property law: feb 23 2010 class notes.

how to handle cases and problems.

1. break the problem up chronologically. 
2. break each chronological step according to its legal effects on each party.
     - interpret the language of any grant
     - analyze the effect of any other facts/events on the estate or future interest held by each party
3. formulate the state of title as each chronological step (the "chain of title").

estates in land: defeasible fees
here we have present interest that are limited but not by life of individual but instead by a conditional limitation. there are two types of conditional limits.

fee simple determinable. NYS it's a fee on limitation (nb, you can use either common or NYS names) FSD is made conditional on a durational event. the FSD is created by a condition attached to words of duration.
     - to A, [so long as /until/ while/ during] (insert specific condition)
     * FSD must have a future interest in the grantor, which we call a possibility of reverter in the

        grantor

fee simple subject to condition subsequent (FSCS), in NYS fee on condition
here the words are based on a subsequent condition.
to A, [but if/ provided/ however/ on condition that] (insert specific condition), O may re-enter and re-take possession.
      * FSCS creates a right of entry (ROE: in NYS, the right of reacquisition) (the right to retake
         property given to the grantee in the FCSC, without committing trespass) in the grantor

mahrenholz v. county board of school trustees. 
1. break the case up into a chronology of events.
2. interpret the language of the grant.

- march 1941: m/m hutton convey 1.5 acres to school trustees
the grant language: "to be used for school purpose only; otherwise to revert to Grantors herein"
what interests can be created by this language? either an FSD or FSCS

- july 1941: huttons purport to convey their future interests to the jacmains
neither possibility of reverter or right of entry may be transferred. court says that you can't grant future interest inter vivos. they are not alienable, inheritable or divisable in IL (they are in NYS). huttons retain POR and trustees retain FSCS.

- 1951: mr. hutton dies intestate (without a will)
if it's an FSD, then hutton's interests are inherited by his heirs (mrs. hutton and harry have POR)
if it is an FSCS, then mrs. hutton and harry have ROE

- 1959: jacs purport to convey their future interests to the mahrenholzes
trustees have FSD and mrs. hutton and harry have POR b/c the jacmains have no interest to convey under IL law. if a FSCS then the trustees have FSCS and mrs. hutton and harry have POR b/c the jacmains have no interest to convey. basically, the point is the interest is the same. 

- 1969: mrs. hutton dies
trustees have FSD and harry inherits POR. if a FSCS then the trustees have FSCS and harry inherits full ROE.... that's the rub. 

- may 1973: school ceases to hold classes in building on 1.5 acres
here's where the difference between FSD and FCSC are apparent: in an FSD, POR becomes operational by magic when the holding party stops using the property and becomes a fee simple absolute. if FSCS, the ROE must take affirmative steps to re-claim and re-take the property. harry has not exercised his ROE, and so until he exercises, the trustees still have the present possessory interest in the property conveyed. 

- may 1977: harry conveys all his interest in the 1.5 acres to the mahrenholzes
under FSD, harry has FSA and so he can pass to the mahrenholzes and retain no interest. but under FSCS, harry has a future interest to be exercised in ROE which he may exercise but he may not transfer inter vivos under IL law.

* september 1977: harry disclaims his interest in the 1.5 acres in favor of the school trustees.
if a FSD, harry had no interest to convey anyway and the mahrenholzes have an FSA. but if a FSCS, harry is extinguishing his ROE and the trustees retain the FSA!!

two different results from the same set of facts, dependent on the interpretation of the clause of the grant language.

what kind of language creates a FSD? words of duration, such as "until," "before", etc.
what language is used to create a FSCS? words of condition.

the court interprets the language as a legal assumption on this ambiguous language that the grant is supposed to create a reverter, not a right of entry, that the huttons would have wanted the land to return to them once the school board was no longer utilizing it.

presumptions are often in favor of FSCS. why is this?
defeasible fees create a lot of uncertainty for the court. in fact, in NYS you have to file the defeasible fee in the estate with the court to retain it! transfer of present possessory interest is

mountain brown lodge v. toscano
the grant language: "said property is restricted for the use and benefit of the lodge, only; and in the event the same fails to be used by the lodge or in the event of sale or transfer by the lodge of all or any part of said lot, the same is to revert to the grantors herein, their successors, heirs or assigns."

the lodge has an interest in the land, and we have to figure out what it is...

does the lodge have a restraint on alienation? they argue that the condition should be voided, and they should be left with a FSA.

can this condition be enforced such that it would be FSCS or should it be voided?

how does the court analyze this grant?

1st clause "in the event the same fails to be used by the lodge" - the court interprets this as restriction on use, which is valid
2nd clause "in the event of sale or transfer by the lodge of all or any part of said lot" - the court interprets this as a restraint on alienation, which can't be enforced

is there a basis for treating these clauses differently?

in this case is there a difference between the restriction on use and alienation? 

there's a blurry line between restriction to use and alienation. but the final question of the court is one of degree, but mainly will have to do with whether or not the clause will render the property unmarketable.

fall city nebraska (notes case) can the railroad sell the land, or does it revert to the city? is that a valid restraint on use or an invalid restraint on alienation? the clause is restraint on alienation because the use is so specific that it renders the land unmarketable (the class of people who can acquire the land without violating any of the conditions becomes too specific).

future interests.
the conveyance of the right to enjoy property at a future time. the interest gives legal rights and responsibilities to the owner. the interest exists in the present and can/will become possessory, dependent on what type of interest it is.

future interests outline.  

heirarchy of estates: fee simple ---> life estate ---> leasehold estate

future interest in the grantor: ask if the last vested estate created by a grant or devise is a lesser estate than that held by the grantor/testator, then there must be a reversion (because there's something left over that wasn't given away)

- reversion: a retained interest, something that the original had after giving away other interests. does not mean however, that it will become possessory later; it may be subject to complete divestment/defeaseance on the occurence of some condition. "the vested estate of a lesser value than that of the vested estate which the grantor/successor in interest of a testator has." reversions result from the hierarchy of estates

problem. 

O conveys Blackacre to A for life. 

"to A for life" = life estate in A, reversion in FSA for O, that is certain to become posessory at A's death.

problem. 

O conveys Blackacre to A for life, then to B and her heirs if B survives A.

to A for life = life estate

then to B and her heirs = remainder 

if B survives A = contingency on a future event

to A, and to B = FSA 

if B survives A = O has not created an interest equal to his own, and therefore there must be a reversion in FSA to become possessory should B not survive A. 

problem (see solutions below). 

O owns a fee simple and makes the following transfers. where is there a reversion. 

(a) O conveys "to A for life, then to B and her heirs." 

(b) O conveys "to A for life, then to B and the heirs of her body."

(c) O conveys "to A for life, then to B and her heirs if B attains the age of 21 before A dies." at the time of conveyance, B is 15yo. 

(d) O conveys "to A for 20 years."

O conveys "to A for life, then to B for life." O subsequently dies with a will devising all of O's property to C. then A dies and B dies. who owns the property?

- possibility of reverter (POR): when an owner carves a determinable estate out of his own of the same quantum (see FSD)
- right of entry (ROE)/ power of termination (NYS: right of reacquisition): when an owner transfers an estate subject to condition subsequent and retains the rights to terminate/cut short the estate.

future interests in a grantee: 
- remainder
   - contingent remainders (NYS: remainder subject to condition precedent)
   - vested (having become a completed right for present or future enjoyment that is absolute and not
     conditional) remainders:
     - indefeasibly vested remainder (a remainder that is certain to become possessory and cannot be
       divested)
     - vested remainder subject to open/subject to partial divestment: because of the statute of uses, this
       differs from a contingent remainder. the difference is created by the grant's language and is
       executed in the way that the interest may be shifted.
     - vested remainder subject to complete divestment (NYS: vested remainder subject to complete
       defeasance)

vested v. contingent remainders
a vested remainder is given to an ascertained person and not subject to a condition precedent.
a remainder is contingent if it meets either of the following criteria:
1. it is created in an unborn or unascertained person(s)
2. it is made conditional upon the occurrence of some future event other than the natural termination of the preceding estate (i.e., it is subject to a condition precedent)
if a remainder meets neither of these criteria, it is vested.

PROBLEM SOLUTIONS!

problem.

O conveys to A for life, then to B and her heirs.

to A for life = life estate

then to B and her heirs = remainder in FSA

is the remainder vested or contingent? 

1. is the taker ascertainable? yes - it is B
2. is the taking conditional upon some future event? no

B's interest is indefeasibly vested. if B dies during A's life, on B's death B's remainder will pass to B's devisees, or to his heirs if he dies without a will. if B dies without will and without heirs, the estate will esheat to the state.

is there a reversion?

1. what was the grantor's interest? FSA (because O gave everything away, so at the end of the day, someone will have an FSA)
2. is the last granted estate equal to his own? yes

therefore no reversion.

problem.

B is 15yo. O conveys to A for life, then to B and her heirs if B attains the age of 21 before A dies.

is the remainder vested or contingent?

1. is the taker ascertainable? yes - it is B and her heirs
2. is the remainder subject to any condition that might cause it not to become possessory upon termination? yes - B has to turn 21 before A dies. B is currently only 15, and it is uncertain that he will reach the age of 21 before A dies.
B has a contingent remainder/ remainder subject to condition precedent in FSA. (if B turns 21 before A dies, then he will have met all conditions necessary to have an indefeasibly vested remainder in FSA).

is there a reversion?

1. what was the grantor's interest? FSA
2. has the grantor conveyed a vested estate equivalent to his own? no - the life estate is vested, but the remainder is in FSA but it's contingent
*therefore O must have a reversion in FSA*

problem.

O conveys blackacre to A for life, then to B for life.
A has a life estate.

remainder does not have to be in fee simple. the remainder can be in life estate or in a defeasible fee!

is the remainder vested or contingent?

1. is the taker ascertainable? yes - it is B for life
2. is the remainder subject to any condition that might cause it not to become possessory upon termination? no, A will certainly die.

(what would happen if B died before A? the property would return to O because of reverter.)

is there a reversion?

1. what was the grantor's interest? FSA

2. is there a conveyed interest equal to the grantor's own? no

*therefore O must have a reversion in FSA*

O dies, leaving a will devising all of O's property to C.

A's interest does not change.

B's interest does not change.

O's interest passes to C, so C has a reversion in FSA.

A dies.

what's the effect on A's interest? A's life estate terminates and A has no further interest.

what happens to B's interest? B's interest becomes possessory by operation of law.

what happens to C's interest? no change - C has a reversion in FSA

B dies.

B's interest ends (life estate terminated)

C's reversion becomes possessory and C owns blackacre in FSA

executory interest (NYS: no such thing, instead remainder subject to condition preceding)
an executory interest must be either
(1) shifting executory interest (cut short/ divest interest of the grantee)
(2) springing executory interest (divest the grantor in the future)
there is no legal difference between the two, however.

executory interest can only be created in the grantee. 

in modern times, executory interests are treated as contingent interests, because they are subject to a condition precedent and do not vest until they become possessory.
executory interest may follow a defeasible fee estate. if a grantor creates a future interest in a grantee after a defeasible fee, it will be an executory interest.

problem.

O conveys "to H, its successors and assignees, but if the premises are not used for X purposes during the next 20 years, to B and her heirs."
to H, its successors and assignees = fee simple defeasible
but if the premises are not used for X purposes during the next 20 years = conditional necessary to occur for B to divest H's interests 
to B and her heirs. = shifting executory interest that divests H once the condition above is met
*H has a fee simple subject to an executory interest* 

problem.
O, owner of Blackacre, wants you to draft an instrument of gift. O wants to convey Blackacre to A for life, and upon A's death O wants Blackacre to go to A's children or, if non are then alive, to B. 

(a) O conveys "to A for life, then to A's children and their heirs, but if at A's death he is not survived by any children, then to B and her heirs." at the time of conveyance, A is alive and has no children. what is the state of the title? 
(b) O conveys "to A for life, then to such of A's children as survive him, but if non of A's children survives him, to B and her heirs." at the time of the conveyance, A is alive and has tow children, C and D.  what is the state of the title?
(c) O conveys "to A for life, then to B and her heirs, but if A is survived at his death by any children, then to such surviving children, and their heirs." at the time of conveyance, A is alive and has two children, C and D. what is the state of title?


problem. 
T devises $10K "to L, if and when he survives his wife." what does L have? why would T devise the grant this way?

property: feb 8 2010 class notes

fee simple. a fee simple is the greatest interest in land the law allows.

historically, the common law formula for estates in land:
"to A and his/her heirs" -- only signifies that it is a fee simple absolute

the modern alternative:
"to A"

we need to understand the vocabulary of transfers at death.

inheritance of a fee simple problems.

p. 183, problem 3:
O conveys greenacre to A and heirs. when there is a debt, the creditors can attach debtors property. does B have an interest in greenacre that her creditors can attach? - no, B does not have an interest in the property until A dies. 

inheritance is a formula. a living person has no heirs. you can't be an heir unless you survive the death of the true owner. you can't know until someone dies who their heirs might be. heirs are takers under intestate succession laws. a "mere expectancy" is not a legal future interest.

p. 185, problem 2:
O dies intestate without issue. does A have an interest in the estate? must distinguish between issue and heirs. heirs are not limited to issue, and can include ancestors and collaterals. 

p. 185, problem 3:
O conveys blackacre to A for life, remainder to B and heirs (at the time of this conveyance, who owns the property? A owns for life, and B owns the remainder in fee simple absolute). B dies intestate without heir (A's death terminates the life estate, and B has no heirs at death). A then dies. who owns the land? the property asheets (goes to the estate). 

life estate.
common law formula: "to A for life/ as long as she shall live (and then to B)"
what happens when a life tenant dies? the chattel or land could go back to the grantor,
life estate is always followed by a future interest, but the interest doesn't always have to be the same (it just becomes possessory by operation of law). the owner could hold a remainder or a reversion. basically, this just means that no additional legal action is needed to create the possessory right to the property once the life tenant dies. just like magic, the remainder or reversion interest goes from future interest to real, possessory interest.

what happens if A (life tenant) sells interest to C before death?
life estate pur autre vie: C has the right to possession and all other rights of a life tenant until A dies.
A cannot sell what she does not own (i.e., the future interest that becomes possessory upon her death). she has no power to destroy the reversion or remainder.

complications.
numerus clausus: in any kind of case where the grantor's intent may be ambiguous, rules of construction are used to establish the intent. similarly to gruen, the intention will be given deference in light of all the writings/deeds/grants. if the grantor's will has a clause in conflict with recognized property rights (like restraint to alienation), then the grant will be read against that intention (we're not going to deny people their rights just because your will says so).

per policy, numerus clausus helps to promote easy, efficient transfer of property rights.

ambiguous grants, restriction to use and restraints or alienation.

white v. brown. 559 S.W. 2d 938
executrix/executor is one who executes a will.
mrs. white has prepared a holographic will (see statute of wills - this is not OK in every juris)
the problem: the white/lied women have lived in the same house for a number of years, and lied wants evelyn white to be able to continue living there until she dies, and makes sandra white-perry the executrix. however, mrs. lied was one of ten children, and she was survived by 2 sisters who could have taken property in intestate laws transferred their property rights under quick claim to mrs. white. however, there are still nieces and nephews who claim that mrs. white only had a life estate and they have an interest in the reversion.

so basically - if this will created a life estate for mrs. white but didn't give any instruction for after mrs. white's death, it would revert to mrs. lied's estate in reversion. her sisters gave up their rights as heirs at law, but the nieces and nephews did not.

mrs. white holds some interest in the house, and is now suing the heirs at law reversion for a reconstruction of the will's language.

the language of the original will either lays out a fee simple will or not.

the chancellory determines the issue was unambiguous and that the house should be sold. this is NOT what the whites want because the proceeds from the house would not be split with them if they only had a partial interest.

the whites appeal to the SC of tenn, saying that mrs. lied's intents were not unambiguous in the will. it's not unambiguous whether or not she intended to pass a life estate or an inheritance fee simple absolute.

what reasons to not divide up the land?
disagreements could arise between the holders of the land
standardization of property rights, promotion of economic efficiency by having one owner of the land (numerus clausus: protecting legally recognized property rights across the board. for example, if dee says "when I die, I give my house to my daughter to live there, and it can't be sold," the 'can't be sold' part is an idiosyncracy that can't be enforced because it is against the right to alienate).

how do we interpret this will?
lied was limiting the rights of white to use the land "i want evelyn white to have the house to live in."
should this distinction be relevant?
to simplify the things that we can bargain over in land

how do property economics ideas play into the decision in this case?
chrysler was looking to build a plant in the area, and it would be economically positive to read the will as FSA.
but how does that play into the issues of restriction of use and restraints on alienation?

- you can't do the restraint of alienation. you can't go against the common law to enforce someone's will.
- but between the life estate and fee simple...

public policy wants us to keep the property as economically pulled together as possible.

notes (p 196-97).
let's say we agree with the dissent, and the heirs want to sell the land. how do you divide the property?
see mortality tables to calculate mrs. white's reasonable life expectance, rate of interest etc to determine her share. remainder goes to relatives' estate.

conflicts between life tenants and remaindermen.

baker v. weedon
aka doc's kids v. "holly" lula mae (that should make this case easy to remember!)

"always tryin' to hold on to wild things, doc. an' that's yo' problem. you cain't love a wild thing." 

the MS highway dep't wants a right of way to the land, and so the state checks the records and determines the grandkids have an interest that they weren't aware of.
the grandkids and elderly anna agree to settle the right of way for $20K with anna to receive $7500.
the property is currently worth $168K. the court accepts as fact that the land will be worth $336K in four years.

anna wants to force a judicial sale of the land. why can't she just sell it?
the interests of all the parties is different:
- anna has a life estate ("to anna for life and then to my heirs") 
- anna has immediate needs for her health and welfare that are not being met. the property is worth a lot less as a farm right now than as a highway property. the income off the interest would be substantially higher than the income from the farm.
- the grandkids interest is to maximize the value of their inheritance. the remaindermen stand to gain much more if they can wait out the clock, a luxury the life tenant doesn't have.

the core dispute is over the life tenant's right to use the property in a way that will best meet her needs and the remaindermen's rights to future interest of speculative gains. the lower court gives anna what she wants, based on economic waste (the property is not being utilized to its fullest potential right now).

the appellate court says, no the test for judicial sale is whether sale is necessary and in the best interest for all parties with interests in the land. the immediate sale is not in the best interest of the remaindermen. (see the analysis with the actuarial tables)

SC MS tells the chancellory to use its equitable powers and divy up the baby solomon style: sell off a chunk of the land for the life tenant's needed funds or to hypothecate (take over the mortgage) for anna's care and maintenance.

the court basically wants the parties to be creative in equity to settle all of their needs fairly.

this case does not have to do with the doctrine of waste. this doctrine gives a legal cause of action to holders of future interest for specific performance or injunction if the life tenant is doing something to the property that interferes with their rights.

waste (where rights of land are divided up between parties, each party has an obligation to not use the property in a way that interferes with the other parties interests in the land)
for life tenants, this makes sense: a life tenant of a home could knock the house down (right to possession) but it damages the heir's interests (the expectation to get the house)

affirmative waste changes that the life tenant makes to the estate that negate its value or deplete its resources, but that are necessary for the tenant's use during right to possession
permissive waste omissions or negligence, failure to take reasonable care of the property

legal life estates can create a lot of problems:
- limit marketability of the land (because fractional ownership of land is not most
- interests of the parties may not align and thereby difficult to make effective and productive use of the land

why have a life estate?

- want to provide for your wife as well as your children

how else might we provide for generational interests?

- create a trust

"this isn't the type of trustee in a jail, dear... as a rule..." 

trust.
- three parties: settlor (creates the trust), trustee (holds the legal title as fiduciary. trustee can make all the decisions), beneficiary (holds equitable title. beneficiaries can be divided over time.)