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Free Hold Estates Definitions

Free Hold Estates Definitions

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Published by: Jackie_Fox_6155 on May 01, 2011
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FREEHOLD ESTATES AND THEIR FUTURE INTERESTS DEFINITIONS

A Contingent Remainder is a Remainder in which the remainder- person does not have a right to immediate possession upon the termination of the preceding estate, unless a condition stated in the transferring document occurs first. To determine whether the Remainder is Contingent or Vested Subject to Open, one needs to analyze the transferring document to determine whether the transferor intended that the remainder-person would have a "vested" future interest subject to its being taken away by the happening of the stated event or whether the transferor intended that the interest would not be "vested" until the stated event occurs. One general guideline in determining the transferor's intent is to identify where the conditional language in the transferring document occurs. If the conditional language in a document is placed after the language that, if considered alone, would have created a Vested Remainder , the language presumably would create a condition subsequent and the Remainder would be a Vested Remainder Subject to Divestment. On the other hand, if the conditional language is placed before the language that would create the remainder, or, if the conditional language is placed so that it is a part of the description of the remainder person, the language presumably creates a condition subsequent and the remainder is a Contingent Remainder. Note, however, that because of the definition of a Vested Remainder, any Remainder in an unborn person or an unascertainable person always creates a Contingent Remainder.

A Determinable Life Estate is a Life Estate created by an instrument that also contains a limitation that might automatically terminate the life estate owner's interest in the property prior to the death of the measuring life. Whether the estate terminates automatically depends upon the intention of the transferor. Generally, the following words preceding the limitation in the transferring instrument will create the presumption that the transferor intended an automatic termination of a life estate: "while", "during", "until", "for so long as". The future interests following a Determinable Life Estate are either the transferor retains a Reversion (not a Possibility of Reverter), a third party receives a Remainder, or a third party receives an Executory Interest.

Therefore. Although. instead of making it absolute.An Executory Interest is a future interest created by the transferring instrument. As a result. it is important to note that courts will not find a Fee Simple Determinable unless the transferring instrument contains words that raise the presumption of automatic termination or contains a combination of words clearly indicating the transferor's intent to terminate the estate automatically. includes a condition or a limitation that would terminate the fee simple when the event in question occurs. The future interests following a Fee Simple Determinable are either a Possibility of Reverter owned by the transferor (or its successors) or an Executory Interest owned by a third party. since the Fee Simple Determinable terminates automatically. Rather. "for so long as". A Fee Estate is an estate that is all the property in the thing referred to. there are no future interests following the Fee Simple Absolute. the Executory Interest might become a possessory estate either automatically upon the expiration of a Fee Simple Determinable. upon the exercise of the Power of Termination or the premature termination of a Determinable Life Estate. having the potential to last forever. upon the termination of a Fee Simple Subject to a Condition Subsequent. the fee simple ownership is divided between the owner of the Fee Simple Determinable and others. rather than a Fee Simple Determinable. there are future interests following a Fee Simple Determinable. an Executory Interest divests present estates created in favor of someone other than the Executory Interest holder or vested future interests created in favor of someone other than the Executory Interest holder. A Fee Simple Absolute is an estate in which the owner holds its interest for an undivided and unlimited time. In many jurisdictions where the future interest is an Executory Interest the fee estate is referred to as a Fee Simple Subject to an Executory Limitation (or some other synonym). upon the expiration of a Fee Simple Subject to an Executory Limitation. "until". . since the same terminology would seem to include a Fee Simple Subject to a Condition Subsequent followed by an Executory Interest. So. generally. Over the years the following words preceding the limitation presumably evidence the intent for automatic termination: "while". "during". It is in someone other than the original transferor or its successors. A Fee Simple Determinable is an estate which arises where the conveyancing instrument first creates a fee simple but. These future interests become vested estates immediately upon the happening of the condition. or upon the divestment of a Vested Remainder Subject to Divestment. using such an alternative identification can cause confusion. An Executory Interest never waits until the natural expiration of all prior estates as remainders will. Therefore. Further. The key to a Fee Simple Determinable is the transferor's intent that the fee simple is to terminate automatically. that rule seems to be eroding. However. traditionally an Executory Interest could not follow a fee simple subject to condition subsequent.

In many jurisdictions where the future interest is an Executory Interest the fee estate is referred to as a Fee Simple Subject to an Executory Limitation (or some other synonym). It is not considered to have simply expired as does the Fee Simple Determinable. A Life Estate is an estate designed to last for the life of a person. The future interests following a Fee Simple Subject to a Condition Subsequent are either a Power of Termination or Right of Re-Entry owned by the transferor (or its successors) or an Executory Interest owned by a third party who has been transferred the Power of Termination or Right of Entry in the same instrument creating the subject fee estate. rather than a Fee Simple Subject to a Condition Subsequent. the estate is referred to as a Life Estate Pur Autre Vie. the Fee Simple Subject to an Executory Limitation terminates automatically. since the same terminology might include a Fee Simple Determinable. However. when the terminating event occurs. . Whether the transferor (or its successor in interest) or the Executory Interest holder is intended to have the right to enter or power to terminate depends upon the transferor's intent. using such an alternative identification can cause confusion. the Fee Simple Subject to a Condition Subsequent will not terminate unless and until the holder of the power to terminate or the right to enter exercises that power or right. This estate is a hybrid of the Fee Simple Determinable and the Fee Simple Subject to a Condition Subsequent. Nevertheless. "if however". as with the Fee Simple Determinable. A Fee Simple Subject to an Executory Limitation is a fee simple estate which may terminate automatically and pass to one other than the original transferor (or its successors in interest) upon a designated contingency's occurring. "however".A Fee Simple Subject to a Condition Subsequent is an estate which arises when the transferring instrument has created a fee simple but also includes a condition that either the transferor (or its successor in interest) or a third party will have a right to enter or a power to terminate the fee simple when the stated condition occurs. However. the time in a Fee Simple Subject to a Condition Subsequent is potentially divided. the Fee Simple Subject to an Executory Limitation is divested or artificially cut off. Unlike the Fee Simple Determinable. "on condition that". The following words preceding the condition presumably evidence the intent to create the Power of Termination or the Right of Entry: "provided". As with the Fee Simple Determinable . "but if". Therefore. there are future interests following a Fee Simple Subject to a Condition Subsequent. as with the Fee Simple Subject to a Condition Subsequent. If the person whose life is designed to be the measuring standard is someone other than the life tenant.

Since a life estate does not last forever. A Possibility of Reverter is a future interest in the transferor which might become a possessory estate upon the automatic termination of a Fee Simple Determinable. Those future interests are owned by either the transferor who retains a Reversion or a third party who receives a remainder. there are future interests that will become possessory following the termination of the life estate. The measuring life may be either the owner or another person. Life Estate Subject to an Executory Limitation seems to be a logical extension of the Fee Simple Subject to an Executory Limitation.A Life Estate Subject to a Condition Subsequent arises when the transferring instrument creates a Life Estate but the ownership of that life estate might not last for the life of the measuring life. as with the determinable life estate. and/or the third party receives an Executory Interest with the Power of Termination or Right of Entry upon the happening of the condition. and/or the transferor retains a Power of Termination or Right of Re-Entry upon the happening of the condition. The following words appearing in the transferring instrument before the instrument states the limitation creates a presumption that the transferor intended to create a Power of Termination or Right of Entry: "provided". The following future interests might become possessory estates upon the termination of a Life Estate Subject to a Condition Subsequent: the transferor retains a Reversion after the life estate's natural termination. Of course. "but if". "on condition that". "however". Unlike the Determinable Life Estate . the life estate is "pur autre vie". refer to that definition. A Nondefeasible Life Estate is an estate created when the transferring interest passes title to the owner for as long as the measuring life is alive. "if. So. however". Again. whether there is the Power of Termination or Right of Entry depends upon the transferor's intent. the life estate subject to a condition subsequent might terminate prior to the demise of the measuring life. In the event the measuring life is one other than the owner. the Life Estate Subject to a Condition Subsequent will not terminate unless and until the holder of the Power of Termination or the Right of Entry exercises that power or right. and/or a third party receives a Remainder to become effective on the natural termination of the life estate. The transferring instrument will also provide for a condition that will give the transferor (and its successors) or another person the Power of Termination or Right of Entry upon the happening of the stated condition. .

also.A Power of Termination or Right of Re-Entry is created when the transferor transfers a Fee Simple Subject to a Condition Subsequent or a Life Estate Subject to a Condition Subsequent and retains for itself and its successors in the instrument the power to terminate the estate created by the instrument. if this Remainder fails because of the Rule Against Perpetuities and one other than the transferor or its successors will take. Note. This is also referred to as a Vested Remainder Subject to Partial Divestment. although this is referred to as a "Vested Remainder". A Reversion is a future interest in the transferor that is created when the transferor conveys less than its entire interest and what it keeps is not a Right of Re-Entry or a Possibility of Reverter and the transferring instrument does not identify another party who will be the next estate taker when the present estate created by the transferring document terminates. if it ever becomes a present estate. However. A Vested Remainder is a remainder that is certain to become possessory upon the natural termination of all prior estates of limited duration. Also. A Remainder is a future interest in someone other than the original transferor which. there are no conditions precedent to the remainder’s becoming possessory. A Vested Remainder Subject to Open (sometimes referred to as a class gift) is a Vested Remainder to a group for which others may qualify for membership after the transferring document becomes effective. the third party has an Executory Interest based on that Power of Termination or Right of Entry. since it is vested for purposes other than the Rule Against Perpetuities. will become a present estate only after the natural termination of all previous estates that are both of a limited duration and were created at the same time as the remainder interest. it must always be at least theoretically possible to determine those parties who are to receive possession upon the prior estates terminating. A Vested Remainder Subject to Divestment is a Vested Remainder which the remainder persons might lose their right to immediate possession due to the happening of a condition that might occur after the Remainder is created and has become vested in interest. Compare. So. that third party's interest is a Contingent Remainder. . that if the transferor provides in the instrument creating the Fee Simple Subject to a Condition Subsequent or the Life Estate Subject to a Condition Subsequent the right in a third party to terminate the prior estate upon the happening of a condition. this remainder is not "vested" for the purposes of the Rule Against Perpetuities.

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