(11) Future Interests, Remainders, Executory Interests, Vested/Contingent

What is a future interest?

An interest that is capable of becoming a present possessory interest at some future time.

What are the two types of future interests in grantees?

Remainders and executory interests.

What is a remainder?

A future interest that becomes possessory immediately upon the natural termination of the preceding freehold estate.

When does a remainder become possessory?

Immediately upon the natural termination of the prior freehold estate.

What is an executory interest?

A future interest that is not a remainder.

How can you identify an executory interest?

If it does not qualify as a remainder, it is an executory interest.

How were executory interests treated at common law before the Statute of Uses?

They were void ab initio.

What does "void ab initio" mean?

Void from the beginning.

Can a remainder cut short the preceding estate?

No.

Why can't a remainder cut short the preceding estate?

Because it must become possessory only upon the natural termination of the prior estate.

Can a remainder follow a fee simple estate?

No.

Why can't a remainder follow a fee simple estate?

Because a fee simple is potentially infinite and may never naturally terminate.

Example: O conveys "to A for life, but if B returns from Europe, then to B and his heirs." What future interest does B have?

An executory interest.

Why is B's interest in the previous example an executory interest?

Because it cuts short A's life estate before its natural termination.

Can a remainder follow an express gap in seisin?

No.

Why can't a remainder follow an express gap in seisin?

Because under common law there could be no abeyance of seisin.

What is meant by "no abeyance of seisin"?

There cannot be a gap during which no one holds seisin.

Example: O conveys "to A for life, and seven days after A's death to B." What future interest does B have?

An executory interest.

Why is B's interest an executory interest when there is a seven-day delay after A's death?

Because the express gap in seisin prevents the interest from being a remainder.

During an express gap in seisin, where does seisin temporarily return?

To the grantor.

At common law, could a remainder follow an estate for years?

No.

Why couldn't a remainder follow an estate for years at common law?

Because an estate for years is a nonfreehold estate and does not include seisin.

What is the modern rule regarding a remainder following an estate for years?

Modern law permits it.

How do you determine whether a remainder is vested or contingent?

Determine whether the remainderman is ascertained and whether any condition precedent exists.

What is a vested remainder?

A remainder given to an ascertained person that is not subject to a condition precedent.

Can a vested remainder be subject to a condition subsequent?

Yes.

What are the three types of vested remainders?

Absolutely vested, vested subject to partial divestment, and vested subject to total divestment.

What is an absolutely vested remainder?

A vested remainder that is not subject to divestment.

What is a vested remainder subject to partial divestment?

A vested remainder in which a class may expand.

When is a vested remainder subject to partial divestment commonly found?

When there is a class gift.

What is a vested remainder subject to total divestment?

A vested remainder that may be completely defeated by a condition subsequent or an executory interest.

What is a contingent remainder?

A remainder given to an unascertained person or to an ascertained person subject to a condition precedent.

When is a remainderman unascertained?

When the identity of the remainderman is not yet known.

What is a condition precedent?

A condition that must occur before the remainder can vest.

When is a remainder contingent because of a condition precedent?

When the remainderman cannot take possession until the stated condition is satisfied.

What are alternative remainders?

Two remainders arising from the same condition where only one can become possessory.

What are alternative executory interests?

Two executory interests arising from the same condition where only one can become possessory.

Example: O conveys "to B for life, then to C if C quits smoking, if not, then to D." What interests do C and D have?

Alternative contingent remainders.

Testable Issue: What is the difference between a remainder and an executory interest?

A remainder becomes possessory only upon the natural termination of the prior freehold estate, while an executory interest either cuts short the prior estate or follows a gap in possession.

Testable Issue: Can a remainder follow a fee simple?

No.

Testable Issue: Can a remainder cut short the preceding estate?

No.

Testable Issue: What makes a remainder vested?

The remainderman is ascertained and no condition precedent exists.

Testable Issue: What makes a remainder contingent?

The remainderman is unascertained or the interest is subject to a condition precedent.

Testable Issue: What is the modern rule regarding a remainder following an estate for years?

Modern law allows a remainder to follow an estate for years.

Essay Rule: How should you distinguish a remainder from an executory interest?

Determine whether the future interest becomes possessory immediately upon the natural termination of the preceding freehold estate. If it cuts short the prior estate, follows a fee simple, or follows an express gap in seisin, it is an executory interest. If it follows the natural termination of a freehold estate, determine whether it is vested or contingent.

Master Synthesis: What is the framework for analyzing future interests in grantees?

First determine whether the future interest is a remainder or an executory interest. If it is a remainder, determine whether it is vested or contingent by examining whether the remainderman is ascertained and whether any condition precedent exists.