Present Estates & Future Interests (no RAP) — Real Property

Two deeds, same grantor, same land, same Town. The first says, to the Town so long as the land is used as a public park. The second says, to the Town, but if the land is ever used to sell alcohol, Owen may re-enter. Both put a string on the Town's ownership. But when the string breaks, they do completely different things.

A handful of words. The first uses durational language, so long as, building the limit into the estate itself. The moment the park closes, the Town's ownership ends automatically, whether Owen notices or not. The second uses conditional language, but if, tacking a condition on from the outside. If the Town opens a liquor stand, nothing happens on its own. Owen has an option, and must exercise it.

Here is the route. First the present estates, the fee simple, the three defeasible fees, and the life estate. Then the future interests, the three the grantor keeps and the two he creates in someone else, and how to classify a remainder. Then class gifts, survivorship, and waste. And finally restraints on alienation.

Start with the one mental model that runs this topic. For every conveyance, ask two questions. What present estate did the first taker get? And what future interest follows it, and who holds it? The slices always have to add up to a complete fee simple. Account for the whole timeline and you have classified it correctly.

One distinction unlocks the reading of any deed. Words of purchase tell you who takes. To Ana. Words of limitation tell you what kind of estate they take, and describe nobody who receives anything. And her heirs. At common law that was the magic phrase for a fee simple, but the heirs got nothing. They were label words.

Fee simple absolute is the largest estate the law allows. Complete ownership, potentially forever, no strings, and freely alienable, devisable, and descendible. Two modern defaults. The old requirement to recite and her heirs is gone almost everywhere. And a conveyance is presumed to pass the grantor's entire estate unless the deed clearly limits it. Ambiguity favors the bigger estate.

This topic is unstarred, so the exam may hand you an interpretive statute. Picture a Franklin provision, § 5-101. One clause says a grant passes all the estate the grantor could convey unless it expressly limits a lesser one. Another says no words of inheritance are needed for a fee simple. A third construes doubtful language against automatic forfeiture. The skill tested is matching the facts to the clause that governs them.

Now defeasible fees. Fee simple estates that can be cut short if a stated event happens. Defeasible just means defeat-able. Three flavors, differing in the words that trigger them and what happens when the trigger fires. Getting them straight is the single most tested skill in this area.

One. Fee simple determinable, created with durational language. So long as. While. During. Until. Unless. When the event happens the estate ends automatically, by operation of law, and possession snaps back to the grantor. He need not lift a finger. What he holds is a possibility of reverter.

Two. Fee simple subject to condition subsequent, created with conditional language. But if. Provided that. On condition that. Usually paired with an express right to re-enter or terminate. Here the estate does not end by itself. The grantor gets an option and has to assert it, historically by re-entering, today by suing. Until he acts, the grantee keeps possession. What he holds is a right of entry, also called a power of termination.

Three. Fee simple subject to an executory limitation. Same idea, except the future interest goes to a third party instead of back to the grantor. To the Town so long as the land is used as a park, and if it is not, then to the Historical Society. Title shifts automatically to the Society, which holds an executory interest.

Try one. A landowner conveys a parcel to a school district so long as it is used for public school purposes. Decades later the district closes the school and runs a paid parking lot. The landowner has died, leaving everything to her daughter. The district says it still holds title because nobody has gone to court. Who owns the parcel?

The daughter. So long as is durational, so the district held a fee simple determinable, and that ends automatically the instant the event occurs. Title sprang back to the possibility of reverter, which the daughter inherited. No lawsuit, no re-entry needed. Had the deed said but if, and given a right to re-enter, the district would still own it until someone asserted that right.

When the words are genuinely ambiguous, courts prefer the condition subsequent, because forfeiture is disfavored. Some courts go further and read a doubtful restriction as a mere covenant, which triggers no forfeiture at all. And misnaming the estate cascades, because one wrong label spoils the future interest too.

Last present estate. A life estate is measured by a lifetime rather than lasting forever. To Ana for life. When Ana dies her interest simply ends, so something must follow it. Either the land returns to the grantor, a reversion, or it goes to a third party, a remainder.

Then the twist. A life estate pur autre vie is measured by the life of another. To Ana for the life of Ben lasts until Ben dies, not Ana. If Ana dies first, her estate passes to her own heirs and keeps running until Ben dies. The same thing happens when a life tenant sells, because she can convey only what she has. Sell to Cara, and Cara holds for the duration of Ana's life.

A life tenant is a caretaker of value she does not fully own. She may possess the land and keep the rents and profits. She may not commit waste. She must pay taxes and mortgage interest, but only up to the income the land produces. And she must make ordinary repairs, not permanent improvements.

Part two, future interests. A future interest is not a someday-maybe hope. It is a real, presently existing property right that you own now, even though possession lies in the future. Sort every one into the right family first. Either the grantor kept it, or he created it in a third party.

The grantor keeps exactly three. A reversion, what he keeps when he carves out a smaller estate and does not give the leftover away. A possibility of reverter, after a determinable fee, which becomes possession automatically. And a right of entry, after a condition subsequent, which is an option he must assert.

On transfer, modern law is generous. Reversions, possibilities of reverter, remainders vested and contingent, and executory interests are all transferable, devisable, and descendible. The one asterisk is the right of entry, where lifetime transfer is split by jurisdiction.

Interests created in a third party come in just two types. Remainders and executory interests, and telling them apart is the heart of this part. A remainder waits politely for the prior estate to end on its own. An executory interest is pushy, cutting an estate short or springing out of the grantor after a gap.

So a remainder is ready to take possession the moment the prior estate ends naturally, without cutting anything short. Two tells. It follows an estate of fixed or naturally limited duration, almost always a life estate, never a fee simple. And it becomes possessory at that estate's ordinary expiration. To Ana for life, then to Ben. Ben has a remainder.

An executory interest takes effect by cutting short some other interest. Two subtypes, differing only in whose interest it divests. Shifting divests a prior grantee. To Ana, but if Ana ever stops farming, then to Ben. Springing divests the grantor, usually after a gap. To Ana when Ana marries. Until she marries the grantor holds the land, and that gap is the giveaway.

Now classify the remainder, because every one is either vested or contingent. A remainder is vested when both of these hold. It is given to a person already born and identifiable. And it is subject to no condition precedent, meaning nothing but the natural ending of the prior estate has to happen first. It is contingent if either fails. Unknown person, or unmet condition.

Vested remainders come in three grades. Indefeasibly vested, certain to take, no conditions, no way to lose it. To Ana for life, then to Ben. Vested subject to open, a class gift where one member is vested but the class can still grow, shrinking each share. And vested subject to total divestment, vested today, but a later condition could wipe it out.

Which brings us to the most tested subtlety in this topic. Is a condition a condition precedent, making the remainder contingent, or a condition subsequent, making it vested subject to total divestment? The trick is where the condition sits. If the conditional language is baked into the description of the taker, so you must satisfy it before you even qualify, that is a condition precedent. The remainder is contingent.

If the gift is stated completely first, and a separate later clause can take it away, it is a condition subsequent, and the remainder is vested subject to divestment. Compare. To Ben if Ben survives Ana. Survival is built into the gift, so contingent. Versus to Ben, but if Ben does not survive Ana, to Cara. The gift is complete, then a clause can divest it. Same practical result, different classification.

One more note. While a future interest is still contingent it clouds title, because a buyer cannot be sure the seller can deliver clean ownership. Once it vests or fails, title is marketable again. And three old doctrines, destructibility, the Rule in Shelley's Case, and the Doctrine of Worthier Title, are abolished or nearly so.

Part three, the rules that ride on top. A class gift is a gift to a group described collectively rather than by name. My children. Three vocabulary words the exam assumes. Children means immediate offspring. Issue means all lineal descendants. And heirs means whoever would inherit under the intestacy statute, so a living person has no heirs yet.

The practical problem is when the class stops admitting members. Under the rule of convenience it closes as soon as any member is entitled to demand possession of her share. Those already born are in, anyone born later is out. So in to Ana for life, then to Ana's children, the class closes when Ana dies. A child born two years later is excluded.

Next, survivorship, where the instinct betrays people. Students routinely assume a remainderman must outlive the life tenant to take. Under modern law that is backwards, unless the instrument imposes survival. If the deed says it, to Ben if Ben survives Ana, then no survival, no gift. But if the instrument is silent, courts do not imply a survivorship requirement.

Try one. A grantor conveys a cottage to my mother for life, then to my friend, with no survival language anywhere. The friend dies first, leaving everything by will to his daughter. Then the mother dies. The grantor says the gift failed. Did it?

No. The remainder is transmissible. It passed through the friend's estate to his daughter, and she takes possession when the life estate ends. Do not invent a survival condition the grantor never wrote. Flip side. When survival is required and the gift is to a class, to Ana's children who survive her, a member who dies first drops out and the survivors split the whole.

Affirmative waste is overt acts that substantially reduce value. Demolishing a building, extracting minerals, oil, or timber. The open mines doctrine limits extraction. A life tenant may keep taking from mines already open when the estate began, but may not open new ones. Permissive waste is harm by neglect. Letting the property rot, skipping repairs, failing to pay taxes.

Permissive waste is harm by neglect. Letting the property rot, skipping repairs, failing to pay taxes. And ameliorative waste is a change that increases value but alters the property's character. Traditionally actionable. The modern rule generally permits it when a substantial change in the neighborhood has made the original use obsolete. So tearing down an empty, unrentable house on a block gone commercial and building retail is usually fine.

Last part, restraints on alienation. The law strongly favors keeping property transferable, so deed provisions that try to stop an owner from selling are viewed with suspicion. Three forms. A disabling restraint strips the power to transfer, so any attempted conveyance is void. A forfeiture restraint takes the estate away if she tries. A promissory restraint has her promise not to.

The governing rule is short. An absolute restraint on the transfer of a fee simple is void, in all three forms. A partial restraint, limited in time or purpose, may be valid if reasonable. And two preemptive rights close the topic. An option forces a sale on set terms. A right of first refusal is weaker, giving first crack only if the owner decides to sell. Both are valid if reasonable.

A word on authorities. This episode named no cases, and that was deliberate. This topic is not built on decided cases. It is built on classification vocabulary and a few construction defaults, and the exam may hand you the governing statute. What it will never do is ask for a case name.

If you keep only three things, keep these. One, durational words end an estate automatically while conditional words only give the grantor an option. Two, a remainder waits for the prior estate to end, an executory interest cuts something short. Three, contingent means an unborn or unascertained taker, or an unmet condition precedent, and nothing else.

Now the traps, straight from the examiners' favorites. One. Confusing durational and conditional language, and handing out an automatic reverter when the grantor really has a right of entry he must exercise. Two. Missing the seam between a condition precedent, which makes a remainder contingent, and a condition subsequent, which makes it vested subject to divestment.

Three. Implying a survivorship requirement the grantor never wrote. Four. Forgetting that modern law abolished destructibility and the Rule in Shelley's Case. Five. Treating a value-increasing change as automatic waste, when the modern rule usually excuses it.

Six. Upholding a total restraint on a fee simple, which is always void. And seven, the one that wastes the most time. Sliding into a Rule Against Perpetuities analysis, which this topic expressly excludes.

The discipline that beats all seven is mechanical. Underline the trigger words. Separate words of purchase from words of limitation. Then place every slice on the timeline until it adds up to a complete fee simple.

Time for the quick check, and this one comes straight from the BARGO question bank. A grantor conveys a lakehouse to my daughter for life, then to my son, but if my son does not survive my daughter, then to my niece. The son is alive and named. The daughter is living and in possession.

How is the son's remainder classified? Option one. A contingent remainder, because his gift depends on his surviving the daughter. Option two. A vested remainder subject to total divestment if he dies before the daughter. Option three. An indefeasibly vested remainder that cannot be lost. Pause here if you want a moment.

The answer is option two. The classification turns on where the condition sits. The gift to the son is stated completely first, then to my son. Only a separate later clause can take it away. That structure is a condition subsequent, so the remainder is vested now, subject to total divestment if he predeceases the daughter.

Option one is the classic trap. The son does have to survive to keep it, but that survival language is not built into his gift as a condition precedent. It comes afterward, as a divesting clause. Option three ignores that clause, which can wipe the interest out. And the niece, not the son, holds a shifting executory interest.

There are thirty plus more questions on this topic alone, each explained like that.

Five things to take away. One. Ask two questions of every conveyance. What present estate did the first taker get, and what future interest follows it. The slices must add up to a complete fee simple. Two. Durational words mean automatic. Conditional words mean the grantor must act.

Three. A remainder waits for the prior estate to end naturally. An executory interest cuts an estate short, or springs out of the grantor after a gap. Four. A remainder is contingent for two reasons only. An unborn or unascertained taker, or a condition precedent.

Five. Courts do not imply survivorship, and a total restraint on a fee simple is void.

Which is why one deed hands Owen his land back the moment the park closes, and the other leaves him an option. Next time, Cotenancy.

Practice this topic with more than 2,900 exam-style questions, free to start, at nextgenbargo.com. This episode is for education and exam preparation only, not legal advice, and we are not affiliated with or endorsed by the NCBE or any bar examining authority.