Notes on Ownership of Real Property: Present Estates and Future Interests

Introduction

• Focus on ownership of real property, specifically present estates and future interests.
• Discusses conveyance of real property from one party to another.

Key Terminology

• Present Estate: A present possessory interest in real property.
• Future Interest: A present non-possessory interest in real property, awaiting a future event.
• Convey: Indicates transfer of real property via a single deed.

Example of Conveyance

• Example: "I convey Greenacre to Amy for her life, then to Bobby."
  • Amy has a life estate.
  • Bobby has an indivisible vested remainder.

Key Concepts

Present Estates

• Freehold Present Estates: Associated with ownership of real property.

  • Types:
    • Fee Simple: Potentially infinite duration.
    • Life Estate: Duration limited by the life of the holder.
    • Fee Tail: Limited to direct descendants (largely abolished).

• Non-Freehold Present Estates: Associated with leasing real property. Types include:

  • Term of years
  • Tenancy at will
  • Periodic tenancy
  • Tenancy at sufferance

Defeasible Interests

• Defeasible: An estate that can terminate prematurely due to conditions set forth in the conveyance.

  • Fee Simple Defeasible: Can be terminated due to conditions.
  • Life Estate Defeasible: Limited by conditions that could terminate before the measuring life ends.

• Types of Defeasible Interests:

  • Subject to condition subsequent
  • Determinable
  • Subject to an executory limitation

Future Interests Held by the Transferor

• If the transferor conveys a fee simple or life estate:
  • Right of Entry: If conditions are not met (for fee simple subject to condition subsequent).
  • Possibility of Reverter: If the condition is durational (fee simple determinable).
  • Reversion: If a life estate is granted.

Future Interests Held by the Transferee

• Remainders: Future interests that follow a life estate and must become possessory immediately upon the termination of the prior estate.
• Executory Interests: Future interests that divest the transferor or transferee.

Remainders - Vested vs. Contingent

• A remainder is vested if:
  1. Created in a living ascertainable person.
  2. Not subject to any condition precedent.
• A remainder is contingent if:
  • It does not meet the criteria for a vested remainder.

Classifications of Remainders

• Indefeasible Vested Remainder: No conditions, certain.
• Vested Remainder Subject to Divestment: Possession is conditioned after acquisition.
• Vested Remainder Subject to Open: Future interests may enlarge (e.g., if children are born).

Conditions Precedent vs. Conditions Subsequent

• Condition Precedent: Must occur before the future interest becomes possessory.
• Condition Subsequent: Conditions that can end the interest after it has vested.

Conclusion

• The concepts of present estates and future interests can be complex but are finite in terms of terminologies and classifications.
• Emphasize the importance of practice problems for mastering these concepts.
• Future lessons will cover limitations and exceptions related to future interests held by the transferee.