Ownership of Real Property: Present Estates and Future Interests

Introduction

• Focus on present estates and future interests in real property.
• Discuss conveyance of real property from one party to another.

Key Concepts

Conveyance Example

• Transferor: Michael transfers real property (Greenacre) to Transferee: Amy.
• Example of conveyance: "I convey Greenacre to Amy for her life, then to Bobby."
• Call of the Question: Determine interests of Amy and Bobby in Greenacre.

Present Estates vs. Future Interests

• Present Estate: Possessory interest in real property (can occupy).
• Future Interest: Non-possessory interest, waiting for an event to gain possession.

Classifying Interests

Decision Tree Approach

• Use decision tree to classify interests in real property.
• Identify language in the conveyance to determine the type of estate.

Conveyance Language

• Conveys: Indicates a single deed transfer, essential for analysis.
• Present Estates: Must determine if it is a freehold or non-freehold estate.

Types of Present Estates

Freehold Present Estates

1. Fee Simple:
   • Lasts forever, does not terminate upon transfer.
   • Default estate if no other language is used.
2. Life Estate:
   • Limited to the life of the holder.
   • Ends upon death of the holder.
3. Fee Tail:
   • Limited to lineal heirs (largely abolished).

Non-Freehold Present Estates

• Related to leasing properties. Types include:
  • Term of years
  • Tenancy at will
  • Periodic tenancy
  • Tenancy at sufferance

Fee Simple vs. Life Estate

• Fee Simple:
  • Can be absolute or defeasible.
  • Defeasible: Can terminate based on conditions.
• Life Estate: Can also be absolute or defeasible.
  • Defeasible Language: Could terminate before the measuring life.
  • Condition Subsequent: Event that could terminate the estate after it has vested.
  • Determinable: Estate that terminates automatically upon an event.

Future Interests

Transferor vs. Transferee Interests

• Determine who holds the future interest (transferor or transferee).
• Transferor: Holds rights of entry or reversion.
• Transferee: Holds a remainder or an executory interest.

Types of Future Interests

1. Reversion: Follows a life estate; transferor retains interest.
2. Remainder: Transfer to a transferee that follows a life estate.
3. Executory Interest: Cuts short a prior interest; can be shifting (divests a transferee) or springing (divests a transferor).

Contingent vs. Vested Remainders

• Vested Remainder:
  • Created in a living ascertainable person; not subject to condition precedent.
• Contingent Remainder:
  • Either not in a living ascertainable person or subject to a condition precedent.
  • E.g., "to Amy's children" when Amy has no living children.

Special Considerations in Remainders

1. Vested Remainder Subject to Open:
   • When transferee is part of a class that can enlarge.
2. Indefeasible Vested Remainder:
   • Clear, certain interests without conditions or constraints.

Conclusion

• Comprehensive overview of present estates and future interests.
• Important to practice with problems to solidify understanding.
• Future lessons will cover exceptions and limitations on future interests.