§ 9.01 A Byzantine System [92]

 

American property law was long dominated by a byzantine system of estates and future interests.  Precise, elaborate, and sometimes arbitrary rules were created to classify estates and future interests into various categories.  Although this system has decreasing relevance today, it is still important to understand its basic structure.

 

§ 9.02 Creation of Estates [92-93]

 

Estates and future interests originate in two main sources: deeds and wills.  They can arise from a trust as well, but either a deed or will is normally used to transfer the property into the trust.

 

§ 9.03 Classifying Estates [93]

 

The main problem that estates present is classification.  Three main variables are used in classifying an estate: (1) freehold or nonfreehold?  (2) absolute or defeasible? and (3) legal or equitable?

 

§ 9.04 Estates: Freehold or Nonfreehold? [93-94]

 

The law traditionally recognized six basic types of estates: three freehold estates (fee simple, life estate, fee tail) and three nonfreehold estates (term of years tenancy, periodic tenancy, and tenancy at will).  Today we view freehold estates as forms of “owning” land, while nonfreehold estates are merely forms of “leasing” land.

 

§ 9.05 Basic Categories of Freehold Estates [94-103]

 

                        [A]       Fee Simple

 

The distinction between the three freehold estates is based on duration.  Fee simple is a freehold estate whose duration is potentially infinite.  It roughly corresponds to the layperson’s understanding of “ownership.”  The most common form is fee simple absolute, the largest aggregation of property rights recognized under American law.  At one time, it was necessary to use special language to create a fee simple (e.g., “to A and his heirs”), but today informal language such as “to A” will suffice in most states.

 

                        [B]       Fee Tail

 

The fee tail is a largely-obsolete freehold estate whose duration is measured by the lives of the lineal descendants of a designated person.  For example, if O granted Greenacre “to A and the heirs of his body,” this created an estate that would endure as long as A’s bloodline continued. 

 

                        [C]       Life Estate

 

The life estate is a freehold estate whose duration is measured by the lives of one or more specified persons.  For example, a grant “to A for A’s life” creates a life estate in A for as long as he lives.  Alternatively, the duration may be measured by the life of a person other than the grantee (e.g., “to A for B’s life”); this is called a life estate pur autre vie.

 

§ 9.06 Freehold Estates: Absolute or Defeasible? [103-110]

 

                        [A]       Basic Distinction

 

Each freehold estate is either absolute or defeasible.  Most estates are absolute, meaning that their duration is restricted only by the standard limit that defines that category of estate.  For example, if O conveys Greenacre “to A,” then A owns a fee simple absolute.  This estate may endure forever, consistent with the basic definition, and will end—if at all—only by escheat.  A defeasible estate is subject to a special provision that may end the estate prematurely, if a particular event occurs, e.g., “to A, but if A ever smokes cigars, then to B.”

 

                        [B]       Types of Defeasible Estates

 

 

There are three types of defeasible fee simple estates.  The fee simple determinable automatically expires at a stated time, immediately giving the holder the right to possession.  For example, if O grants land “to A for so long as used as a park,” and the park use ceases, then title immediately revests in O.  The fee simple subject to a condition subsequent does not automatically expire when the triggering condition occurs; rather, the future interest holder must take affirmative action to end the estate.  For instance, if O grants land “to A, but if not used as a park, then the land shall return to me,” and the park use ceases, O must take action to end A’s estate, such as by filing suit against A.  Finally, the fee simple subject to an executory limitation automatically expires when a stated event occurs, but gives the right to possession to a transferee (e.g., “to A, but if the land is not used as a park, then to B”).  Defeasible life estates may also be created, but are less common.

 

§ 9.07 Freehold Estates: Legal or Equitable? [110]

 

Each estate and future interest can also be created in trust.  If O grants land “to T in trust for L, and then for R,” then T holds legal title to the land, but L has an equitable life estate and R has an equitable vested remainder in fee simple absolute.

 

§ 9.08 Restrictions on Transfer: Rule Against Restraints on Alienation [111-112]

 

Any total or “absolute” restraint on alienation of a fee simple is null and void.  For example, if O conveys land “to A, but if A ever attempts to sell the land, then to B,” a court would find the restraint void; thus, A owns fee simple absolute and B has no interest.  Partial restraints on alienation of a fee simple may be allowed if reasonable in nature, purpose, and duration.

 

§ 9.09 Restriction on Use: Waste [112-114]

 

A person who holds an estate subject to a future interest may not commit waste.  Affirmative waste occurs when the voluntary acts of the present estate owner significantly reduce the value of the property (e.g., destroying a valuable house).  Permissive waste stems from inaction: the failure of the estate owner to exercise reasonable care to protect the estate (e.g., failing to fix a leaky roof).