Property I

Possessory Estate

Possessory estate is the right to possess a piece of property now.

Nature

There are four natures that possessory estates have:

  1. Fee Simple

    A fee simple estate is the most common type. It allows the owner of the estate to keep the land forever or to devise it to someone else to keep forever. A fee simple will not end naturally.

    The words "and his heirs" in a conveyance are the words of limitation that create a fee simple.

    While a fee simple allows the grantee's heirs to inherit the estate, no legally recognizable interest is granted to them.

    Absolute

    Fee simple absolute means that no limitations at all. Fee simple is the only type of estate capable of being absolute, as all other types have inherent limitations.

  2. Fee Tail

    A fee tail estate allows the grantee to posses the land for the remainder of his life, but limits him from selling, giving, or devising the right of possession after his death. Instead the title is automatically inherited by the grantee's next lineal descendant. As it relies on having lineal descendants, at some point the law presumes that one will not be available and the estate will naturally end.

    A fee tail is communicated by the words of limitation "and the heirs of his body."

    Like fee simple, fee tail does not convey any legally recognizable interest to the grantee's heirs.

    Fee tails have been abolished in almost all states. In most states, any fee tail simply becomes a fee simple.

  3. Life Estate

    A life estate allows the right to possess the property for only the grantee's lifetime. It does not pass to the owner's issue on death.

    The words of purchase for a life estate are simply "for life."

    Pur Autre Vie

    Pur autre vie is a duration of a life estate based upon the lifetime of a person other than the possessor.

  4. Term of Years

    A term of years, commonly known as a lease, is an estate for a limited period of time.

    The words of limitation are usually some variation of "for 10 years."

Words of Limitation

Words of limitation tell what kind of limitation, if any, is inherent in the estate.

If no words of limitation are included in the words of purchase, it is assumed because of the state's rules of construction that the grantor conveys all of the rights that he is able to.

Possessory estates can have limitations beyond that of their natures however.

Limitations
Absolute

Fee simple absolute means that no limitations at all. Fee simple is the only type of estate capable of being absolute, as all other types have inherent limitations.

Defeasible

A defeasible estate is one that is capable of being ended by the occurrence of a particular event.

Three kinds of limitations can accomplish this:

  1. Determinable

    A determinable estate may end early automatically upon the happening of the limiting event.

    It relies on a duration without a condition happening. Words of duration are like: "until", "during", "as long as", or "while". The words of limitation will usually be in the original conveyance.

    It gives the grantee a possessory estate in fee simple determinable.

    If the future interest is retained by the grantor, it gives him a possibility of reverter.

    If the future interest is given to another grantee, it gives that person an executory interest.

  2. Subject to an Executory Limitation

    An estate subject to an executory limitation can be interrupted by the next estate.

    It relies on a condition happening. Words of condition are like: "but if", "provided that", "on condition that", or "however". The words of limitation will usually be separated from the original conveyance by punctuation, instead attached to the following future interest.

    It gives an executory interest as a future interest in the second grantee.

  3. Subject to a Condition Subsequent

    An estate subject to a condition subsequent requires the grantor to take some action to reclaim the property.

    It relies on a condition happening. Words of condition are like: "but if", "provided that", "on condition that", or "however". The words of limitation will usually be separated from the original conveyance by punctuation, instead attached to the following future interest.

    It gives a right of entry as a future interest.

Future Interest

A future interest is the right to possess a piece of property in the future.

Remainder

Remainder is a future interest created when a grantor conveys an inherently limited possessory estate and, in the same conveyance, conveys the future interest to a second grantee.

Remainders can be vested or contingent.

Vested Interest

A vested remainder is certain to become possessory to an ascertained person according to the words creating the remainder by merely waiting until the prior life estate ends.

Contingent Interest

A contingent remainder is one

  1. with a condition precedent before the remainder-holder can take possession or
  2. one that is given to an unascertained person.
Condition Precedent

A condition precedent means that something has to happen before the remainder-holder can take possession.

It's like being subject to a condition subsequent, but backwards. Something has to happen before the natural termination of the preceding estate.

e.g. O to A for life, then to B if B has reached 25 years old.

Contingent interests occur naturally at the end of the previous interest as long as the condition is met.

If a remainder first just says to someone (to B, but if B does not survive A...), it is a vested interest subject to divestment. If a remainder put the condition in the same clause (to B if B survives A), it is a contingent interest.

  • If anything has to be done first, such as kids being born or people surviving, it is contingent, not vested.

Vested remainders are descendable. Contingent remainders are not.

Executory Interest

An executory interest is an interest in a grantee following a determinable estate or an estate subject to an executory limitation.

An executory interest automatically takes effect upon the happening of the condition. Its distinguishing characteristic from a contingent interest is that it divests other interests early.

Executory interests can be shifting or springing.

Shifting

A shifting executory interest divests an estate in another grantee.

e.g. A to B, but if C graduates, to C. C has a shifting executory interest.

Springing

A springing executory interest divests an estate in a grantor.

e.g. A to C, if C graduates. C has a springing executory interest.

Reversion

Reversion is a future interest in a grantor to an inherently limited possessory estate.

Merger

When the same person holds both a present possessory estate (or vested future interest) and the next vested future interest (i.e., no other person hold an intervening vested future interest), and the interests were not created by the same conveyance, then the present possessory estate (or vested future interest) merges with the vested future interest (lesser merges into greater) and destroys any intervening contingent remainders.

Destruction of Contingent Remainders Doctrine

A contingent remainder is destroyed if it is still contingent (not vested) when the prior estate ends.

E.g.
O to A for life, then to B if B reaches 30.
If A dies before B is 30, B's contingent remainder is destroyed.

Abolished in most states.

Rule Against Perpetuities

No interest is good unless it must vest and close, if at all, not later than twenty-one years after some life in being at the creation of the interest.

Does not apply to future interests in the grantor.

If the rule applies, strike out the offending future interest immediately at the time of conveyance.

Book's definition

A future interest is void the moment it is created if:

  1. It is given to a grantee (a remainder or an executory interest);
  2. It is either contingent (given to an unascertained taker or subject to a condition precedent or both) or subject to open [or executory]; and
  3. It might still be contingent or subject to open longer than 21 years after the death of the last person alive at the time of the conveyance.
Charitable Exemption

If both the possessory estate and vulnerable future interests are conveyed to charities, then the Rule Against Perpetuities does not apply.

Reforms:

Wait & See

The Wait & See reform does not test for possibilities at the time of conveyance.

It will test after one of two times:

  1. Wait & see for the common law period (lives in being plus 21 years)
  2. Wait & see for 90 years
Uniform Statutory Rule Against Perpetuities

Interest is valid if at least one of the following is true:

  • It complies with the original Rule against Perpetuities
  • It is certain to either vest and close or fail within 90 years
  • It actually vests and closes or fails within 90 years (a "wait and see" approach)
Saving Clause

Saving Clause in conveyance creates a time limit on when future interests must vest; not surprisingly, that time limit is 21 years after the death of some life in being at the time of the conveyance.

i.e., add "within 21 years of the death of B" to conditions.

Destruction of Contingent Remainders Doctrine

A contingent remainder is destroyed if it is still contingent (not vested) when the prior estate ends.

E.g.
O to A for life, then to B if B reaches 30.
If A dies before B is 30, B's contingent remainder is destroyed.

Abolished in most states.