Intro. to Planning Law#8a

8/8/2019 Intro. to Planning Law#8a

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Estates in Land & FutureInterests

UNIT 8a


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An estate in land is an interest in realproperty that is or may become

possessory. In property law, the rights and interests

associated with an estate in land may be

conceptually understood as a bundle ofrights because of the potential for different

parties having different interests in thesame real property.


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The law recognizes different sorts ofinterests, called estates, in real property. Thetype of estate is generally determined by thelanguage of the deed, lease, or bill of sale

through which the estate was acquired.Estates are distinguished by the varyingproperty rights that vest in each, and that

determine the duration and transferability ofthe various estates. A party enjoying anestate is called a "tenant."


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Categories of estates

Freehold Estates rights of ownership

Fee Simple (fee simple absolute) - most rights,least limitations, indefeasible

Fee Tail - inalienable rights of inheritance

Conditional or determinable estate - voidable

ownership Life Estate - ownership for duration of

someone's life
http://en.wikipedia.org/wiki/Freehold_estate


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Leasehold Estate-rights of possessionand usebut not ownership. The lessor

(owner/landlord) gives this right to the lessee (tenant). There are four categoriesof leasehold estates:

estate for years (tenancy for years)lease of any length with specific beginand end date

periodic estate (periodic tenancy)automatically renewing lease (month tomonth, week to week)

estate at will (tenancy at will)leasehold for no fixed time or period. It lastsas long as both parties desire. Termination is bilateral (either party mayterminate at any time) or by operation of law.

tenancy at sufferancecreated when tenant remains after lease expiresand becomes a holdover tenant, converts to holdover tenancy upon landlordacceptance;

Types of leases Gross Lease

Net Lease

Percentage Lease


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Statutory Estates - created by law Community Property

Homestead

Dower interest of a wife in husbands property

Curtesy intrest of a husband in wifes property

Tenancy by Entirety Equitable Estate - neither ownershipnor possession

Lien

general

specific

Easement easement in gross

easement appurtenant

ingress

egress


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Fee Simple - An estate of indefinite duration, thatcan be freely transferred. The most common andperhaps most absolute type of estate, underwhich the tenant enjoys the greatest discretion

over the disposition of the property. Conditional Fee simple - An estate lasting

forever as long as one or more conditionsstipulated by the deed's grantor does not occur. If

such a condition does occur, the property revertsto the grantor, or a remainder interest is passedon to a third party.


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Fee Tail - An estate which, upon the death of the

tenant, is transferred to his heirs.

Life Estate - An estate lasting for the natural lifeof the grantee, called a "life tenant." If a lifeestate can be sold, a sale does not change itsduration, which is limited by the natural life of theoriginal grantee.

A life estate pur autre vieis held by one person for thenatural life of another person. Such an estate may

arise if the original life tenant sells her life estate toanother, or if the life estate is originally granted pur

autre vie.


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Leasehold - An estate of limited

duration, as set out in a contract, calleda lease, between the party granted theleasehold, called the lessee, and

another party, called the lessor, havinga longer lived estate in the property. For

example, an apartment-dweller with a

one year lease has a leasehold estatein her apartment. Lessees typically

agree to pay a stated rent to the lessor.


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A tenant enjoying an undivided estate in

some property after the termination of someestate of limited duration, is said to have a"future interest." Two important types of futureinterests are:

Reversion - A reversion arises when a tenantgrants an estate of lesser maximum durationthan his own. Ownership of the land returns

to the original tenant when the grantee'sestate expires. The original tenant's futureinterest is a reversion.


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Remainder - A remainder arises when atenant with a fee simple grantssomeone a life estate or conditional fee

simple, and specifies a third party towhom the land goes when the life estateends or the condition occurs. The third

party is said to have a remainder. The

third party may have a legal right to limitthe life tenant's use of the land.


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Estates may be held jointly as jointtenants with rights of survivorship or as

tenants in common. The difference in these two types of

joint ownership of an estate in land is

basically the inheritability of the estate.


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In joint tenancy (sometimes called tenantsof the entirety when the tenants aremarried to each other) the surviving tenant(or tenants) become the sole owner (or

owners) of the estate. Nothing passes to the heirs of the

deceased tenant.

In some jurisdictions the magic words "withright of survivorship" must be used or thetenancy will assumed to be tenants incommon.


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Tenants in common will have a heritableportion of the estate in proportion to

their ownership interest which ispresumed to be equal amongst tenantsunless otherwise stated in the transfer

deed.


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Property Rights - enjoyed by tenants under the

various estates

These include the right to:

Decide how a piece of real property is

used; Exclude others from enjoying the property;

Transfer (alienate) some or all of these

rights to others on mutually agreeableterms


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Historical Review

In Common Law, real property wasproperty that could be protected by

some form of real action, in contrast topersonal property, where a plaintiffwould have to resort to another form of

action.


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The law now broadly distinguishesbetween real property (land andanything affixed to it) and personal

property (everything else, e.g., clothing,furniture, money). The conceptualdifference was between immovableproperty, which would transfer titlealong with the land, and movable

property, which a person would retaintitle to.


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Words of Purchase and

Words of Limitation Words of Purchase - "to A"

Words of Limitation - "for life" or

"and her heirs"

Words of Inheritance

Words of Condition"as long as A lives on the land"


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Fee Simple:

Words of Limitation Words of general inheritance

"to A and his/her heirs"

"to the Church of England its successorsand assigns"

"to the heirs of B [and their heirs]"


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Fee Tail:

Words of Limitation Words of special inheritance General: "to A and the heirs of his body"

Male: "to A and the male heirs of his body" Female: "to A and the female heirs of her

body"

Special: "to A and the heirs of his bodybegotten upon the body of his present wifeX"


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Fee Tail:

Words of Limitation Words of special inheritance

"to A and A's issue"

"Die without issue" or "Have issue"

C.L. = indefinite failure of issue

Modern = definite failure of issue


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Fee Simple Conditional

(Before Statute DeDonis) "to A and the heirs of her body"

If A had issue born alive, then A could grantaway a fee simple

If A had no such issue, then at A's death

the property reverted back to A's grantor


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Fee Tail - Modern Law

New fee tails abolished, grantee gets afee simple.

Grantee gets a common law fee simpleconditional.

Grantee gets a life estate, grantee's issue

get a fee simple remainder. New fee tails can be created but can

easily be disentailed by will or deed.


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Life Estate:

Words of Limitation "to A"

"to A for life"

"to A in fee simple" (?)

"to A forever

"to A for the life of A"


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Life Estate Pur Autre Vie:

Words of Limitation "to A for the life of B"

"to B for life

then B grants B's interest to A

In both cases:

A = tenant pur autre vie

B = the measuring life


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Term of Years - Expiration and

Words of Limitation Words of limitation set a definitely

ascertainable period of time.

"to A for one day" "to A for five years"

"to A for 999 years"

Automatic expiration at end of specified

duration.


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Fee Simple - Expiration

Words of limitation set an indefinite

duration.

Expires at an owners death intestatewithout heirs.

Freely inheritable (by descent).

Freely transferable by will or by inter vivos

grant.


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Life Estate - Duration

Words of limitation set an indefinite

duration. Expires at death of life tenant.

Not inheritable or devisable.

Limited transferability by grant.


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Life Estate Pur Autre Vie:

Expiration Expires at death of the measuring life

Death of life tenant before death of

measuring life

O to A for the life of B ?

O

TG A Dies B Dies


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All Estates Can be Determinable

i.e., subject to forfeiture

i.e., subject to a conditional limitation

Example: "as long as the property is

used for agricultural purposes

Termination prior to expiration


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All Estates Can be Subject to a

Condition Subsequent Example: "on the condition that the land

not be used for industrial purposes, and if

the land shall ever be used for industrialpurposes then the grantor and his/her

heirs may re-enter and retake the land"

Termination prior to expiration


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All Estates Can be

Vested or ContingentAn estate is vested if:

Owned by living person; and

Owned by an ascertained person; and

No condition precedent to the estate

becoming a present possessory estate.

Might have to wait for the natural expiration

of prior estate(s).


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All Estates Can be Present or

Future Interests Present Interest - Owner has the

exclusive right to present possession of

the property.

Future Interest - Owner has no right to

possess the property until one or more

prior estates end by failure, expiration,

termination or otherwise.


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Joint Tenants

(One Estate) Own undivided = shares in the property.

Survivorship defeats death-time transfers.

C.L. presumption when grant was silent.

Permitted in real and personal property.

Partition and Severance applicable.

Own by the whole and by the share.


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Joint Tenants - Unities

TIME: all interests must vest at thesame time.

POSSESSION: all interests must beundivided rights to possess the entireproperty.

TITLE: all interests must derive from thesame document.

INTEREST: all estates must be of thesame type and duration.


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Tenancy by the Entirety

Four joint tenancy unities plus unity of

MARRIAGE.

Presumption when grant is silent butgrantees are husband and wife.

Permitted in real and personal property.

No right to partition or severance.

Allowed in a plurality of states.


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Tenancy by the Entirety

C.L. Treatment - Husband could grantaway the entire estate subject to the wife'sright of survivorship. Estate could be

levied by husband's separate creditors. Modern Treatment - Any attempted grant

by either spouse is wholly void. Estate can

not be levied by separate creditors ofeither spouse.


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Husband and Wife at C.L.

During marriage - Husband entitled toexclusive possession of, and rents andprofits from, all of his wife's freeholds.

Curtesy - Widower had a life estate in alllands in which his deceased wife hadseisin at any time during the marriage;

provided, that issue had been born aliveduring the marriage. (Legal and equitablefreeholds.)


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Husband and Wife at C.L.

Dower - Widow has a life estate in 1/3 of

all lands in which her deceased husband

had seisin at any time during the marriage.

(Legal freeholds only.)


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Cotenant Liability

All cotenants are not in possession.

No liability unless:

Bailiff or property manager Rent received from non-cotenants Ouster Exploitation of natural resources

Sale or Partition No accounting or contribution for

business activity.


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Cotenant Liability

Accounting and Contribution upon a sale:

Rental value

Mortgages, taxes, insurance

Improvements

Liability equal to each cotenant'sproportionate undivided share.


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Reversionary Interests in a

Fee Simple Absolute Grantor All reversionary interests are vested.

Fee Tail - Reversion in Fee Simple Life Estate - Reversion in Fee Simple

Term of Years - Reversion in Fee Simple

Fee Simple Absolute - None


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Reversionary Interests in a

Fee Simple Absolute Grantor

Fee Simple Determinable a/k/a

Fee Simple Subject to a Conditional

Limitation

Possibility of Reverter in Fee Simple

"toA

and her heirs so long as the land is

used for agricultural purposes"


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Possibility of Reverter:

Example 1

"to A and her heirs so long as the land is

used for residential purposes"

O had a fee simple absolute.

O conveyed a determinable fee simple.

O owns a possibility of reverter in fee simple.


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Possibility of Reverter:

Example 2

"to A for life so long as A lives on the land

O owned a fee simple

O conveyed a determinable life estate O owns a reversion in fee simple

No possibility of reverter for the life of A

(between A moving and dying).


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Power of Termination/Right of

Entry for Cond. Broken

F. S. Subject to Cond. Subsequent

Power of Termination a/k/a

Right of Entry for Condition Broken "to A and her heirs on the condition

that if the land shall ever be used for

commercial purposes the grantor andher heirs shall have the right to re-enterand retake the premises"


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Remainders

Future interest which is not owned bythe person who created the interest.

Can be in fee simple or in fee tail or for

a life estate.

Can be vested or contingent.


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Vested Remainders

(Indefeasibly) Vested Remainder

Vested Remainder Subject to Complete

Divestment (or Defeasance)

Vested Remainder Subject to Open a/k/a

Vested Remainder Subject to Partial

Divestment (or Defeasance)


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Indefeasibly Vested Remainders

"to A for life, then to B and her heirs

B owns an indefeasibly vested fee simpleremainder.

"to A for life, then to B for life

B owns an indefeasibly vested life estateremainder.

Becomes a present estate after priorestate(s) expire.


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Vested Remainder Subject to

Complete Divestment

"to A for life; then to B and her heirs; but ifB does not survive C, then to C and herheirs"

B owns a vested fee simple remaindersubject to complete divestment undermodern law.

C owns a shifting executory interest in feesimple under modern law.


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Vested Remainder Subject to

Open (or Partial Divestment)

"to A for life, then to A's children and theirheirs" (opens as children as born).

If A has a child C1 at the time of the grant,then C1 owns a vested fee simpleremainder subject to open.

If C2 is born two years later, then C1 andC2, as cotenants, would own a vested feesimple remainder subject to open.


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Contingent Remainders


Shifting Executory Interests

Springing Executory Interests Contingent remainders, executory

interests and vested remainders subject

to open (CR or EI*) are the only interestswhich are subject to the rule againstperpetuities.


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Must follow one or more prior freeholds;and

Possibility of vesting between the time ofthe grant which created the estate and theexpiration or sooner termination of theprior freehold(s).

"to A for life; then to B and her heirs if Bmarries C"


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Alternative contingent remainders

"to A for life; then to the B and her heirs if B

survives A; but if A does not survive B, then toC and her heirs"

B and C each own a contingent fee simple

remainder only one of which will everbecome a possessory estate.


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Shifting Executory Interests

"to A and her heirs; but if the land isever used for commercial uses, then to

B and her heirs" B's interest:

is a future interest because it has nopresent right to possession;

is contingent because it has a conditionprecedent;

would prematurely terminate A's.


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Springing Executory Interests

"to A and the heirs of her body starting oneyear from today

Purports to transfer seisin from the grantorto a grantee any time later than the time ofthe grant which purports to create theinterest.

No possibility of vesting before expiration ortermination of prior freehold(s).


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C.L. Rules w/r/t Creating and

Transferring Freehold Estates

A present freehold could only be created ortransferred by a feoffment.

A reversion could be created by afeoffment or by a grant.

A remainder could only be created by a

grant. Only reversionary interests could follow a

grant of a fee simple.

C l / / C i d


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No shifting executory interests.

Grantor could not create a freehold

contingent remainder which wouldterminate another freehold estate prior

to its natural expiration.

"to A and her heirs, but if the land shallever be used for commercial purposesthen to B and her heirs"

C L R l / / C i d


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No springing executory interests. No legal contingent freehold interest

could follow a term of years. "to A for 1 year, then to B and his heirs if

B marries C"

A freehold could not be created tocommence in futuro. "to A and the heirs of her body from and

after B's death"


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C L R l / / C i d


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Transferring Freehold Estates No springing executory interests. A contingent remainder is destroyed if

it does not vest before the expiration

or sooner termination of a priorfreehold. "to A for life, then to B for life, then to C

and her heirs if C marries D"

C's estate was destroyed upon the deathof the survivor of A and B, if she had notyet married D.

C L R l / / C i d


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Transferring Freehold Estates A contingent remainder is destroyed if

it does not vest before the expiration orsooner termination of a prior freehold.

"to A for life, then to B and the heirs of hisbody if B marries C, then to D and hisheirs"

A and D could conspire to intentionally

destroy C's contingent remainder by aforfeiture or merger of A's life estate.


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M E ti


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Merger - Exception

If a life estate and the next vestedestate (i.e., a fee tail or a fee simple)are created in the same person by thesame document, then the two estatesdid not merge so as to destroy acontingent remainder.

"to A for life, then to B and the heirs ofher body if B survives A, then to A andher heirs" (???)

R l i Sh ll ' C


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Rule in Shelley's Case:

Applicable Fact Patterns

"to A for life . . . then to A's heirs [and

their heirs]"

"to A for life . . . then to the heirs of the

body of A [and their heirs]"

"to A and the heirs of her body . . . thento A's heirs [and their heirs]"

R l i Sh ll ' C


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Rule in Shelley's Case

If a document creates a freehold in Aand purports to create a fee simple (or

fee tail) remainder in A's heirs, then theremainder becomes a fee simple (or feetail) in A.

Freehold and remainder must eitherboth be legal or both be equitable.

Other estates may intervene.

R l i Sh ll ' C


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"to A for life, remainder to A's heirs" R.S.C. - "to A for life, remainder to A and

her heirs"

Merger - "to A and her heirs" "to A and the heirs of his body,

remainder to As heirs" R.S.C. - "to A and the heirs of his body,

remainder to A and his heirs" Merger - does not apply

R l i Sh ll ' C


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"to A for life, then to B and the heirs ofher body if B survives A, remainder toA's heirs"

R.S.C. - "to A for life, then to B and theheirs of her body if B survives A, remainderto A and her heirs"

Merger - does not apply

A grants "all my interest in Greenacre toC". C gets a fee simple absolute.

D t i f W thi Titl


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Doctrine of Worthier Title

Testamentary Branch - Heirs takefreeholds by descent rather than bypurchase.

O devises land "to my eldest son S" At O's death, S is the sole heir.

Inter VivosBranch - No remainders can

be granted to the grantor's heirs. O grants "to O for life remainder to my

heirs"

M d R l ft St t t f


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Modern Rules after Statute of

Uses and Statute of Wills Shifting executory freeholds - okay Springing executory freeholds - okay

Contingent freehold remainders - never

destructible Rule in Shelley's Case - abolished

Doctrine of Worthier Title

Testamentary Branch - abolished I.V. Branch = rule of construction

Rule Against Perpetuities - created


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Statute of Uses

Didn't abolish uses (equitable estates). Immediately transformed certain uses into

the corresponding legal estates.

Modern trusts are okay. Feoffment to uses:

O enfeoffed T and his heirs to the use of Aand her heirs.

A's use was executed giving A a legal feesimple.


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Statute of Uses

The bargain and sale:

O bargained and sold to the use of A and

his heirs. The covenant to stand seised:

O covenanted to stand seised to the use

of O's son A and his heirs. In both cases, A's use was executed

giving A a legal fee simple.

Rule Against Perpetuities:


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Rule Against Perpetuities:

Statutory Rule

A CR or EI* is not valid unless it mustnecessarily vest or fail within the ruleperiod.

Rule Period = 90 years from time ofcreation of the CR or EI*.

Time of creation:

Devise - death of the testator

Grant - delivery & acceptance of deed


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C L What Might Happen?


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C.L. What Might Happen?

Rule and Wait and See Rule

O devises "to A in fee simple; but if the landis ever not used for mining, then to B in feesimple.

Time of creation = time of O's death.

Measuring lives = A and B.

Rule period starts at O's death. Rule period ends on the 21st anniversary of

the death of the survivor of A and B.



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Rule and Wait and See Rule Today - O grants "to A for life, then to B in

fee simple if B marries C.

Time of creation = today.

Measuring lives = O, A, B and C.

Rule period starts today.

Rule period end on the 21st anniversary of

the death of the survivor of O, A, B and C. Passes C.L. Rule & Wait and See Rule.


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Common Law What Might


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Common Law What Might

Happen? Rule

It is ALWAYS possible for any living

person to have children or to have

additional children.

A child is ALWAYS born during the

lifetimes of both biological parents. There are NO EXCEPTIONS.



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Today O grants "to all grandchildren of

A who reach age 21.

A's kids: C1 (age 45) and C2 (60)

C1's kids: GC1 (18) and GC2 (19)

Time of creation - today.

Measuring lives O, A, C1, C2, GC1 and

GC2.



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A has C3 one year from today - C3 isnot a measuring life.

One month later all of the measuringlives (O, A, C1, C2, GC1 and GC2) die.

21 years elapse (rule period ends).

Then C3 has GC3 whose interestpurportedly vests when GC3 turns 21.

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