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Possessory Estates: Defeasible Estates


Present Language Transferabilit Transferor’ what transferor Transferability Transferee Transferabilit Example
possessory in grant y s future interest common law (3rd person) y common law
interest common law Future means
interest
“to O and his
fee simple heirs” devisable none n/a n/a n/a n/a “to A and
absolute alienable his heirs”
“and his heirs” inheritable
words of limitation

fee simple durational devisable possibility of automatic not alienable executory not alienable “to A and
determinabl language: alienable reverter reversion interest his heirs so
e inheritable to grantor upon devisable devisable long as he
while the happening of inheritable inheritable uses land for
until a certain event farming”
so long as (language (condition (may be devisable “to A so long as
(s.o.l. starts doesn’t have with release only to
during broken) she farms, but if
clocking when to be explicit) person with present
in the time not, to David.”
condition possessory interest)
broken) that (may last foreva if
no broken cond.)

fee simple condition devisable right of if condition is not alienable “to A and
subject to subsequent: alienable entry broken, grantor not devisable executory not alienable his heirs
condition inheritable has to actually interest provided
subsequent but if, enter land and inheritable devisable that he uses
on the bring action for inheritable the land for
(s.o.l. starts condition (language ejectment farm”
clocking when that, doesn’t have
transferor takes provided that to be explicit) (may last foreva if
formal action) however no broken condit.)
f.s.s.t.
executory condit. lang. devisable not alienable executory not alienable “to A and
+ alienable none right of entry to interest heirs
limitation provided that
transferee inheritable transferee devisable devisable
used for farm,
(s.o.l. starts has exec. (interest is inheritable inheritable
held with the but if not… to
when condition interest B”
is broken) transferee)
alienable estate reverts alienable vested rem.
Life estate “to A for reversion back to grantor devisable contingent rem. *look to other “to A for
life” not devisable at the end of the inheritable executory intrst chart life”

*modern law, all the present and future interests are alienable, devisable, and inheritable (except for life estate - same as common law)
not inheritable life of A

revisions
fee simple determinable – transferee has executory interest; “to A so long as she farms, but if not, to David.” future interest held by a third party
when there is an executory interest instead of the transferor; not alienable, devisable, inheritable
-have either possibility of reverter OR executory interest = not both ; cant have remainders following fee simple determinable
-statute of limitations starts clocking – as soon as the condition is broekn

fee simple subject to executory limitation - -statute of limitations starts clocking – as soon as the condition is broken

fee simple subject to condition subsequent – ONLY followed by right of entry; conditional language and future interest is held by a third party,
then the present possessory interest is called a fee simple subject to executory limitation – and then future interest is called executory interest (and
its nor alienable, devisable, and inheritable)
-statute of limitations starts clocking as soon as something formal is done to show that he is aware a condition is broken

life estate can be held by third party – vested remainder – a, d, in, (no reversion after that),
contingent remainder – not alienable, devisable, inheritable

present posessory / lang / a d i / transferor / transferor interest / a d i / transferee 3rd party / a d i / example

alienable  the holder of the fee simple absolute can sell the property
devisable  the person can name a taker of the property in their will
inheritable  if the holder of a fee simple absolute fails to name a taker in their will, then the laws of the state will determine who gets the
property – based on the laws of intestacy

-Common law: if it just says “to A”  that is a life estate; in order for it to be a fee simple absolute, must have words of limitation “and his heirs”
-Modern law: if we see “to A”  assume that it is a fee simple
-distinction between fee simple determinable and fee simple subject to condition subsequent are the consequences that follow = future interest

-land always has to belong to someone

-common law context: future interest is not alienable, so the only way to get the land is with a release  release is the process of selling the future
possessory interest to another party
-modern law context: all future interests are alienable, devisable, and inheritable

*modern law, all the present and future interests are alienable, devisable, and inheritable (except for life estate - same as common law)
Fee simple determinable
-fee simple given as a gift (i.e. Money to school for school purposes, To Z and heirs for faming) does not count as a fee simple determinable, just a gift.
-fee simple determinable is created by durational language
-possibility of reverter is the future interest married to fee simple determinable; it is the only future interest possible following fee simple determinable
-once the condition is broken (no longer defeasible estate) and estate automatically reverts to grantor, grantor then has a fee simple absolute
-third party (i.e. heirs) can be given expectancy interest, but not any present or future interest if just part of words of limitation

-statute of limitations clock starts to run as soon as the condition is broken

Fee simple subject to condition subsequent


-fee simple is not automatically terminated, but may be cut short by the grantor when the stated condition happens; unless and until the actual entry is
made, a fee simple continues
-grantor has right to re-enter and take the premises (with an ejectment action) once the condition is broken
-third party (i.e. heirs) can be given expectancy interest, but not any present or future interest if just part of words of limitation

-when a grant is ambiguous, the court will name it a fee simple subject to condition subsequent

statute of limitations clock starts to run when grantor takes formal action of right of entry (not when condition is broken)

Fee simple subject to executory interest


-future interest in a transferee that only takes effect by divesting another interest (3rd party)
-transferor and transferee (3rd party) cannot simultaneously have future interests

doctrine of latches: if O is aware that a condition has been broken and has right of entry, and O sits on his rights too long and doesn’t make any formal
move, then the land will be given to the party that broke the condition (like adverse possession)
-idea of rewarding productivity on land; give incentive for owners to protect their land and future interests to land

hypo: O conveys land to A and her heirs so long as land not sued for sale of alcohol, and if alcohol is sold on land, O has right to re-enter premises. A’s
restaurant for 11 yrs on land and gives complimentary mimosa on Sun and cooks with brandy. B buys restaurant and in year 11 wants to build a bar.

B’s argument for adverse possession: This grant was given as a fee simple determinable -- “so long as” is the durational language. Condition was
broken a long time ago bc A used alcohol in cooking and gave alcohol away on Sun. Nothing is free, so that was part of the lunch package  alcohol
was sold. After 10 years, Statute of limitations passed and O did not come onto land and bring action for ejectment. With doctrine of latches, now B can
adversely possess land. (tacks on A’s time on the land)

O’s counter: This grant was given as a fee simple subject to condition subsequent based on the conditional language. The statute of limitations does not

*modern law, all the present and future interests are alienable, devisable, and inheritable (except for life estate - same as common law)
start clocking until O does something formal to acknowledge that the condition has been broken. In such a case, B has not been in possession of the land
long enough to adversely possess it.

Life estate
Doctrine of waste: 2 kinds of waste
1. affirmative waste – holder of the life estate takes actions that end of decreasing the value of the property
2. permissive waste – owner of the life estate fails to take action and as a result decreases value of the property (passive with prop management)
(i.e. person given land as gift, builds a house there, roof leaks with water, party doesn’t do anything, but could have done something to preserve
property – liable for decreased value of property)

Open minds doctrine: Life estate holder is entitled to use the property as the person before him did  he does not necessarily have to improve the value
of the property, he just cannot decrease its value. As long as the property value is not decreased, it does not matter how he uses the land.

modern courts  do a straightforward economic analysis (numbers are controlling) to see if the land was improved and made profits (then it is ok)

*modern law, all the present and future interests are alienable, devisable, and inheritable (except for life estate - same as common law)
Future Interests: Remainder Interests that follow Life Estate
Current Future interest Transferability Future interest in Elements Example
state in Transferee of remainder Transferor
common law

Life Vested remainder devisable nothing 1. given to ascertained person “to A for life, then to B and
estate in fee simple alienable 2. not subject to condition precedent his heirs.”
absolute inheritable

Life Vested remainder devisable nothing 1. given to ascertained person “to A for life, then to
estate subject to open alienable 2. subject to condition subsequent, may be children of B and their
OR inheritable other takers heirs.” B has one child.
Vested remainder
subject to partial
divestment
1. no takers are ascertained
Life Contingent devisable reversion 2. interest is contingent upon some event “to A for life, then to
estate remainder inheritable other than life estate ending children of B and their
(until contingent heirs.” B has no children.
not alienable becomes vested)

1. no takers are ascertained


Life Alternative devisable reversion 3. two potential takers have simultaneous “to A for life, then to B and
estate contingent inheritable future interests, only one will become vested her heirs if B marries C, but
remainder (until contingent – both subject to condition precedent if B doesn’t marry C, to D
not alienable becomes vested) and his heirs.”

1. given to ascertained person, A


Life Executory interest devisable nothing 2. no condition precedent “to A for life, then to B and
estate inheritable 3. B’s executory interest only fulfilled by her heirs, but if B doesn’t
divesting prior estate marry Calvin, to D and his
not alienable 4. only follows a vested interest, not heirs.”
contingent

Life none alienable reversion life estate ends when person dies “to A for life”
estate
not divisible (if A sells life estate to B, its still measured by
not inheritable A’s life time span)
Life vested remainder
estate subject to
divestment

*modern law, all the present and future interests are alienable, devisable, and inheritable (except for life estate - same as common law)
future interest – gives legal rights to its owner – it’s a presently existing interest that may become possessory in the future

Vested remainder
1. given to an ascertainable person
2. is not subject to a condition precedent; as soon as the previous estate ends, the possessory interest is fulfilled; chosen person gets the estate
law favors vested interests rather than contingent

vested remainder subject to open – if “to A for life, then to B’s children and their heirs.” At the time of grant, B has child C. In 2 years, B has another
child D. C’s future interest of vested remainder subject to partial divestment has been partially divested – he will get smaller share now bc of D.

Contingent remainder
1. given to an unascertainable person (not sure of the takers)
2. made contingent on some event happening other than the natural termination of the previous estates
considered “condition precedent”
once the contingency is fulfilled, then the contingent remainder becomes a vested remainder (certainty)
when life estate is followed by a contingent remainder, the grantor has a reversion future interest bc not sure of any takers; once it becomes vested, no
future interest for the grantor

“to A and his heirs” – “and his heirs” are just words of limitation; don’t confer legal future interest
“to A for life, then to heirs of B” – “to the heirs” are named as takers – they have contingent remainders

Destructibility of contingent remainders (at common law) – if the life estate ends before the contingency is met, then estate reverts back to grantor and
the contingent remainder future interests are destroyed (no longer exist)

Executory interest
1. future interest in a transferee that only takes effect by divesting another interest (3rd party)
2. follows a vested remainder or defeasible interest, but not a contingent remainder

*modern law, all the present and future interests are alienable, devisable, and inheritable (except for life estate - same as common law)
Reversion
- interest remaining in the grantor or successor – who transfers a vested estate of a lesser quantum than that of the vested state which he has
- revert = “come back”
- may or may not be certain that future interest of reversion will become possessory
(i.e. “to A for life”  O’s reversion is fulfilled when A dies; “to A for life then to B and B’s heirs if B outlives A.”  if B does not outlive A, O’s
reversion is fulfilled, but if B outlives A, O’s reversion is unfulfilled.)

Possibility of Reverter
- grantor’s future interest when he carves out a fee simple determinable; future interest is possibility of reverter (automatic if condition is broken, but if
condition not broken, grantor’s future interest may never become possessory)
- once the condition is broken and automatically reverts to grantor, then title of land is fee simple absolute

Right of entry
- grantor’s future interest after he transfers a fee simple subject to condition subsequent and has power to cut short/terminate the estate if the condition is
broken; grantor has future right of entry (may not become possessory if the condition is not broken)
- not automatic transfer back to grantor – he must take formal action

-can’t have reversion and vested remainder in the same time because if there is a vested remainder, it does not revert back to grantor – is definitely going to be
fulfilled by the vested remainder party
-expectancy interest confers no legal interest
-person must be dead in order to have an heir
-unborn children have contingent remainder until they are born – in which case they continue have contingent remainder if there is a condition to be met (i.e.
turning 21 years old)

Rule against perpetuities –


-people who create trusts or legal estates will tie the land for an indeterminate period of time; make the future of the land uncertain  property
law wants certainty so has the rule
-if we look at contingent remainder or executory interest and it would take lives in being + 21 years (approx. 90 years) – then its invalid.
-if it takes more than 90 years for an interest to vest, then the interest is invalid (and we cross it out)
-came up with the “lives in being + 21 yrs” – based on issue that when person comes up with estate – grantor probably wont figure out past the
lives of his kids and grandkids. Grantor can’t reach out to control land years after death – gets 90 years.
-rule is in place to prevent grantors to attach stuff to assets for more than 90 years

To A so long as the land is used for farming – if it is not, then to B. (B has executory interest)
-if land ceases to be farmed in 300 yrs, then executory interest is invalid.

To Sarah for life, then to B if any person steps foot on Mars. (contingent remainder)

*modern law, all the present and future interests are alienable, devisable, and inheritable (except for life estate - same as common law)
contingent remainders and executory remainders are subject to the rule of perpetuities (but vested remainders are not)
Rent Control
Pros - provides affordable housing; protects tenants; stops poor tenants from being priced out of the
system; reduces homelessness; reduces likelihood of slums; allows tenants personhood in apartments - i.e.
you get attached to a place and make it a home, stops people from moving every year/end of every lease
term, so it fosters community
Cons - reduces supply of housing (landlords may choose to leave market); puts burden of affordable
housing on LLs instead of on govt; results in inefficient use of property; attracts more consumers to an
already over-saturated/competitive market; gives LLs no incentive to maintain or improve their property
(pre-war bldgs with shitty old kitchens - while habitable, not necessary up to market standards).

o Pros:
• Provides low cost housing
• Protects tenants’ ability to remain in an apartment
• Transfers wealth / political power to tenants à w/o rent control, poor tenants are priced out of the
system and therefore cannot vote to change the system.
• Provides greater tenants “personhood” interest in the apartment à sentimental attachment to home
means apartment should not be treated like other commodities.
o Cons:
• Reduces supply à landlords may leave the market, new landlords may not enter the market, and
tenants hang on to apartments just because they have them
• Creates lost surplus / inefficient (“dead weight loss”) à some landlords cannot charge what the
apartment is worth (the lose the difference between the apartment’s FMV and the rent control price); some
tenants cannot find apartments for prices they’re willing to pay (T needs a 3 bedroom, while X has a 3
bedroom but only needs a 2 bedroom; X won’t give it up due to rent control so T has to get a 2 bedroom)
• Inefficient use à people who could pay more pay less and people who need less space take more
space
• Attracts consumers who wouldn’t otherwise enter the market to a market with less supply
• Treats apartments different from every other commodity (regular S/D)
• Landlords convert rental units into condos / commercial property
• Makes landlords responsible for what the government should be responsible (possible “taking)
• Landlords have no incentive to maintain / improve the property

*modern law, all the present and future interests are alienable, devisable, and inheritable (except for life estate - same as common law)