taken away.

Grantor uses express conditional language that the conveyance will be terminated upon the occurrence (or non-occurrence) of an event or condition. Gives grantee a present possessory interest in property, BUT reserves a future interest in the property in favor of either the grantor or third party.

3 types:

+Fee Simple Determinable

+Fee simple subject to condition subsequent

+Fee Simple Subject to Executory Limitation

Fee Simple Determinable

Conditional conveyance that allows the grantor to retain a possibility of reverter.

• words of duration (so long as, during, while, the property shall revert, provided that)

• Words indicate interest conveyed will automatically terminate if a specified condition occurs.

Characteristics:

• Devisable subject to condition

• Descendible Subject to condition

• Alienable subject to condition

• future interest = possibility of reverter - Grantor maintains possibility of reverter.

Fee Simple Subject to Condition Subsequent

Does not automatically end when event (condition) occurs. Grantor has right to take back property, but nothing happens until she affirmatively exercises that right.

Grantor must use clear and durational language and expressly reserve the right to re-enter.

“To A But if … Grantor Shall Have a Right of Entry”

“To A Upon the Condition That … Grantor Shall Have a Right of Entry”

Characteristics:

• Devisable Subject to Condition Subsequent

• Descendible Subject to Condition Subsequent

• Alienable Subject to Condition Subsequent

• Future interest = Right of Entry (Power of Termination) - grantor retains the right of entry.

Fee Simple Subject to Executory Limitation

Provides for the estate to pass to a third person upon the happening of the stated event.

Language =
“To A But if X occurs, then to B”

Automatically passes to a 3rd party.

Characteristics:

• Devisable subject to condition subsequent

• descendible subject to condition subsequent

• Alienable subject to Condition subsequent

• Future interest = shifting executory interest - a future interest, held by a third person, that cuts off another’s interest.

interpretation of defeasible fees of court

Generally disfavored

Law wants to encourage ready alienation of property and discourage restraints that would have the effect of withdrawing such property from the ordinary rules and channels of trade and commerce.

Life Estate

Lifetime ownership of land. Ownership is measured in terms of lifetime (not years).

“To A for Life” = Simple Life Estate

“To A for B’s Life” = Pur Autre Vie - life estate measured by the life of someone other than the grantee (to A for B’s life)

Rights of life tenant = ordinary uses & profits = life tenant is entitled to all ordinary uses and profits of the land.

Has a present possessory interest

Affirmative Waste

Those with a present possessory interest must NOT damage or commit waste to the property.

Affirmative waste = damages that are intentional/negligent or the unapproved exploitation of minerals on the property

Permissive waste

Failure to make required repairs

Ameliorative waste

A substantial change in the use of the property that increases its value

exceptions:

• prior use - Exception for affirmative waste. If, prior to the grant, the land was used for exploitation, then the life tenant can continue to exploit unless otherwise agreed.

• Reasonable Repair and Maintenance - consumption of natural resources is permitted for reasonable repair and maintenance of the property

• Expressly authorized by grantor

• OR normal use of lang - where the land is only suitable for such use

Open Mines Doctrine

Permits continued excavation from any mine on the property that is already open, but prohibits the opening of new mines.

Permissive waste

failure to maintain the estate both physically and financially.

Duty to maintain the estate physically and financially only to the extent of the income or profits derived from the land. (FMV)

-Obligation to repair

-Obligation to pay interest on encumbrances

-Obligation to pay taxes

Obligation to repair

life tenant must keep the property in a reasonable state of repair to the extent of the income or profits derived from the land or, if none, to the extent of the reasonable rental value of the land.

Obligation to pay interest on encumbrances

life tenant must pay interest on encumbrances on the land to the extent of the income or profits derived from the land or, if none, to the extent of the reasonable rental value of the land.

Obligation to Pay Taxes

Life tenant must pay taxes on the land to the extent of the income or profits derived from the land or, if none, to the extent of the reasonable rental value of the land.

Ameliorative Waste

An unauthorized improvement to the estate that changes the land’s physical character. Ameliorative waste is prohibited unless all future interest holders consent.

• Exception: unanimous consent by future interest holder

Future interest reverts to the Grantor

Responsible for the principal portion of mortgage payments and extraordinary repairs.

Reversion (possibility of reverter)

Creates a future interest of possession in the grantor if a specified condition occurs. If such condition occurs, the present possessory interest in the grantee will automatically terminate and vest in the grantor.

interest that remains after subtracting what the grantor has granted from what the grantor originally possessed

Right of grantor = automatic reversion

When in favor of grantor NOT subject to CL RAP because they vest upon creation.

Transferability:

• Devisable = yes

• Descendible = yes

• Alienable = yes

Remainder

Future interest created in a grantee upon the termination of a prior estate of known fixed duration.

A remainder is created only by express grant in same instrument in which preceding possessory estate is created.

“To B for life, then to C”

OR

Term of years “to B for 20 years, then to C”

Future interest goes to a third party remainder. Responsible for the principal portion of mortgage payments and extraordinary repairs.

Right of re-entry (Power of termination)

Creates a future interest in the grantor, wherein the grantor has the right to re-enter and take the property if a specified condition occurs.

Right of grantor = no automatic reversion - estate does not revert automatically; grantor must exercise her right of entry.

When in favor of grantor NOT subject to CL RAP because they vest upon creation.

Transferability

• Devisable = yes

• Descendible = yes

• Alienable = ? some courts have held that a right of entry is not transferable inter vivos.

Restraints on Alienation

• Occurs when the grantor attempts to restrict the alienability or transferability of the land

  • 1. Disabling restraints - all transfers are void

  • 2. Forfeiture restraints - land is forfeited if a transfer is attempted 

  • AND

  • 3. Promissory restraints - an attempted transfer breaches a covenant 

Restraints are enforceable based on…

(1) the interest conveyed;

(2) whether the restraint is reasonable

** All absolute restrictions on alienation or transferability on fee simple estates are void and unenforceable.

Rule Against Perpetuities (RAP) Under CL

Invalidates any future interest in a conveyance of real property that will not vest within 21 years of a life in being at the time the interest was created

Applies to:

• Contingent remainders

• Executory interests

• Vested Remainders Subject to Open

“Wait-and-see” approach to RAP

a non-vested property interest is invalid ONLY IF it actually does not vest within 21 years after the death of a lif in being at the time the interest was created. Rather than invalidate interests on the possibility that they will not vest, this approach waits to see if the interest will actually not vest.

Uniform Statutory Rule Against Perpetuities

If a future interest actually vests within 90 years of its creation, it will be deemed valid.

Vested Remainder

Created in

(1) Ascertained Persons AND

(2) NOT subject to any condition precedent (ready to become possessory).

Indefeasibly Vested Remainder

“To A for Life, Remainder to B”

-Vested, certain of becoming possessory and cannot be divested.

If B predeceases A, B’s future interest passes either through B’s will or through intestate succession if B died intestate.

Condition Subsequent

A condition that, if it occurs, will bring the estate to an end.

“To A for life, then to B, but if B should die under the age of 40, to C”

Inherent Limitation

“to A for life, then to B for life, then to C and her heirs”

B has a vested remainder for life subject to total divestment if B doesn’t survive A.

Divestment occurs because of the inherent limitation in a reminder for life: it fails if it doesn’t become possessory within the life tenant’s life.

Vested Remainder Subject to Complete Defeasance

(aka Vested Remainder Subject to Total Divestment)

Vested but not certain of becoming possessory. Either vested subject to being divested by operation of a condition subsequent or by an inherent limitation of the estate in remainder.

Vested Remainder Subject to Open

vested in a class of persons, at least one of whom is qualified to take possession, but the shares of the class members are not yet fixed because more persons can subsequently become members of this class.

“To A for life, the to the children of B and their heirs”

Contingent Remainder

created in (1) an unascertained person OR

(2) subject to a condition precedent (other than natural termination of preceding estates).

Unascertained Person - Heirs of Living Person

a living person cannot have heirs, so a living person’s heirs are unascertained persons

Subject to a Condition Precedent

A condition precedent is an act or event that must exist or occur before the remainder vests

To a for life, then if B marries C to B

A failure condition precedent = reversion to grantor - if condition precedent is not satisfied, the interest reverts back to the grantor or the grantor’s heirs.

Satisfaction of condition precedent = indefeasible remainder

Indefeasible remainder

Is a vested remainder that is not subject to a condition precedent

To A for life then to B.

B’s future interest is an indefeasibly vested remainder. B is certain to acquire the property after A’s death, and there are no conditions that could prevent B from taking possession of the property.

Fee Simple Subject to Executory Interest

Is a conditional conveyance of real property, in which a 3rd Party (not the grantor or his heirs) will be entitled to the property upon the occurrence of a specified condition.

"To person X, so long as (or “but if”) … to person Y”

Shifting Executory Interest

A future interest in a grantee that divests or cuts short a defeasible fee in another grantee

“To A and her heirs, but if B returns from Rome, to B and her heirs”

Springing Executory Intrest

A future interest in a grantee that divests the grantor, springs out of the grantor at a date subsequent to the granting of the interest; upon completing a certain event, interest springs out.

“O conveys to A and her heirs when/if A Marries.”

O = retains fee simple

A = springing executory interest

Adverse possession

(1) have actual physical possession or occupancy of the land;

(2) maintain that possession continuously and without interruption;

(3) exclude others from possession;

(4) have “hostile” possession (be there without permission) and

(5) maintain “open and notorious” posseions.

easement by express grant

one that is recorded and signed by the grantor and must comply with all the formalities of a deed

easement by implication

Created by operation of law rather than written instrument:

3 types:

(1) An intended easement based on a use that existed when the dominant and servient estates were severed

(2) An easement implied from a recorded subdivision plan

(3) an easement by necessity.

Easement by prescroption

Analogous to adverse possession.

Use must be open and notorious

adverse

continuous and uninterrupted for the statutory period.

Tenancy in Common

“To A & B as Tenants in Common” - each tenant 2 or more