subject to open future children of B will be excluded from the class

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1 Problem 14: O deeds to A for life, then to the children of B. [B is alive and has 2 kids, Chandler and Monica.] What is the state of title following O s conveyance? A = present life estate Chandler, Monica = vested remainder in fee simple absolute (shared as co owners), subject to open Future children of B = contingent remainder in fee simple absolute (not ascertainable until birth) O = no estate (property cannot revert to O) #14(a): O deeds to A for life, then to the children of B. [B is alive and has 2 kids, Chandler and Monica.] Two years later, A dies. What is the state of title following A s death? Chandler, Monica: now have a present fee simple absolute estate (based on Rule of Convenience); future children of B will be excluded from the class 1

2 Rule of Convenience With a class gift, the class closes (even if it could otherwise remain open naturally) when any member of the class is entitled to demand present possession This promotes convenience regarding the ownership, use, and development of the land If Chandler and Monica have to wait until B dies, they can t really develop and/or sell the land during B s life (when contingency will be resolved) Closing the class at the time of A s death (when Chandler and Monica can take possession) thus makes the land practically alienable sooner Rule of Convenience Note: The Rule of Convenience is a rule of construction, not a rule of law This means that a court would NOT apply the Rule of Convenience to close a class before its natural closing, if the grantor s intent was clearly to the contrary 2

3 Problem #16: O deeds Blueacre to A s children. [At time of conveyance, A is alive and has no children.] State of the title following O s conveyance? No present estate in A s children (no existing children) O = fee simple, subject to executory interest A s children = executory interest in fee simple absolute O s estate will be divested when child is born to A, but O s estate would become fee simple absolute if A died without ever having children Now suppose that in Problem #16, A has a child, Tom, 3 years later. Should the Rule of Convenience close the class (since Tom is technically entitled to possession)? No, class should remain open If rule was applied, the entire FSA would vest in A s first child, but as O made a gift of a future interest to A s children, it suggests O likely intended to benefit all of A s children Tom = fee simple, subject to open 3

4 Kost v. Foster 1897: M/M Kost executed a deed Deed stated: Grantors... Convey and Warrant to their son Ross Kost... for and during his natural life only, at his death to his lawful children, the lawful child or children of any deceased lawful child of Ross Kost to... receive its or their deceased parent s share What future interests were created by this deed? And why does it matter? Why It Matters Oscar, one of Ross s kids, went bankrupt in 1936 Bankruptcy Trustee sold all of Oscar s assets to Foster, to raise money to pay Oscar s creditors If Oscar had a vested remainder (alienable under IL law), Foster now owns a 1/7 share of the land in fee simple absolute (and can have land sold in partition) If Oscar had only a contingent remainder (not alienable inter vivos in IL), then Foster got nothing, and Oscar would still own his 1/7 interest 4

5 Oscar s Argument Oscar: my remainder was contingent (subject to a condition precedent that I had to survive my dad Ross in order to take the property) Each child of Ross = contingent remainder in FSA Children of each child of Ross: alternate contingent remainder in FSA (it will vest in them if their parent died before Ross did) at his death to his children [if they survive him; if not] the lawful child or children of any deceased lawful child of Ross Kost to have its deceased parent s share Court: Oscar s interest was a vested remainder in fee simple, subject to divestment The divesting condition in the deed was Oscar dying before Ross, leaving children surviving him If Oscar died childless before Ross, nothing in the deed would explicitly divest his interest The law doesn t imply that someone holding a remainder has to survive the life tenant; a condition precedent of survival must be expressed Oscar s 1/7 interest was sold to Foster, who now (with the 6 siblings) has a fee simple absolute 5

6 Contingent Future Interests and the Problem of Deadhand Control Should the law allow O to make the following conveyance? O to A for life, then to A s children for their lives, then to A s grandchildren for their lives, then to A s great grandchildren for their lives, then to A s great great grandchildren for their lives,... [etc.] Problem: each future generation would have a contingent remainder (open classes) Conveyance would tie up land in A s family forever Each generation could only enjoy the land for their respective lives, land would be effectively inalienable Problem: over the generations, ownership could become more and more fractionalized (you could have dozens/hundreds sharing a life estate as co owners) 6

7 Rule Against Perpetuities No interest is good unless it must vest, if at all, not later than 21 years after the death of some life in being at the time the interest was created. A contingent future interest that might vest too remotely is considered void ab initio John Chipman Gray RAP: Policy Addresses inalienability of land caused by risk of remote vesting of contingent future interests (i.e., possibility that future interests may remain contingent for too long into the future) Period ( life in being + 21 years) reflects balancing of interests of landowners (e.g., keeping land tied up in families) and society/future generations (promoting alienability of land) 7

8 Applying the RAP Step 1: Classify the interests created by a deed or will (as if they were valid) Step 2: Apply RAP to each interest created RAP can apply to invalidate any of the following types of future interests: A contingent remainder A vested remainder subject to open (open class) An executory interest Applying the RAP O to A for life, then to B s heirs. [B is alive at the time of O s deed.] A = life estate B s heirs = contingent remainder in fee simple absolute O = reversion in fee simple absolute (could become possessory at O s death if B died without heirs) Do these interests satisfy RAP? 8

9 Interests of A and O are valid because they are vested at the time the deed took effect Contingent remainder in B s heirs is valid, because it cannot vest too remotely B was a life in being at the time of O s conveyance At B s death, B s heirs will be identified (and their remainder will vest), or B will die without heirs (and their remainder will fail) Thus, B is the measuring life that proves that the interest in B s heirs is valid RAP: The Measuring Life A measuring life is someone: (1) who was alive at the time that the interest you are testing was created, AND (2) whose life/death is related, by logical necessity, to whether that interest will vest or fail, either during that person s life, at their death, or within 21 years after their death In previous problem, B is the measuring life (B s death will resolve the contingency) 9

10 O to A, but if B graduates from law school, to B A = fee simple subject to executory interest B = executory interest in fee simple absolute (will vest if B graduates from law school) A s interest is VALID (vested present estate at time O s deed took effect) B s interest is VALID B s interest will either VEST IN FEE SIMPLE ABSOLUTE DURING HIS LIFE (if B graduates law school) or FAIL AT HIS DEATH (if he doesn t), in which case A will thereafter have a fee simple absolute estate O to A, but if the land ever ceases to be used for residential purposes only, then to B A = fee simple subject to executory interest B = executory interest in fee simple absolute (will vest if land is not used for residential purposes) A s interest is VALID (vested present estate at time O s deed took effect) B s interest is INVALID It might vest 500 years before land ceases to be used for residential purposes (> 21 years after B s death or the death of anyone alive at time of A s deed) 10

11 O to A, but if the land ever ceases to be used for residential purposes only, to B A = fee simple absolute B = no estate (intended executory interest is void because it might vest too remotely) How might O have saved B s interest? O should have tied the condition to the life of either A or B E.g., to A, but if A ever ceases to use the land for residential purposes only, then to B (A is the measuring life), or E.g., to A, but if the land ever ceases to be used for residential purposes only during B s life, to B (B is the measuring life) 11