Session 06 Notes

Property class session 06 - Present Possessory Estates, Future Interests, and Restraints on Alienation

I. Overview of Estates Classification

A. Initial Analysis Framework

• First Question: Is the estate in fee or life?
• Life Estates (3 types):
  1. Life of the grantee (O to A for life)
  2. Pur autre vie (life of another)
  3. Defeasible life estates (3 subtypes):
     • Life estate determinable
     • Life estate subject to condition subsequent
     • Life estate subject to executory limitation

B. Fee Estates (3 types)

1. Fee Simple Absolute (common law/iPhone law)
2. Fee Tail (minority common law only - not often tested)
3. Defeasible Fees (3 subtypes):
   • Fee simple determinable
   • Fee simple subject to condition subsequent
   • Fee simple subject to executory limitation

II. Fee Simple Determinable

A. Definition and Characteristics

• Automatic forfeiture upon breach of condition
• Grantor (O) automatically retains a possibility of reverter
• Operation of law - no action required by grantor

B. Future Interest

• O has a possibility of reverter (automatic)
• Created by operation of law when fee simple determinable is conveyed

C. Multiple Future Interests Example

Example: O to A for life, so long as A uses Blackacre for residential purposes.

Analysis:

• O: Presumed fee simple absolute (initially)
• A: Determinable life estate (present possessory interest)
• O has TWO future interests:
  1. Possibility of reverter (if A breaches residential use condition)
  2. Reversion (when A dies)

Rationale: Property returns to O either (1) automatically upon breach, or (2) upon A’s death - two separate triggering events

Note: Dean calls this a “reversionary interest” - NOT required terminology for exam purposes

III. Fee Simple Subject to Condition Subsequent

A. Definition and Characteristics

• Discretionary forfeiture upon breach
• O retains right of entry (also called “right of re-entry”)
• Must be expressly reserved in the conveyance
• A retains property until O exercises right to re-enter and retake

B. Future Interest

• O has a right of entry (discretionary, not automatic)
• Must be expressly reserved - O reserves right to re-enter and retake

C. Comparison Chart

Element	Fee Simple Determinable	Fee Simple Subject to Condition Subsequent
Forfeiture	Automatic	Discretionary
Future Interest	Possibility of reverter	Right of entry
Creation	Automatic by operation of law	Must be expressly reserved
Language	Durational (so long as, while, during)	Conditional (on condition that, provided that, but if)

IV. Restraints on Alienation

A. General Rule

• Restraints that completely withhold ability to sell, transfer, or alienate are INVALID
• Remedy: Strike through (cross out) the invalid provision

B. Validity Analysis - Three Factors

1. Duration: Is there a time limitation?
   • Unlimited duration = likely invalid
   • Limited duration (e.g., 10 years) = may be valid
2. Purpose: Is there an explanation or reasonable purpose?
3. Reasonableness: Can the restraint be assessed as reasonable?

C. Example - Invalid Restraint

Conveyance: O to A, so long as Blackacre is used for residential purposes, and A or A’s heirs never sell Blackacre ever.

Analysis:

• A has: Fee simple determinable
• O has: Possibility of reverter
• Problem: “Never sell Blackacre” provision
  • No duration limit
  • No explanation/purpose
  • Cannot assess reasonableness
  • Result: Strike through - provision is VOID

After striking invalid restraint:

• Reads as: “O to A, so long as Blackacre is used for residential purposes”
• A can sell to B
• B receives: Fee simple determinable (same as A had)
• Condition travels with the property

D. Transfer of Defeasible Estates

Key Principle: A grantee can never convey more than what they have - only equal or less

Example: A (who has fee simple determinable) sells to B

• B receives: Fee simple determinable
• B must comply with same conditions A had
• The defeasible nature transfers with the property

Example - Adding Additional Restrictions: O to A (so long as residential purposes) → A sells to B (so long as B uses as two-story residence)

• A has: Fee simple determinable + possibility of reverter (vis-à-vis B)
• B has: Fee simple determinable (more restricted than A’s interest)
• B has less interest than A (confined to two-story residential, not just any residential)

V. Ambiguous Conveyance Language

A. Conflicting Language Problem

Example: O to A, on condition that Blackacre is used for residential purposes, otherwise Blackacre will automatically revert back to O.

Issue:

• “On condition that” = language suggesting condition subsequent
• “Automatically revert” = language suggesting determinable (automatic forfeiture)
• Contradictory provisions

B. Resolution - Grantor’s Intent Controls

Analysis Steps:

1. Identify the contrary language
2. Note the ambiguity
3. Default to grantor’s intent
4. Examine what remedy/repercussions O wanted upon breach

Automatic Forfeiture Language:

• “Automatically revert back to O” indicates:
  • O wants immediate, automatic return
  • O doesn’t want to exercise discretion
  • O doesn’t want burden of re-entry
• Conclusion: Latter part of provision (automatic forfeiture) trumps the “on condition” language
• Result: Fee simple determinable (Professor’s view)

C. Jurisdictional Split

Professor’s View: Fee simple determinable

• Automatic forfeiture language evidences O’s intent
• Latter provision (remedy language) weighs more heavily

Book’s View: May conclude fee simple determinable based on different analysis

• Examines durational language (“so long as”)

Exam Tip: Either answer acceptable IF properly explained

• Must identify the ambiguity
• Must explain how contrary language creates conflict
• Must articulate which provision trumps and WHY
• Analysis and reasoning matter more than conclusion

D. Minority Jurisdiction Rule (California)

Majority Jurisdictions:

• Recognize fee simple determinable
• Recognize fee simple subject to condition subsequent
• Recognize automatic forfeiture

Minority Jurisdictions (e.g., California):

• Do NOT recognize fee simple determinable
• No automatic forfeiture
• All defeasible fees are either:
  • Fee simple subject to condition subsequent, OR
  • Fee simple subject to executory limitation

Exam Note: For extra credit, can write: “This would be a fee simple determinable in majority jurisdictions” (implies minority view is different)

VI. Fee Simple Subject to Executory Limitation

A. Key Distinction

• Property goes to third party (not back to O)
• O has NO possibility of reverter
• O has NO right of entry
• Third party (B) has executory interest (future interest)

B. Critical Rule

EXAM TIP: A remainder CANNOT follow a fee - only follows a life estate

• This distinction is heavily tested
• Remainder = follows life estate, goes to third party
• If fee → third party = executory interest, not remainder

VII. Case Law

A. Nof v. Gray (Texas Supreme Court)

Facts:

• Vada Wallace Allen’s will devised land to son William Robert Gray (Bobby)
• Will provision: Land to Bobby with instruction to maintain it and not sell it, pass down to his three children
• Bobby sold land to Pulaski Farms, LLC
• Bobby’s children sued claiming Bobby only had life estate (couldn’t sell in fee)

Issue: Did Bobby receive a fee simple or a life estate?

Holding: Life estate

Analysis - Cardinal Rule of Will Construction:

1. Ascertain testator’s intent from instrument’s language
2. Consider provisions as a whole
3. Harmonize provisions to give effect to overall intent

Court’s Reasoning:

• Language “not to be sold, but passed on down to your children” demonstrates:
  1. Life estate elements present
  2. Grandchildren designated as remaindermen
  3. “Passed on down” = transfer upon Bobby’s death to next generation
  4. Intent to keep property in family for multiple generations

“Not to be Sold” Provision:

• Bobby argued: Invalid restraint on alienation (should be struck)
• Court held: NOT a restraint; evidences intent to create life estate
• Rationale: Keeping property in family = good faith intention
• Future beneficiaries are grandchildren = confirms life estate, not fee

Result:

• Bobby: Life estate only
• Cannot sell in fee simple
• Sale to Pulaski Farms invalid

Exam Application:

• O to A, but not to be sold, passed on down to B
• “Not to be sold” + “passed on down to B” = life estate in A
• Cannot “pass on down” a fee (A would control disposition)
• Remainder to B evidences life estate in A

B. Baker v. Weedon (Mississippi Supreme Court, 1972)

Facts:

• John Weedon (72) married Anna (17)
• Anna worked farm with John for ~20 years
• John’s will: Life estate to Anna; remainder to John’s 3 grandchildren (from prior marriage)
• Anna became elderly, couldn’t work farm, rental income insufficient
• Anna sought judicial sale; grandchildren opposed
• Farm value: ~$168,000, expected to double to $336,000 in 4 years

Issue: May a court order judicial sale of property subject to future interests if necessary for best interest of all parties?

Holding: Yes, courts of equity may order judicial sale if necessary for best interest of all parties with current or future interests

Analysis:

• Present interest holder (Anna): Needs income, has creditors
• Future interest holders (grandchildren): Would lose appreciation if sold now
• Court must weigh equities of both sides

Economic Waste Doctrine:

• Life tenant committing waste may justify judicial sale
• Prevents further deterioration and value loss
• Must consider interests of future interest holders

Result:

• Remanded to trial court to determine best interest of all parties
• No clear formula provided
• Court balances:
  • Present needs of life tenant
  • Future financial interests of remaindermen
  • Overall economic efficiency

Rule: Court can order sale of entire property (present + future interests) and split proceeds if in everyone’s best interest

VIII. Restraints on Alienation - Policy Rationales

A. Objections to Restraints (p. 284)

1. Unmarketable Property

   • Land becomes unavailable for highest and best use
   • Economic inefficiency

2. Discourages Improvements

   • Owner unlikely to invest in improvements on land they cannot sell
   • Reduces property development

3. Repugnant to Fee

   • Alienability is definitional characteristic of fee ownership
   • Restraints inconsistent with fee simple concept

IX. Common Law vs. Modern Law

A. Fee Simple Absolute - “Heirs” Requirement

Common Law (Pre-1600s):

• Required: “O to A and his/her heirs”
• “Heirs” language mandatory for fee simple absolute
• Without “heirs” = life estate only

Example: O to A forever (1600)

• Common law: Life estate (no “heirs” language)
• “Forever” means A’s lifetime, not perpetual
• Property reverts to O upon A’s death

Modern Law (iPhone Law):

• “Heirs” language NOT required
• Presumption of fee simple absolute
• Intent controls over magic words

B. Fee Tail - Abolished

Common Law: O to A and the heirs of his/her body

• Lineal descendants only
• If A dies without children → reversion to O

Modern: Abolished in most jurisdictions

• Minority/far-reaching states only
• Not heavily tested

X. Exam Tips and Study Strategies

Key Memorization Points:

1. Fee simple determinable → possibility of reverter (automatic)
2. Fee simple subject to condition subsequent → right of entry (discretionary, must be expressly reserved)
3. Fee simple subject to executory limitation → executory interest in third party (O has nothing)
4. Life estate → reversion to O (unless remainder to third party)
5. Remainder CANNOT follow a fee (heavily tested)

Analysis Framework:

1. Identify what O has initially (usually fee simple absolute)
2. Determine: Fee or Life?
3. If defeasible, identify type by:
   • Language used (durational vs. conditional)
   • Automatic vs. discretionary forfeiture
   • Who gets property upon breach (O or third party)
4. Identify future interests
5. Check for restraints on alienation
6. Apply grantor’s intent when ambiguous

Writing Tips:

• Always explain reasoning for identifying estate type
• When ambiguous language present:
  • Identify the ambiguity explicitly
  • Explain contrary provisions
  • State which provision controls and WHY
  • Grantor’s intent is tiebreaker
• Can present alternative analyses if book disagrees with reasoning
• Thoroughness of analysis matters more than conclusion