PROPERTY OUTLINE— NON-FREEHOLD ESTATES Property is a bundle of rights: Right to use; Possess; Transfer; Exclude; Manage: Receive Income; Dispose I. LANDLORD-TENANT: LEASE OR LICENSE? Lease—possessory interest in land; right to control property License—merely authorizes the licensee to use land in the possession of another a. Lease entitles a party to the right of possession b. License authorizes the right to use the land c. Determining factors: i. Designation of a specific space (lease) and time limit ii. Ability to assign 1. Leases are assignable 2. Licenses are personal iii. Language used 1. What was the intent of the parties? iv. Context in which the issue arises v. Principle of Assignability—leases are generally assignable; licenses are generally persona, but you can make them transferable; both are transferable, but the default rules are a little different d. Tenant’s Right to Possession at the Commencement of the Lease i. Landlord’s obligation to provide the tenant w/the legal right to possession 1. Legal right of possession as of the date that the leasehold commences a. If the landlord makes it impossible to enter at that time, tenant may be able to cancel lease and recover damages 2. Breach by landlord a. Landlord fails to have any possessory right to the property b. Landlord has given another party a prior right of possession c. Landlord personally prevents a tenant from entering or taking possession 3. Remedies for breach by landlord ii. Landlord’s implied warranty for actual possession 1. Majority Rule (English Rule)—Landlord is required to put the tenant in actual possession at the beginning of the leasehold term; If the landlord fails to do so, the tenant may terminate the lease and/or sue the landlord for damages; Duty and obligation of landlord to deliver actual physical possession at the beginning of the lease; Landlords are more experienced and have the ability to deal w/hold-overs 2. Minority Rule (American Rule)—Landlord is only required to deliver legal possession and has no duty to deliver actual possession; Tenant can take action against hold-over just like landlord can II. LANDLORD-TENANT: INTERFERENCE WITH ACTUAL PHYSICAL POSSESSION AND QUIET ENJOYMENT a. Interference During the Term of the Lease i. Interference by Trespassers/Wrongdoers 1. Covenant of quiet enjoyment does not protect the tenant against possessory intrusions by parties acting independently of the landlord, and as a result, the tenant has no cause of action against the landlord unless the landlord is negligent ii. Interference by landlord or someone for whom landlord is responsible 1 1. Eviction from Entire Leased Premises—If the landlord or a paramount titleholder excludes the tenant from the entire leased premises, the eviction terminates the tenant’s obligation to pay rent 2. Partial Actual Eviction—when tenant is deprived of some portion of the leased property a. Majority/Smith Rule—total abatement of rent is in order for any encroachment (beyond de minimis) on land b. Minority/Restatement 2nd, Property section 6.1 Rule—partial abatement for partial eviction; leave parties to their equitable remedies; apportion the loss; relies on normal legal remedies for breach of contract 3. Constructive Eviction—no physical deprivation occurs, but deprives tenant of enjoyment of the property; has to be so bad the tenant has to move out a. Even w/out rising to the level of constructive eviction and requiring tenant to vacate the premises, such interferences may deprive the tenant of expectations under the lease and reduce the value of the lease, requiring in fairness an award of compensatory damages (Echo) 4. Covenant of Quiet Enjoyment—there is implied in every lease a covenant the landlord (or someone w/paramount title) will not interfere w/the tenant’s quiet enjoyment of the leased premises; a breach of the covenant of quiet enjoyment occurs when the landlord substantially interferes w/the tenant’s beneficial use and enjoyment of the premises a. Echo test: Landlord has to substantially interfere, but it is different than constructive eviction, which is much higher than quiet enjoyment DURATION CREATION FIXED PERIOD; one EXPRESS AGREEMENT year (written lease) SUCCESSIVE PERIODS; week-toweek, month-tomonth, or year-toyear EXPRESS AGREEMENT; IMPLICATION (no set termination date); OPERATION OF LAW (1tenant holds over, 2-invalid lease)* EXPRESS AGREEMENT; IMPLICATION (one just enters land w/consent for landlord, but there is not call for payment of rent or termination date) HOLDOVER; one who wrongly remains in possession TERMINATION ENDS AUTOMATICALLY (date is certain) PROPER NOTICE; at common law, year-to-year requires 6 months notice; other periodic tenancies requires 1 period in advance; notice will terminate as of end of term NOTICE; at common law, no advance notice required; today, many jurisdictions require some notice LANDLORD’S ELECTION; landlords given election of 2 options TENANCY FOR YEARS PERIODIC TENANCY (very common) TENANCY AT WILL NO DESIGNATED PERIOD TENANCY AT SUFFERANCE DEPENDENT ON LANDLORD’S ACTION 2 IMPLIED LANDLORD’S DUTIES AND IMPLIED CONDITIONS TO TENANT’S OBLIGATION a. Duties are implied based on normal expectations of parties; based on usage, etc. i. Repair would outlast lease ii. Benefit of Tenant v. Landlord iii. Replacement of item benefits one tenant v. another tenant 1. Landlord is more likely to be responsible in large apt complex for mowing lawn iv. Tenants may be expected to change things like lightbulbs, but might not be expected to perform more significant maintenance 1. Tenants as a class shouldn’t be responsible or have the knowledge to make bigger repairs b. Warranty of Habitability—landlord must maintain bare living requirements; vital facilities i. Warranty of Habitability depends on language of the lease and intent of parties; court looks at: 1. What kind of property is involved 2. Circumstances ii. Remedies: 1. Complete termination of the lease 2. Abatement a. Before tenant can receive a rent abatement, she must i. Notify landlord of breach ii. Give reasonable time for repair (breach is based on this) iii. Damages: 1. Percentage diminution approach: a. Recovery is a percentage in which your use of property was affected i. Below 50% is hard b/c tenant didn’t bargain for less than 50% c. Warranty of Suitability—property is suitable for its intended purpose, not just warranty of habitability, like in residential i. Constructive eviction is very unreasonable and in many situations is not the preferred remedy, so many states have adopted the Warranty of Habitability d. Depending on the expectation of the parties, custom and usage and local housing codes, a landlord may have implied obligations under the lease, such as a duty to repair or maintain the leased premises, and that a breach of any of one these duties may give the tenant a variety of remedies, including: i. Moving out and terminating the lease; ii. Making the repairs and offsetting the cost against future rent obligations; iii. Reducing or abating rent to an amount equal to the fair rental value in view of the defect, or iv. Remaining in possession, paying full rent and seeking damages IV. LANDLORD’S TORT LIABILITY FOR PERSONAL INJURIES a. Traditional View i. Landlord has no duty to make the premises safe ii. EXCEPTIONS: 1. Common Areas—landlord must exercise reasonable care 2. Latent Defects—if at time of lease, landlord knows of defect the tenant could not discover upon reasonable inspection, the injury that results could make landlord liable a. Once disclosure is made, if tenant accepts premises, the tenant assumes risk and landlord is no longer liable III. 3 V. 3. Landlord Covenants to Repair—if landlord promises to make a repair and does not do it, landlord is liable to tenant for the injury that results 4. Negligent Repairs—even if landlord is not contractually obligated to make repair and makes repair negligently or does not do it, he could be liable for injuries that result 5. Public Premises—if landlord leases property that is to be used for admission to public, landlord could be liable to members of public for defect that existed in public areas at the tie of the lease (stadiums, restaurants, etc.) a. Duty is not to tenant, but duty is to 3 rd person, the people who come onto premises b. Disclosure to tenant of defect does not relieve landlord of liability 6. Breach of Warranty of Habitability—landlord liable for injuries for implied or statutory warranty of habitability and landlord has failed to exercise reasonable care to fix it a. Asper v. Haffley: Breach of warranty AND failure to exercise reasonable care iii. If you don’t fall into one of those exceptions, landlord is not liable for the injuries that result iv. Strict Liability Traditional view was too strict; Peterson overrules Becker, no landlord strict liability v. Negligence Courts have moved towards Negligence (Stephens v. Stearn); adopts duty of landlord to exercise reasonable care in all situations vi. Liability for Criminal Acts—courts are divided on this issue 1. Landlord can be held liable for creating an “unreasonable enhanced” risk of loss resulting from foreseeable criminal conduct 2. Warranty of Habitability obliges landlord to furnish reasonable safeguards to protect tenants from foreseeable criminal activity on the premises 3. In PA, landlords are generally not liable for criminal injures a. Criminal acts are too unpredictable; 3 rd parties are too unpredictable b. Landlords cannot be expected to protect tenants and cannot be expected to be held liable for activity on the premises c. Court leaves open if landlord provides security, but does so negligently, he/she can be held liable LANDLORD’S MOTIVES IN SELECTING OR REMOVAL TENANTS a. Unless proscribed by statute, a landlord has a right to be selective and to reject a prospective tenant for any reason b. Many states have statutes that prohibit a landlord from refusing to lease property because of race, religion, color, national origin, or disability i. Unruh Act protects people from discrimination based on a group ii. Illustrative v. Restrictive interpretations 1. MARINA—Broad Says Unruh Act protects all arbitrary acts of consideration 2. KRAMARSKY—Restrictive Nothing illegal about discriminating against lawyers as a group iii. It’s going to depend on whether state has a discrimination statute, what it say, and how it’s interpreted whether you bring an action under a state statute iv. Fair Housing Act (FHA)—a federal statute; Courts interpret it narrowly 1. § 3604(c) says you cannot advertise your discrimination 2. How can you show discrimination? a. Discriminatory intent, or 4 b. Discriminatory impact—does it disproportionately affect minorities, etc. VI. ASSIGNMENTS AND SUBLEASES a. Absent a description in lease, tenant can transfer interest in part i. If tenant makes a transfer of all rights—it is an assignment, full remainder of term ii. If tenant transfers less than all of the rights—it is a sub-lease; part of the property for less than the whole time 1. Transfer right of possession for less than full remainder of term b. Determines whether landlord can ultimately sue i. Assignment—Grace transfers remaining interest to Jack 1. Assignee stands in shoes of original tenant; privity of estate; each is liable to the other for all covenants which run w/the land (paying rent, maybe repairs) 2. Unless landlord lets original tenant out, that person is always bound by contract, not estate theory (Italian Fisherman) ii. Sub-lease—Grace transferred three months to Jack c. A landlord may be able to enforce promises made in a lease against assignees or sublessees under: i. Contract Theory—if sublease/assignee expressly assumes obligations under master lease, that party is bound by agreement to perform ii. Estate Theory—landlord can enforce covenants running w/land, covenant to pay rent, against assignees during period they’re in privity of estate w/the landlord 1. Landlord cannot enforce against sublesses b/c sublessee is not under privity of estate w/landlord d. Tenant’s Right to Assign/Sublease i. Traditional/Majority Rule—a landlord has the right to arbitrarily withhold consent to an assignment or sublease (Epstein) ii. Minority Rule—a landlord may withhold consent to an assignment or sublease only when the landlord has a good faith reasonable objection (Rinky Dinky) iii. Restatement 2 nd of Property—“the landlord’s consent to alienation by the tenant cannot be withheld unreasonably, unless a freely negotiated provision in the lease gives the landlord the absolute right to withhold consent.” VII. TENANT’S BREACH: LANDLORD’S REMEDIES a. Traditional Remedies i. No duty to mitigate ii. Allow premises to remain vacant and sue to recover rent owed iii. Accept surrender 1. When landlord accepts surrender, tenant is no longer liable 2. Acceptance of surrender can be implied, doesn’t have to be express a. If landlord enters into new lease, remodels, etc., court might be clear there was an acceptance of surrender b. Key is if landlord intended to accept surrender iv. Relet the premises as “tenant’s agents” 1. If landlord lets premises like this, he can recover rent from original lease and rent collected from new person a. Some jurisdictions require the lease to expressly include this remedy b. Other jurisdictions require the landlord to first notify the tenant of its intent to relet v. Without doing any of these, landlord runs the risk of accepting surrender 5 b. Modern Trend i. Landlord has a duty to mitigate damages 1. Landlord must take steps as would be expected of reasonable landlord letting out similar property under similar market conditions a. Basically, he must act as a reasonable landlord ii. Burden of proof 1. Some courts put it on the landlord 2. Other courts put it on tenant to show the landlord did not take reasonable mitigation efforts c. Recovery of Future Rent i. Multiple cause of action approach 1. Landlord can only recover rent to time of trial and must do a new cause of action for rents due as they accrue a. Cannot get future rents, must do a new cause of action each time ii. Anticipatory breach approach 1. Can recover present value of contract; present amount due under the lease discounted to present value iii. Retained jurisdiction approach 1. Provides landlord can get accrued rents through trial and future rents by returning to court to show landlord has taken reasonable mitigation efforts, then landlord can order rents that have become due at that point iv. Rent acceleration clause 1. Some lease provide entire balance of rent is due and payable immediately upon default of tenant 2. A few courts have held this clause is invalid as a penalty 3. Many other courts have upheld the validity of such clause a. Including PA 4. In situation where rent is accelerated, if tenant pays landlord, landlord is not entitled to possession to premises 5. A few courts have held if contract provides both acceleration and termination of the lease, they can do both FREEHOLD ESTATES—NON-CONCURRENT ESTATES I. INTRODUCTION TO PRESENT AND FUTURE ESTATES: TERMINOLOGY a. Future estate (“future interest”) is an interest in land which i. Maybe become possessory, but which is not now possessory ii. Is “a segment of ownership measured in terms of duration” 1. It arises today in land transactions, particularly in the area of wills and trusts b. Four Categories of Present Estates: i. Fee Simple Absolute—largest estate recognized; invests the holder w/full possessory rights, now and in the future; it can be sold, divided, devised, or inherited and it has an indefinite or potentially indefinite duration. 1. O to A ii. Defeasible Fees—have the potential for infinite duration, but they can be terminated upon the happening of a stated event; could go on forever, like fee simple absolute, but different b/c they can come to an end at some point if something happens 6 1. Fee Simple Determinable—an estate that automatically terminates on the happening of a stated event and reverts to the grantor a. “for so long as”; “until”; “while”; “during” b. Whenever grantor conveys fee simple determinable, the grantor retains a possibility of reverter c. Future interest is a property right that entitles them to ownership at some future point in time d. Possibility of reverter—arises automatically and doesn’t have to be expressly retained by grantor and are transferable EXAMPLE 1. O to A so long as no alcoholic beverages are consumed on the premises. - Could last forever if no one ever consumes an alcoholic beverage; but if someone does, then O becomes owner again - If it’s created as a possibility of reverter, it remains that, it doesn’t turn into an executory interest 2. Fee Simple Subject to a Condition Subsequent—condition subsequent is an estate in which the grantor reserves the right to terminate the estate upon the happening of a state event; grantor has to take some action a. “but if”; “upon condition that”; “provided that” EXAMPLE 2. O to A and his heirs, on the express condition that the premises are never to be used by A for the sale of liquor, and in the event that they are so used, then O or her heirs may enter and terminate the estate hereby conveyed. A has a fee simple subject to a condition subsequent What happens if condition is broken here? It may be terminated, not automatically terminated; O has the right to terminate a/k/a “right of entry/power of termination”; future interest O has is the right to terminate as grantor is the right of entry/power of termination; since grantor can elect to terminate, the grantor can waive it; if future interest is made instead to 3 rd party, it is called an executory interest 3. Fee Simple Subject to an Executory Limitation—is an estate that, upon the happening of a stated event, divests in favor of a 3 rd person rather than the grantor EXAMPLE 3. O to Church A, provided, however, that if the premises shall ever cease to be used for church purposes, title shall pass to the United Way. What does Church A have here? Has a fee subject to limitation Does O retain anything? No, they pass it on to the 3 rd party; b/c grantor reserves no interest, grantor doesn’t have power of termination and that interest is created in the 3rd party, the United Way; United Way’s power is executory interest EXAMPLE 4. O to Church A for so long as the premises are used for church purposes, and if they shall ever ceased to be so used, then and in that event to the United Way. What does Church A have? Fee simple subject to an executory limitation b/c it says “for so long as” 7 Who has future estate? The United Way What is their interest called? Executory interest First you decide who has present interest, like who has the property now, then you figure out the future interest What if it is unclear and there are not the magic words? - The preference would be for courts to construe it as a fee simple subject to a condition subsequent if it’s between that and the fee simple determinable Fee Tail—an estate where inheritability is limited to lineal heirs Key Words: “from O to A and heirs of her body” ** Most jurisdictions have abolished fee tail by statute ** Life Estate—an estate that’s measured by the life or lives of one of more persons; usually measured by life of the grantee (but doesn’t have to be) EXAMPLE 5. O to A for life. EXAMPLE 6. O to A for life or until he remarries This is a determinable life estate; analogous to fee simple determinable b/c it ends when A dies or remarries Life Estate Pur Autre Vie—life estate measured by someone else other than the grantee Can be created by grantor EXAMPLE 7. O to A for the life of B. Life estate measured by someone other than the life tenant EXAMPLE 8. O to A for life. A then conveys her interest to B. Measured by A’s life, not B’s life O has a reversion; O owns whole fee simple absolute, so there has to be a future interest b/c it’s less then a fee simple absolute; b/c grantor has the future interest here it is called a reversion When does B’s estate come to an end? When A dies Who has the present estate? B What you’re looking to see is: o Who has property now? How has the present estate? It will be a: Fee simple absolute Fee simple determinable Fee simple subject to a condition subsequent Life estate Future interest—an estate that does not entitle the owner thereof to possession immediately; it gives the holder only the right or possibility of future possession of the estate. EXAMPLE 9. O conveys Blackacre to Villanova University so long as Blackacre is used for school purposes. What does Villanova have and who has future interest? Villanova has a fee simple determinable and future interest is O, b/c there is a reverter Three Future Interests Retained by Grantor: 1. Possibility of Reverter 8 a. Possibility of Reverter—an interest which is retained by the grantor who conveys a fee simple determinable EXAMPLE 10. O conveys Blackacre to Villanova University, but if the University ceases to be used for school purposes, O may reenter and retake the property. Villanova has a fee simple subject to condition subsequent and power of termination 2. Right of entry/power of termination is the interest retained by the grantor who conveys a fee simple subject to a condition subsequent that operates in the grantor’s favor. 3. Reversion a. Reversion—the residue left in a grantor who transfers an estate which is smaller than the estate which she had; when the owner of an estate transfers a lesser estate, the future interest that the owner keeps is called a reversion i. They are divisable, inheritable ii. Do not expressly have to be reserved iii. Can arise by operation of law EXAMPLE 8. O to A for life. A then conveys her interest to B. O has a reversion b/c that’s the future interest left in O FUTURE INTERESTS CREATED IN THIRD PERSONS I. REMAINDER a. A future interest in a third person that can become a present estate upon the natural expiration of the preceding estate 1. If there is no life estate, no possibility of a remainder a. Must be expressly created in the same instrument creating the preceding possessory estate b. It cannot cut short or divest a prior estate c. It cannot follow a time gap after a preceding estate EXAMPLE 11. O to A for life, then to B and his heirs. What does B have? B has a remainder EXAMPLE 12. O to A for life and then to B and his heirs one day after A’s death. What do the parties have in this case? B can’t have a remainder b/c there is a time gap Upon A’s death, it goes back to O O has a reversion b/c it can’t be possibility of reverter b/c it’s not fee simple determinable O’s reversion expires B has executory interest EXAMPLE 13. On June 1, O conveys Blackacre to A for life. On June 3, O conveys “all of my right title and interest in Blackacre to B.” What do the parties have? What does B hold? When A dies, property goes to B Not a remainder B has O’s reversion—once a reversion is always a reversion until it becomes an executory interest Types of Remainders 1. Vested Remainder 9 a. Vested remainder is one that throughout its continuance, is ready to become a possessory estate whenever and however the preceding estate terminates. It is given to an ascertained person and is not subject to a condition precedent i. Future interest holder will get property upon expiration of life estate; it’s going to be an ascertained person and not subject to any conditions preceding b. Three kinds of vested remainders: i. Indefeasibly or absolutely vested remainder 1. Is a remainder that is created in one ormore ascertained persons that ics certain to become possessory whenever and however the preceding estate ends (i.e. no conditions precenednat to beomcing possessory other than the natural expiration of the prior estate) and that cannot be defeated of abridged. EXAMPLE 11. When A dies, B will get property and when B gets it, he has fee simple absolute ii. Vested remainder subject to open (class gift) 1. Is a remainder created in a class of persons that is certain to become possessory upon the natural expiration of the prior estate, but is subject to diminution by reason of other persons becoming entitle to share in the remainder a. You will get property, but it gets reduced EXAMPLE 14. O to A for life then to the children of B. Assume that A and B are living and B has one child, C - As each child is born, C shares get reduced - Vested remainder b/c we know C is going to get something upon life tenant’s death, but it’s not determinable yet until some of the class closes - O has nothing iii. Vested remainder subject to complete defeasance 1. Is a remainder created in one or more ascertained persons that is certain to become possessory upon the natural expiration of the preceding estate, but has no certainty of retaining possession permanently a. You will get property when life tenant dies, but you could lose it if condition happens EXAMPLE 15. O to A for life, then to B and his heirs, but if B dies unmarried, then to C and his heirs. - B gets property when A dies - C has an executory interest - Condition is on the backside—you could lose property if condition happens 2. Contingent Remainders a. Is a future interest in a transferee that is nto certain to take effect whenever and however the prior estate ends, but which possibly will become posessory upon the expiration of the preceding estate. It is contingent because: o It is created in unborn or unascertained persons, or b. Until remainder is ascertained, there is no one to take possession of preceding estate, should it come to and end i. It is subject to a condition precedent EXAMPLE 16. O to A for life and then to the children of C. (Assume C is childless at the time of the grant) - A has a life estate 10 - Children of C have a contingent remainder b/c they are unborn children at the time of the estate - Once D is born, D has a vested remainder subject to open b/c all D has to do is be born EXAMPLE 17. O to A for life, then to B’s heirs. (Assume B is alive) - B’s heirs have a contingent remainder b/c they are unascertained persons; b/c B is living, B’s heirs don’t have anything; you don’t ascertain heirs until someone dies; no one is an heir of the living EXAMPLE 18. O to A for life and then to B and his heirs if B marries C. - Contingent remainder subject to condition precedent b/c condition has to be satisfied before B has a right to possession EXAMPLE 19. O to A for life, then to B and his heirs if B survives A, and if B does not survive A, to C and his heirs. - A has a life estate - B has a contingent remainder - C has an alternative contingent remainders - They are contingent on B surviving A * If first future interest is a contingent remainder, subsequent future interest in a third party is going to be a contingent remainder * EXAMPLE 20. O to A for life, then to B and his heirs if B marries C, otherwise to D and his heirs. - A has life estate - B has a contingent remainder upon condition - D has an alternate contingent remainder What if B isn’t unmarried when A dies? When life estate ends, condition might not be met If everyone’s alive, A would have a life estate, and the other two parties would have contingent remainders Problem is what if A dies, B is alive, C is alive, not married, and D is still in picture - Minority would say B’s interest would be destroyed under that rule - Majority would say it doesn’t effectuate intent of grantor, to allow D to take the property, but could lose property if B marries C, so D’s interest is a fee simple subject to an executory limitation Common law decided “destructibility of contingent remainders” Unless reminder is vested at or before termination of estate’s prior possession, it should be destroyed; unless condition is met when life estate comes to an end, life estate is destroyed So, B’s interest is gone and D automatically takes possession as next remainder What’s the problem w/the “destructibility of contingent remainders” rule? Most jurisdictions have gotten rid of this rule, b/c it ineffectuates w/the intent of the grantors Minority view would mean D has fee simple absolute Question becomes, what happens to property when A dies and B is unmarried at A’s death if C is still alive? 11 1. O has a reversion and property reverts back to O and if condition is met, then it springs to B (springing executory interest), or 2. O never intended to keep any interest b/c O didn’t write it in, so it goes to D, except that D could lose the property if B marries C a. Courts probably follow this one I. DIFFERENCE BETWEEN CONTINGENT REMAINDERS AND REMAINDERS SUBJECT Where the condition is o Contingent remainder if condition is on front end o If condition is on the back end, like if you get property but can lose it, then it is a vested remainder subject to defeasance II. EXECUTORY INTERESTS A. Executory interests are future interests in third parties that either: 1. Divest or cut short a transferree’s preceding estate (shifting executory interests), or 2. Follow a gap in possession of cut short the grantor’s estate (springing interests) B. Two Types of Executory Interests: 1. Shifting executory interest a. Divests the transferee 2. Springing executory interest a. Follows a gap in possession or divests the transferor EXAMPLE 21. O to A and his heirs, but if B returns from Canada, then and in that event to B and his heirs What do parties have here? - A has a fee simple subject to executory limitation - B has a shifting executory interest b/c interest is divested of another transferee EXAMPLE 22. O to A for life, remainder to C and his heirs, but if C predeceases B, to D and his heirs. What do parties have here? - A has a life estate - B has a shifting executory interest - C has a vested remainder subject to complete the feasance - D has a shifting executory interest Condition on back end and doesn’t need to be met for C to get property What happens if C dies before A? Assuming A is alive, then it goes to D EXAMPLE 23. O to A when and if A marries B. Who has property now? - O has the present estate; O has the property now; O is fee simple to subsequent limitation; O can lose property if A marries B - A has a fee simple subject to a condition subsequent; some kind of determinable; A has a springing executory interest EXAMPLE 24. O to A for life, and one year after A’s death to B. - A has a life estate - B has a springing executory interest - O has a reversion 12 EXAMPLE 25. O to A for life, and on A’s death to B. But if B predeceases A, on A’s death to C. This answer goes on how we turn interest; we do it clause by clause - A has a life estate - C would have an executory interest Condition subsequent language (but if) Rules of construction 1. Remainder can’t follow a fee simple of any kind - If interest follows a fee that is held by third prson we know it’s an executory interest 2. If first future interest is vested remainder subject to divestment, following future interest in 3 rd party is going to be an executory interest II. INTRODUCTION TO THE COMMON LAW RULE AGAINST PERPETUITIES a. “No interest is good unless it must vest, if at all, not later than 21 years after some life in being at the creation of the interest.” b. Applicability of RAP i. Contingent Remainders 1. Must be certain to vest in possession, to become a vested remainder, or to fail w/in the measuring period EXAMPLE 4. O to A for life and then to B and his heirs if B survives A, and if B does not survive A, to the United Way - United Way and B have contingent remainders - B’s remainder contingent on surviving A - United Way’s remainder contingent on B not surviving A - Their interests are good—it will vest in possession when A dies; condition will vest in A’s lifetime or B’s lifetime - A can be life in being at creation of interest; at A’s death or w/in 21 years of A’s death ii. Executory Interests 1. Must be certain to take possession or fail w/in measuring period EXAMPLE 5. O to A and her heirs iii. Vested Remainders Subject to Open 1. Subject to open is deemed vested for purposes of RAP if, w/in the perpetuities period iv. Option/rights of First Refusal c. RAP does not apply to i. Indefeasibly Vested Remainders ii. Vested Remainders Subject to Complete Defeasance iii. Interests retained by the grantor, such as (i) reversions, (ii) possibilities of reverters, and (iii) rights of entry iv. Charity to Charity Exception 1. Charitable trusts thought to exist forever and not violate RAP; we want to further gifts to charities, it’s a policy decision 2. Both possessory estate and gift-over have to be charities v. Present Estates d. When Period Begins to Run: i. Wills 13 1. Perpetuities period begins to run on the date of the testator’s death (b/c he can keep changing his will until he dies) ii. Revocable Trusts 1. Perpetuities period begins to run on the date the trust becomes irrevocable 2. This will be at the settlor’s death or when the trust is amended to make it irrevocable a. Trust is arrangement where legal titles are held by one party for the benefit of another iii. Irrevocable Trusts 1. Perpetuities period begins to run on the date the trust is created iv. Deeds 1. Perpetuities period begins to run on the date the deed is delivered w/the intent to pass title a. Once deed is passed, B has to be alive on that date b/c perpetuities begin from that point e. Meaning of Must Vest i. For a contingent future interest to be valid, it must vest in interest, if it vests at all, w/in the lifetime of some person who was alive at the creation of the future interest plus 21 years after such person’s death ii. It need not be demonstrated that it has to vest, but if it should vest, it must occur w/in the period of the rule 1. Relevant question is if it does vest 2. Fixed right of present or future enjoyment of property III. LIFE ESTATES AND ASSOCIATED FUTURE INTERESTS: THE DOCTRINE OF WASTE FREEHOLD ESTATES—CONCURRENT ESTATES I. CONCURRENT ESTATES: CREATION II. CONCURRENT ESTATES: ADMINISTRATION III. JOINT TENANCIES: TERMINATION (SEVERANCE) IV. MARITAL PROPERTY 14
"Law School Classic Property Law Outline"