8.1(1) Present and Future Estates

Fee Simple Absolute

It is [..1..]% ownership of a property and lasts [..2..]

• The grantee is called the [..3..] and can do [..4..] with it.

• Example conveyance: “O conveys Green Acre to [..4..]"

1. 100%

2. Forever

3. Owner

4. Anything

5. A

Life Estate

It is ownership of a property that only lasts for the duration of a specific person's [..1..]

• The owner is called the [..2..]

• The owner cannot leave the property to someone in their [..3..]

• Example conveyance: "O conveys Green Acre to [..4..]"

1. life

2. life tenant

3. will

4. A for life

Grantor gives a farm "to my sister, Brenda, and her heirs."

• What interest does Brenda have?

Fee Simple Absolute

Grantor gives a farm "to my sister, Brenda, and her heirs."

• Can Brenda leave the farm to whomever she wishes in her will? (Y'/N)

Y

Charles is granted a life estate at a family cabin. He loves it so much he includes it in his will, leaving it to his best friend, Dave.

• When Charles dies, does Dave get the cabin? (Y/N)

N (Charles had a life estate, which ended the moment he died. There was no ownership interest left for him to give away in his will)

A grantor can give away a "life estate"—a piece of ownership that lasts for the life tenant’s life.

• When the life tenant dies, the ownership has to go somewhere.

• There are only two possibilities, and the words of the [...] tell you which one it is.

grant

The first possibility for what happens when the life tenant dies:

• "I convey Green Acre to Ann for life."

When Ann dies, what happens to Green Acre?

Goes back to Grantor or—if Grantor is dead—Grantor’s heirs.

What is the name of the future interest when—after the life estate is over—the Grantor has the right to get the property back?

Reversion

The second possibility for what happens when the life tenant dies:

• "I convey Green Acre to Ann for life, then to Bob."

When Ann dies, what happens to Green Acre?

Bob gets the property automatically

What is the name of the future interest when—after the life estate is over—the life estate goes to a third person?

Reversion

Life Estate Future Interests

The only thing you need to ask is: "After the life estate is over, does the property go back to the original owner, or does it go to someone new?"

• Back to Grantor = [..1..]

• To a new person = [..2..]

Reversion

Remainder

Remainder Subtypes

1. The Sure Thing: [..1..]

2. The Maybe: [..2..]

Vested Remainder

Contingent Remainder

A […] Remainder is like having a reserved seat ticket. You have the ticket, your name is on it, and your seat is guaranteed. You just have to wait for the show to start.

Vested

What do you call someone who holds a remainder future interest that is vested?

A vested remainderman (or simply a remainderman)

A […] Remainder is like being on the standby list. You might get a seat. It's not guaranteed.

Contingent

What do you call someone who holds a remainder future interest that is contingent?

Contingent remainderman

A Contingent Remainder happens for one of two reasons:

• [..1..]

• [..2..]

The person is unknown (unascertained)

There is a condition to meet.

"To Ann for life, then to the first of Ann's children to become a doctor."

• Here, the remainder is contingent because […]

The person is unknown (unascertained)

"To Ann for life, then to Bob, if Bob is over 30 years old."

• Here, the remainder is contingent because […]

There is a condition to meet.

Vested Remainder Subtypes

1. [..1..]

2. [..2..]

Vested Remainder Subject to Open

Vested Remainder Subject to Total Divestment

Vested Remainder Subject to Open

The Key Identifier: The conveyance is to a […] of people (e.g., "children").

Class

Vested Remainder Subject to Total Divestment

The Key Identifier: The language gives a complete vested remainder and then—in a separate clause—adds a condition that can […] ("but if...", "provided that...", "on condition that...")

take it away

Vested Remainder Subtypes

• Your share might get smaller = [..1..]

• You might lose your whole share = [..2..]

Vested Remainder Subject to Open

Vested Remainder Subject to Total Divestment

What Does this Create?

"To my brother for life, then—if he has children—to my brother's children."

Contingent Remainder

Limits on the Life Tenant

Because the life tenant knows someone else will get the property after them, he has one primary responsibility: he can't do anything that would damage or devalue the property for the future owner.

The legal name for this is the duty not to […]

commit waste

Who pays taxes on the life estate?

The current life tenant

Life Estate

A mortgage payment has two parts: [..1..] and [..2..]

interest, principal

Life Estate

• Who pays the interest?

  • Who pays the principal?

Life Tenant

Remainderman/Reversioner

What Topic Does this Describe?

A Grantor gives someone what seems like full, forever ownership (a Fee Simple) but attaches a specific condition or string to the conveyance that could cause the ownership to be taken away.

Defeasible Fees

Defeasible Fees Subtypes

1. Automatic Detonator […]

2. Manual Detonator […]

Fee Simple Determinable

Fee Simple Subject to Condition Subsequent (FSSCS)

Fee Simple Determinable

• Key Identifier: […]

Durational language in the conveyance

Fee Simple Determinable

Durational Language (so long as) ➞ […]

Automatic Termination

Fee Simple Determinable

The Grantor's future interest is called a: […]

Possibility of Reverter

Fee Simple Determinable

Example: "To A and his heirs so long as the property is used for residential purposes."

Result: The moment A stops using the property for residential purposes, A's ownership [..1..], and the property [..2..] goes back to the original Grantor.

Terminates

Automatically

FSSCS

• Key Identifier: […]

Conditional language in the conveyance

FSSCS

The Grantor's future interest is called a: […]

Right of Re-entry

FSSCS

The Grantor must […] their right of re-entry to reclaim ownership

Exercise