Present Estates and Future

Interests
Part 3
 Dead weight . . .

 Fee Tail – abolished generally; most construe as a fee simple

absolute
 Destructibility of Contingent Remainders – mostly abolished;
modern rule provides reversion of property to O until the
contingency occurs vesting title in the remainderman
 Doctrine of Worthier Title – mostly abolished; remainder in
O’s heirs construed as a remainder in O.
 Rule in Shelley’s Case – mostly abolished; remainder in
grantee’s heirs construed as a remainder in the grantee.
 Destructibility of
Contingent Remainders
The Rule: A contingent remainder that is not
ready to take effect immediately upon the
termination of all preceding estates is
destroyed. Applies in only 4 states today (not
California)
Example : O to “A for life, then to B and his heirs if B attains age
21.” B is alive but only 15 when A dies.
With the rule, B’s remainder is still contingent and is destroyed
by the rule; O and his heirs get the reversion.
Without the rule, O holds a reversion only until B reaches 21, or a
trustee is appointed to hold the property until B reaches age 21.
 Doctrine of Worthier Title
Rule: A grantor cannot, either by conveyance or
by will, give a remainder to his own heirs. The
contingent remainder in the heirs is void and it
creates a reversion in the grantor.Now
abolished in California.
Example: O to A for life, then to the heirs of O.
Under the rule, A has a life estate and O has a
reversion in fee simple absolute.
 Rule in Shelley’s Case
Rule: When a will or conveyance creates a freehold in
A and purports to create a remainder in A’s heirs, the
remainder becomes a remainder in A. Rule abolished
in most states.
Example: O to “A for life, and after A’s death to the
heirs of A.”
With the rule: A has a life estate and a vested remainder
in fee simple absolute = A has a fee simple absolute.
Without the rule: A has a life estate, A’s heirs have a
contingent remainder in fee simple absolute.
 Doctrine of Merger
 Whenever the same person acquires all
of the existing interests in land, present
and future, a merger occurs. That
person then holds a fee simple absolute.
 A to B for life. A then sells his reversion to
B. Since B now owns all interests in the
property, B has a fee simple absolute by
merger.
 Interpretation of Ambiguous
Conveyances
Four overriding principles govern the interpretation
of ambiguities in conveyances:
1. Intent of the grantor (but mere precatory language does
not control)
2. “The law abhors a forfeiture” – construe against a
person forfeiting or automatically losing property (FSSCS
preferred over FSD)
3. Free alienability of property (remove restrictions that
impede owners’ ability to sell or transfer)
4. No New Estates (construe ambiguities to a recognizable
form; do not create a new type of estate)
 Interpretation of Ambiguous
Conveyances
Wood v. Bd. of County
Commissioners of Fremont County
(Wyo. 1988)
Property conveyed “for the purpose
of constructing and maintaining
thereon a County Hospital . . . “
◦ Construe as FSD or FSSCS or FSA?
 Interpretation of Ambiguous
Conveyances
Edwards v. Bradley (Va. 1984)
FSA or LE?
The intent of grantor – keep property
out of hands of daughter’s creditors –
only way to do this was with a LE.
Ambiguous Conveyances - Recap
Four overriding principles govern the interpretation
of ambiguities in conveyances:
1. Construe conveyance to reflect intent of the grantor
(but mere precatory language does not control)
2. “The law abhors a forfeiture” – construe against a
forfeiture or automatic loss of property (FSSCS preferred
over FSD)
3. Free alienability of property (remove restrictions that
impede owners’ ability to sell or transfer)
4. No New Estates (construe ambiguities to a recognizable
form; do not create a new type of estate)
 Waste

All tenants (present and future) are

obligated to maximize profits and
minimize the costs from the property;
present holders cannot unreasonably
damage the estate to the detriment
of future interest holders.
 Waste
McIntyre v. Scarbrough (Ga. 1996)
A life tenant is entitled to the full use
and enjoyment of the property if she
exercises the ordinary care of a
prudent person for its preservation
and protection and commits no acts
which would permanently injure the
remainder interest.
 Waste
Voluntary or affirmative waste – deliberate acts by
possessory tenant to destroy or diminish the property;
includes removal of natural resources.
Permissive waste – failure to make ordinary repairs
preventing deterioration; failure to pay carrying
charges necessary to prevent loss of the property.
Ameliorating waste – possessory tenant changes the
property in a way that increases the value or utility of
the property.
Life tenant can make changes due to change of
circumstances. E.g., Melms v. Pabst Brewing Co.
 Rights and Responsibilities
of Life Tenants
Like Co-Tenants:
1. Life tenant is entitled to the beneficial use
of land, but may not act to impair the value
of the estate and interests owned by
others in the same land – cannot commit
waste.
2. A life tenant is not responsible for damage
caused by others to the land; may recover
damages from third parties limited to the
value of the interest of the life tenant.
 Rights and Responsibilities of Life
Tenants
3. A life tenant has the duty to pay carrying
costs – mortgage and taxes as they
accrue during period of tenancy.
4. Assessments for permanent
improvements are apportioned between
the life tenant and the future interest
holders.
5. A life tenant is not under a duty to insure
the estate.
 Rule Against Perpetuities
The rule invalidates future
interests that may vest too
far into the future; it
restricts the ability of the
grantor to tie up and
restrict alienability of
property for generations.
Allows control of property
in the hands of the living,
not the dead.
 Rule Against Perpetuities

“No interest is good unless

it must vest, if at all, no
later than 21 years after
some life in being at the
creation of the interest.”
 Rule Against Perpetuities

Modern Rule (Uniform RAP) does not

apply to nondonative (i.e.,
commercial) transfers.
 In some jurisdictions, options to purchase
and rights of first refusal (“preemptive
rights”) are considered contingent future
interests that are subject to RAP.
 Rule Against Perpetuities
 “No interest is good” = if the interest does not
conform with the rule it is void ab initio
 “unless it must vest” – the contingent interest must
vest (become possessory) or fail (fail to become
possessory) within the period of the rule
 “if at all” – if the contingent interest is absolutely
certain either to vest or fail entirely within the period
it is valid.
 “some life in being”- search for the validating life who
is the person who shows us if the interest will vest or
fail within the person’s lifetime, at the person’s death
or 21 years after the person’s death
 Rule Against Perpetuities
“not later than 21 years after some life
in being” at the creation of the future
interest
Ask: is there any life in existence at the
creation of the interest of which it can be
said for a certainty that the interest will
vest (become possessory) or fail to vest
within 21 years of that person’s death?
 Rule Against Perpetuities
Common law rule applies only to future
interests created in a third party:
Contingent remainders
Vested remainders subject to open
Executory Interests
RAP does not apply to future interests held by
the grantor (reversion, possibility of reverter,
power of termination). RAP does not apply to
vested remainders.
 Rule Against Perpetuities

Paraphrase: An interest is invalid if there

is any possibility, however, remote, that
the interest may vest (become
possessory) or fail to vest more than 21
years after the death of someone who
was alive at the creation of the interest.
 Rule Against Perpetuities

Example 1: O conveys Blackacre “to A

for life, remainder to the first son of A
whenever born who becomes a
teacher.”
At the time of the conveyance, A has
son who is not presently a teacher.
O conveys Blackacre “to A for life, remainder to the first son
of A whenever born who becomes a teacher.”
At the time of the conveyance, A has a son who is not
presently a teacher.

1. What are the interests?

 A has a life estate
 Son has contingent remainder because his
future interest follows the natural
termination of A’s life estate but is subject
to a condition precedent that he become a
teacher, which may never happen.
 O has a reversion
O conveys Blackacre “to A for life, remainder to the first son
of A whenever born who becomes a teacher.”
At the time of the conveyance, A has a son who is not
presently a teacher.

2. RAP applies only to the son(s)

contingent remainder
ASK: What are the “measuring lives” (the “lives in being”)
at the time of the conveyance?
 A is a life in being at the time of the conveyance
 A’s son is a life in being at the time of the conveyance.
Could A have another son (call him S2) born after the time
of the conveyance who might become a teacher?
S2 would not be a “measuring life” because he was not in
existence at the time of the conveyance.
O conveys Blackacre “to A for life, remainder to the first son
of A whenever born who becomes a teacher.”
At the time of the conveyance, A has a son who is not
presently a teacher.

 Is it possible that S2 could become a

teacher more than 21 years after A’s death,
AND more than 21 years after the death of
all of A’s other sons living at the time of the
conveyance?
 Yes. Because of this possibility, the
contingent remainder to A’s son violates
RAP and is void.
O conveys Blackacre “to A for life, remainder to the first son
of A whenever born who becomes a teacher.”
At the time of the conveyance, A has a son who is not
presently a teacher.

 So . . . The contingent remainder is void and O

takes the reversion at the death of A.
 O conveys Blackacre “to A for life, remainder to
the first son of A whenever born who becomes a
teacher.”
 O conveys Blackacre “to A for life.”
 A has a life estate.
 O has a reversion in fee simple absolute.
 Rule Against Perpetuities

Example 2: O to A for life, then to B and

his heirs.
A has a life estate
B has a vested remainder in fee simple
absolute.
Does RAP apply?
 Rule Against Perpetuities

Example 2: O to A for life, then to B and his

heirs.
A has a life estate
B has a vested remainder in fee simple
absolute.
Does RAP apply? No. The rule applies only to
contingent remainders, executory interests
and/or vested remainders subject to open
(partial divestment).
Rule Against Perpetuities – “Create, Kill
& Count” Method
Example 3: O to A for life, then to A’s
first child who reaches age 25 and his or
her heirs. Assume A has 2 children, B
age 23 and C age 20.
 A has ….
 A’s first child to reach age 25 has …
 O has ….
Rule Against Perpetuities – “Create, Kill
& Count” Method
Example 3: O to A for life, then to A’s
first child who reaches age 25 and his or
her heirs. Assume A has 2 children, B
age 23 and C age 20.
 A has a life estate
 A’s first child to reach age 25 has a contingent
remainder in fee simple absolute
 O has a reversion in fee simple absolute.
Rule Against Perpetuities – “Create, Kill
& Count” Method
Example 3: O to A for life, then to A’s first
child who reaches age 25 and his or her heirs.
Assume A has 2 children, B age 23 and C age
20.
Does RAP apply to the contingent remainder?
The “Create, Kill & Count” technique tries to
create a scenario that violates RAP; if so then
the remainder is void:
“O to A for life, then to A’s first child who reaches age 25
and his or her heirs.”
Assume A has 2 children, B age 23 and C age 20.

Create someone who is eligible to

claim the property under the terms
of the conveyance –
E.g., A’s child X born after the
conveyance (X is not a “life in
being”).
“O to A for life, then to A’s first child who reaches age 25
and his or her heirs.”
Assume A has 2 children, B age 23 and C age 20.

Kill off everyone else: O, A, B, and C.

“O to A for life, then to A’s first child who reaches age 25
and his or her heirs.”
Assume A has 2 children, B age 23 and C age 20.

Count 21 years: How old is X at the end of 21

years? X is 21. Is it possible that X will live
another 4 years to receive the property? Yes,
so this is a scenario where the interest vests
(becomes possessory) after the lives in being
plus 21 years.
The contingent remainder therefore
violates RAP and is void ab initio.
“Create, Kill & Count” Method

Example 4: O to A for life, then to B

and his heirs if B is 25. Assume B is 23.
A has a life estate
B has a contingent remainder in fee simple absolute.
O has a reversion in fee simple absolute.
 Does RAP apply? There is a contingent
remainder, so . . . Create, Kill and Count
O to A for life, then to B and his heirs if
B is 25. Assume B is 23.
 Create: Can you create someone who will be eligible
to claim the property? No. The condition is tied to
B; B is the only person who is eligible to satisfy the
condition.
 Even killing off O, A, B, there is no one who will take
the property and so the remainder will FAIL – that is
enough to satisfy RAP – this interest must vest or fail
to vest within 21 years . . .
If the interest is expressly tied to a named person who is alive,
as opposed to a described person, the interest will not violate
the RAP.
“Create, Kill & Count” Method
Example 5: O to A and her heirs as long as
alcohol is not sold on the land, then to B and
his heirs.
A has a fee simple subject to an executory
limitation
B has a shifting executory interest in fee
simple absolute.
Does RAP apply? B has an executory interest,
so apply the rules.
 “O to A and her heirs as long as alcohol is not
sold on the land, then to B and his heirs.“

 Create: X an heir of A, and Y an heir of B.

 Kill: O, A and B
 Count: 21 years – is it possible that X, who now holds
the fee simple subject to an executory limitation,
could sell alcohol on the land, thereby making Y’s
executory interest possessory? Yes. Therefore, B’s
executory interest in fee simple is void.
Where the executory interest is following a fee simple
defeasible, the executory interest will violate RAP unless the
restricting condition is expressly tied to a life in being.
 “Create, Kill & Count” Method
Example 6: O to A for life, then to B and his heirs, but
if A sells alcohol on the land, then to C and her heirs.
A has a defeasible life estate
B has a vested remainder in fee simple subject to
complete divestment
C has a shifting executory interest in fee simple
absolute.
Does RAP apply? Yes, C has a shifting executory
interest, so apply Create, Kill & Count . . .
“O to A for life, then to B and his heirs, but if A sells
alcohol on the land, then to C and her heirs.”

 Create: X, an heir for B, and Y an heir for C.

 Kill: All lives in being at the time the interest was created
(O, A, B, and C).
 Count: 21 years – the executory interest must become
possessory, if at all, during or at the expiration of A’s life
estate because the condition is “A selling alcohol;” we
will know at A’s death whether the condition is met (A
didn’t sell so executory interest fails) or is not met (A did
sell so executory interest vests) so RAP is not a problem.
Modern Modifications of RAP

Wait and See approach

Uniform Statutory RAP
Options to Purchase and Preemptive
Rights
Statutes of limitation on possibilities
of reverter or rights of reenty
Wait and See Approach
 The validity of an interest
subject to RAP is judged by
actual events as they
happen, not by possible
events that might happen.
The validity of an interest is not
determined at the time the
interest is created, but we wait
and see if the interest actually
vests or fails within the
perpetuities period.
 Wait and See Approach
 How long? Some jurisdictions use common
law perpetuities period; others use 90
years under Uniform RAP.
 Cy pres doctrine (French for “as near as
possible”) an invalid interest is reformed
to approximate most closely the intention
of the creator of the interest.
 More than half the states have reformed
RAP to adopt a wait and see approach
 Uniform Statutory RAP

Uniform Statutory RAP, adopted in about half of the

states, sets a uniform period of 90 years from the
creation of the interest for the vesting to occur.
So an interest is valid if it vests under the common law
RAP or within 90 years.
If the interest is voided under the USRAP, a court can
reform the conveyance in a manner that most closely
approximates the transferor’s intent.
Options to Purchase and Preemptive
Rights

Option to purchase – right to acquire the

property at some time in the future for a
fixed price.
Preemptive Rights (rights of first
refusal) – rights to acquire the property at
the market price if it is sold in the future.