#11550 - Common Law Estates - Property

COMMON LAW ESTATES

Under feudal system, since lords granted land as compensation for personal services, used to be that land was granted only as a life estate, unless the grant explicitly included the words “and his heirs.” Today (by statute in 1851 in Tennessee, and at some point everywhere else), changed the default so that now the full interest in the land is conveyed unless the deed explicitly limits it to life interest or some other lesser interest.

Numerus clausus—property rights are in boxes. One cannot create new or customized property interestsleads to easier transferability of property.

Terms in Will

• Heir—survivor

• Legatee—gets personal property

• Devisee—those to whom the testator leaves real estate in his/her will

Context in Wills

• In general, only look at operative text. Lakeacre hypo, testator might have wanted to pander to his son by describing his “intent,” but he used certain textual devices to look them into certain property interests. If he wanted both sons to get an equal interest, he could have made them tenants in common. If the testator looks like he had legal assistance in drafting, and chose specific “boxes,” then it takes a lot to overcome the text. If its not really clear and specific, and it looks really messy, then maybe the context comes into it

A. Three types of fee

1. Fee Simple (absolute): endures forever. Living person has no heirs yet. Heirs are determined at death. Usually goes to children and spouse, then parents, then siblings, cousins. If one dies intestate with no next of kin who can be reached, land escheats to the state.

   1. White v. Brown: Jessie Lide testified “I wish Evelyn White to have my home to live in and not be sold. I also leave my personal property to Sandra White Perry. My house is not to be sold.” Question was whether this is fee simple or life estate

      1. Court says there’s a strong presumption for fee simple instead of life estate; unless the testator’s intent is unequivocally clear, court will grant fee simple.

   2. Words of Purchase—describe the conveyance

      1. O to A

   3. Words of Limitation—at early common law, words of limitation like “and his heirs” described the type of interest being conveyed (LE or FS). The heirs are not actually part of the conveyance, just there for magic words, have no legal interest. A can still sell the land or devise the land away to whomever he wants and leave heirs w/ nothing. Today, you don’t really need “and his heirs” b/c of presumption for FSA. But sometimes lawyers just throw them in anyway.

      1. O to A and then to Charles.

2. Life Estate: endures for the life of a person. Can be “pur autre vie,” for another’s life.

3. Term of years

4. Remainder (what’s left after the life estate). If A has a life estate, remainder to B, B’s creditors can not attach the property until after A dies. Similarly, B cannot prevent A from selling his life estate.

B. Remainders

1. Vested—Two requirements for vested remainders

   1. You know the event is going to occur. Remainders after a life estate, at least the event is certain to occur.

   2. You know who is going to get the remainder—the person is ascertained. You never really know who A’s heirs are until he dies.

   3. O to A and then to her sons Charles and George. In 1600, A has a LE, and then C and G have LE. Today, A has LE, and C &G have vested remainder. A can only convey his LE, can’t convey fee simple b/c he doesn’t have it. If, instead, it had said O to A and his heirs, then A has fee simple and “and his heirs” just denote the FS in 1600, but are virtually meaningless today.

2. Contingent

   1. Might be given to an unascertained person, or it might be contingent on a condition precedent (other than termination of the preceding estate) that may or may not occur. Contingent remainder interest does not mature into possession if the conditions are not met. Since you never know who the heirs are until the decedent dies, gifts to heirs are contingent remainders.

C. Executory Interests—a future interest in a third party that divests or cuts short a prior estate.

• Most commonly follow defeasible fees. Follows a defeasible fee if the property passes to a third party instead of to the grantor.

D. Numerus Clausus—There are certain boxes that can be checked. But one cannot just create a new kind of property right.

• Johnson v Whiton: A will gave to a granddaughter and her heirs on her father’s side property. Court said he can’t make up a new kind of estate or restrict descent. Court granted the granddaughter fee simple absolute.

E. Waste—Basic idea: when multiple persons have a possessory interest, A should not be able to use the property in a manner that unreasonably interferes with the expectations of B.

1. Definitions:

   1. Affirmative waste: injurious acts that substantially reduce the value of the property in question, with some exceptions.

      1. Minerals can usually be extracted if they were being extracted when the future interests were created. Maybe at the same rate? Maybe at the rate that would maximize the combined interest of the fee holder and the remaindermen?

   2. Permissive waste: failure to take reasonable care of the property. Life tenant can be assessed damages for not keeping it up. Failure to pay taxes resulting in forfeiture can be waste.

   3. Walker definition (FU handout): a spoiling or destroying of the estate w/r/t house, wood, or soil, to the lasting injury of the inheritance. In some wild lands, tenant may clear a reasonable portion for the purpose of cultivation

   4. Melms definition (FU handout):

      1. any act or omission of duty by a tenant of land which does a lasting injury to the freehold, tends to the permanent loss of the owner of the fee, or to destroy or lessen the value of the inheritance, or to destroy the identity of the property, or impair the evidence of title. OR

      2. Any material change in the nature and character of the buildings made byt the tenant, even though the value of the property would be enhanced by the alteration.

   5. Restatement definition (FU handout):

      1. The owner of an estate for life who has the privilege to receive the issues and profits of such land, or the privilege to receive the rent and income thereof, has a duty to preserve the land and structures in a reasonably state of repair…and a duty not to change the premises in such a manner that the owners of the interests limited after the estate for life have reasonable ground for objection thereto.

2. Posner says that life tenant and remaindermen have bilateral monopoly. So transaction costs are high of negotiating with each other—that’s why you need the waste doctrine.

3. Baker v Weedon—Mr. Weedon devised farm land to his wife as a life estate and then to her daughters if she had any, and if not, to his grandchildren. She didn’t have daughters, so grandchildren became vested remaindermen. She wanted to sell the house b/c she needed cash, but the remaindermen thought a new highway was going to increase the value of the house in a few years, such that it would be waste to sell it now. Trial court granted forced sale with proceeds vested in a trust, interest paid to the life tenant for her life. Court says it would be waste, and forced sales should only be used when it is in the best interests of all the parties. Court wants them to settle, but remands to the trial court and says if they don’t settle, court can sell a small piece of the land and give her the proceeds.

E. Restraints on Alienation

1. Reasons why restraints are bad

   1. They make property unmarketable

   2. Perpetuate the concentration of wealth

   3. Discourage investments in improving land

   4. Prevent the owner’s creditors from reaching the property

2. Types of Restraint

   1. Disabling restraint: withholds from the grantee the power of transferring his interest

   2. Promissory restraint: the grantee promises not to transfer the interest

   3. Forfeiture restraint: if grantee even attempts to transfer his interest, it is forfeited to another person.

DEFEASIBLE ESTATES

A. Types of Defeasible Fees

1. Fee Simple Determinable: Fee simple can continue forever, but ends automatically when some stated event occurs

   1. Reversionary interest is called possibility of reverter

   2. Magic words are “until” or “so long as” or other durational words

   3. Cannot be conveyed by will or inter vivos conveyance, except to the fee holder. Not alienable or devisable, but they are inheritable (Mahrenholz). Same for FSSCS

2. Fee Simple Subject to Condition Subsequent: does not automatically end, but gives the grantor the option to take land back on occurrence of a specified event

   1. Reversionary interest is called right of re-entry

   2. Courts sometimes use laches here to prevent holders of R of R from waiting forever

   3. Reversionary interest in FSSCS cannot be conveyed inter vivos, except to the fee holder

   4. O to A but if…are the magic words for FSSCS

3. Fee Simple Executory—reversionary interest goes to a third party on occurrence of the stated event

4. Covenant. Always want to try to make the argument that it’s just a covenant (enforceable by injunction), and not only of the first three types above, which are enforceable by forfeiture.

B. Mahrenholz v County Board—

• Board owned 1.5 acres w/ a reversionary interest to Hutton, Mahrenholz owned the other 38.5. Hutton’s purported disclaimer of his interest to the Mahrenholzes was void since you can’t transfer inter vivos, so he really conveyed his reversionary interest to the Board, thus giving them fee simple absolute.

• Deed said “this land to be used for...