Should anyone be contemplating spending part of their summer break honing their skills at identifying estates in land and future interests, I offer the question-based system below which can be used to simplify the process of identifying estates in land and future interests. The questions can also be easily diagrammed as a flow chart for even easier use.
One begins by identifying an interest that appears to be either a future interest or an estate in land.
QUESTION 1. Does the interest holder have a right to present possession? If yes, then the interest is an estate, so proceed to Question 2. If no, then the interest is a future interest, so proceed to Question 7.
QUESTION 2. Does the individual with the right of present possession have the right to control the property and the right to continuous possession until it expires by its own terms? If the answer is no, then the individual is likely either a licensee (like a guest in a hotel room) and thus has no estate at all, or the holder of a tenancy at will, a periodic tenancy, or a tenancy at sufferance which are non-freehold estates. If the answer is yes, then the interest is a freehold estate, so proceed to Question 3.
QUESTION 3. Will the right of present possession automatically terminate at some point in the future based upon the passage of time or the death of an individual? If yes, then the estate is a “particular” estate (Question 4); if no, then it is a form of Fee Simple estate (Question 5).
QUESTION 4. If the estate will automatically terminate in the future, then it is a life estate if the termination occurs when an individual dies. (If the measuring life is that of someone other than the estate holder, the estate is a life estate pur autre vie.) If the termination occurs after the passage of a specified period of time (as in one day or 99 years), it is an estate for years. If the termination point is the end of a line of bodily descent, then the estate is one of fee tail.
QUESTION 5. If the estate will not automatically terminate based on the passage of time or an individual life, then it is some sort of fee simple estate. If there are no restrictions whatsoever, then it is an estate of fee simple absolute. If it is an estate that could result in a forfeiture, go to Question 6.
QUESTION 6. If the estate is subject to a forfeiture clause but could go on forever, will it forfeit to a third party or will it revert back to the grantor or the grantor’s successors? If to a third party, then the estate is one of fee simple subject to an executory limitation. If it reverts back to the grantor, then it is an estate of fee simple determinable if the restriction is in the nature of a limitation; if the restriction is in the nature of a condition subsequent, then the estate is one of fee simple subject to a condition subsequent. (if the estate that is subject to the potential forfeiture is not a fee simple estate, but a life estate, an estate for years, or a fee tail, the same terminology applies. Any of these three estates could be determinable, subject to a condition subsequent, or subject to an executory limitation.)
QUESTION 7. If the interest at issue is a future interest, the first question is whether or not it accompanies a particular estate, i.e., an estate for years, a life estate, or a fee tail. If it does, go to Question 8. If it accompanies some form of determinable or conditional estate (like fee simple subject to an executory limitation, fee simple determinable, or fee simple subject to a condition subsequent), go to Question 10.
QUESTION 8. If the future interest accompanies a particular estate, then the question is whether it is retained by the grantor (or the grantor’s successors) or whether it has been created for the benefit of a third party (as in O to A for life, then to B). If retained by the grantor, the interest is a reversion. If created for a third party, then it is some form of remainder. If it is a remainder, go to Question 9.
QUESTION 9. To determine the type of remainder, one asks the following. Are there unmet conditions precedent (as in “then to A, if he is 25, and A isn’t) or is it impossible to determine the identity of remainderman (as in the heir of O, when O is still alive)? If the answer to either part is “yes,” then the remainder is a contingent remainder. If the answer to both parts is no, then the remainder is vested. However, there are three types of vested remainders. If there are no unmet conditions either precedent or subsequent, the holder of the interest can be identified and is not a member of a class including individuals with contingent remainders, then the interest is vested remainder (sometimes referred to as an indefeasibly vested remainder). If the remainder is vested, but could be divested by some subsequent event (as in O to A for life, then to B, unless C marries one of the Obama daughters, in which case to C), then the interest is a vested remainder subject to divestment (or a defeasible vested remainder). If the remainder is vested, but part of a class that includes members with contingent remainders (as in O to A for life, then to the daughter of A who reach age 21, when A has some daughters who are 21 and others who are younger), the interest is a vested remainder subject to open.
QUESTION 10. If the future interests accompanies a fee simple estate that is subject to a limitation or a condition, the first question is whether the interest is held by the grantor (or one of his or her successors) or by a third party. If held by the grantor then the interest is a possibility of reverter if the restriction is in the nature of a limitation (as in a fee simple determinable), or else a right of entry/power of termination if the restriction is in the form of a condition subsequent. If the interest is in a third party, then the interest is an executory interest, regardless of whether the restriction is a condition or a limitation. However, there are two types of executory interests. If the effect of the interest is to divest a grantee (as in O to A so long as beer is not sold on the premises, but if it is, to B), B’s interest is a shifting executory interest. However, if the restriction divests the grantor (as in O to A in 5 years), then the interest is a springing executory interest.
By using these ten questions, one can readily identify any estate or future interest, no matter how puzzling its nature might at first appear.