Present Estates and Future Interests

A present estate is measured by how long it can last. The fee simple absolute can last forever. A defeasible fee ends on a stated event. A life estate ends at a death. This section teaches how to identify each estate from the words of the grant, and what a life tenant may do with the land.

fee simple absolute – The largest estate in land: it lasts forever, may be freely sold, given away or inherited, and no future interest follows it.Cal. Civ. Code § 762

heirs – The persons who take a decedent’s property under the intestacy statute. A living person has no heirs, only heirs apparent with a mere expectancy.

fee tail – An estate that passed only to the holder’s lineal descendants, created by “to A and the heirs of his body”. Abolished almost everywhere; the words now create a fee simple.

Defeasible fees

defeasible fee – A fee simple that ends, or can be ended, when a stated event happens. The three kinds differ in how the estate ends and who takes the land.

fee simple determinable – A fee simple that ends automatically when a stated event happens, so that the land returns to the grantor. It is created by words of duration.

fee simple subject to a condition subsequent – A fee simple that the grantor may end by re-entering after a stated event. Nothing happens until the grantor acts.

fee simple subject to an executory limitation – A fee simple that passes automatically to a third person, not to the grantor, when a stated event happens.

The difference between the first two defeasible fees matters. A fee simple determinable ends by itself: the grantee becomes a trespasser at once, and the period for adverse possession starts to run. A fee simple subject to a condition subsequent continues until the grantor acts. Courts dislike forfeiture, so unclear words are read as a condition subsequent.

Life estates and waste

life estate – An estate that lasts for the life of a named person, usually the holder. It ends automatically at that person’s death.

life estate pur autre vie – A life estate measured by the life of a person other than the holder (French: “for another life”). If the holder dies first, the holder’s successors hold until that life ends.

A life estate is created by words such as “to A for life”. The life tenant may possess the land, take its ordinary income, and sell or lease the estate. A buyer gets only what the life tenant had: an estate that ends at the measuring death. The law of waste balances the life tenant against the holder of the future interest.

waste – Conduct by the holder of a present estate that harms, or permanently changes, the land to the injury of the holder of a future interest.

When a grantor gives away less than the whole fee simple, something is left behind. That something is a future interest in the grantor. There are only three: the reversion, the possibility of reverter and the right of entry. Each one follows a particular kind of present estate, and each one is vested from the moment it is created. That last fact matters for the Rule Against Perpetuities in section 5.

reversion – The future interest that a grantor keeps after transferring a smaller estate, such as a life estate, without giving away the rest.Cal. Civ. Code § 768

possibility of reverter – The future interest kept by a grantor who conveys a fee simple determinable. It becomes possessory automatically when the stated event happens.

right of entry – The future interest kept by a grantor who conveys a fee simple subject to a condition subsequent. Also called a power of termination. The grantor must exercise it.

The reason is historical. The grantor never gave these interests away, so nothing “vests” later; the grantor simply keeps what was already owned. These interests are property, so a reversion, a possibility of reverter and a right of entry all pass to the grantor’s heirs or devisees at death. A will that gives “all my property” carries them with it.

The right of entry is the weakest of the three because it needs action. The grantor must give notice or sue to retake the land, and courts require the grantor to act within a reasonable time after the breach. California adds statutory time limits on a power of termination; section 6 gives them. A grantor who knows of the breach and does nothing for years may find that laches or the statute of limitations has barred the claim.

A future interest can also be given to a grantee, a person other than the grantor. There are two families: remainders and executory interests. A remainder waits for the prior estate to end; an executory interest cuts an estate short. Inside the remainder family, the labels vested and contingent decide whether the Rule Against Perpetuities applies.

remainder – A future interest in a grantee that becomes possessory, if at all, immediately when the prior estate ends naturally. It never cuts the prior estate short.

Vested or contingent?

condition precedent – An event, other than the natural end of the prior estate, that must happen before a remainder can become possessory. It sits inside the words that create the remainder.

condition subsequent – An event, stated in a separate later clause, that takes away an interest already given. It divests; it does not delay.

vested remainder – A remainder given to an ascertained person and not subject to any condition precedent. It becomes possessory when the prior estate ends, unless a condition subsequent divests it first.

contingent remainder – A remainder given to an unascertained person, or subject to a condition precedent, or both. It may never become possessory.

Read the punctuation. A condition inside the words that create the gift is a condition precedent, and the remainder is contingent: “to B if B survives A”. A condition in a later clause that takes away a complete gift is a condition subsequent. The remainder is then vested subject to complete divestment: “to B, but if B dies before A, to C”.

vested remainder subject to open – A vested remainder given to a class, such as “A’s children”, when at least one member exists and more members can still join and reduce each share.

vested remainder subject to complete divestment – A vested remainder that a condition subsequent can take away entirely, before or after it becomes possessory.

class gift – A gift to a group described by a shared characteristic, such as “children” or “grandchildren”, whose membership can change until the class closes.

Apply the rule to “to A for life, then to A’s children”. The class gift stays open while A lives and closes at A’s death. Every child of A takes an equal share. A child who died before A still takes through that child’s estate, because the gift has no survival condition.

Executory interests

executory interest – A future interest in a grantee that becomes possessory by cutting short another estate, either a grantee’s estate (shifting) or the grantor’s estate (springing).

shifting executory interest – An executory interest that divests another grantee on an event: “to A, but if A stops farming the land, to B”.

springing executory interest – An executory interest that divests the grantor on an event: “to A when A marries”. The grantor keeps possession until then.

On the MBE, treat Shelley’s Case and destructibility as abolished unless the question says otherwise. Where Worthier Title survives, it is only a rule of construction that yields to the grantor’s contrary intent. A contingent remainder is not destroyed when the life estate ends; the grantor’s reversion holds the land until the condition happens.

alternative contingent remainders – Two contingent remainders with opposite conditions, so that when one vests the other must fail: “to B if B survives A, otherwise to C”.

The Rule Against Perpetuities stops a grantor from keeping land out of the market for generations through interests that may vest far in the future. For each contingent interest, ask one question: is it certain to vest or fail within the period? If not, it is void.

vest – An interest vests when the taker is ascertained and every condition precedent is satisfied. A class gift vests fully only when the class closes.

life in being – A person alive, or already conceived, when the interest is created. A useful measuring life is one whose death affects when the interest vests.

Options

Reforms

wait-and-see – A reform under which a court judges an interest by the events that actually happen during the period, not by what might happen.

cy pres – French for “as near as possible”. A court rewrites an invalid provision to match the grantor’s intent as closely as possible, for example by reducing an age of 25 to 21.

In plain English: an interest is valid if it passes the common-law test, or if it actually vests or fails within 90 years. If not, the court reforms the instrument to carry out the transferor’s plan (Cal. Prob. Code § 21220). Exception: the statute does not apply to most commercial (nondonative) transfers, such as an option bought in a business deal (Cal. Prob. Code § 21225).

Land should be free to move from owner to owner. A grantor who tries to keep land in the family forever, or to forbid a sale, is limited by the rule against restraints on alienation. This section teaches that rule and the California statutes that change this chapter’s common-law vocabulary. California distinctions are rarely essay-tested. In a Performance Test, use only the Library; knowing the common-law vocabulary helps you read a statute there quickly.

restraint on alienation – A provision in a grant that limits the holder’s power to transfer the land. It may forbid transfer, forfeit the estate on transfer, or extract a promise not to transfer.

In plain English: a condition is “repugnant” to a fee simple when it takes away the freedom to sell that a fee simple includes. Such a condition has no effect. California courts read Cal. Civ. Code § 711 as a rule of reason. They weigh the reason for the restraint against how much it limits transfer. A limited, reasonable restraint may survive. A flat ban on selling a fee simple does not.

Wellenkamp v. Bank of America (1978) 21 Cal.3d 943 shows this rule of reason at work. The lender threatened to demand full payment of a home loan unless the buyer of the house agreed to a higher interest rate. The court held that automatic enforcement of this due-on-sale clause was an unreasonable restraint. The lender had to show that the sale impaired its security or increased the risk of default. Federal law now overrides this result for most loans (12 U.S.C. § 1701j-3); chapter 11 covers due-on-sale clauses.

California statutes that change the vocabulary

Two practical consequences follow. First, a recorded power of termination is a cloud on title for a California title examiner. It expires on its own after 30 years, unless the holder records a notice to preserve it. Second, a contingent remainder or a right of re-entry can be sold in California (Cal. Civ. Code § 699; Cal. Civ. Code § 1046). A buyer of a future interest takes a real property right, not a mere expectancy.

This review has 3 parts: a chapter summary, 5 MBE-style questions, and the glossary. Answer each question in under 2 minutes before opening the answer. Then read the explanation for every option, not only the one you chose, because the distractors are the labels you will confuse under time pressure. Finally, cover each glossary definition and say it in your own words, in English.

Read each MBE stem in the same order every time. First find the words of the grant, usually inside quotation marks. Second, note the dates and who is alive. Third, read the call: “who owns”, “what interest”, or “will the plaintiff prevail”. Only then read the options. The correct option names the interest and gives the reason that matches the words of the grant.

state of title – A list of every interest in a parcel of land at a given moment, with the name of each holder.

alienation – The transfer of an interest in land from one person to another, by sale, gift or will.

ascertained person – A person who is born and identified at the moment the question is asked, so that a court could name the taker.

conveyance – A transfer of an interest in land by a written instrument, usually a deed, during the transferor’s life.

devise – A gift of land by will. The person who receives it is the devisee.

in gross – Held personally by a person, not attached to the ownership of other land or to a lease.

issue – A person’s lineal descendants: children, grandchildren and later generations. “Without issue” means leaving no living descendant.

measuring life – The life whose end fixes the end of a life estate, or the life in being used to test an interest under the rule.

power of termination – The modern name for a right of entry: the grantor’s power to end a fee simple after a condition subsequent is broken.

words of limitation – Words that describe the size of the estate given, such as “and his heirs” or “for life”; they give nothing to the persons named.

words of purchase – Words that identify who takes an interest, such as “to A” or “then to A’s children.”