defeasible fees cont’d

DEFEASIBLE FEES Cont’d

Mahrenholz v. County Board Distinguishing

Fee Simple Determinable Fee Simple Determinable from Fee Simple on Condition SubsequentFee Simple on Condition Subsequent

DQ100: 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?

Mahrenholz P583: “[A] grantor should give a FSD if he intends to give property for so long as it is needed for the purposes for which it is given and no longer, but he should employ a FSCS if he intends to compel compliance with a condition by penalty of a forfeiture.” - Pretty fine distinction- Court is describing idealized use of the forms- Can use to argue a grant is FSD or FSCS

Use a FSD “to give property for so long as it is needed for the purposes for

which it is given and no longer”• To Xavier, so long as he operates his dental practice

on the premises.• To Yolanda, so long as she doesn’t remarry.• To Zebulon University, so long as it is used as a

research laboratory.

Use a FSCS “to compel compliance with a condition by penalty of a forfeiture.”

• To Xavier, but if the property is ever used for commercial purposes …

• To Yolanda, but if alcohol is ever used on the premises …

• To Zebulon University for construction of a science building, but if the building is not completed within 5 years or if it ever ceases to be used for educational purposes …

Mahrenholz v. County Board

FICUS: DQs 101-104

Mahrenholz v. County BoardTo the Trustees of School District No.

1: "to be used for school purpose

only; otherwise to revert to Grantors herein.”

DQ101: Fee Simple Determinable DQ101: Fee Simple Determinable or Fee Simple on Condition Fee Simple on Condition

Subsequent?Subsequent?

"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 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

Mahrenholz v. County Board DQ102: 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)

FSD v. FSCS: Consequences• Transferability after breach

• Adverse Possession

FSD v. FSCS: Consequences• Transferability after breach

• Adverse Possession

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

FSD v. FSCS: Consequences• Transferability after breach• Adverse Possession• Income from land after breach

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

DQ102: Why do so many grants fail to

indicate clearly which interest is intended?

DQ103: IS STORAGE A “SCHOOL PURPOSE”?

PARTIES’ LIKELY ARGUMENTS?

DQ103:IS STORAGE A “SCHOOL PURPOSE”?

What legal research could you do to help resolve this

question?


What legal research could you do to help resolve this

question? CASES ON “SCHOOL PURPOSE”

CASES ON “CHURCH PURPOSE” ETC.


What factual research could you do to help resolve this

question? (What facts matter?)

IS STORAGE A “SCHOOL PURPOSE”? What facts matter?: GRANTOR’S

INTENT• CHECK GRANT OR RELATED DOX • WITNESSES TO TRANSACTION• ASK GRANTOR IF ALIVE• WITNESSES RE GRANTOR BELIEFS

DQ104. Why should we allow grantors to have any

control at all of what happens to land after they

have died? Come back to later w

Shapira

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 Grantee:Fee S im ple on Executory L im itation

(p lus Executory Interest)

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


If Self-Executing:Fee S im p le D eterm inable

(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 o r G rantor M ust Act

If 2d Grantee:Fee S im ple on Execu tory L im ita tion

(p lus Execu tory In terest)

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

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

• FUTURE INTEREST IN EITHER GRANTOR OR GRANTEE


• 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)

DEFEASIBLE FINITE ESTATES

Can create conditions cutting off finite estates, yielding, for example:

• Life Estate Determinable• Term of Years on Condition Subsequent

Back to Poincianas:

(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 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.

DOCTRINE OF MERGERIf one person becomes the owner of two

contiguous interests, the interests will merge.

ONLINE– Review Problems R-W

• Assigned …• Write-Ups Posted After Wednesday

– Exam Q Bank Through Spring 95– Tests for Fall 95 and Spring 97– Answers Posted after Wednesday

LOGISTICS

• Same Midterm Blind Grading Numbers• Watch Course Page for Info on:

– Classrooms for Exam– Office Hours Thurs Sun

• Qs on Assignment III?

PROBLEM IFeaturing Live Oaks

(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.

For Review Problems• Remember not in same form as your test.• Try to make lists of key questions &

ambiguities• Try to follow decision tree out as far as

you can• We’ll go over in class as time permits: I’ll

aim to do one from each panel.• I’ll post suggested analysis for all review

problems after class on Wednesday.

PROBLEM I: MULTI-STEP ANALYSIS

• FSD or FSCS?• CONDITION VIOLATED?• EFFECT OF VIOLATION?• ADVICE RE PURCHASE

(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)?

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•Mahrenholz: More like punishment than purpose

(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?

IF VIOLATION, RESULT? If O has Possibility of Reverter?

O gets legal title at moment of violation.

If sufficient time has passed, J may have title through adverse possession

IF VIOLATION, RESULT? If O has Right of Entry (RE)?

Assuming O has not acted, O still has REIf O is aware of Julia’s use of alcohol, may be held to have waived the right to enforce regarding these kinds of uses of alcohol.

Note that if J sells a defeasible fee to D, D takes subject to any condition not made irrelevant by the sale.

• To J so long as alcohol is never used on the premises. – Wording of condition not limited to J;

appears to apply to anyone– Condition survives sale.

COMPARE:• To J so long as J never uses alcohol on

the premises. – Condition only places limit on J.– Essentially void if J is not the owner. – Once J is dead, condition can never be

violated, so owner would have fee simple absolute.

11 years after its opening Donald wants to buy

restaurant and add a bar. Advise Donald.

Plausible Advice to Donald Includes:

• Buy both present estate and future interest (or “all rights” of both J and O) to merge into f.s.absolute

• Serve free liquor & raise prices (and argue waiver if O questions)

• Make purchase contingent on J insuring right to use alcohol (winning suit re adverse possession/ waiver/etc.; buying future interest; waiver K with O)

EXECUTORY INTERESTS• Future interest in grantee• Cuts off prior vested interest (present

estate or reversion or vested remainder) rather than waiting for it to expire naturally.

Pre-1536 Limitations on Future Interests in Grantees

• Must follow finite estate• Must be capable of taking effect at the expiration

of preceding estate • Must not take effect before the expiration of the

preceding estate

EXECUTORY INTERESTS• Future interest in grantee• Cuts off prior vested interest rather

than waiting for it to expire naturally.• Shifting Executory Interest cuts off

another grantee

EXECUTORY INTERESTS• Future interest in grantee• Cuts off prior vested interest rather than

waiting for it to expire naturally.• Shifting Executory Interest cuts off another

grantee• Springing Executory Interest cuts off

grantor

EXECUTORY INTERESTS(EXAMPLES)

Shifting Executory Interest: To Justin & his heirs so long

as no tobacco is grown on the land, otherwise to Eric and his heirs.

EXECUTORY INTERESTS(EXAMPLES)

Springing Executory Interest: • To Crystal if she passes the

California bar exam.

defeasible fees cont’d

Documents

fee simple subject

school purposecases

church purpose

condition subsequentdq100

automatic condition

trustees of school district

legal research

county boardficus