Future Interests

Future Interests

1. Retained by Grantor

   • Reverter - only for Fee Simple Determinable
   • Right of Entry / Power of Termination - only for Fee Simple Subject to Condition Subsequent
   • Reversion
     • Future interest that arises in a grantor who transfers an estate of lesser quantum than she started with 

2. Retained by Transferree

   • 3) Executory interest
     • Future interest of defeasible fee NY: abolished distinction below - both called: Remainders Subject to a Condition Precedent
     • i) Shifting executory interest
       • Always follows a defeasible fee and cuts short someone other than grantor.
       • e.g. "To A and her heirs, but if B returns from Canada sometime next year, to B and his heirs"
         • B has a shifting executory interest. A has a fee simple subject to B's shifting executory interest.
     • ii) Springing executory interest
       • Cuts short grantor or grantor's heirs
       • e.g. "To A, if and when he marries." A is unmarried.
         • A has a springing executory interest. O has a fee simple subject to A's springing executory interest. 
     • Rule Against Perpetuities applies
       • Where no limit on the time within which it must vest violates RAP.
         • e.g. "To A and his heirs so long as the land is used for farm purposes, and if the land ceases to be so used, to B and his heirs."
           • Offensive future interest stricken: "To A and his heirs so long as the land is used for farm purposes."
             • A has a fee simple determinable. Grantor has the possibility of reverter. 
   • Remainder
     • "To A for life, then to B" or "To A for ten years, then to B" Always accompanies a preceding estate of known fixed duration - usually life estate or term of years.
     • 1) Vested remainder
       • Where remainder is both an ascertained person and is not subject to any condition precedent. 
       • i) Indefeasibly vested remainder
         • Holder of this remainder is certain to acquire an estate in the future.
         • e.g. "To A for life, remainder to B." A is alive. B is alive
           • If B predeceases A - B's future interest passes by will or intestacy
       • ii) Vested remainder subject to complete defeasance / vested remainder subject to total divestment / in NY - vested remainder subject to total defeasance
         • Remainderman's taking could be cut short because of a condition subsequent. 
         • e.g. "To A for life, remainder to B, provided, however, that if B dies under the age of 25, to C"
           • If B is under 25 at time of A's death, B still takes.  However, B must live to 25 for his estate to retain his interest - otherwise passes to C. 
           • Grantor's future interest: Reversion
           • C has a shifting executory interest
       • Class closed = No vested remainder!
         • CL Rule of Convenience
           • Class closes whenever any member can demand possession.
           • Exception: Womb Rule
       • Class open
         • iii) Vested remainder subject to open
           • Additional takers can still join group = partial diminution of share
           • e.g. "To A for life, then to B's children." A is alive. B has two children, C and D.
             • If C or D predeceases A - share goes to their divsees or heirs
           • Rule Against Perpetuities may apply
             • Gift that is conditioned on the members surviving to an age beyond 21 violates RAP = void
               • e.g. "To A for life, then to such of A's children as live to attain the age of 30." A has two children, B and C. B is 35 and C is 40. A is alive
                 • Grantor has a reversion
     • 2) Contingent remainder
       • Where remainder is an unascertained person or is subject to a condition precedent, or both. 
       • Later person ascertained or condition met
         • Contingent remainder becomes: Indefeasibly vested remainder
       • Later person ascertained or condition no met
         • Grantor's future interest = Reversion
       • Rule of destructibility - CL vs. Now
         • At common law, a contingent remainder was destroyed if it was still contingent at the time the proceeding estate ended. Rule abolished in NY!   Now - if still contingent grantor or grantor's heirs hold estate for remainder subject to B's springing executory interest.
       • Rule in Shelly's Case - CL vs. Now
       • The Doctrine of Worthier Title
       • Rule Against Perpetuities applies