Question/Answer for February 25, 2013

Obviously in the midst of estates and future interests, a lot of the questions I've gotten have had to do with the correct answers to various of the problem sets in the book. So I'm including an explanation for all of the problem in the various problem sets in the reading. The explanations below also include explanations about the evaluation of the various conveyances/devises under the Restatement (Third) of Property (which is included in the reading), but keep in mind that for the final exam, you won't be responsible for knowing the Third Restatement. Learning the basic rules is challenging enough, and it is unlikely that the Restatement is going to have a meaningful effect on the law in an area that is as "hidebound" as estates and future interests.

There have been a few other questions that I'll address in a separate memo. What follows below is just the explanations for the problem sets in the casebook.

Note 3(a), page 289. O has conveyed “to A.” Under the traditional law, the conveyance would have given A only a life estate because it lacked the words of limitation for a fee simple absolute. Under modern rule of construction (page 242), a court would likely find that the conveyance creates a fee simple absolute. This result would be unchanged under the Third Restatement.

Note 3(b), page 289. O has conveyed “to A for life.” These words of limitation clearly create a life estate in A, and O retains a reversion in fee simple absolute. Under the derivative title principle, once a future interest was classified as a reversion, subsequent transfers of the future interest did not change the classification. Thus, the future interest would still be classified as a reversion after O transfers it to B. The Third Restatement notes, however, that there are no legal consequences to identifying an interest as a reversion or a remainder, so that it makes no difference which label is applied after a subsequent transfer. Accordingly, it would be proper, under the Third Restatement’s approach, to call B’s interest either a remainder or a reversion. § 25.2, cmt. g.

Note 3(c), page 289. O has conveyed “to A during his lifetime.” The conveyance creates a life estate in A and O retains a reversion in fee simple absolute (as the deed does not dispose of any interest in the property beyond A’s life estate). In the second conveyance, A conveys the land “to B for her life.” Under the derivative title principle, A can convey no more than he has (his life estate). In effect, B has an estate for the life of A (life estate pur autre vie), as long as she is also alive (consistent with a determinable estate). As a result, the most accurate way to characterize B’s estate is a life estate determinable pur autre vie. A has a possibility of reverter for life—the land would revert to him for his life, pursuant to this interest, if B predeceased him. O would have a reversion in fee simple absolute that would take effect at A’s death (even if B is still alive at that point, her estate would terminate as it is measured by A’s life). Under the Third Restatement, on the analogous reasoning, B’s estate is a life estate defeasible pur autre vie, with A retaining a reversion (for A’s life) and O retaining a reversion in fee simple absolute.

Note 3(d), page 289. O has conveyed “to A and her heirs so long as a restaurant is operated on the premises.” Under existing law, this conveyance creates a fee simple determinable in A because the conveyance contains the typical words of limitation (“so long as”) for a fee simple determinable; O retains a possibility of reverter in fee simple absolute. Under the Third Restatement, however, A’s estate would be called a fee simple defeasible and O would have a reversion in fee simple absolute.

Note 3(e), page 289. O has conveyed the land “to A while she lives on the land.” At first blush, one might argue that A would take an estate in fee simple under the rule of construction that the grantor passes his entire interest unless there is an express limitation on that interest (or unless a limitation must necessarily be implied). However, this is an example of a case where a court would probably imply that the grant limits A to a life estate. O has specified that A’s estate can last only as long as A herself lives on the land; this is not possible following A’s death. Thus, A would have a life estate determinable (an estate that in any event would end on her death, and sooner if she ceased living on the land). O would have both a possibility of reverter in fee simple absolute (that would become possessory if A stopped living on the land while still alive) and a reversion in fee simple absolute (that would become possessory upon her death). By contrast, you might distinguish a conveyance where the grantor conveys “to A while the land is used as a residence,” where the land could still be used consistently with the restriction even after A’s death. In that case, the restriction would not appear to require a court to imply that the grantor intended to limit A to a life estate; thus, A would have a fee simple determinable estate and O a possibility of reverter in fee simple absolute. The Restatement Third would classify A’s interest as a defeasible life estate. § 24.5, cmt. e.

Note 3(f), page 290. O has conveyed “to A for life, then to B for life, then to C and her heirs.” The conveyance creates a life estate in A, a vested remainder for life in B, and a vested remainder in fee simple absolute in C. The result is the same under the Third Restatement.

Note 3(g), page 290. O has conveyed “to A and her heirs until A’s son finishes medical school.” A has a fee simple interest that will terminate automatically when and if A’s son finishes medical school, but which will continue perpetually if the son does not finish medical school. Thus, under the existing system of estates, A holds a fee simple subject to an executory interest. B has an executory interest in fee simple absolute (that interest will be vested and become possessory if and when the finishes medical school). Under the Third Restatement, A has a fee simple defeasible and B has a remainder in fee simple absolute.

Note 3(h), page 290. O conveys the land “to A for life, but if A gets married, O shall have the right to reenter and recover the premises.” Under the existing system of estates, A has a life estate subject to condition subsequent; if she gets married, O may exercise his optional right to forfeit A’s life estate. [This answer assumes that this is not an invalid restraint on A’s ability to marry. A might argue that the restraint should not be given effect, and a court could be sympathetic to this argument, but this answer assumes that the restraint is valid.] O has a right of entry for life. O also has a reversion in fee simple absolute, because the original conveyance did not dispose of ownership of the land following A’s death. Under the Third Restatement, A has a defeasible life estate and O has a reversion in fee simple absolute.

Note 3(i), page 290. O has conveyed “to A when A marries.” If A is unmarried at the time of the conveyance, the conveyance gives A only a future interest, not a present interest. O has a fee simple subject to executory limitation and A has an executory interest in fee simple absolute. Under the Third Restatement, O has a fee simple defeasible and A has a remainder in fee simple absolute.

Note 2(a), page 302. The devise creates a life estate in A, a contingent remainder in fee simple absolute in B (contingent because it is subject to an express condition precedent that he reach 21 before A dies), and a reversion in fee simple absolute in O based upon the possibility that the contingent remainder might fail. When B later turns 21, satisfying the contingency, his interest becomes a vested remainder in fee simple absolute and O’s interest expires. Under the Third Restatement, A has a life estate, B has a contingent remainder in fee simple absolute, and O has a contingent reversion in fee simple absolute. Both B and O’s interests are contingent because the Restatement defines a future interest as contingent “if it might not take effect in possession or enjoyment.” § 25.3.

Note 2(b), page 302. The devise creates a life estate in A, a vested remainder subject to divestment in fee simple absolute in B (vested because the devise makes an absolute gift to B, but adds the condition of “reaching 21 before A dies” in a subsequent clause), and C has an executory interest in fee simple absolute. O has no reversion; although B might be divested by C (if B fails to reach 21 before A dies), there is no possibility that both B and C’s interests will fail. When B later turns 21, it is not possible for his interest to be divested by C; thus, B’s interest becomes a vested remainder in fee simple absolute and C’s interest expires. Under the Third Restatement, A has a life estate, B has a contingent remainder in fee simple absolute, and C has a contingent remainder in fee simple absolute. Note that historically, the law would have recognized that O had a technical reversion whenever a life estate was followed by alternative contingent remainders. The Third Restatement notes, however, that this technical reversion existed only because of the possibility that both remainders could be destroyed under the Rule of Destructibility of Contingent Remainders. Because the Destructibility Rule is not recognized by the Third Restatement, there is no need for technical reversions.

Note 2(c), page 302. The conveyance creates a fee simple determinable in A and a possibility of reverter in fee simple absolute in O. If A violated the condition by constructing a commercial office building on the land in 2011, A’s interest would automatically terminate, and O would have a fee simple absolute. If A remained in possession after that point, the statute of limitations for adverse possession would begin to run as soon as the condition was violated. Under the Third Restatement, A has a fee simple defeasible and O has a contingent reversion in fee simple absolute.

Note 2(d), page 302. A has a life estate and B has a vested remainder in fee simple absolute. A vested remainder is both devisable and inheritable; thus, if B died before A, B’s interest would become part of his estate to pass either by his will (if he had one) or by intestacy. The classification is unchanged under the Third Restatement: A has a life estate and B has a vested remainder in fee simple absolute.

Note 2(e), page 302. A has a life estate, B has a vested remainder in a life estate, X and Y have a contingent remainder in fee simple absolute, C has an alternative contingent remainder in fee simple absolute (contingent both on B having no surviving children and on C surviving B), and O has a reversion in fee simple absolute because both of the alternative contingent remainders might fail.

If A, B, C, X, and Y were all killed simultaneously in a plane crash, O would have a fee simple absolute (both A and B’s life estates would expire and both contingent remainders would fail (B would have no surviving children and C has not survived B).

Under the Third Restatement, A has a life estate, B has a contingent remainder in a life estate, X and Y have a contingent remainder in fee simple absolute subject to open, C has an alternative contingent remainder in fee simple absolute, and O has a contingent reversion in fee simple absolute. The Restatement takes the position that B’s interest is a contingent remainder because it is possible he might die before A dies; thus his interest might not take effect in possession or enjoyment. The Restatement would classify X and Y’s interest as a contingent remainder in fee simple absolute subject to open because B could have additional children before he died. (Under the traditional common law, it was unnecessary to say that a contingent remainder was “subject to open” if the interest had not yet vested.) Finally, O retains a contingent reversion because under the terms of the conveyance, it is possible that both alternative contingent remainders might fail. Thus, in contrast to note 2(b), O’s interest is not merely a technical reversion. See § 25.3, cmt. g, illus. 15.

Note 2(f), page 303. A has a life estate, B has a vested remainder in a life estate, X and Y have a vested remainder subject to divestment and subject to open in fee simple absolute, C has an executory interest in fee simple absolute. Because X and Y have vested interests that can be divested only by C, there is no interest remaining for O. Notice, however, that in this devise, there is no requirement that C survive B. Accordingly, if A, B, C, X, and Y were all killed simultaneously in a plane crash, X and Y’s interests would be divested by C, leaving C with a fee simple absolute.

Under the Third Restatement, A has a life estate, B has a contingent remainder in a life estate, X and Y have a contingent remainder in fee simple absolute subject to open, and C has an alternative contingent remainder in fee simple absolute. The Restatement would classify X and Y’s interest as a contingent remainder because it might not take effect in possession (if X and Y die and no other children survive B). In this case, as note 2(b), O has no interest because there is no possibility that both of the alternative contingent remainders will fail. See § 25.3, cmt. g, illus. 17.

Note 2(g), page 303. A has a life estate, B has a vested remainder subject to divestment in fee simple absolute (alternatively, one might call this a vested remainder in a fee simple determinable), and O has a possibility of reverter in fee simple absolute. Under the Third Restatement, A has a life estate, B has a contingent remainder in fee simple absolute, and O has a contingent reversion in fee simple absolute.

Note 2(h), page 303. A has a life estate, B has a vested remainder subject to divestment in fee simple absolute (alternatively, one might call this a vested remainder in fee simple subject to executory limitation), and C has an executory interest. Under the Third Restatement, A has a life estate, B has a contingent remainder in fee simple absolute, and C has an alternative contingent remainder in fee simple absolute.

Note 2(i), page 303. A has a life estate, B has a vested remainder in a life estate, and C has a vested remainder in fee simple absolute. As discussed in note 2(e), the Third Restatement would classify B’s interest as a contingent remainder in a life estate.

Note 2(a), page 305. Following the conveyance, Chambers has a life estate. Laughrey has a vested remainder for life (Laughrey is identifiable and the remainder is not subject to an express condition precedent—Laughrey’s survival of Chambers is not implied as a condition precedent). Thomas has a vested remainder in fee simple subject to open (he is identifiable and the remainder in Lawless’s children is not subject to any condition precedent). The class is open, so Thomas may have to share with other (as yet unascertainable) children of Lawless, but because the remainder in fee simple is indefeasibly vested in at least one person (Thomas), Henning retains no interest.

Note 2(b), page 305. Henning has attempted to convey the land “to Chambers’s children.” Does it matter whether Chambers had children at the time of the conveyance? Yes. If Chambers had no children on the date of the conveyance, then Henning is attempting to create a future interest in Chambers’s children. As a result, Henning will have a fee simple estate, and the deed will convey an executory interest in fee simple absolute in Chambers’s children (which will, in the future, divest Henning’s estate unless Chambers dies without ever having had children).

If, at the time of the conveyance, Chambers already had children, the deed would vest fee simple absolute title in them immediately. If Chambers had one child at that time, the child would have a vested fee simple title and the right to immediate possession. Because the conveyance was to Chambers’s children (plural), however, it is likely that a court would not apply the rule of convenience to immediately close the class of Chambers’s children. Most likely, Chambers’s existing child would have a fee simple subject to executory limitation, and as-yet unborn children would have an executory interest (meaning that any future born children would share in the fee simple upon their birth).

Note 2(c), page 305. Following the conveyance, Chambers has a life estate, Thomas and Becca have a contingent remainder in fee simple absolute, and Henning has a reversion in fee simple absolute. The remainder is contingent because neither of Lawless’s existing children have satisfied the contingency of reaching age 21.

Note 2(d), page 305. When Thomas reached 21, he became a vested member of the class (he was born, ascertainable, and had satisfied the condition precedent) but the class was still open because Lawless was still alive and able to produce children who could become members of the class. When Thomas died, he died holding a vested remainder, which is fully alienable, devisable, and inheritable. Thus, after Thomas’s death, Chambers still has a life estate and Thomas’s estate (his heirs if intestate and devisees if he had a will) hold a vested remainder subject to open.

Note 2(e), page 305. Rachel’s birth does not change the status of the future interest. Like Becca, she is a member of the class, but Rachel and Becca’s interests have not yet vested because they have not yet satisfied the age contingency.

Note 2(f), page 305. With Chambers’s death, the class gift can close under the Rule of Convenience because there is at least one member of the class (Thomas’s estate) who is vested and eligible to demand possession. Therefore, the vested remainder becomes a present possessory estate. At the same time, however, there are two members of the class—Becca and Rachel—who have not yet satisfied the age contingency. Therefore, Thomas’s estate takes a fee simple estate but must share with his siblings if and when they reach 21. Accordingly, Thomas’s estate has a fee simple subject to executory limitation. Becca and Rachel have executory interests in fee simple absolute.

Note 2(g), page 305. Becca’s premature death at age 20 means that her interest fails because she did not satisfy the age contingency. Thus, Thomas’s estate still has a fee simple subject to executory limitation, but only Rachel holds an executory interest in fee simple absolute.

Note 2(h), page 305. Debbie’s birth does not change the status of title. The class was closed under the Rule of Convenience at Chambers’s death, so Debbie is not a member of the class.

Note 2(i), page 305. When Rachel turns 21, she satisfies the age contingency and, therefore, gets a share of the possessory estate with Thomas’s estate. Because all members of the class have now either satisfied the age contingency or have died (causing their interest to fail), Becca and Thomas’s estate hold the property in fee simple absolute. This is a good time to foreshadow the concept of concurrent estates, which is covered in Chapter 6. Becca and Thomas’s estate are co-tenants in fee simple absolute; each has a one-half, undivided share in the property as a whole.

Note 2(j), page 305. Debbie’s 21st birthday has no effect on the status of title. As explained in note 2(h), Debbie was never a member of the class because the class closed before she was born. Therefore, she has no legal rights to the property under Henning’s conveyance.