defeasible fees

DEFEASIBLE FEES

DEFEASIBLE FEESRestatement Terms

•FEE SIMPLE DETERMINABLE (to grantor; automatic)

•F.S. ON CONDITION SUBSEQUENT (to grantor; must act)

•F.S. ON EXECUTORY LIMITATION (any to grantee)

IDENTIFYING DEFEASIBLE FEES

W ho Holds Future Interest?G rantor (or unnam ed) or 2d G rantee


If G rantor (or unnam ed):H ow does it operate?

Self-Executing or G rantor M ust Act

If 2d G rantee:Fee S im ple on Executory L im ita tion

(p lus Executory In terest)



If Self-Executing:Fee S im ple D eterm inab le

(p lus Possib ility o f R everter)

If Grantor M ust Act:Fee S im ple on C ond ition Subsequent

(p lus R ight o f Entry)

If Grantor (or unnam ed):H ow does it opera te?

Self-Executing or G rantor M ust Act

If 2d G rantee:Fee S im ple on Executory L im ita tion

(p lus Executory In terest)


Warning: Inconsistency

• Textbook says Fee Simple on Executory Limitation terminates automatically (P580)

• For our purposes, assume that sometimes, a Fee Simple on Executory Limitation can operate like a Fee Simple on Condition Subsequent

• “To Sonny & his heirs, but if Sonny ever runs for Congress, Cher & her heirs may enter and take the land.”

DEFEASIBLE FEES

v. CONTINGENT REMAINDERS

DEFEASIBLE FEES

• PRESENT INTEREST IS FEE

CONTINGENTREMAINDERS

• PRESENT INTEREST IS FINITE

DEFEASIBLE FEES


• PRESENT ESTATE CUT OFF IF CONDITION MET



• PRESENT ESTATE TERMINATES NATURALLY

DEFEASIBLE FEES


• PRESENT ESTATE CUT OFF IF CONDITION MET

• FUTURE INTEREST IN EITHER GRANTOR OR GRANTEE



• PRESENT ESTATE TERMINATES NATURALLY

• REMAINDER IN GRANTEE PLUS REVERSION IN GRANTOR

Pepe grants Tealacre to Rory and his heirs, but if Totie loses 100 pounds, she may enter and retake the land.(Fee Simple on Executory Limitation +

Executory Interest)

Pepe grants Tealacre to Rory for life, then to Totie if she loses 100

pounds.

(Life Estate + Contingent Remainder)

Back to the Beatles:

(H): Thelma conveys "to Louise for 99 years if Louise so long live."

Louise?


Louise: Term of years determinable.

What other interests are there?


Louise: Term of years determinable.

Thelma: Possibility of Reverter +

Reversion =

Reversion (Merger)

DOCTRINE OF MERGER

If one person becomes the owner of two contiguous interests, the

interests will “merge”

DOCTRINE OF MERGER

If one person becomes the owner of two contiguous interests, the interests will

merge.

Example: Eric has a life estate. Vanessa holds the reversion that follows it. If Eric purchases the reversion from Vanessa, it merges with his life estate and he will have a fee simple absolute.

DOCTRINE OF MERGERIf one person becomes the owner of two

contiguous interests, the interests will merge.

Example: Eric has a life estate. Vanessa holds the reversion that follows it. If Eric purchases the reversion from Vanessa, it merges with his life estate and he will have a fee simple absolute.

Mahrenholz v. County Board

DQs E5-E8 Eagles

IGNORE THE JACQMAINS

1. Delete last paragraph on P581.

2. Delete last complete paragraph on P582.

3. Pretend you never heard of the Jacqmains.

Mahrenholz v. County Board MAJOR EVENTS

• 3/51: Grant to SD#1

• 2/69: Mrs.H dies intestate; HH sole heir

• 5/73: Property used for storage only

• 5/77: HH conveys interest to Ms

• 9/77: HH releases interest to SD#1

Mahrenholz v. County Board MAJOR EVENTS: FSD +PR

• 3/51: Grant to SD#1: SD-FSD Hs-PR

• 2/69: Mrs.H dies intestate; HH sole heir?





• 3/51: SD-FSD Hs-PR

• 2/69: Mrs.H dies intestate; HH sole heir SD-FSD HH-PR

• 5/73: Property used for storage only?(2 Possibilities: Violation or Not)




2/69: SD-FSD HH-PR

GRANT VIOLATED

HH-FEE SIMPLE ABSOLUTE

5/77 HH --> Ms?

NO VIOLATION

SD-FSD HH-PR

5/77 HH --> Ms?


GRANT VIOLATED

HH-FS ABSOLUTE

5/77 HH --> Ms?

Ms-FS Absolute

9/77 HH release to SD?

NO VIOLATION

SD-FSD HH-PR5/77 HH --> Ms?

SD-FSD HH-PR



GRANT VIOLATED

Ms-FS Absolute


Ms - FS Absolute

NO VIOLATION

SD-FSD HH-PR


SD - FS Absolute

Mahrenholz v. County Board MAJOR EVENTS: FSCS +RE

• 3/51: Grant to SD#1: SD-FSCS Hs-RE

• 2/69: Mrs.H dies intestate; HH sole heir?





• 3/51: SD-FSCS Hs-RE

• 2/69: Mrs.H dies intestate; HH sole heir SD-FSCS HH-RE

• 5/73: Property used for storage only?(2 Possibilities: Violation or Not)




2/69: SD-FSCS HH-RE

GRANT VIOLATED

SD-FSCS HH-RE

5/77 HH --> Ms?

NO VIOLATION

SD-FSCS HH-RE

5/77 HH --> Ms?


GRANT VIOLATED

SD-FSCS HH-RE

5/77 HH --> Ms?

SD-FSCS HH-RE


NO VIOLATION

SD-FSCS HH-RE 5/77 HH --> Ms?

SD-FSCS HH-RE



GRANT VIOLATED

SD-FSCS HH-RE


SD - FS Absolute

NO VIOLATION

SD-FSCS HH-RE


SD - FS Absolute

Mahrenholz: Summary of Possibilities

FSD/PR FSCS/RE

Violation Mahrenholzes School District

No Violation School District School District


The court says (P583) : “The type of interest held governs

the mode of reinvestment with title if reinvestment is to occur.”

DQE6. What does the court mean by

“reinvestment” ?

DQE7: (P584) “In Northwestern Univ. …, a conveyance was ‘made upon the express condition that said Wesley Hospital… shall erect a hospital building on said lot … and that on the failure of said Wesley Hospital to carry out these conditions the title shall revert to Northwestern University.’

This language cannot be interpreted as creating anything but a fee simple subject to a condition subsequent, and the court so held.”

DQE8: In a deleted passage in its discussion of McElvain, the court says

that

“as an action in ejectment was brought…, the difference between a fee simple determinable and a fee simple subject to a condition

subsequent would have no practical effect ….”

Why does it believe this?


DQs E9-E12 Fleetwood Mac


To the Trustees of School District No. 1:

"to be used for school purpose only; otherwise to revert to

Grantors herein.”

DQE9: Fee Simple DeterminableDQE9: Fee Simple Determinable

or

Fee Simple on Condition Fee Simple on Condition Subsequent?Subsequent?

To Trustees of SD No.1: "to be used for school purpose only;

otherwise to revert to Grantors herein.”: FSD

• “only” suggests automatic• condition in 1st clause• “to revert” (v. “may re-enter”) suggests

automatic• similar grants held FSD

To Trustees of SD No.1: "to be used for school purpose only;

otherwise to revert to Grantors herein.” FSCS:

• 2 clauses usually used for FSCS

• No time words

• Most states presume FSCS


DQE10: Under what circumstances might the

distinction between a fee simple determinable and a fee simple on

condition subsequent be significant?

FSD v. FSCS: Consequences

• Transferability after breach (Mahrenholz)


• Transferability after breach

• Adverse Possession




• Income from land after breach (to grantor if FSD)




• Income from land after breach

• Waiver/Estoppel by future interest holder (possible if FSCS)

DQE10: Why do so many grants fail to

indicate clearly which interest is intended?

DQE11:

IS STORAGE A “SCHOOL PURPOSE”?

ARGUMENTS

DQE11:

IS STORAGE A “SCHOOL PURPOSE”?

What legal research could you do to help resolve this

question?

DQE11: IS STORAGE A “SCHOOL PURPOSE”?: RESEARCH

LEGAL: CASES ON “SCHOOL PURPOSE”

CASES ON “CHURCH PURPOSE” ETC.

FACTUAL: WHAT FACTS MATTER ?

DQE11: IS STORAGE A “SCHOOL PURPOSE”?: RESEARCH

FACTUAL: GRANTOR’S INTENTIN GRANT ITSELF

WITNESSES TO TRANSACTIONASK GRANTOR

WITNESSES RE GRANTOR BELIEFS

DQE12. Why should we allow grantors to have any

control at all of what happens to land after they

have died?

PROBLEMS I-L

Featuring The Grateful Dead

(I) O conveys "to J and her heirs so long as the premises are not used for sale of beer, wine, or liquor, and if beer, wine, or liquor is sold on the premises, O retains a right to re-enter the premises." J opens a restaurant that serves several dishes cooked with wine or flamed with brandy and at Sunday brunch offers a free glass of champagne. The restaurant is successful, and 11 years after its opening D wants to buy it and add a bar. Advise D.

PROBLEM I: MULTI-STEP ANALYSIS

• FSD or FSCS?

• CONDITION VIOLATED?

• EFFECT OF VIOLATION?

• ADVICE RE PURCHASE


• FSD or FSCS?• CONDITION VIOLATED?

• EFFECT OF VIOLATION?


(I): O “To Julia and her heirs so long as the premises are not used for sale of beer, wine, or liquor, and if beer, wine, or liquor is sold on the premises, Orrin retains a right to re-enter the premises."

Does Orrin’s interest vest automatically (FSD) or does

he have to act (FSCS)?

(I): “To Julia and her heirs so long as the premises are not used for sale of beer, wine, or liquor, and if beer, wine, or liquor is sold on the premises Orrin retains a right to re-enter the premises."

FSD or FSCS?

•“So long as” & condition built into 1st clause suggest FSD

• Moment of violation clear, so can be FSD

•“Right to re-enter” & 2 clauses suggest FSCS

• Most states: presumption favoring FSCS


• FSD or FSCS?

• CONDITION VIOLATED?• EFFECT OF VIOLATION?


(I): O “To J … so long as … premises are not used for sale of beer, wine, or liquor, and if beer, wine, or liquor is sold on ... premises O retains a right to re-enter….” DOES IT VIOLATE GRANT IF J’s restaurant:(i) serves several dishes cooked with wine or flamed with brandy? (ii) at Sunday brunch offers complimentary glass of champagne?

defeasible fees

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