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1、Real PropertyRed denotes Hot Topics (must know cold)Statistics: 33 MC questions on MBEI. Estates in LandFavoriteA. Basic Terminology1. Devisablepasses by will - WILL2. Descendiblepasses through intestacy - INTESTACY3. Alienabletransferable - inter vivos - INTER VIVOS (Inter vivos trust is a revocabl
2、e trust created while the donor is still alive, to hold property for the benefit of another. also called living trust)4. RemainderA future interest created in a grantee that is capable of becoming possessory upon expiration of a prior possessory estate created in the same conveyanceB. Basic Principl
3、es1. A living person has no heirs (only heirs apparent)2. Courts generally disfavor restrictions on free use of land and restrictions on free alienationconstrued strictlyC. Present Estates1. Fee Simple Absolute (absolute ownership)a) To A or To A and his heirs (no longer necessary)b) Future Interest
4、None. IMPOSSIBLE b/c somebody cant have absolute ownership if they dont own it until a future time. c) Freely devisable, descendible and alienable.2. Defeasible Fees (three types)MBE/NY Favorite: DEFEASIBLE FEE ESTATE: An estate in which the holder has a fee simple title that may be divested upon th
5、e occurrence or nonoccurrence of a specified eventa) Fee Simple Determinable / FEE ON LIMITATION (NY)(1) To A for so long as; during; until . . . (2) Future InterestGrantor has Possibility of Reverter (FSDPORFee Simple Determinable is ALWAYS followed by a Possibility of Reverter)(3) Freely devisable
6、, descendible and alienable, BUT transferees are always subject to the condition(4) Breach results in automatic forfeitureNY DistinctionIn NY, this estate is called a Fee on Limitationb) Fee Simple Subject to Condition Subsequent / FEE ON CONDITION(1) To A, but if X event occurs, Grantor reserves ri
7、ght to reenter and take (grantor must expressly carve out right to reenter)(2) Future InterestGrantor has Right of Entry (a/k/a Power of Termination)(3) Breach does NOT result in automatic forfeiture, but Grantor has option to cut shortNY DistinctionIn NY, this estate is called a Fee on Condition an
8、d Grantors future interest is called a Right of Reacquisitionc) Fee Simple Subject to Executory Limitation(1) To A, but if X event occurs, then to B(2) Future InterestB has Shifting Executory Interest(3) Freely devisable, descendible and alienable, BUT transferees are always subject to the condition
9、(4) Breach results in automatic forfeitured) Two Important Rules:(1) Words of mere desire, hope or intention are NOT sufficient to create a defeasible feerequires clear durational language (or express condition)(2) Absolute restraints on alienation are void (i.e., bans on power to sell or transfer n
10、ot linked to a reasonable time-limited purpose)*Offending language is disregarded and grantee acquires Fee Simple Absolute3. Life Estate & WASTEa) To A for life or To A for life of B (life estate pur autre vie)b) Future InterestsGrantor has Reversion; OR third party has Remainderc) Alienable (transf
11、eree has life estate pur autre vie), BUT NOT devisable or descendibled) WasteHuge Favorite(1) Two General Rules:(a) Life tenant entitled to all ordinary uses and profits from land(b) Life tenant must not commit waste(2) Types of Waste(a) Voluntary/Affirmative Waste: MeansIntentional or negligent con
12、duct that causes a decrease in value(i) RuleMust NOT consume or exploit natural resources on property (such as timber, oil or minerals), UNLESS one of following exist (PURGE):(a) P U - Can continue prior use (Open Mines Doctrinecan continue to mine open mines, BUT cannot open new mines)(b) R - Can c
13、onsume resources for reasonable repairs and maintenance(c) G - Can exploit if expressly permitted in grant(d) E - Land is suitable ONLY for exploitation (e.g., quarry)(b) Permissive Waste/Neglect(i) Occurs when life tenant allows land to fall into disrepair or fails to reasonably protect land(ii) Ru
14、les(a) RepairsLife tenant must simply maintain premises in reasonably good repairNOT required to make substantial repairs(b) TaxesLife tenant is obligated to pay all ordinary taxes, to the extent of income or profits from land (or fair rental value, if no income/profits)(c) Ameliorative Waste(i) Mea
15、nsSubstantial alterations that may enhance value(ii) RuleLife tenant must NOT engage in acts that enhance propertys value, UNLESS ALL future interest holders:(a) Are known, AND(b) Give consent4. Fee Tail (generally abolished, including NYhardly ever tested)a) To A and the heirs of his bodyb) Future
16、InterestsGrantor has Reversion; heirs have Remainderc) Modern RuleResults in creation of Fee Simple Absolute insteadD. Future Interests1. Future Interests in Grantora) Possibility of ReverterAccompanies only Fee Simple Determinable (FSDPOR)b) Right of Entry/Power of TerminationAccompanies only Fee S
17、imple Subject to Condition Subsequentc) ReversionAccompanies other estates, EXCEPT Fee Simple Absolute2. Future Interests in TransfereesFavoritea) RemaindersThink of Forest Gump(1) General(a) Remainders ALWAYS follow a preceding estate of known fixed duration (e.g., Life Estate or Term of Years)Rema
18、inders NEVER cut short or divest a prior transferee (i.e., never follow a Defeasible Fee)(b) A Remainder is vested if BOTH:(i) Created in an ascertained (or born) person, AND(ii) NOT subject to any condition precedent (i.e., a condition that appears BEFORE the language creating the Remainder or is w
19、oven into the grant to remainderman)(c) A Remainder is contingent if:(i) Created in an unascertained (or unborn) person, OR(ii) Is subject to a condition precedent (or both)NY DistinctionIn NY, any future interest that is subject to a condition precedent is called a Remainder Subject to a Condition
20、Precedent(2) Vested RemainderThree Types:(a) Indefeasibly Vested Remainder (best you can get)(i) Certain to acquire the estate, with no conditions attached(ii) Interest passes by will or intestacy to heirs if grantee predeceases prior estate holder(b) Vested Remainder Subject to Complete Defeasance
21、(a/k/a Vested Remainder Subject to Total Divestment)(i) Taking NOT subject to any condition precedent, BUT right to possession could be cut short because of a condition subsequentNY DistinctionIn NY, this remainder is called a Remainder Vested Subject to Complete Defeasance(c) Vested Remainder Subje
22、ct to Open(i) Occurs when Remainder is vested in a group of takers, at least one of whom is qualified to take possession (e.g., To A for life, then to Bs children)(ii) BUT class is subject to partial diminution because additional takers not yet ascertained can qualify as class members(iii) Common La
23、w Rule of ConvenienceClass closes whenever any member can demand possession (establishes a clear bright line that is easy to administer)(a) Womb Rule ExceptionA child in womb at time of prior estate holders death will share in gift(b) If living remainders predecease prior estate holder, their shares
24、 go to their devisees or heirs (because their interests were vested)(3) Contingent Remainder(a) Taking is subject to a condition precedent (look for and if language)(b) Limitations on Contingent Remainders(i) Rule of Destructibility of Contingent Remainders(a) Historically at common law, Contingent
25、Remainder was destroyed if still contingent at time preceding estate ended(b) Today: Rule has been abolishedGrantor holds subject to a Springing Executory Interest once the condition is met (Note: land always must be held by someone)(ii) Rule in Shelleys Case(a) Occurs only when To A for life, then
26、to As heirs(b) Historically at common law, the present and future interests would merge to create a Fee Simple Absolute (even in the face of contrary intent)(c) Today: Rule has been virtually abolishedAs heirs have a Contingent Remainder(iii) Doctrine of Worthier Title(a) Applies when grantor, who i
27、s alive, tries to create a future interest in his heirs (e.g., To A for life, then to grantors heirs)(b) Under the rule, the Contingent Remainder in grantors heirs is VOID, and grantor has a Reversion(c) PolicyTo promote the free transfer of land(d) HOWEVER, the doctrine is a rule of construction, a
28、nd not a rule of lawGrantors intent can override IF grantor clearly intended to create a contingent remainder in his heirsNY DistinctionRule of Destructibility of Contingent RemaindersAbolishedRule in Shelleys CaseAbolishedDoctrine of Worthier TitleAbolished (with respect to transfers taking effect
29、after Sept. 1, 1967)b) Executory InterestThink of Doctor Evil(1) DefinedA future interest created in a third party transferee, that is NOT a Remainder and that takes effect by either cutting short some interest in another person (shifting) OR in the grantor or his heirs (springing)(2) Shifting Execu
30、tory Interest(a) ALWAYS follows a Defeasible Fee and cuts short someone other than grantor(3) Springing Executory Interest(a) Cuts short grantors interest (no third party is involved)NY DistinctionNY has abolished the distinction between Executory Interests and Contingent Remainders. Instead, both a
31、re called a Remainder Subject to a Condition Precedentc) Rule Against Perpetuities(1) RuleCertain future interests are VOID if there is any possibility, however remote, that given interest may vest more than 21 years after the death of a measuring life(a) RAP applies to rights of first refusal as we
32、ll(2) Four Step Approach:(a) Determine which future interests have been created by conveyance(i) RAP applies ONLY to Contingent Remainders, Executory Interests and certain Vest Remainders Subject to Open(ii) RAP DOES NOT apply to any future interest created in grantor, OR to Indefeasibly Vested Rema
33、inders or Vested Remainders Subject to Complete Defeasance(b) Identify the conditions precedent to vesting(c) Find a measuring lifeSomeone alive at date of conveyance whose life or death is relevant to the conditions occurrence (usually grantee of prior estate)(d) Ask: Will we know, with certainty,
34、within 21 years of death of measuring life if future interest holder(s) can or cannot take (i.e., any chance interest will not vest)? If not, future interest is VOID (strike offending grant language)(i) Fertile Octogenarian RulePresumes that a person is fertile regardless of age(ii) Bad as to one, b
35、ad as to all Rule(a) A gift to an open class that is conditioned on members surviving beyond 21 years old violates RAP(b) If it is possible that a disposition might vest too remotely with respect to ANY class member, the ENTIRE class gift is void (every class member must be capable of taking within
36、21 years)(iii) Shifting Executory Interests with no time limit violate RAP(a) If striking the offending language leaves the grant grammatically unsound (look for a but if clause), then the ENTIRE conditional clause is stricken and grantee ends up with a Fee Simple Absolute(iv) Charity-to-Charity Exc
37、eption(a) Gifts between charities DO NOT violate RAP (offending language remains valid)(b) PolicyTo encourage gifts to charity(3) RAP Reform(a) Wait and See Doctrine (a/k/a Second Look Doctrine)Determine validity upon death of measuring life (eliminates what if analysis)(b) Uniform Statutory Rule Ag
38、ainst Perpetuities (USRAP)Provides for an alternative statutory 90-year vesting period(c) BOTH of above reforms:(i) Apply cy pres (as near as possible)Court reforms grant to most closely reflect grantors intent(ii) Reduce offensive age contingencies to 21 yearsNY DistinctionNY applies the common law
39、 RAPHas rejected Wait and See and cy pres, except for charitable trustsNY Reform Statute - Reduces offending age restrictions to 21 years - Presumes that a woman over 55 cannot have a child (adoption is disregarded) - NY suspension ruleInterest is VOID if it suspends the power to sell or transfer fo
40、r 21 yearsE. Concurrent EstatesFavorite1. Joint Tenancya) Defined: Two or more own with right of survivorship (i.e., upon death, share passes automatically to surviving joint tenant(s)b) Requirements for Creation:(1) Four Unities (T-TIP)Joint Tenants must take their interests:(a) At same time(b) By
41、same title (i.e., same instrument)(c) With identical, equal interests, AND(d) Identical rights to possess the whole(2) PLUS, grantor MUST clearly express right of survivorshipc) Severance (SPAMSale, Partition And Mortgage)(1) Sale(a) Joint tenant can sell or transfer her interest during her lifetime
42、 (no consent required), BUT interest is NOT devisable or descendible (because of ROS)(b) Sale severs the joint tenancy as to other tenants (transferee becomes a Tenant in Common)Joint tenancy remains intact as between other tenants(c) Doctrine of Equitable ConversionMere act of entering into contrac
43、t for sale severs the joint tenancy (equity regards as done that which ought to be done)MBE Favorite(2) PartitionNY and MBE Favorite(a) Voluntary AgreementPermissible, peaceful way to end tenancy(b) Partition in KindJudicial action for physical division of property if in best interests of all partie
44、s(c) Forced SaleJudicial action, if in the best interests of all, where the land is sold and the sale proceeds are divided up proportionately(3) Mortgage(a) Title Theory of Mortgages (Minority Rule)One joint tenants execution of a mortgage or lien on her share severs the joint tenancy as to other te
45、nants(b) Lien Theory of Mortgages (Majority, including NY)One joint tenants execution of a mortgage or lien on her share will NOT sever the joint tenancyd) Use of StrawFour Unities may be created by use of a straw manNY DistinctionBy statute, NY has dispensed with the need for a straw man. In NY, it
46、 is permissible for owner to convey directly to himself and another as JTWROS using only one instrument.2. Tenancy by the Entirety (21 states recognize, including NY)a) Defined: Marital interest between husband and wife, with right of survivorshipb) Arises presumptively in any conveyance to H and W,
47、 UNLESS clearly stated otherwisec) Very protected form of co-ownershipRemember Cant touch this(1) Unilateral ConveyanceNeither tenant, acting alone, can defeat right of survivorship (transfer is void)(2) CreditorsCreditors of only one spouse CANNOT touch tenancyd) SeveranceNY Favorite(1) Voluntary petition(2) Conveyance signed by BOTH parties(3) DivorceNY DistinctionIn NY, one spouse may mortgage his interest and his creditors may enforce against that interest, BUT ONLY as to the debtor spouses share (take as Tenants in Common). Further,
