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Property - The System of Estates
Property Final Exam
Terms in this set (32)
Word of Purchase
Words in a deed or will that tell who takes an interest in real property.
"To A and her heirs" are words of purchase.
Word of Limitation
Used to indicate duration or terms of the conveyance of property.
"... for life" are words of limitation.
Person(s) who survive decedent and are designated as intestate successors under the state's statute of decent.
Living person has no heir.
A group that represents a deceased ancestor
If decedent leaves issue, they take to the exclusion of all other kindred.
Today, if a person dies intestate, without heirs, his/her property escheats to the state.
Fee Simple Absolute (FSA)
An estate of indefinite or potentially infinite duration. Most common freehold estate. (Present interest).
Common law: "and his heirs" are must-have words of limitation to create a FSA.
Modern trend: "and his heirs" are no longer needed to create a FSA.
Fee Tail (FT)
Estate that has potential of enduring forever, but will necessarily cease if and when the first fee tail tenant has no lineal descendants to succeed him in possession.
Created to descend and reamin within a family
Possible future interests: RV & CR
Life Estate (LE)
"To A for life"
Lasts for duration of grantee's life
Grantor has a reversion (RV)
Pur autre vie - LE measured by another's life
LE is defeasible.
A fee/ estate that may come to an end before its maximum duration has run because of the operation of a special limitation, a condition subsequent, or an executor limitation.
Main types: FSD, FSCS, FSEL
Fee Simple Determinable (FSD)
Fee simply so limited that it will end automatically when a stated event occurs.
Triggering words: long as, while, during, until
If property automatically goes back to the grantor, the possessor begins possessing adversely upon the happening of that event.
Future interest: PE
Fee Simple Subject to Condition Subsequent (FSCS)
Fee simply that does not automatically terminate, but may be cut short or divested at grantor's election when a state condition happens.
Unless and until entry is made, the fee simply continues.
Triggering words: If, on condition, unless, provided that, however.
Future interest: RE
Fee Simple Subject to Executory Limitation (FSEL)
Estate created when a grantor transfers a fee simple subject to a condition subsequent, and in the same instrument creates a future interest in a third party rather than himself.
"To A, but if ceases to use the land as farmland, to B" - A = FSEL, B = EI
The triggering event CANNOT be death.
Future interest: EI
Future interest that follows a life estate. The land will go back to the grantor once the life estate ends.
Future interest that follows a life estate, but only where the land goes to a third party once the life estate ends.
Executory Interest (EI)
The future interest held by third party that cuts short FSEL.
Possibility of Reverter (PR)
Future interest that cuts short FSD.
Can only be held by the grantor.
Right of Entry (RE)
Future interest that cuts short FSCS.
Can only be held by grantor. Grantor has discretion whether to exercise it or not.
General Rules of Interpretation
1. Between FSD and FSCS, preference is to find FSCS.
2. Use of word "only" - strong evidence of FSD
3. Use of word "forever" suggests FSCS.
4. Until condition is broken, we don't know who gets PR (grantor or his heirs)
When two or more persons have rights to possess property at the same time, one party cannot disvalue the other party's interest.
Three Categories of Waste
1. Affirmative waste: Arising from voluntary acts that are injurious (substantially reduce the value of the property)
2. Permissive waste: Arising from failure to act/ take reasonable care of the property
3. Ameliorating waste: Arising from actions that improve the property (substantially change the principal use of the land but increase the value of the land)
Interests Retained by Grantor
1. Reversion (RV)
2. Possibility of Reverter (PR)
3. Right of Entry (RE)
Interests Created In A Third Party
1. Vested Remainder (VR)
2. Vested Remainder Subject to Total Divestment (VRD)
3. Vested Remainder Subject to Open (VRO)
4. Vested Remainder Subject to Open and Total Divestment (VROD)
5. Contingent Remainder (CR)
6. Executory Interest (EI)
There is a reversion when:
1. Grantor conveys a CR (Ex: "To A for life, then to B and her heirs if B reaches 21."
2. Grantor conveys a lesser vested estate than that the grantor has (e.g. fee tail, life estate, or leasehold).
There is no reversion if:
1. Grantor conveys a FSA.
2. Grantor conveys a VR in fee simple.
3. Grantor conveys an estate of same quantum as the one he owns.
Vested Remainder (VR)
A remainder is vested if:
1. It is given to an ascertained person AND
2. It is NOT subject to a condition precedent/ is ready to become possessory whenever and however all preceding estates expire.
Vested Remainder Subject to Total Divestment (VRD)
A remainder not certain of becoming possessory but which divests if an event happens.
"To A for life, then to B and her heirs, but if B does not survive A, to C and her heirs."
Vested Remainder Subject to Open (VRO)
A remainder created in a class of persons, where at least one member of the class is ascertained, and there is no condition precedent. The shares of the class members are not yet fixed because more persons can become members of the class.
"To A for life, then to A's children and their heirs." A has one child B. If A has no child at the time of the conveyance, the remainder is contingent because no taker is ascertained.
Contingent Remainder (CR)
A remainder is contingent if:
1. It is given to an unascertained person OR
2. It is made contingent upon some event occurring other than the natural termination of the preceding estates.
Alternate Contingent Remainder
If A doesn't take it then B does and vice versa.
"To A for life, then to B if B survives A, but if B does not survive A, to C."
Executory Interest (EI)
If a future interest does not follow a natural termination of the preceding estate, it must be an executory interest.
To become possessory:
1. Divest or cut short some interest in another transferee OR
2. Divest the transferor in the future
Rule Against Perpetuities (RAP)
"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."
Individuals have the right to transfer property interests, but to a limit.
RAP only applies to interests that are not vested at the time of the conveyance: CR, EI, and class gifts.
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