The common law estates concern interests in common law that divide ownership in Real Estate overtime. Not as common now because a trust is more efficient

Interest: any legal right associated with specific property. All estates are interests in land. Other interests that are not estates include easements, restrictive convenants, liens, mortgages, etc.

Estate: a type of property right that measures a person’s interest in the land in terms of duration. An interest may be either a present possessory estate or one that does not take possession until the happening of some future event-a future interest.

Present Interest	When Does it End	Example	Future Interest Retained
Fee Simple Absolute	Indefinite in Time	O grants Blackare “to Marge and her heirs” or “to Marge in fee simple” or “to Marge”	None None None
Life Estate	Upon the death of a named person	O grants-
		B to M for life, then to N	Remainder, indefeasibly vested
		B to M for life, then to her adult children	Contingent Remainder
		B to M for life, then to N if C occurs	Contingent Remainder
		B to M for life, then to C, but if C occurs to K	Remainder (in N); vested subject to complete divestment
		B to M for life, then to her children [N was the only child at the grant]	Remainder (in N); vested subject to partial divestment
Fee Simple Determinable	Automatically upon the occurrence of a named event	O grants B to M as long as C occurs, (then to O)	Possibility of Reverter (in O).
Fee Simple Subject to Condition Subsequent	Indefinitely, but upon the happening of a named event, but can be ended by action (self-help or lawsuit) by the grantor or the grantor’s successor	O grants B to M, but if C occurs, then O has the right to reenter and take the premises	Right of entry/power of termination (in O)
Fee Simple Subject to Executory Limitation	Indefinite, but upon a named event, can be given to 3rd party	O grants B to M as long as C occurs, then to N O grants B to M< but if C occurs, then to N O conveys B to M, but if C occurs, then N has the right to reenter	Executory interest (in N)

Reversion

Follows the natural end of a life estate, and in other contexts in which the owner has not disposed of the entire fee

O Grants B “to Marge for life, then to O”

O Grants B “to Marge for life”

Possibility of Reverter

Interest reserved to the grantor that follows a fee simple determinable, O will automatically get the property back if the limitation built into the fee simple occurs

O grants B “to C, as long as it used for X, then to O”

O grants B “to C, as long as it is used for X”

Right of Entry (Power of Termination**

Interest retained by the grantor that follows a fee simple subject to condition subsequent

O grants B “to C, but if it is not used for X, then O has the right to reenter and take the premises”

**Subject to the Doctrine of Laches: right of entry must be exercised within a reasonable time, which is probably subject a statute of limitations in bringing an action in ejectment

Future Interests Created in Grantees
Remainder	Remainder follows a life estate
Indefeasibly vested	The identity of the takers if known, no other contingency has to be fulfilled before the interest is ready to become possessory, no condition subsequent can cut short the remainder	M grants B “to Homer for life, then to B, L, and M”
Contingent	Some uncertainty remains as to the identity of the class of takers or the occurrence of the condition. When the uncertainty is resolved, the remainders are said to vest in interest
Vested subject to complete divestment	Occurrence of a condition can cause the interest to shift to someone else	M grants Blackacre “To Homer for life, then to B; but if B fails to graduate high school by age 19, then to L”
Vested subject to partial divestment	Vested because no uncertainty as to their status as children of Homor and no condition precedent on their remainders. But subject to partial divestment because if more children are born, the interest would diminish.	M grants Blackacre “to Homer for life, then to his children and their heirs (Lisa has been born at the time but not Maggie
Executory Interest	Interest in a transferee that divests or cuts short a previous interest.	M grants Blackacre “to B, but if alcohol is ever consumed on the premises, then to N”

Vests in Possession	When the interest becomes a present possessory one (when the preceeding interests have terminated)
Vest in Interest	Various types of uncertainty about the interest has been resolved
A Reversionary Interest	Vested in interest upon creation
Executory Interest	Normally must become possessory in order to vest in interest

The action for waste can be invoked not only by holders of remainders following life estates, it applies in any situation of concurrent or sequential ownership, including landlords objecting to actions by tenants that the landlord claims will damage the landlord’s reversion

Three Categories of Waste:

Affirmative Waste	Occurs when life tenant undertakes some affirmative act on the property that is unreasonable and causes “excess” damage to the revisionary or remainder interest	Affirmative waste is defined in terms of what is regarded as “normal” use of the property.
Permissive Waste	Occurs when life tenant fails to take some action w/r/t/ the property and the failure to act is unreasonable and causes excess damage to the reversion or the remainder	Permissive waste is defined by what constitutes “normal” behavior
Amerliorative Waste	Affirmative act b life tenant that significantly changes the property, but that increases its market value	Traditional view is that ameliorative waste is just another type of affirmative waste and is not permitted [Brokaw] Leading view is that ameliorative waste is permitted when it can be justified by changed circumstances (Melms v. Pabst Brewing) FORK

Browcaw v. Fairchild: Brokaw built several adjacent mansions on prime real estate in New York City and gave his children each a life estate. Each life estate was followed by a remainder to the issue of the life tenant. The will provided that if any of the life tenant should die without issue, the remaining heirs of Issac would get that house. Here, the plaintiff (George) had a life estate, followed by a contingent remainder in George’s children, subject in turn to a contingent remainder in the three other children of Brokaw.

D wanted to change the mansion to apartments. The contingent remainder argued what he is trying to do is contrary to his obligations as a life tenant.
What is potentially key here is that the will left “my residence”, seems like he wants to preserve the actual house [what happens if he does not want it?] [what about if you are granted open land and you want to build a factory on it?]
- If he wants to preserve the house, this is definitely ameliorative waste because he is significantly changing the property (the residence) by destroying it, even though it would increase its value.
- Court holds that ameliorative waste is just another type of waste and is therefore not permitted. [FORK: More popular view says that if the circumstances substantially change, ameliorative waste is permitted [Pabst Brewing]]
  - What if it just granted “my property”, or “my house”? Seems like court said if it was just granting “the corner plot of ground with improvements thereon”, then such would not necessarily constitute waste.
FORK: what about someone with only the possibility of reverter or an executory interest with a highly remote chance of ever becoming vested seeks to bring an action for waste?
Other Antecdotes from the case:
- It is no justification for an act of waste that a party will, at some point in the future, put the premises in the same condition as they were when the lease was made. Question is solely, whether the tenant at the time of the wrongful act done, caused an injury which then affected the plaintiff’s to his reversion.

Persona #2

“The Trustee”

Holds LEGAL (Possessory) title to all the property in the trust, usually in fee simple
Charged with the PROTECTION and MANAGEMENT of the trust

Trustee can use property anyway an owner of a fee simple could:
- Sell
- Use proceeds to buy different property
- Rent the property
- Use property as collateral for loan
Property can’t be touched by trustee’s creditors
Trustees are usually corporations, banks/financial institutions

Persona #3

“The Beneficiary”

Holds EQUITABLE title to all of the property in the trust
Receives the benefits of the trust

Beneficiaries are designated by the terms of the “common law estates of land”, although the law behind CLEIL do not apply to trusts, its just naming
Usually carved up among several beneficiaries spread over multiple generations

Power of appointment: when a donor of property by will or trust creates or reserves a power in some other person to designate the recipient(s) of particular property or beneficial interest in property.

Examples: In the case of a 401K, the settlor is the individual seeking to save for retirement, and usually also the primary beneficiary.

It is...

#11369 - Forms Of Ownership - Long Merril & Smith Property Outline

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