Fee Simple Subject to an Executory Limitation PDF

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Property Law I; Rules Against Perpetuities Chapter Notes focusing on fee simple subject to exec limit...

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Property I Lecture Notes FOCUS: RULES AGAINST PERPETUITIES Fee Simple Subject to an Executory Limitation Ex. O! School Board, but if Blackacre shall cease to be used for school purposes, to A and his heirs A’s executory interest is void under RAP for the same reason A’s executory interest in the preceding example is void The conveyance to the School Board gives them a fee simple absolute Fee Simple Determinable Created by Will A possibility of reverter is an interest retained by the grantor if the FSD is created by a deed; it is retained by the testator’s heirs if the FSD is created by a will APPLICATION TO OPTIONS An option creates in the optionee a right to purchase the property on the terms provided in the option. Because the option is specifically enforceable in equity by the optionee, it is regarded as creating in the optionee an equitable interest in property comparable to a contingent future interest An option is void IF it is possible to exercise the option more than 21 years after some life in being at its creation Policy Reason: if someone has an option on the property, the owner will not improve it and no one else is likely to purchase it. Options tend to make land unimprovable and inalienable Ex. O! A and her heirs an option to purchase Blackacre for $10,000 This option is not limited to A’s life, but can be exercised by A’s heirs and their heirs for long after A’s death. The option is VOID Preemptive Options: givens the optionee the right of first refusal if the owner desires to sell. Most courts hold the preemptive option void should it find that the option can be exercised beyond the perpetuities period

Exception for Condo’s: Option in a condo association giving the association the right to buy if the unit owner desires to sell, which permits the association to control who buys in, is not subject to RAP Options in Leases: An option in a tenant to renew the term or to purchase the property is not subject to RAP Uniform Statutory Rule Against Perpetuities: USRAP exempts options from RAP. In the states that have adopted USRAP, options may endure forever, unless they are subject to the rule against unreasonable restraints on alienation WAIT-AND-SEE DOCTRINE Under the common law RAP, any possibility of remote vesting voids the interest Under the wait-and-see doctrine, the validity of interests is judged by actual events as they happen, and not by possible events that might happen. The validity of the interest is not determined at the time the interest is created. It is necessary to wait and see what actually happens Wait-and-see for the perpetuities period: The adoptive states wait out the common law perpetuities period before declaring the contingent interest void Wait-and-see for ninety years: USRAP rejects waiting for the common law period and calls for waiting 90 years. If a contingent interest satisfies the whatmight-happen test of the common law, or actually vests within 90 years, it is valid under the Uniform Rule Criticism: Two grounds: (i) not knowing whether an interest is valid or void may prove inconvenient; and (ii) the doctrine results in the extension of the dead hand and of more wealth being tied up in trust

CY PRES DOCTRINE Second reform of RAP

Under this doctrine, an invalid interest is reformed, within the limits of the Rule, to approximate most closely the intention of the creator of the interest. Exercising the reformation, a court can reduce age contingencies to 21 years or make some other appropriate change to reform the invalid interest...