Future Interests

MBEMax wiki article — paired with the Real Property question set on mbemax.com.

One-line summary

A future interest is a presently existing right to possess or use property at some future time; the main types are reversions, possibilities of reverter, rights of entry, remainders (vested or contingent), and executory interests — each created by matching present estates.

Mnemonic

R-P-R-R-E — Reversion, Possibility of reverter, Right of entry, Remainder, Executory interest.

Pair each future interest with its matching present estate:

• Fee simple absolute → nothing (no future interest in anyone).
• Fee simple determinable → possibility of reverter (in grantor).
• Fee simple subject to condition subsequent → right of entry / power of termination (in grantor).
• Fee simple subject to executory limitation → executory interest (in third party).
• Life estate → reversion (in grantor) OR remainder (in third party).
• Fee tail → reversion or remainder (largely abolished).

Present estates and their future interests

Fee simple determinable (FSD)

• Words: "so long as," "while," "until," "during."
• Automatically ends on occurrence.
• Future interest in grantor: possibility of reverter.

Fee simple subject to condition subsequent (FSSCS)

• Words: "but if," "provided that," "on condition that," with right to re-enter.
• Does NOT automatically end; grantor must exercise right of entry.
• Future interest in grantor: right of entry / power of termination.

Fee simple subject to executory limitation (FSSEL)

• Shift from one grantee to another on condition.
• Future interest in third party: executory interest (shifting or springing).

Life estate

• Duration = life of life tenant.
• Future interest in grantor: reversion.
• Future interest in third party: remainder (vested or contingent).
• Life tenant's duties: no waste, pay ordinary expenses, mortgage interest (not principal) from income.

Fee tail

• Historical — passes only to lineal descendants. Mostly abolished; treated as fee simple absolute in most states.

Remainders

Vested vs. contingent

• Vested — created in an ascertained person AND not subject to any condition precedent (other than the natural end of the preceding estate).
• Contingent — subject to condition precedent OR given to unascertained persons.

Types of vested remainders

• Indefeasibly vested — certain to take.
• Vested subject to open — to a class that may expand (class gift).
• Vested subject to complete divestment — taking, but may be lost on condition subsequent.

Executory interests

• Shifting — shifts from one grantee to another on condition.
• Springing — takes from grantor on condition (often after gap).

Rule Against Perpetuities (RAP)

Rule. No interest is good unless it must vest, if at all, not later than 21 years after some life in being at the creation of the interest.

Interests subject to RAP:

• Contingent remainders.
• Executory interests.
• Vested remainders subject to open (class gifts).
• Options to purchase not tied to present leasehold.

Interests EXEMPT from RAP:

• Reversions, possibilities of reverter, rights of entry (grantor's interests).
• Indefeasibly vested remainders.
• Vested remainders subject to complete divestment.

Modern reforms — USRAP (90-year wait-and-see); many states abolished RAP for trusts.

Classic RAP traps:

• Fertile octogenarian — all people capable of having children, regardless of age.
• Unborn widow — "to A for life, then to A's widow for life, then to A's children" — widow may not be in being at creation.
• Slothful executor — "when my estate is settled" — creates executory interest that could vest too remotely.
• Magic gravel pit — "to the gravel pit" — class may stay open too long.

Doctrine of Worthier Title (mostly abolished)

• "O conveys to A for life, then to O's heirs" — common law treated as reversion in O.

Rule in Shelley's Case (mostly abolished)

• "O conveys to A for life, then to A's heirs" — common law gave A fee simple.

NCBE loves to test

• Identifying the interest. Start with present estate; derive future interest.
• Vested vs. contingent. Condition precedent language ("when B turns 21") vs. unascertained taker.
• RAP mechanics. Find the "validating life" — a life in being at creation who guarantees vesting within 21 years of death.
• Charity-to-charity exception. RAP does not apply to interests shifting from one charity to another.
• Reversion vs. possibility of reverter. Reversion follows life estate; possibility of reverter follows FSD.
• Class gifts. RAP applied rule — an interest in a class is bad as to all unless good as to all (all-or-nothing).
• Options. Options to purchase in gross (not tied to present lease) subject to RAP; in-lease options often exempt.

Fast hypos

Hypo 1. "O to A for life, then to B." A: life estate. B: indefeasibly vested remainder in fee simple. O: nothing.

Hypo 2. "O to A for life, then to B if B survives A." A: life estate. B: contingent remainder in fee simple (condition precedent). O: reversion.

Hypo 3. "O to School Board so long as used for school purposes." School Board: FSD. O: possibility of reverter.

Hypo 4. "O to A and her heirs, but if the property is used for commercial purposes, then to B." A: FSSEL. B: shifting executory interest. RAP concern — executory interest may vest after 21 years; likely invalid unless curtailed.

Hypo 5. "O to my grandchildren who reach 25." O has two children alive. RAP trap — a grandchild born after O's death might reach 25 more than 21 years later; void at common law.

Case anchors

• Symphony Space v. Pergola Properties, 88 N.Y.2d 466 (1996) — option-to-purchase RAP violation.
• Jee v. Audley, 29 Eng. Rep. 1186 (1787) — fertile-octogenarian trap.
• Dyer v. Maine Drilling & Blasting, 984 A.2d 210 (Me. 2009) — modern RAP / wait-and-see applied.

See also

• Landlord–Tenant
• Easements
• Recording Acts
• Adverse Possession

Sources

Restatement (Third) of Property: Wills and Other Donative Transfers §§ 25.1–27.1; Uniform Statutory Rule Against Perpetuities; Symphony Space v. Pergola Properties, 88 N.Y.2d 466 (1996); Jee v. Audley, 29 Eng. Rep. 1186 (1787).