BARBRI - Real Property 1 - Maynard (Florida) Transcription and Captioning by

Transcription

1 BARBRI - Real Property 1 - Maynard (Florida) Transcription and Captioning by Good morning. My name is Therese Maynard. I teach at Loyola Law School in downtown L.A. I can actually see Staples Center from my office. I also happen to be a licensed member of the California Bar. More years ago now than I want to own up to, I actually took BAR/BRI to help me get ready for the California Bar exam. Although I'm a long ways from home, I'm delighted for those of us live here in Jacksonville, I will be here all day today and back tomorrow morning and I am going to talk about the law of real property, for both the multistate questions that you'll find on this summer's exam as well as for the Florida essay. Now, as some of you may have thought back on your first-year real property course, if your school is like mine, you probably remember an acutely boring class filled with obsolete common law concepts, things like livery of season, operation of the English feudal system; and you say, "I'm studying for the Florida Bar, who cares how the English feudal system operates." And lucky for you the Florida Bar Examiners don't care and we don't care. So remember, all I'm going to worry about for our three sessions together is what you need to know to handle those multistate questions on property law as well as anything that will come up on the Florida essay. And, folks, in my experience, that means we may ignore most if not everything you talked about in your first-year real property course because all we're going to worry about are the rules you need to know for this summer's exam. Now everybody should have my handout that I prepared. If you take a look at it, you'll see that it's got a lot of hypos. Lots and lots of fact patterns. Save your hand. I've written out the facts of every single fact pattern that we're going to cover. Most of those fact patterns are taken from prior multistate questions and it's a little misleading because many of them have a subpart that reflects the kind of follow-on question that you're likely to encounter on the multistate questions in particular. Now I don't know if any of you have yet seen the large outline that BAR/BRI gives you for property law. It's very comprehensive. The one for last summer was 152 pages single-spaced. And, boy, is it comprehensive. It covers everything that could possibly come up on this summer's Bar exam here in Florida. But I've got to tell you, if you hang in there with me, in my handout I'm going to cover every single rule that you need to know to answer any of the multistate questions that we've ever had and any issue that I've seen ever come up on the Florida essay. Now I also want to suggest that in addition to laying out hypos, I think that my handout has another couple of advantages over that detailed outline that BAR/BRI gave you. First, I think it's a lot more

2 realistic about details. It's going to cover the rules you need to know to be able to analyze the fact patterns that are going to show up on this summer's exam. Also another big advantage I think it has is that I've tried to write the rules in a way that's easy for you to remember. So they're written in plain English. And I tried to organize the lecture so that the rules are going to be easier for you to memorize and then remember how to use them on the Bar exam. Finally, if you took a quick look at it, being the middle-aged Luddite that I am, this is my version of interactive. There are blank lines you're going to have to fill in. As we go through our three sessions of property law, I'm going to tell you what you need to write down, so by the time we're done, every single one of those blank lines is going to be filled in. I also want you -- although it looks a little long, I want you to realize there's a lot of white space on my handout. That's done deliberately. I would suggest as we go through our three sessions together you write down any additional notes, anything you need that's going to help you remember the material. You can annotate this handout as we go through our three sessions. Each night, if you need a little more review, a little more detail, you might want to consult that detailed outline that BAR/BRI gave you and then annotate any additional detail that you need. But the goal is that as we go through our three sessions together, this is going to be your freestanding study guide. This is where you're going to concentrate all of your note taking, all the rules you need to know. As you start reviewing those multistate questions, this will be the tool that you will go back to to refresh any detailed rules that you need to remember, and the additional explanation. I know the handout looks daunting, but if you would turn to page 116, I have provided you this summer with a -- what I call "shrink-wrap version" of the handout. All the rules that we're going to cover I have put into a summary outline. And this is what I would suggest is what you need to remember, that you need to focus on, and when it's time to start memorizing all those rules, I've taken everything, all those plain English rules, and put it into one place. Now if you'll skip past the table of contents -- I'll come back to that in a moment -- and turn to the first page of the handout. Let me remind you what you're responsible for on this summer's Bar exam here in Florida. On those multistate questions you need to remember about majority rules, which means usually you only need to know one rule, the majority rule. Occasionally they will hold you responsible for a significant minority view. On certain topics then you are going to need to know two rules. But generally speaking, you're going to apply the majority rule, and that means you're going to apply -- let's fill in our first blank there -- you're going to apply the common law rule unless there has been a majority change. That's what you write down, "majority change," in the common law rule. Since you are responsible for the majority rule, that means you are responsible for the law followed by more than half the states. Since more than half the states continue to follow the common law rule, that means you are generally speaking going to apply the common law rule unless I tell you there's been a majority change in the common law rule. In every instance where there's been a majority change in the

3 common law rule that you need to worry about for this summer's exam, I'm going to cover all of those during our three sessions together. As I said, generally speaking, then, since you need to know the majority rule, that means, generally speaking, you apply the common law rule. But occasionally there will be a significant minority view. And I will cover all of the significant minority views that you need to worry about during our three sessions together. I'm going to cover all of the significant minority views that have ever shown up on the Florida exam. Before we dive into the nits and grits, let me give you some sense of how you can expect those 33 property questions on the multistate exam to divide themselves out. In paragraph 2 there, sale and conveyancing are, from my perspective, the most important topics. Fully half of the questions in any given year, around 15 to 17 questions, will come in the area of adverse possession, conveyancing, recording, and security interests. And if you look at the table of contents, for those of us here live in Jacksonville, we're going to come back and do those most important topics tomorrow morning when we're fresh. That's when we will take up, as part of Property 3, we will take up the all-important areas of sale and conveyancing. The next most important topic from my perspective is, turning to the first page of the table of contents, is what we're going to do this morning, the law of estates, including the law of future interests. In any given year, it seems as though there's six to nine questions that come out of the law of the states and future interest. That also includes landlord-tenant law, which we'll start, for those of us live here in Jacksonville, we will start right before lunch and then we'll finish landlord-tenant law, which is much easier to deal with, we will finish that this afternoon right after lunch, live here in Jacksonville. That's part of Property 2. Then if you'll turn to the second page of the table of contents, this afternoon, for those of us live here in Jacksonville, we will take up the next area of importance on the Bar exam for the multistate questions is the law of easements, covenants and servitudes, the non-possessory interests. In any given year it seems there's about four to six questions that come in the area of easements, covenants and servitudes. And if you've doing the math and totaling things up, you'll realize that in any given year there will be a handful of questions left over. They get allocated over what I like to call the miscellaneous topics in property law, things like the law of fixtures, water rights and the like. As we go through our three sessions together, I'm going to cover all of those miscellaneous topics that you need to worry about as well. So that's what you need to worry about or how things will show up on the multistate. What about the Florida essay?

4 The good news here in Florida is you're pretty much a common law jurisdiction. So for the most part the rules that we're going to cover for the multistate questions are exactly the same rules that you're going to use if those issues show up here on the Florida essay. However, having said that, you've got a set of Florida distinctions. And I would urge you each night as we go through the topics to consult the Florida distinctions, but what I've tried to do here is I've customized the handout. In particular, where Florida law is different than the rule you're going to use on the multistate, I've tried to flag those areas where there's a major difference between the rule that you need to know on the multistate and then the separate and different rule that you're going to use if that issue shows up on the Florida essay. So again, my suggestion is that each night you might consult that set of Florida distinctions and annotate any additional detail that you need. So that by the time we're done, the handout becomes your freestanding study guide, not only for those all important multistate questions, but also any issues that's going to come up on the Florida essay. If you'll turn back to page 1, regardless -- at the bottom of the page there, regardless of how the issue shows up, whether it's on a multistate question or on the essay, here in Florida, let me suggest there are really only two kinds of questions that the Bar examiners can throw at you. First, they expect you to be able to identify and describe the three interests in Blackacre, so let's list them. That's the estate. That's what we will start with today is the estate. On line 2 you write "easement." The law of easements we will cover this afternoon in Property 2. And then on line 3, the restrictive covenant. The restrictive covenant. So you've got the estate, the easement and the restrictive covenant. So they expect you to be able to identify and describe the three interests in Blackacre, and then let me suggest the only other kind of question that they can throw at you is, so how do I acquire my interest in Blackacre; how do I acquire my easement; since I don't take my easement to the office with me every day, how do I retain my interest in Blackacre; and finally, how do I transfer my interest in Blackacre. I want to suggest those are really only the two types of questions they can throw at you on the Bar exam. This handout is customized so that you'll be able to remember the rules you need to know to answer those two basic types of questions. For those of us here live today in Jacksonville, we are, compliments of the law school here and BAR/BRI, providing you lunch. So we will probably go until around 12:30 or so and then we'll break and then we'll start back up for Property 2 right at 1:30. My goal is to get you out of here around 5 or a few minutes after so that we can get through all the rules you need to know in an orderly fashion. We will take a couple breaks. We try to keep them strictly to ten minutes, and that way I can make sure I get through everything you need to know and still get you out of here on time. So let's turn then and dive into the law of property. Let's start over there at the top of page 2. We're going to start off with the estate. And as it says there, estates fall into two categories, either freehold or

5 non-freehold. But either way, here is the key word. For estates you write down "possession." Possession. You have some kind of an estate if you have a right of possession for any amount of time. Now your right to possess Blackacre may exist in the present, hence they are known as the present possessory estates. On the other hand, your right to possess Blackacre may not come into existence until later on down the road, and you will remember that estates with future rights of possession are called "future interests." Future interests, and we're going to do that law of future interest this morning while we're still fresh. All right. Those present possessory estates fall into seven -- seven different types. Falling into two categories: freehold and non-freehold. The non-freehold estates are more popularly known as the landlord-tenant estates. We will start landlord-tenant law before lunch and then finish it up as part of Property 2. So what we're going to turn to now are the freehold estates. And you're remember there are three: the fee simple, including the different types of fee simple, which we collectively refer to as the defeasible fees; the life estate; and then the least important on this summer's Bar exam is the fee tail. All right. Let's go through all of them. Let's start with the largest estate known to the law, the fee simple absolute, or we will abbreviate it all day as the FSA. You remember this estate is capable of lasting forever, has potentially infinite duration, but far more important on the Bar exam is this estate must be fully alienable. By that I mean no direct restraints. No direct restrictions on the right to transfer ownership of the fee simple absolute. So let me show you how it's come up a number of times on the multistate. Take a look at Hypo Number 1. John wills the farm in upstate New York to Yoko but provides in his will that if Yoko tries to sell the property, he wants it to go over there to Shaun. And in the call of the question, they want to know what interest does Yoko take under the will. You pick the answer that says Yoko has the FSA, she has the fee simple absolute. And Shaun gets nothing. You pick the answer. It says Shaun gets nothing. Now how did you get that result? Because of our rule there. Any attempt to put a direct restraint on the right of alienation is void, which means you ignore the restriction. That's what you write down. You ignore the restriction. It's void. It doesn't exist as a matter of property law. That means as a practical matter you ignore the restriction. So if you ignore the restriction here, that's why you pick the answer that she gets the FSA, and Shaun gets nothing. Now why is it void? Remember that strong public policy that runs throughout the law of property. You're going to bump into it many times during our three sessions together. That's the public policy favoring the free alienability of interests in land. Any time you try to put a restriction on the right to transfer ownership it's simply void. It violates public policy, it doesn't exist as a matter of property law, so you ignore the restriction.

6 Now, what gets a little tricky on the Bar exam is that you will remember from your first-year property course -- and if you don't remember, trust me, by the time we're done doing future interest law this morning, you'll be well aware -- that it's perfectly okay to put a condition on the use of Blackacre. As we say, a condition on the exercise of the fee simple. So what you have to be able to do on the Bar exam is distinguish language imposing a condition on the exercise of the fee simple, because that's void, but it's perfectly okay to put a condition on how the property can be used. So take a look at how it's come up on the Bar exam. So part C. Now they tell you John wills the farm to Yoko but provides that if Yoko allows Paul onto the property, then he wants the farm to go over there to Shaun. This is okay. That's what you write down. "This is okay." Why? Write down "language of condition." This is language of condition. This is language imposing a condition on how the property can be used. Language of condition does not violate public policy. The only thing that violates public policy is a limitation on the right to transfer ownership, which you know is void. All right. Turning to the top of the next page. Having waxed poetic about that strong public policy favoring the freeholding ability of interest in land, let me mention an important modern exception, and it comes up in the case of something known as a right of first refusal. And today the right of first refusal is perfectly okay. It's a valid form of restraint on alienation. Take a look at Hypo Number 2. Now John wills the farm to Yoko, but in his will provides that if Yoko should try to sell the property during her lifetime, then Shaun is going to have a right of first refusal. You will remember that a right of first refusal means if you see Yoko try to sell the property during her lifetime, then it's going to trigger this option that Shaun has to come in and buy the property before she can sell it to anybody else. They want to know is this okay. The answer is yes. It is a restriction on the right to transfer ownership. But you pick the answer that says it's a valid form of restraint on alienation. All right. You will remember from first-year property that in the law of the states, language is crucial. So what kind of language do you need to see in order to validly create the fee simple absolute? And in common law, very precise words. You had to see the words "to A and her heirs." That's the only way to create the fee simple absolute. So in common law, if the language of the grant read to A, then A took a life estate. If the language of the grant read to A, then A took only a life estate. But here we're going to bump into our first instance where we have a majority change in that common law ruling. Today all courts presume a fee simple was granted unless the language shows a clear intent, a clear intent, to do something else. So today the courts presume a fee simple was granted unless the language of the grant on the Bar exam shows a clear intent to do something else. And every time they want to test on this modern presumption. Take a look at Hypo Number 3. The language of the grant reads, to A, or as it does here, to Yoko. What estate does Yoko take? She gets the FSA.

7 I assure you one of the choices will be a life estate. But you remember our modern presumption and she's going to get the fee simple absolute. Just as a reminder, there are different types of fee simple. Collectively in property law we refer to them as the defeasible fees. I think it's a whole lot easier to understand the terms of these defeasible fees if you talk about them in connection with the future interest that goes hand in hand. So we are going to defer our discussion of defeasible fees for a few minutes and we will do the defeasible fees as part of our discussion of future interest law. So let's turn then to the least important freehold estate on this summer's Bar exam, and that is the fee tail. And the reason it's not all that important today is that virtually every state has either eliminated this estate altogether or at a minimum has dramatically altered the terms of this estate by a modern statute. However, they do expect that you went to law school, and they do expect that you studied for the Bar exam. So they do expect you to know what is a fee tail. You remember at common law, fee tail was a device used by the grantor to lock the property into the grantee's family, and that way the grantor could prevent the property from being transferred outside the family. And again, we're in the law of estates, so very precise words were required at common law. In order to create the fee tail you had to see the words "to A and the heirs of her body" or the words "to A and her bodily heirs." Occasionally the Bar examiners will use in the language of the grant "to A and her bodily heirs," and you remember today our modern presumption. This language will be presumed to create the FSA unless the Bar examiners specifically ask you to apply the common law rule. But if they don't, you remember that the modern presumption is those words will give rise to the fee simple absolute. All right. The last of the freehold estates is the life estate. As it says there, the life estate can arise by express grant, or as we will see in a moment, it can arise wholly by implication. But either way here is the key thing to remember about the life estate: The life estate is never measured, never measured by time; only measured by life. Only measured by life. So what that means is, if you see a fixed period of time in the language of the grant, a period of time determinable by looking at a calendar, it is not a life estate. So let me show you how it's come up a number of times on the Bar exam. Take a look at Hypo Number 4. Some years ago a large house over there in Nashville, Tennessee, was conveyed from Garth to Elvis. The language of the grant read, "To Elvis for 200 years if the legend should live that long." They want to know, does he have a life estate? The answer is no. No. Even though his interests will expire when he does on his death, the language of this grant does not create a life estate. Here he got an estate that will terminate in a fixed period of time, so it is not measured by life. Therefore it is not a life estate.

8 Okay. What if, as it often does out there in the real world, the language of the grant reads "to Elvis for life." I give you this as an example of a life estate created by express grant. And we say the grantee's life is the measuring life. So as a matter of property law here, Elvis, the grantee, his life will serve as the measuring life. Now you remember it doesn't have to be that way. It can be -- the measuring life can be the life of somebody else. But before we talk about a life estate pur autre vie, let me show you Hypo Number 5 which illustrates just how carefully you have to be when you read the facts of the Bar exam question. Here I'm going to give you an example of how the life estate can arise wholly by implication. So they tell you that in his will, Lyndon leaves the ranch to Luci and Lynda after the death of my beloved wife, Lady Bird. And in the call of the question they don't ask about Luci and Lynda. They want to know what is Lady Bird. You tell them Lady Bird has an implied life estate. She has an implied life estate. The courts are going to say that has to be what Lyndon had in mind when he said, "I want the Texas ranch to go to my daughter after the death of my beloved wife." So here it arises by necessary implication from the terms of Lyndon, the testator's will. All right. More often than not in the real world I live in, it will be a life estate created by express grant, and more often than not the grantee will be the measuring life. But one thing you have to get used to is the Bar exam is not the real world. So you're going to worry about the life estate pur autre vie, or where the measuring life is the life of somebody else. So let me give you an example, Hypo Number 6. O to Tarzan for the life of Jane. We all know that here Tarzan has a life estate, but now it's going to be measured not by his life, but by Jane's life. When you get that kind of a fact pattern, then a couple different things might happen as you read along in the facts. So let's take a look at subpart B. They want to know at common law what happens to Tarzan's estate if Tarzan dies and Jane, remember, our measuring life, is still alive? And, folks, this question starts off with three little words that are a red flag to you on this summer's Bar exam: "at common law." When you see -- yeah, you want to circle those three words, because when you see them on the Bar exam, that is your clue that they are asking you to apply a rule that once you pass the Florida Bar, and you will all pass the Florida Bar this summer, this question is asking you to apply a rule that you will never use when you practice law. And I often get asked, why do they ask questions about rules that we're never going to use out there as newly minted Florida lawyers. Think of this as the legal history question. This is the question they ask to make sure you really did go to law school. So if they ask you at common law what's going to happen to his interest if he dies and Jane's alive? The common law courts like to say: Season is vacant. They like to say season is vacant. So anybody takes. That's what you write down. So as a practical matter, anybody takes. Since season is vacant, the

9 common law court said anybody could come along and keep the property until Jane, the measuring life, dies. But if they do not ask you to apply the common law rule, then you remember that today we have a majority change in the common law rule. And today the rule is if you see the life tenant die before the measuring life dies, then you're going to pick the answer that says the life estate interest passes to the estate of the deceased life tenant to be disposed of as part of his estate and obviously it's going to continue in place until Jane, the measuring life, dies. So you would pick the answer here that says that Tarzan's life estate interest passes to his estate, passes to his estate to be disposed of under the terms of his estate and continue in place until Jane, the measuring life, dies. All right. When you get this kind of a grant, one more thing that could happen in the facts of the Bar exam questions over there in subpart D. What are you going to do if the facts show that Jane dies first, leaving Tarzan still alive? You pick the answer Tarzan's life estate terminates. His life estate is over. Why? Because his life estate was measured by Jane's life, not his life. So when Jane dies first, his life estate is over. Even if the facts show that he is alive and swinging, you pick -- all right. That's what passes for Bar review humor. I won't do that again. So anyway, his life estate is over. All right. Let me try to redeem myself. On subpart E is language that we saw on a recent multistate question. Now the language of the conveyance reads: To Tarzan, and on Tarzan's death, to Jane. And they want to know what interest does Tarzan have. I assure you one of the choices is they're going to try to throw you the head fake and say that under our modern presumption he gets the fee simple absolute. But that's wrong. Tarzan gets a life estate. How did you get that answer, Tarzan gets a life estate? Look at how his interest is measured. On his death his life estate is over, and the property is to go to Jane. So here his interest is measured by life, and therefore he gets a life estate, even though the Bar examiners used -- did not use the word "life" in the language of the grant. You look at how his interest is measured, and it's measured by life. On his death his interest is over, so he gets a life estate. Let me show you another way the life estate pur autre vie can come up, on the Bar Exam. Take a look at Hypo Number 7. Again, the Bar exam is not the real world so you read along, and you see that Garth, Garth conveys his large mansion in Nashville to Reba for life. First thing you do on the Bar exam is you label out the interests and you label them out in the order the conveyances are made. So right away you take a look at subpart A. You know that Reba got a life estate and Reba's life is the measuring life. In that conveyance, Reba got a life estate and here her life estate interest is measured by Reba's life. But then because the Bar exam is not the real world, you're going to see that Reba develops some cash

10 flow problems in her personal affairs. So in an effort to raise a little extra money, what does she arrange to do? She arranges to sell, convey away, transfer her life estate interest to her agent, Al. And, folks, it's got to be her agent who is going to buy her life estate interest. Because in the real world I live in, not much of a market for life estate interest. So here she's going to sell her interest to her agent, Al, and you've got to figure out what does Al get in this deal. You know Al gets a life estate measured how? Measured by Reba's life. She conveys away her interest, and that means Al gets a life estate measured by Reba's life. All right. Then you read on. What are you going to do if Al dies before Reba dies? What are you going to do with the property? Remember our modern rule. The life estate is going to pass to Al's estate and continue until Reba dies. Because in effect at this point it is, as a result of the transfer, a life estate pur autre vie. So you are going to apply the same rule. I wrote it out there for you again. If you see the life tenant die before the measuring life dies, you're going to have -- pick the answer that says the estate goes to -- the property goes to the estate of the deceased life tenant and obviously the life estate then continues until the measuring life dies. So the moral of the story, label out the interests and label them out in the order the conveyances are made. That's crucial to do, first order of business, on a Bar exam question. All right. Remember we talked just a moment ago about that strong public policy favoring the free alienability of interests in land. Now what we're going to do is see how that public policy plays itself out where the facts show that there is a restriction imposed on the right to transfer ownership of a life estate interest. Hypo Number 8. Bill. Bill conveys Whiteacre to Paula for life, then to Monica, but he provides that if Paula tries to sell, convey away her life estate interest, then her life estate terminates, and he wants the property to go over there to Monica in fee simple. Is that forfeiture restriction? Is that restraint on alienation valid? The answer is yes. Yes, because the modern view allows a provision that terminates the life estate interest if you see the life tenant try to convey away her interest in the land. So remember, you cannot do it in the case of the fee simple absolute. But today that type of forfeiture restriction is perfectly okay as a matter of public policy in the case of the life estate interest. All right. More often than not, in my experience, when you spot on the multistate questions in particular the creation of a life estate interest, there will typically be a follow-on question that goes to some dispute that has arisen between the life tenant and the holder of the future interest, the person who is going to come on the property when the life estate is over. And their relationship is governed by the law of waste. You want to hang a star on this set of rules. Waste is the most important set of rules that we've come to so far today. You're going to see that we're going to bump into these rules several more times during our three sessions together.

11 In all these rules on waste that you need to remember, you can remember, if you remember one word: Life tenant "maintains" the estate. That's her job. She's got to maintain the estate. And the beauty of this word "maintain" is that it expresses both the maximum and the minimum that the life tenant can do out there on the property. Expresses both the maximum and the minimum. Do anything more than maintain or anything less than maintain, you're going to be guilty of waste and you're going to be liable. You remember, you don't need to write this down, but you remember from law school that waste comes in three flavors: voluntary, permissive and my experience where things can get a little hairy is the matter of ameliorating waste. Let's look at the rules you need to know for each of the three flavors of waste. Let's start by defining voluntary waste. Voluntary waste is any affirmative action, any affirmative action, that goes beyond the right of maintenance. Goes beyond the right of maintenance that results in harm to the premises. So you're looking for facts that show that the life tenant goes on the property, takes some affirmative action beyond the right of maintenance that results in harm to the property. So here what does the word "maintain" mean? It means you let the life tenant continue the normal use of the land. So you've got a life estate in an Iowa corn farm, you farm it. You've got a life estate in a Pennsylvania coal mine, you mine it. But any change of use is going to constitute voluntary waste, and you know that that's going to make the life tenant liable. So the classic fact pattern on the Bar exam has the life tenant go out there and start drilling for oil or mining for coal. You just ask yourself, does that constitute the normal use of the land? Because otherwise you remember our rule. Depletion of natural resources is going to give rise to waste unless the facts show that such consumption is the normal use of the land as in the case of a life estate in a coal mine or a granite quarry. You remember the courts called this the "open mines doctrine" and the examiners will refer to this as the open mines doctrine. The courts say that the mining activity constituted the open use of the land at the time the life estate was created. But again, if you got a recent multistate question, they had a life tenant who had a life estate interest in an apple orchard in the Pacific Northwest. They made a big deal, he's going out there, picking all the Golden Delicious apples, selling off the harvest and keeping all the profit from the Golden Delicious apple crops. That is not going to give rise to waste. The open mines doctrine is worried about the depletion of natural resources. The sale of Golden Delicious apples, the sale of harvestable crops does not involve waste. But to show how they recycle these questions, on another occasion, again it was a life estate in an apple orchard in the Pacific Northwest, but now the guy goes out and he starts drilling for natural gas. Now you've got a problem under the open mines doctrine.

12 Let's turn now to permissive waste. In the case of permissive waste, life tenant doesn't take any affirmative action. Now what you're worried about is inaction, omission, the failure to maintain. And that's going to give rise now to duties. The word "maintain" here is going to result in imposing certain duties on the life tenant. By far and away the most important duty is the duty to repair. And here's the rule. Life tenant has the obligation to make ordinary repairs but not replacement. But not replacement. So as we will see over our three sessions together, the Bar examiners on the multistate have an inordinate fascination with the Iowa corn farm. So on a recent multistate question the Iowa corn farm had a roof on the barn, and it leaked, right? So he went in and he patched it. A couple weeks later, another heavy rain, springs a new leak. The life tenant goes in and he patches it. What they're strongly suggesting is we would be a whole lot better off if this fellow would just put a new roof on the barn. But you remember his job is to keep fixing it, to keep patching it. He has no obligation to replace it. Again, an important limitation on the scope of this repair obligation, the repair obligation is limited; limited to the income received, the rents and profits received from the land. And if the facts of the Bar exam question show that we're not getting any income, no rents and profits, then the repair obligation is going to be limited to the reasonable rental value of the property if the life tenant is using the land. If the facts show that the life tenant is out there using the land. So if you stop and think about it, at the bottom of the page there, if the facts of the Bar exam question show that the life tenant is not getting any money, no rents and profits, no income from the property and he's not otherwise making any use of the land, that means life tenant has no repair obligation. Apparently you can write it really big, "no repair obligation." All right. A few other duties of the life tenant. First, over there at the top of the next page, the general rule is that it's a life tenant's job to pay all of the taxes, all of the property taxes. So if you have a dispute on the Bar exam question, life tenant, holder of the future interest, arguing back and forth about who's got to pay the property tax rule, general rule, life tenant's obligation. But again, his obligation is subject to exactly the same limitation. The obligation extends only to the income received from the land, and if the facts show he's not getting any money and he's not otherwise making any use of the land, then the life tenant is -- has got no tax obligation. So that leads to an important twist on the tax obligation. Well, the general rule is the life tenant has the duty to pay taxes. What are we going to do if the facts show that the life tenant fails to pay the taxes on the property? Then you tell the holder of the future interest: Buddy, you better make sure those taxes get paid. Because otherwise a tax sale will eliminate, will eliminate, the future interest. In all the jurisdictions that I'm going to lecture in this summer, it's usually the case that the tax collector, the tax authorities will only have their patience taxed for so long, no pun intended. And that means if you don't pay your taxes and the tax bill piles up, eventually the taxing authorities are going to sell your

13 property in a tax sale to collect payment of the back taxes and that means the buyer at the property is going to take that property free and clear of the future interest. That's why you tell the holder of the future interest: If you want this property, Buddy, you better make sure those taxes get paid, because otherwise the inevitable tax sale means your interest is going to be extinguished. What if they tell you the property has a mortgage on it? The general rule is that the life tenant is going to have to pay interest on the mortgage, but generally speaking is not required to make principal payments, not required to make principal payments. Usual rule is that the holder of the future interest is the fellow who's got to make the principal payments. But again, the interest obligation is subject to exactly the same limitation. It extends only to the income received, and if there are no rents and profits, then it's limited to the reasonable rental value of the property, provided the facts show that the life tenant is out there using the land. So again, the repair, tax, and interest obligation are all subject to exactly the same limitation. All right. What about insurance? General rule, life tenant does not have to insure the property. However, life tenant does have an insurable interest. An insurable interest. So if I'm lucky enough to be granted a life estate in a 10,000-square-foot Beverly Hills mansion, I don't have to have to insure it, but if I want to make sure it's there for me in my golden years, I do have an insurable interest. All right. The third flavor of waste is that crazy common law rule known as ameliorating or ameliorative waste. And ameliorative waste occurs when the facts show that the life tenant goes out there on the property and alters the property substantially but now the life tenant's activity increases, actually winds up increasing the value of the land. Remember, with voluntary waste he went out there on the property and took some affirmative action that altered the property substantially but resulted in lowering the value of the property. Now in the case of ameliorating waste, his activity actually is going to wind up increasing the value of the land. And invariably, when they want to test on the Bar exam on ameliorating waste, they return to, if your law school is like mine, what I'm sure is a familiar law school hypothetical. Remember that once gorgeous, stately residential Victorian mansion, and now, of course, urban progress being what it is, inevitably it's going to be surrounded by pick your favorite form of urban blight, manufacturing uses, downtown office high-rises, whatever it is. Of course, what does that mean out there in the real world what the life tenant wants to do? Wants to tear down the old mansion, thereby making the property underneath more valuable for other uses such as an office high-rise. And Hypo Number 9, because it's the Bar exam and not the real world, the facts are going to show that along comes the holder of the future interest and says to the life tenant: Hey, Buddy, you can't tear down that residential mansion. I'm up there on the 16th floor of that office highrise, toiling away, waiting for you to expire so I can retire and pull my grandpappy's rocking chair out of storage and park myself right there on the front porch and rock like grandpappy did. So you can't tear down the mansion.

14 And that's the context. They are going to ask you, are you going to let the life tenant tear down the mansion? And here is the rule: If changed conditions have made the property relatively worthless, then you go ahead and let the life tenant tear down the mansion without any liability. Over there at the top of the next page, four words you want to remember: changed conditions and relatively worthless. Those four words show up all the time on the answers on the multistate. You are looking for changed conditions that have resulted in making our residential mansion relatively worthless. If the facts show that the residential mansion is relatively worthless, then you go ahead and let the life tenant tear down the mansion without any liability to the holder of the future interest. And, folks, we've reached an important milestone on our journey through property law. We have now finished discussing all three of the freehold estates. Remember the other four present possessory estates are the non-freehold, the landlord-tenant estates, and we will do those later. But the key thing about all three of these freehold estates, the fee simple, the life estate, and the fee tail, is that all of them carry with them the concept of season, a concept of season. And you'll remember from law school that season originated at early common law. Back then it referred to the incidence of title, the incidence of ownership. You know, when the lord and the vassal stride out onto Blackacre and they have that symbolic ceremony conveying a two-egg or a clod of earth, conveying season. Well, folks, season endures. It originated early in common law but it endures today and continues to be important for pretty much the same reason it was important at common law. Identifying the holder of season is key, because that's the person who is the taxpayer. That is the person whose door you're going to knock on in order to collect payment of the property taxes, and since paying taxes was important at common law and continues to be important today, that means as a matter of property law, it's really important, there in paragraph C, each and every time you see Blackacre change hands, each and every time you see a conveyance of Blackacre take effect, property law wants to know who has season at all times and under all possible circumstances. Remember, tax collector, each and every time the property changes hands, is going to turn to you and going to say: No matter what happens in the future, you're always going to be able to tell me, the tax collector, whose door to go knock on to collect payment of the taxes. And that's really important, as a matter of property law and as a matter of studying for the Bar exam. I think it's an important point to keep in the back of your head as we approach our next topic, as we tackle the law of future interest. As we go through these rules, remember that each and every time property changes hands, the tax collector is going to turn to you, property law, and say: Do you know where this property is going, no matter what happens in the future? You can account for season at all times and under all circumstances. All right. The law of future interests.

15 For many of you, if experience is any indicator, this may be that part of the program you most love to hate, the law of future interest. So what we're going to do is we're going to keep it simple. We're going to build the wall of future interest law brick by brick, going through all the rules you need to worry about for this summer's exam. And let's start by defining it. What is a future interest? Future interest exists now, at the moment it's created, but possession, its possession, will not take place, if it takes place at all, until sometime down the road in the future. I emphasize that point because occasionally the Bar examiners will try to get you to pick the answer that says the interest does not exist now; it only exists in the future. And that's wrong. And the future interest exists now, at the moment it is created. It's simply not going to become possessory, if it becomes possessory at all, until sometime down the road in the future. All the rules you need to worry about in the law of future interest divide themselves into one of two categories. The first are the classification rules. You write down the classification rules and then you hang a star on it. Because more than half the battle is won in the law of future interest in mastering the classification rules. And on the next line you write down the rule against perpetuities. Yes, I guarantee you at least one question this summer will be on the rule against perpetuities. But if you remember perpetuities law as your own personal nightmare from first-year property, don't worry. By the time we're done this morning, not only are you going to spot the perpetuities question, you will be able to handle any of the fact patterns we've ever seen. First topic is the most important classification rules. Future interest divides themselves into two categories: Those future interests that are kept by the grantor and the other category is those that are conveyed away by a third-party grantee. So let's list them. Future interest kept by the grantor are the reversion, the reversion. On line 2, the possibility of reverter, so if there's any chance it goes back to the grantor, it's got to be a reversion, possibility of reverter. And line 3, the right of entry, the right of entry. If there's any chance, if the facts show there's any chance the property will go back to the grantor, then you know the future interest has got to be a reversion, possibility of reverter, or right of entry. Those are the only three future interests you can have in favor of the grantor. In the other category, future interest conveyed away to a third-party grantee consists of the remainder and the executory interest. Those are the only two future interests you can have in favor of the thirdparty grantee. That would be the remainder and the executory interest. All right. Let's start with the reversion, and let's look at an easy example of the reversion. In fact, Hypo Number 10 is a conveyance that we talked about earlier this hour. The language of the grant reads O to A for life. We all know A has the life estate. But remember what we just said. At the moment that conveyance takes effect, you've got to be able to tell the tax collector that you know where the property

16 is going to go when the life estate is over, so that he can collect the property taxes. And you know that O keeps, at the moment the conveyance was made, O keeps a reversion in fee simple. Now why? Hang a star on this rule. The reversion arises in favor of the grantor whenever the facts show the grantor conveys away less -- less than the full durational estate that the grantor had. The reversion arises automatically by operation of law whenever the facts on the Bar exam, the language of the conveyance shows that he conveyed away less than the full durational estate. He had a fee simple, he conveyed away less, the life estate, the reversion arises automatically by operation of law. All right. That was an easy example of reversion. Let's make it a little more complicated. Take a look at Hypo 11. All right. O conveys the property to A for life. We all know A has the life estate. And remember, you label out the interest in the order the conveyances are made. Under the rule we just learned, what did O keep? O keeps a reversion. At the moment he grants the life estate to A, O keeps a reversion. And then because it's the Bar exam and not the real world, you read on. And later on you see A turn around as the grantor and convey away, grant a life estate, to B, convey exactly the same property to B for life. Then you've got to figure out what is it that B got in that conveyance. And he obviously got a life estate. But the key thing here, it's measured by B's life and A's life. It's measured by B's life and A's life. All right. When you get that kind of multiple conveyances of the same piece of property, and you read on in the facts and a few different things might happen. So first thing is in subpart A. What are you going to do with the property if the facts show that B dies before A dies? Well, when B dies, B's interest terminates. B's interest terminates. Why? He got a life estate measured by B's life. When B dies, B's interest is over. B's life estate terminates. And then you're likely to be asked the question there in subpart B. Well, then, where is the property going to go when B dies? And before you can answer that question, you've got to look at subpart C, and you've got to ask yourself, what interest did A keep at the moment he granted a life estate to B? You know A kept a reversion for life. Why did A keep a reversion for life? Remember our rule. Whenever the facts show that the grantor conveys away less than the full durational estate, that reversion arises automatically by operation of law. A keeps a reversion for life. So that means, answering the question in subpart B, if B dies before A dies, where will the property go? It will go back to A. It will go back to A, because if B dies and A is still alive, A's life estate interest is not over. A conveyed away less than the full durational estate, and so the property will go back to A. A, at the moment that conveyance was made, A kept a reversion for life. All right. One more wrinkle. Subpart D.