REAL PROPERTY
1) Present Estates
A present estate gives a party present possession over land. There are two types – Freehold estates
which give parties title to the land like deeds, and non-freehold estates which merely give possession
over land like leases or easements. Generally, a grantor will give his land to a grantee, which is the
present estate. There are three types of present estates.
Fee simple absolutes are given to a grantee for an indefinite duration. Thus the grantee will continue
to hold the present estate for an indefinite period of time and it cannot be taken away from him by
the grantor. Wordings such as ‘With hope that’ or ‘For the purpose of’ signify a fee simple. The
grantee may transfer the fee simple by devise, inheritance or conveyance. However, they cannot be
removed from the grantee by the grantor because they are freely alienable. Thus there are no future
interests in fee simples.
Defeasible fees are different to fee simple absolutes in that they grant present possession to the grantee
for a ‘potential’ indefinite duration. This means that there is a possibility that the grantee may lose
his possession at some point in the future due to a specified event. There are three types of defeasible
fees. A fee simple determinable grants a present estate to a grantee for a potentially indefinite period,
unless a condition is not fulfilled. Wordings such as ‘on condition that’, ‘for as long as’, ‘while’ or
‘during’ are examples of a defeasible fee. If the condition is not fulfilled, the land will revert back to
the grantor through his ‘possibility of reverter’. The advantage with fee simple determinables (FSD)
is that such reverter does not have to be expressly stated; the land automatically reverts back to the
grantor. Also, the reverter may be transferred to another party either by conveyance, devise or
inheritance. The grantee can also transfer his defeasible fee to another party in the same manner, but
the subsequent grantee remains subject to any conditions which will revert back to the grantor should
the condition not be fulfilled. Fee simple subject to condition subsequents (FSSCS) also grant present
estates to a grantee for a potentially indefinite period. Wordings like ‘but if’ or ‘if it happens that’ are
notable examples. However, unlike a fee simple determinable, FSSCS does not automatically
guarantee reversion to the grantor if a specified event occurs. A FSD includes a condition precedent,
which requires that a condition be fulfilled for the land to transfer to the grantee. Whereas a FSSCS
includes a condition subsequent, which has the opposite effect. The land will revert back to the grantor
should the condition be fulfilled, but only in limited circumstances. In this case, the disadvantage of
a FSSCS is that the land only reverts if a ‘right of re-entry’ is expressly stated in the conveyance. This
is different to a fee simple determinable, which does not require any expression of such a reverter
option because it is automatic. Thus, having a FSSCS can provide problems for grantors. In fact, the
right has to be exercised by the grantor for the land to revert back. Until then, the grantor still has the
right of re-entry but not a fee simple until he exercises it, and the grantee will continue to have a
FSSCS because it has not been reverted back yet. In terms of transferability, the FSSCS is
transferrable in any way, but the right of re-entry is only transferrable by will or intestacy. The right
of re-entry cannot be transferred by conveyance to any other party. Where the wording in a deed uses
expressions of both a FSD and FSSCS, courts will tend to presume it is a FSSCS for public policy
reasons because they disfavour the automatic forfeiture of defeasible fees unless the grantor exercises
his right to enter the land and take it back. A fee simple subject to executory interest is similar to a
FSSCS where it includes a condition subsequent and the meeting of that condition will cause the
grantee to lose his possession. However, it is different to a FSSCS in that the land may transfer to a
third party instead of reverting back to the grantor.
,Lastly, life estates are another form of present estates. Life estates may be made for the life of the life
tenant (the grantee) as a life estate, or for the life of another party as a life estate pur autre vie. If, for
the life tenant’s life, the life tenant dies, the land will either revert back to the grantor, or to any
remainderman who were expected to take after the life tenant and included in the conveyance. The
same applies in a life estate pur autre vie where the party whose life is the measuring life dies.
However, in a life estate pur autre vie, if the life tenant dies before the measuring life, the estate may
either transfer to the life tenant’s devisees in a will or his heirs by intestacy, or alternatively to another
party specifically appointed by the grantor in the first place. A life estate is transferrable by the grantee
in any manner. But if transferred, the transferee takes subject to the continued life of the transferor,
not the new transferee. Thus, the transferee still loses the life estate to the original grantor or any
remaindermen, even if the transferee dies after the transferor. For example, Grantor conveys a life
estate to Grantee for the Grantee’s life, then to Remaindermen. Grantee transfers his life estate to TP.
After Grantee dies, TP’s life estate will transfer to Remaindermen, even though Grantee is still alive.
Life estates may also be made as defeasible fees, subject to condition subsequents or precedents.
2) Future Estates (RAP)
Unlike present estates, future estates grant possession of land to a party, not of immediate possession
but after the grantee’s interest is divested. There are three types of future estates.
Reversionary interests are future estates that revert back to the grantor from the grantee after a specific
event occurs. The grantor essentially conveys land to a grantee for a duration shorter than the grantor’s
reversionary interest because the grantee will have a defeasible fee/life estate, which is shorter in
duration than the fee simple through which the grantor will take when the land is reverted back to
him. These are found in life estates and defeasible fees, but never in fee simples because the grantee’s
interest cannot be alienated by the grantor. Reversionary interests mainly include a possibility of
reverter or a right of re-entry. The former does not have to be expressly stated as the future estate
reverts back to the grantor, whereas a right of re-entry must be exercised by the grantor and it has to
be expressly stated. Both are transferrable by will or inheritance, but a right of re-entry cannot be
sold. Reversionary interests may be waived by the grantor knowingly and voluntarily, but otherwise
it cannot be terminated under the Rule Against Perpetuities (RAP) because they are certain to vest
after the grantee’s estate terminates within the 21-year perpetuities period.
Remainder interests are future interests that do not revert back to a grantor, but instead they are
transferred to a third party from the grantee. Most remainder interests will vest naturally after the
preceding estate held by the grantee terminates. However, the remainder must be expressly created
in the conveyance, unlike the possibility of reverter. Remainders are included in life estates and
defeasible fees, but never in fee simples because again, the grantee’s fee simple cannot be alienated
like with reversionary interests. There are four types of remainders. Three of those remainders are
certain to vest, whereas one is not certain to vest.
Regarding vested remainders, one of them is the indefeasibly vested remainder which consists
of an ascertained remainderman and no condition precedent. This means that the future estate will
immediately transfer to the remainderman automatically once the preceding estate terminates. Thus,
it is not subject to the RAP because it is certain to vest.
Next is the vested remainder subject to total divestment. This is similar to a fee simple subject
to condition subsequent, in that the fulfilment of a condition subsequent will totally divest the interest
of the remainderman and transfer to a third party who holds an executory interest. The
remainderman’s interest will be vested so it will not be subject to the RAP. The issue is whether that
executory interest can meet the RAP because it does not transfer to the third party immediately after
,the interest is created in the grantee. Thus, if the executory interest cannot meet the RAP, the interest
will revert back to the grantor as a reversionary interest instead.
On the other hand, a vested remainder subject to open is different. Here, the remaindermen
will take a future estate as a class gift, such as the children of a measuring life. Some may be
ascertained when the interest was created, in which these remaindermen will hold a vested remainder
subject to open. However, others who remain unascertained or unborn will hold a contingent
remainder, in which the interest will not vest in them immediately because they are not ascertained
as of yet. They will partially divest the ascertained remaindermen’s interest once their interests vest,
rather than totally divest their interest like in a vested remainder subject to total divestment.
Ultimately, they will all hold the future estate as tenants in common. The issue of when they will be
ascertained is contingent upon the closing of the class. If the wording includes ‘to my grandchildren’,
the class will be closed if someone calls for distribution among the remaindermen or the class can no
longer take any other persons because the measuring life has died. If the wording includes ‘to all my
grandchildren’, the class gift will remain open after testator’s death. It is critical that the
remaindermen be ascertained because the vested remainder subject to open will be subject to the
RAP, to determine if the class can take the future estate within the 21-year perpetuities period.
Lastly, a contingent remainder as seen in the vested remainder subject to open is created where
there are unascertained remaindermen or a condition precedent exists. This is the opposite to an
indefeasibly vested remainder, which requires ascertained remaindermen and no condition
precedents. Thus, contingent remainders do not vest in the remaindermen automatically after the
grantee’s interest is created until either the remaindermen are ascertained or a condition precedent is
fulfilled. As a result, they will be subject to RAP. The key difference with contingent remainders and
the other vested remainders is that contingent remainders can only be transferred to the
remaindermen’s heirs or devisees if the condition precedent does not require their survival. For
instance, if the remainderman must survive the grantee under an existing condition precedent but dies
beforehand, their contingent remainder cannot transfer to their heirs. Instead, they must revert back
to the grantor. Whereas vested remainders can be transferred to the remaindermen’s heirs, or to other
parties by conveyance or will. However, they can only be transferred to creditors when their interests
vest.
There are current outstanding issues with regards to remaindermen. Firstly, there is the issue with
whether a remainder is destroyed if the grantee dies before the remainderman’s future interest vests.
Under the common law, it was considered that his remainder is destroyed. The interest would revert
back to the grantor, and the remainderman would in fact take the interest from the grantor as a
springing executory interest in which the remainderman cuts short the grantor’s interest once the
necessary condition precedent is fulfilled. However, the modern law has abolished such view and
instead continues to recognise that a remainder exists, which the grantor will transfer after the
condition precedent is fulfilled. Another issue is where the remaindermen are actually the grantee’s
heirs. ‘Shelley’s Rule’ deals with this dilemma. Under the common law, it was also considered that
the remaindermen’s interest would not be considered as a remainder, since the grantee’s heirs would
be considered to inherit the grantee’s interest. But again, this view is abolished by modern law which
still recognises that they have a remainder rather than an inheritance right. Whereas the ‘Doctrine of
Worthier Title’ deals with where the remaindermen are the grantor’s heirs, not the grantee’s heirs.
Here, the view is that the grantor will have a reversionary interest in the remainder, but only if the
grantor expressly showed an intent to take it as a reversionary interest. Otherwise, the grantor’s heirs
can take the future estate from the grantee as a remainder. Lastly, there is the issue of where a grantor
acquires both a present estate and a future estate held by remaindermen. In this case, the interests will
be considered to have merged under the ‘Doctrine of Merger’. The grantor will have a fee simple as
the remainder will have been destroyed.
, Executory interests are future estates that are granted to a third party by divesting the remainderman’s
interest. These are different to remainders which will naturally become possessory upon the preceding
estate’s termination. Whereas executory interests are not naturally possessory because they require
the remainderman’s interest to terminate first. Executory interests must also be expressly created in
the conveyance like remainders. They will be found in life estates or defeasible fees only. They can
be transferred in any manner, unless a condition precedent requiring their survival is included in the
conveyance. There are two types of executory interests. Springing executory interests cut short the
grantor’s interest. For instance, a grantor may hold a present estate but after a condition precedent is
fulfilled, the grantee’s interest will vest and he will take the grantor’s estate. Also, as seen before, if
the grantee dies before the remaindermen’s interest was to vest, the interest will revert back to the
grantor, and the remainderman will cut short the grantor’s estate once a condition precedent is
fulfilled by the remainderman. Whereas a shifting executory interest cuts short the grantee’s interest,
not the grantor’s. Where a grantee has a present estate and a remainderman takes a future estate, but
a condition subsequent is fulfilled, the estate will transfer to a third party from the grantee instead.
However, the executory interest will be subject to RAP because it is not certain whether it will vest
within 21 years after the interest is created in the grantee.
3) Co-Tenancy
Co-tenancy is a type of possessory agreement over land between two or more parties; co-tenants.
There are three types of co-tenancies.
Joint tenancies are common between co-tenants which provide the advantage of inheriting the other
co-tenant’s share after he passes away. This is through the right of survivorship. But to have a joint
tenancy, there are several requirements to meet. The joint tenancy must grant the co-tenants equal
undivided interests in the land, with the right to the whole possession of the land, included in the
same instrument and acquired at the same time. The right of survivorship must be expressly included
in the instrument, otherwise it creates a tenancy in common which has the opposite effect whereby a
deceased co-tenant’s share will pass to his heirs rather than to the remaining co-tenants. But even if
the right of survivorship is expressly included, a joint tenancy can still become a tenancy in common
by a process known as severance. Severance can take place in many ways. For example, conveyance
of one’s interest can sever the tenancy. One single tenant may convey his interest and sever the entire
tenancy. If all tenants sell their interests together, some states believe that a severance has occurred,
but others still believe a joint tenancy exists between them, in which they will inherit each other’s
proceeds. A joint tenant may sever by murdering his co-tenant, although not all states find a severance
occurs in which a constructive trust will be imposed instead on the deceased tenant’s estate to produce
more income on his share, which will then pass to his heirs. A joint tenant can also sever by partition,
which divides the land into separate portions. A voluntary partition by all the tenants can sever the
tenancy entirely, but an involuntary partition will only sever the partitioning tenant’s interest only.
This means that if the tenancy has more than two tenants, the non-partitioning tenants will continue
to enjoy the right of survivorship, and they cannot inherit the partitioned tenant’s interest if he dies.
A joint tenant can also sever by obtaining a judgment lien on his share. However, this only occurs
once foreclosure has taken place and his interest is sold to a foreclosing buyer. In this case, the
judgment lien will remain attached to the severed interest only, not the entire land. Otherwise, a
judgment lien remaining on one’s interest will not sever the tenancy. A joint tenant could also sever
his interest by obtaining a mortgage on his interest. Sadly, most states follow the lien theory, in which
there is no severance because the creditor of the mortgage will simply only have possessory rights
over the co-tenant’s interest rather than title. Yet in few states, the creditor may be able to sever the
tenancy through the title theory because he will have title over the share once the mortgage is
executed. This means that the other co-tenant cannot take the mortgagor’s share if he dies. Instead,
