MBE Real Property - Property Interests

Fee simple absolute;

Defeasible estate;

Fee simple determinable;

Fee simple subject to condition subsequent; and

Fee simple subject to executory limitation

Life estate; and

Non-freehold estates (leasehold estate)

Absolute ownership for potentially indefinite duration.

Freely:

Alienable

Devisable

Descendible

No.

Fee simple absolute.

Interest that lasts for the duration of the grantee’s life. Grantee is called the life tenant.

Freely transferrable during life of life tenant

Not usually devisable or descendible

Life estate

Life estate measured by someone other than the grantee’s life (ex. “To A for the life of C”).

Reversion - in O, the grantor (“A for life”)

Remainder - in third party (“A for life, then to B”)

May be contingent or vested

Measuring life (usually the original life tenant’s life).

Right to possession; and

Right to rent & earn profits during term

Note: Life tenant cannot sell or waste the property without the remainderman’s consent

Pay property taxes & mortgage interest;

Make reasonable repairs;

Not commit waste; and

Pay insurance premiums (some jurisdictions)

Life tenant must keep property in the same condition as when she took ownership. 3 types:

Affirmative (“voluntary”) waste

Permissive waste

Ameliorative waste

Intentional and willful damage to the property that decreases its value to the future interest holder

No, unless exploitation was:

Expressly authorized by the grantor;

Necessary to maintain the land; or

Already occurring before life tenant took ownership (open mines doctrine)

Allows a life tenant to continue exploiting natural resources on the land as long as the mining was previously done and still occurring when the life tenant took ownership

Failure to protect the property from damage by neglect

No more than the income/profits generated by the land

When the life tenant makes improvements to the land.

Most jurisdictions allow the life tenant to make improvements if:

A change in neighborhood conditions makes the improvement necessary; and

There is no diminution in property value

The holder of a remainder interest (vested or contingent) as well as a reversion interest.

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Only an injunction to prevent future waste

Damages;

Injunction to prevent future waste

Yes, has a license to enter the property that cannot be revoked by current tenant. Can seek injunction or damages if waste is found.

A fee estate of potentially infinite duration that can be terminated upon the occurrence of a specified event

Fee simple determinable

Fee simple subject to condition subsequent

Fee simple subject to executory interest

What type of language creates it?

Property interest that terminates automatically upon the happening of a named future event.

Created with specific durational language ("until," "while," "so long as")

Possibility of reverter: automatically reverts back to the grantor if condition happens

Modern law: transferrable, devisible, descendible

At common law: via intestacy only

What type of language creates it?

Gives grantor power/right to terminate interest upon occurrence of a specific event.

Created with specific, conditional language: "on condition that," "provided," "if"

Fee simple subject to a condition subsequent is preferred over fee simple determinable (because there is no automatic forfeiture)

Covenant is preferred over a defeasible estate

Power of termination: when the subsequent condition is met, the grantor has the power to terminate by affirmative action to re-take the property; the property does not automatically revert back to the grantor.

⚠️ Note: Also called the "right of re-entry"

Yes, devisable, descendible, and alienable (in most jurisdictions).

Note that, under the common law, transfer was permitted only by inheritance. Today, most jurisdictions permit inter vivos transfers.

What type of language creates it?

An estate that is subject to a future interest by a third party, and upon occurrence of an event, the estate will automatically divest in favor of the third party.

Created with specific conditional language: "To A, but if A doesn't finish law school, then to B and B's heirs"

Shifting or springing executory interest

Reversion (life estate);

Possibility of reverter (fee simple determinable);

Power of termination (also can be called "right of reentry"; fee simple subject to condition subsequent)

Power of termination:

Must be expressly retained by grantor in the conveyance

When the event happens the property does not automatically revert back to the grantor, the grantor must re-take the property

Descendable; devisable, not transferrable inter vivos (majority rule)

Possibility of reverter:

Automatically created whether or not grantor expressly reserves the right in conveyance

When the event happens the property automatically reverts to the grantor

Descendible, devisable, transferrable

Remainder

Vested

Contingent

Executory interest

Shifting

Springing

A future interest in a third party that arises after termination of prior possessory estate.

Can either be vested or contingent.

⚠️ Note: Can never follow a defeasible fee

Interest that is:

Created in an ascertainable grantee; and

Not subject to any condition precedent other than termination of the preceding estate

Types:

Indefeasibly vested

Vested remainder subject to total divestment

Vested remainder subject to open

Grantee takes possession upon termination of prior estate, no conditions attached

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Future interest that could be cut short if some condition happened.

Ex. "To A for life, remainder to B, but if B doesn't quit smoking, then to C."

B has a vested remainder subject to total divestment because she must quit smoking to keep the interest.

Remainder vested in an ascertained group of class of takers, at least one of whom is capable of taking possession

Open: Others can join

Closed: No new persons can join

A class closes as soon as at least one member of the class can demand possession of the land

Remainders that are either:

Created for an unknown beneficiary ("To A for life then to B's heirs" if B has no children yet); or

Subject to a condition precedent ("To A for life then to B and her heirs if B passes the bar")

Indefeasibly vested remainder

Provides that any conveyance, which purports both to convey a present possessory estate of definite duration (such as a life estate) to a grantee and to create the corresponding remainder entirely in the grantee's heirs, instead results in the conveyance of the grantor's entire estate to the grantee alone, because both the present and future estates are deemed to be merged in the grantee.

⚠️ Note: Shelley's Rule has been abolished in most states

When A conveys future interest to heirs, there is a rebuttable presumption that A intended to keep interest to herself

Note: The majority of states have abolished this.

Future interest that cuts short another interest if the specified condition occurs. Can be either shifting or springing.

Shifting: cuts short a third party's interest ("To A and her heirs but if B passes the bar, then to B)

Springing: cuts short the grantor's interest ("To A if she passes the bar")

💡Memory tip:

ShifTing (divests third party)

SprinGing (divests grantor)

Future interests are void unless they vest no later than 21 years after the death of the measuring life

It is either specified in conveyance, or an individual who is relevant to the future interest.

Executory interests

Contingent remainders

Vested remainders subject to open

Rights of first refusal

Powers of appointment

Options

Courts will rewrite the conveyance "as near as possible" to the grantor's original intent

Joint tenancy

Tenancy by entirety

Tenancy in common

Tenancy in common

Each co-tenant owns an undivided interest in the property and has the right to possess the whole

No right of survivorship;

Freely devisable, transferrable, alienable;

Right to possess the whole; and

Right to partition

Co-ownership with the right of survivorship:

Freely alienable

NOT devisable or descendible

Must have the Four Unities ("PITT"):

Unity of Possession: equal right of possession;

Unity of Interest: equal interest with co-tenants;

Unity of Title: same conveyance; and

Unity of Time: interests created at the same time

*In some modern jurisdictions, all that is required today is possession and unity.

If one joint tenant dies, property automatically transfers to the remaining joint tenants

Right of survivorship

Becomes a tenancy in common

The joint tenancy remains intact between remaining joint tenants and the interest sold is held as a tenancy in common between all parties (as long as there are 3 or more JTs)

Lien: JT is not severed

Title: JT is severed

Joint tenancy is severed and the interest transferred is that of a tenant in common

A joint tenancy creates a right of survivorship and a tenancy in common does not

Tenancy in common only requires unity of possession (not the 4 unities like a JT)

A joint tenancy between a married couple that has:

Right of survivorship

No right to partition

Divorce;

Death of one spouse;

Agreement in writing

Yes

No, unless there was an ouster

No

Split proportionally according to each co-tenant's property interest

Improvements: No, but if the property value increases b/c of the improvement, co-tenant who did the improvement can receive the profit upon sale (but tenant is also liable for any diminution in property value from the improvements)

Repairs: No, even if the repairs are necessary, but some jurisidictions allow it as long as other co-tenants are notified in writing

In proportion to their share of the property

Divides concurrent estate into separate tracts of property in proportion to each tenant's ownership; can be either voluntary or involuntary (court order).

Two types: partition in kind and partition by sale

Any joint tenant or tenant in common

Partition in kind: divides property into distinct sections

Partition ordered by the court when it's impossible to come up with a fair and equitable physical division of the lot.

Proceeds from the sale will be apportioned among co-tenants.

Action brought by co-tenant if the other co-tenant has denied them access to the property.

Co-tenant can regain access and recover loss of use from property.