Three future interests capable of creation in the grantor?
1) The Possibility of Reverter (accompanies only the FEE SIMPLE DETERMINABLE FSDPOR)
2) The Right of Entry, also known as the Power of Termination (accompanies only the FEE SIMPLE SUBJECT TO CONDITION SUBSEQUENT - Bobby Brown)
3) The Reversion = catchall for grantor
Three future interests capable of creation in a transferee (other than grantor)?
- A vested remainder ((i) the indefeasibly vested remainder, (ii) the vested remainder subject to complete defeasance (also known as the vested remainder subject to total divestment), and (iii) the vested remainder subject to open)
- A contingent remainder;
- An executory interest (of which there are two species: (i) the shifting executory interest, and (ii) the springing executory interest).
Diff b/t vested remainder and contingent remainders?
A remainder is vested if it is both created in an ascertained person and is not subject to any condition precedent.
A remainder is contingent if it is created in an unascertained/UNBORN/heirs person or is subject to a condition precedent, or both.
Diff b/t 3 kinds of vested remainders?
- The indefeasibly vested remainder: No Strings Attached - certain to acquire estate in future, with NO CONDITIONS ATTACHED.
- Vested remainder subject to complete defeasance (AKA vested remainder subject to total divestment): his taking not subject to condition precedent, but could be cut short by condition subsequent (condition will appear after person and comma in sentence).
- The vested remainder subject to open: remainder is vested in a GROUP/CLASS/CATEGORY of takers, at least one of whom is qualified to take – class is open if others can still join; CLOSED at the point WHEN ANY MEMBER CAN DEMAND POSSESSION (exception for child in the womb at the time in question), and if class member dies, their stake goes to their heirs.
Diff b/t vested and contingent remainders versus executory interests?
Remainders follow fixed periods. Executory interests follow defeasible fees and interrupts –> spoiler.
What is a remainder?
Future interest in GRANTEE (not grantor) capable of becoming possessory upon the expiration of a prior possessory estate created in the same conveyance in which the remainder is created.
Remainderman is sociable, patient, and polite. 1. How sociable? 2. How patient ant polite?
- Sociable: He’s never alone. He’s created in same instrument as and following preceding estate of known, fixed duration.
- Polite and patient b/c he waits patiently for preceding estate to end; he would never terminate or cutoff someone. HE NEVER FOLLOWS A DEFEASIBLE FEE.
If you can get estate by defeasible fee, you’re not a remainderman. You have a?
Executory interest.
Contingent remainder rules, three, for “HISTORICALLY AT COMMON LAW”?
- Rule of Destructibility of Contingent Remainders: At common law, a contingent remainder was DESTROYED if it was contingent when preceding estate ended. Today, that rule has been abolished.
- Rule in Shelley’s Case: O conveys “To A for life, then, on A’s death, to A’s heirs.” A is alive. –> HISTORICALLY, the interests would MERGE, giving A a fee simple absolute. (Would apply even in the face of contrary grantor intent.) Today, rule has been abolished -> so life estate + contingent remainder in heirs + grantor reversion.
- Doctrine of Worthier Title (AKA the rule against a remainder in grantor’s heirs): when O, who is alive, tries to create a future interest in his heirs. O, who is alive, conveys “To A for life, then to O’s heirs.” Contingent interest in heirs is no good. O merely has a reversion. Still alive today, but grantor’s intent controls and can overrule interpretive rule.
What is an executory interest? Shifting v. springing?
SPOILER! A future interest created in a transferee (a third party), which is not a remainder and which takes effect by either cutting short some interest in another person (“shifting”) or in the grantor or his heirs (“springing”).
Executory shifting interest always follows? Who does it cut short?
Follows defeasible fee and cuts short someone other than grantor.
Rule against perpetuities (RAP) is? Remember fertile octogenarian.
Certain kinds of future interests are void if there is any possibility, however remote, that the given interest may vest more than 21 years after the death of a measuring life.
Four step technique for RAP questions?
- Determine which future interests have been created by the conveyance. The RAP potentially applies only to contingent remainders, executory interests, and certain vested remainders subject to open. Does NOT APPLY TO FUTURE INTERESTS IN GRANTOR, INDEFEASIBLY VESTED REMAINDERS, AND VESTED REMAINDERS SUBJECT TO COMPLETE DEFEASANCE.
- Identify the conditions precedent to the vesting of the suspect future
interest. - Find a measuring life.
- Ask: Will we know, with certainty, within 21 years of the death of our measuring life, if our future interest holder(s) can or cannot take? If so, RAP satisfied.
2 most common RAP fact patterns?
- A gift to an open class that is conditioned on the members surviving to an age beyond 21 violates the common law RAP –> “Bad as to one, bad as to all” w/r/t class taking –> leaves life estate + reversion to grantor.
- Many shifting executory interests violate the RAP. An executory interest with no limit on the time within which it must vest violates the RAP. E.g., “To A and his heirs so long as the land is used for farm
purposes, and if the land ceases to be so used, to B and his heirs.” –> future interest is void b/c too remote –> leaves fee simple determinable + possibility of reverter to grantor (no RAP problem for interests of grantors).
Gift to charity A and then to charity B in violation of RAP?
Charity-to-charity conveyance never violates RAP.
Four modern reforms to RAP?
- The “wait and see” or “second look” doctrine: Validity of any suspect future interest is determined on the basis of the facts as they now exist at the end of the measuring life –> eliminates “what if”/”anything’s possible” inquiries.
- The Uniform Statutory Rule Against Perpetuities (USRAP): provides for ALTERNATIVE 90-YEAR VESTING PERIOD.
- cy pres doctrine: lets court conform violating gift to RAP while trying to match up with intent of grantor.
- Reduction of any offensive age contingency to 21 yrs.
Contingent remainders are created in ______ (2 types) persons or ______
unborn or unascertained persons or subject to a condition precedent
for future interests to be w/in reach of creditors, they must be ______
transferable
When does a class gift close?
Under the rule of convenience, a class closes (no unborn member may share) at the point when some member of the class can CALL FOR DISTRIBUTION of their share of the gift.
What 6 interests are exempt from the rule against perpetuities? (besides grantor’s interests, which are exempt)
- Vested remainders not subject to open
- Reversions
- Possibilities of reverter
- Rights of entry
- Charity-to-charity gifts
- Options to purchase held by current tenant
To what 4 interests does the ruling of perpetuities apply?
- Contingent remainders
- Executory interests
- Vested remainders subject to open
- Options to purchase generally
Where a void interest is stricken under the rule against perpetuities, what happens to the property?
The void interests are treated as though they were never there, e.g., “to a as long as liquor is not consumed on the premises, then to b” would stricken the “then to b”
How does the “bad as to one, bad as to all” rule work?
If the interest to any class member may vest to remotely, the whole class gift fails. For the class gift to vest, the class must be CLOSED and all conditions precedent must be SATISFIED for each member.
A disabling restraint on any legal restriction is void. Name the 3 types of restraint on alienation, each of which are void.
- Disabling restraints, under which attempted transfers are ineffective
- Forfeiture restraints, under which attempted transfer forfeits the interest, and
- Promissory restraints, under which attempted transfer breaches a covenant
