DEFEASIBLE FEES

1
DEFEASIBLE FEES
2
DEFEASIBLE FEESRestatement Terms

• FEE SIMPLE DETERMINABLE (to grantor
  automatic)
• F.S. ON CONDITION SUBSEQUENT (to grantor must
  act)
• F.S. ON EXECUTORY LIMITATION (any to grantee)

3
IDENTIFYING DEFEASIBLE FEES
4
IDENTIFYING DEFEASIBLE FEES
5
IDENTIFYING DEFEASIBLE FEES
6
Warning Inconsistency

• Textbook says Fee Simple on Executory Limitation
  terminates automatically (P580)
• For our purposes, assume that sometimes, a Fee
  Simple on Executory Limitation can operate like a
  Fee Simple on Condition Subsequent
• To Sonny his heirs, but if Sonny ever runs for
  Congress, Cher her heirs may enter and take the
  land.

7
DEFEASIBLE FEES
v. CONTINGENT REMAINDERS
8

• DEFEASIBLE FEES
• PRESENT INTEREST IS FEE

• CONTINGENT
• REMAINDERS
• PRESENT INTEREST IS FINITE

9

• DEFEASIBLE FEES
• PRESENT INTEREST IS FEE
• PRESENT ESTATE CUT OFF IF CONDITION MET

• CONTINGENT
• REMAINDERS
• PRESENT INTEREST IS FINITE
• PRESENT ESTATE TERMINATES NATURALLY

10

• DEFEASIBLE FEES
• PRESENT INTEREST IS FEE
• PRESENT ESTATE CUT OFF IF CONDITION MET
• FUTURE INTEREST IN EITHER GRANTOR OR GRANTEE

• CONTINGENT
• REMAINDERS
• PRESENT INTEREST IS FINITE
• PRESENT ESTATE TERMINATES NATURALLY
• REMAINDER IN GRANTEE PLUS REVERSION IN GRANTOR

11
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)

12
Back to the Beatles(H) Thelma conveys "to
Louise for 99 years if Louise so long live."

• Louise?

13
(H) Thelma conveys "to Louise for 99 years if
Louise so long live."

• Louise Term of years determinable.

What other interests are there?
14
(H) Thelma conveys "to Louise for 99 years if
Louise so long live."

• Louise Term of years determinable.
• Thelma Possibility of Reverter
• Reversion
• Reversion (Merger)

15
DOCTRINE OF MERGER

• If one person becomes the owner of two contiguous
  interests, the interests will merge

16
DOCTRINE OF MERGER

• If 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.

17
DOCTRINE OF MERGER

• If 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.

MERGE
18
Mahrenholz v. County BoardDQs E5-E8 Eagles
19
IGNORE THE JACQMAINS

1. Delete last paragraph on P581.
2. Delete last complete paragraph on P582.
3. Pretend you never heard of the Jacqmains.

20
Mahrenholz v. County Board MAJOR EVENTS

• 3/51 Grant to SD1
• 2/69 Mrs.H dies intestate HH sole heir
• 5/73 Property used for storage only
• 5/77 HH conveys interest to Ms
• 9/77 HH releases interest to SD1

21
Mahrenholz v. County Board MAJOR EVENTS FSD PR

• 3/51 Grant to SD1 SD-FSD Hs-PR
• 2/69 Mrs.H dies intestate HH sole heir?
• 5/73 Property used for storage only
• 5/77 HH conveys interest to Ms
• 9/77 HH releases interest to SD1

22
Mahrenholz v. County Board MAJOR EVENTS FSD PR

• 3/51 SD-FSD Hs-PR
• 2/69 Mrs.H dies intestate HH sole heir SD-FSD
  HH-PR
• 5/73 Property used for storage only?
• (2 Possibilities Violation or Not)
• 5/77 HH conveys interest to Ms
• 9/77 HH releases interest to SD1

23
Mahrenholz v. County Board MAJOR EVENTS FSD
PR2/69 SD-FSD HH-PR

• GRANT VIOLATED
• HH-FEE SIMPLE ABSOLUTE
• 5/77 HH --gt Ms?

• NO VIOLATION
• SD-FSD HH-PR
• 5/77 HH --gt Ms?

24
Mahrenholz v. County Board MAJOR EVENTS FSD PR

• GRANT VIOLATED
• HH-FS ABSOLUTE
• 5/77 HH --gt Ms?
• Ms-FS Absolute
• 9/77 HH release to SD?

• NO VIOLATION
• SD-FSD HH-PR5/77 HH --gt Ms?
• SD-FSD HH-PR
• 9/77 HH release to SD?

25
Mahrenholz v. County Board MAJOR EVENTS FSD PR

• GRANT VIOLATED
• Ms-FS Absolute
• 9/77 HH release to SD?
• Ms - FS Absolute

• NO VIOLATION
• SD-FSD HH-PR
• 9/77 HH release to SD?
• SD - FS Absolute

26
Mahrenholz v. County Board MAJOR EVENTS FSCS
RE

• 3/51 Grant to SD1 SD-FSCS Hs-RE
• 2/69 Mrs.H dies intestate HH sole heir?
• 5/73 Property used for storage only
• 5/77 HH conveys interest to Ms
• 9/77 HH releases interest to SD1

27
Mahrenholz v. County Board MAJOR EVENTS FSCS
RE

• 3/51 SD-FSCS Hs-RE
• 2/69 Mrs.H dies intestate HH sole heir SD-FSCS
  HH-RE
• 5/73 Property used for storage only?
• (2 Possibilities Violation or Not)
• 5/77 HH conveys interest to Ms
• 9/77 HH releases interest to SD1

28
Mahrenholz v. County Board MAJOR EVENTS FSCS
RE2/69 SD-FSCS HH-RE

• GRANT VIOLATED
• SD-FSCS HH-RE
• 5/77 HH --gt Ms?

• NO VIOLATION
• SD-FSCS HH-RE
• 5/77 HH --gt Ms?

29
Mahrenholz v. County Board MAJOR EVENTS FSCS
RE

• GRANT VIOLATED
• SD-FSCS HH-RE
• 5/77 HH --gt Ms?
• SD-FSCS HH-RE
• 9/77 HH release to SD?

• NO VIOLATION
• SD-FSCS HH-RE 5/77 HH --gt Ms?
• SD-FSCS HH-RE
• 9/77 HH release to SD?

30
Mahrenholz v. County Board MAJOR EVENTS FSCS
RE

• GRANT VIOLATED
• SD-FSCS HH-RE
• 9/77 HH release to SD?
• SD - FS Absolute

• NO VIOLATION
• SD-FSCS HH-RE
• 9/77 HH release to SD?
• SD - FS Absolute

31
Mahrenholz Summary of Possibilities
32
Mahrenholz v. County Board The court says
(P583) The type of interest held governs the
mode of reinvestment with title if reinvestment
is to occur. DQE6. What does the court mean by
reinvestment ?
33
DQE7 (P584) In Northwestern Univ. , a
conveyance was made upon the express condition
that said Wesley Hospital shall erect a hospital
building on said lot and that on the failure of
said Wesley Hospital to carry out these
conditions the title shall revert to Northwestern
University.This language cannot be interpreted
as creating anything but a fee simple subject to
a condition subsequent, and the court so held.
34
DQE8 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?
35
Mahrenholz v. County BoardDQs E9-E12
Fleetwood Mac
36
Mahrenholz v. County Board

• To the Trustees of School District No. 1
• "to be used for school purpose only otherwise to
  revert to Grantors herein.
• DQE9 Fee Simple Determinable
• or
• Fee Simple on Condition Subsequent?

37
To Trustees of SD No.1 "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

38
To Trustees of SD No.1 "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

39
Mahrenholz v. County Board DQE10 Under what
circumstances might the distinction between a fee
simple determinable and a fee simple on condition
subsequent be significant?
40
FSD v. FSCS Consequences

• Transferability after breach (Mahrenholz)

41
FSD v. FSCS Consequences

• Transferability after breach
• Adverse Possession

42
FSD v. FSCS Consequences

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

43
FSD v. FSCS Consequences

• Transferability after breach
• Adverse Possession
• Income from land after breach
• Waiver/Estoppel by future interest holder
  (possible if FSCS)

44
DQE10 Why do so many grants fail to indicate
clearly which interest is intended?
45
DQE11 IS STORAGE A SCHOOL PURPOSE?ARGUMENT
S
46
DQE11 IS STORAGE A SCHOOL PURPOSE?What
legal research could you do to help resolve this
question?
47
DQE11 IS STORAGE A SCHOOL PURPOSE?
RESEARCHLEGAL CASES ON SCHOOL
PURPOSECASES ON CHURCH PURPOSE ETC.
FACTUAL WHAT FACTS MATTER ?
48
DQE11 IS STORAGE A SCHOOL PURPOSE?
RESEARCHFACTUAL GRANTORS INTENTIN GRANT
ITSELFWITNESSES TO TRANSACTIONASK
GRANTORWITNESSES RE GRANTOR BELIEFS
49
DQE12. Why should we allow grantors to have any
control at all of what happens to land after they
have died?
50
PROBLEMS I-L

• Featuring The Grateful Dead

51
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 cham- pagne. The restaurant is successful,
and 11 years after its opening D wants to buy it
and add a bar. Advise D.
52
PROBLEM I MULTI-STEP ANALYSIS

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

53
PROBLEM I MULTI-STEP ANALYSIS

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

54
(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 Orrins interest vest automatically (FSD) or
  does he have to act (FSCS)?

55
(I) 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."

• 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

56
PROBLEM I MULTI-STEP ANALYSIS

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

57
(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
Js restaurant(i) serves several dishes cooked
with wine or flamed with brandy? (ii) at Sunday
brunch offers complimentary glass of champagne?