Estate Subject to Conditions pg. 37
Fee simple Defeasible: Last indefinitely if the condition is never violated or can terminate if the condition is violated
Ex. O conveys a Fee simple estate in BA to B subject to the condition that the estate will immediately terminate if BA is ever used for commercial purposes.
§ Answer: The estate will prematurely terminate if the condition (no commercial use) is violated. B has a fee simple defeasible because it may last forever if the condition is never violated or it may be prematurely terminated if the condition is violated.
Ex. O devises a fee simple estate in BA (which is a farm) to W so long as BA continues to be used for farming.
§ Answer: W’s estate in BA will last forever unless BA stops being sued as a farm. W has a fee simple defeasible estate b/c the estate may last forever OR it may be prematurely terminated due to violation of the condition (it stops being used as a farm).
Defeasible leasehold: leasehold estate that may prematurely end prior to the time it would normally end due to violation of a specified condition.
Ex. O leases BA to A for ten years subject to the condition that the lease will immediately end if BA is used for residential purposes at anytime during the term of the lease.
§ Answer: A has estate for year’s leasehold which will normally end after 10 years. Lease could be prematurely terminated prior to the end of the 20 year term if A breaches the condition by living on the property.
Ex. O leases X a monthly periodic tenancy in BA subject to the condition that the tenancy will immediately terminate if X keeps a pet on the property.
§ Answer: Proper notice is one month notice, however if X keeps a pet on BA the least will terminate immediately. X has a defeasible monthly periodic tenancy because it can terminate normally if property notice provides or can terminate prematurely if condition is violated.
3 types of conditions that can make estate defeasible (If conditions are violated allows O)
§ Determinable condition: Estate automatically and immediately goes back to O (FS determinable estate) (Det LE) (Det LH)
§ Condition subsequent: O has right to retake present possession of an estate when condition is violated. However O does not gain the right to possession of the estate until she takes action to retake possession of the estate? (FS subject to condition; LE subj to cond. sub; LH subj to cond. subs)
§ Executory Limitation: Estate will automatically and immediately go to the 3rd party named in the transfer who can be anyone other than the O (like Determinable condition) OR Gives the 3rd party the only the right to take possession of the estate (Like Condition subsequent).
Ex. O conveys a life estate in BA to X provided X never becomes an attorney; if X does become an attorney BA shall automatically go to O.
§ Answer: X has a determinable life estate. (Upon violation of condition estate automatically goes back to O grantor).
Ex. O devises (will) a life estate in BA to X provided X never becomes an attorney; and if X does become an attorney BA shall automatically go to Z.
§ Answer: X has a life estate subj to executory limitations. (Upon violation of the condition the estate automatically goes to 3rd party Z).
Ex. O conveys 15 year estate for year’s leasehold in BA to L but O shall have the right to reenter and retake possession of BA if L fails to properly maintain BA.
§ Answer: L has a 15 years estate for years Leasehold subject to condition subsequent. (Upon violation of the condition, O has the right to retake BA instead of automatically reverting back to O.)(Needs action)
Ex. O conveys a FS estate in BA to X provided X never becomes a veterinarian; and if X does become a Vet BA shall automatically go to O.
§ Answer: X has a FS determinable estate (Upon violation of the condition the estate auto goes back to O)
Ex. O conveys a FS in BA to A but the conveyance provides that the estate shall automatically reverts to O if A sells alcohol on BA; and that the estate shall automatically go to B if A engages in gambling. (Assuming A has not sold alcohol on BA nor engaged in gambling on BA, what interest in BA does A own?)
§ Answer: A has 2 conditions: A has a determinable FS estate on condition if A sells alcohol on BA and A has a FS subject to an executory limitation if he gambles on BA the estate goes to a 3rd party.
Word: A has a determinable fee simple estate that is also subject to an executory limitation.
Future Interest (Reversionary- Goes Back to O-Grantor)
Possibility of reverter (determinable): Upon termination or natural, O automatically becomes the owner of the present estate.
Ex. O conveys BA to A. However, the conveyance provides: (a) a loses all right in BA if he ever uses it for commercial purposes; and (b) if A loses all rights in BA O auto becomes the owner of the present estate in BA.
§ Answer: O has a possibility of reverter in BA b/c breach of the condition auto eliminates A’s right in BA in favor of O
Right of entry (subject to condition subsequent): future interest retained by O. O has the right to terminate the transferee’s present estate and retake possession. O could physically enter the property and retake possession or could bring a lawsuit seeking for transferee removed from property.
Ex. O conveys BA to A. However, the conveyance provides: (O shall have the right to retake BA if A uses it for commercial purposes; and (b) A only loses his right in favor of O if O takes steps to retake possession of BA.
§ Answer: O has right of entry in BA b/c A only loses rts in BA if O takes action to retake BA. Even if A uses BA for other purposes, he continues to own BA until O retakes possession of BA.
Reversion: retained by O that will only become a present estate at the natural end of the prior present estate. (Future interest retained by O that follows natural end of a life estate or the natural end of an estate for year’s leasehold). (Auto created when there is not determinable estate or estate subj to condition)
Note: The will determines who gets the reversionary interest just like any other property owned by decedent at death. If it does not, it will go to the decedent’s heirs via intestacy.
Ex. O leases BA to A for ten years.
§ Answer: O has a reversion b/c he is entitled to present possession of BA only after the normal end of estate years leasehold.
Ex. O conveys a fee tail in BA to his only child, C.
§ Answer: it is possible that some O’s lineal descendants will die out and if so, O has a reversion in BA when the FT terminates because the line of descendants ends.
Non-reversionary future interest— transferred to third party instead of being retained by O (transferor)
Remainder or Executory interest
Remainder: future interested created in another person (not O) which can only become present estate, if ever, at the natural end of the prior present estate.
Ex. O conveys BA to A for life, and then to B upon A’s death.
§ Answer: B’s future interest will become present estate immediately at the natural end of A’s present life estate which is at A’s death. B has a remainder.
Ex. O leases BA to T for 15 years pursuant to an estate for years lease. The lease also provides that upon the end of the 15 year lease term BA shall go to P.
§ Answer: P only gets present possession at the natural end of the prior possessory estate (the leasehold). P’s interest is a remainder.
Ex. O devises BA to A for life, then to B for life, then to C in a fee simple absolute.
§ Answer: A has a present life estate in BA. B has a remainder b/c B will get present possession of BA immediately at the natural end of the prior estate (A’s life estate) at A’s death. C has a remainder b/c C will get present possession of BA immediately at the natural end of the prior estate (B’s life estates) at B’s death.
Note: distinction between a remainder and an executory interest is based on when the future interest becomes/ or may become a present estate. If this can only occur immediately at the natural end of the prior possessory estate, it is a remainder.
Executory Interest: If future interest becomes present estate by prematurely terminating the prior possessory estate before it naturally ends, it is an executory interest.
§ If gaps exist b/t the end of the prior possessory estate and the time the future interest can become a present estate, the future interest is an executory interest.
Ex. O conveys BA to A forever, but if A uses BA for commercial purposes then to B for life.
§ Answer: B’s future interest can only become a present estate if A’s interest is prematurely terminated or cut-off b/c A violates the condition by using BA for commercial purposes. B has an executory interest.
Ex. O conveys BA to A for life, then on year after A’s death to B.
§ Answer: A has a present life estate in BA. A on e year gap exists b/t the end of the prior possessory estate (A’s LE) and the time when B’s interest can become present estate. Due to this gap B’s interest is an executory interest.
Ex. O conveys a LE in BA to W; and in the same conveyance O simultaneously conveys a FSA interest in BA to M which can only become a present estate if W marries.
§ Answer: W has a present life estate in BA. M’s interest is an executory interest b/c it can only change from a future to a present estate if W marries. If W marries his life LE is prematurely terminated or cutoff prior to its natural end (LE) which would be upon W’s death. M will not get present possession of BA upon W’s death. M gets right to present possession only if W marries. If W dies without having married M does not have right to BA b/c condition has not been breached.
Review Question pg. 55
5. O conveys a fee simple absolute interest in BA to A. Answer: O has no interest
6. O, FSA owner of BA conveys a life estate in BA to A. Answer: O has a reversion (natural life end goes back O).
7. O leases BA to T for 15 years pursuant (following) to an estate for years lease .lease provides that upon the end of the 15 years lease term BA shall go to P; but if T fails to pay rent for 2 consecutive months, BA shall go to Z. Describe the interest granted to P and Z by O.
§ Answer: P and Z have future interests in BA. P will have a remainder (upon the natural end of the 15 year lease) and Z will have an executory interest (if the leasehold estate is terminated by failure to pay rent for 2 consecutive months)
8. O conveys a life estate in BA to A, then a life estate in BA to B, then 10 days later B’s death BA shall go to C for life. Describe the interest in BA created by O’s conveyance.
§ Answer: A has a present life estate. B has a remainder (will have present possessory at the natural end of A’s death). C has an executory limitation (will have present possessory after it goes back to O due to the gap).
§ O retains an interest in BA (a reversion) that will become possessory interest after all 3 life estates end.
9. O leases BA to A for 10 years. The lease provides: (a) A loses all right in BA if he ever uses it for commercial purposes; and (b) if A loses all right in BA O automatically becomes entitled to the present estate in BA. Describe any interest retained by O after the originally conveyance.
§ Answer: A has a present 10 year terms of years leasehold. O has a reversion which become effective at the end of 10 year lease (natural end) and O has a possibility of reverter b/c breach of the condition prematurely and automatically eliminates A’s rights in BA in favor of O.
Types of Remainders
Vested Remainder or Contingent Remainder
Vested Remainder exists if: at the time remainder is created a specific person is alive (known or ascertained) and no condition exist which must be satisfied before remainder can become a present possessory estate at the natural end of the prior possessory estate.
Ex. O conveys BA to A for life, remainder to B
§ Answer: A has present life estate. B is an existing person at the time O made the conveyance. When the prior present possessory estate naturally ends (at A’s death) B’s future interest in BA will auto become a present possessory estate w/o having to satisfy any condition. B has a vested remainder in BA at time of conveyance by O.
Ex. O conveys BA to A for life, remainder to A’s first child. At the time of the conveyance A does not have any children.
§ Answer: A has a present life estate followed by a remainder in A’s first child. The owner of the remainder is not known or ascertained at the time the conveyance is created so it cannot be vested remainder. By default it is a contingent remainder.
Ex. O convey BA to A for life, remainder to A’s first child. At the time of the conveyance A has one child, C.
§ Answer: O created present life estate in A followed by a remainder in C. C exist and is known and ascertained. C has a vested remainder. (C must wait until A dies before C obtain a present estate is not a condition precedent).
Ex. O conveys BA to A for life, and if A’s first child is alive at A’s death, remainder to A’s first child. At the time of the conveyance A has one child, C.
§ Answer: C is known and ascertained. A condition precedent exist which must be satisfied first (C must be alive at A’s death) before C’s interest can become a present possessory estate. C has a contingent remainder b/c a condition precedent exists. (Even though C is known and ascertained, he has to wait til’ A dies and still be alive to get the estate).