We’ve already talked some about reversions. We’ll talk about them in more detail now.
A reversion is an future interest retained by the grantor when he transfers a vested estate(s) and/or a vested future interest of a lesser quantum than that which he owed.
What are the quantum of estates?
- Fee simple
- Fee tail
- Life estate
This stuff is based on a lot of fictions and assumptions. We don’t look at the facts. The law is just the law.
Why do we ignore the fee simple defeasible in this quantum of estate ranking?
Why does O have a reversion after granting A a life estate? It’s because he’s given away an estate of a lesser duration than the one he started with. Whether O started with a fee simple or a fee tail, he would still retain a reversion because he granted something less than he had.
What future interest is retained when you give a fee simple defeasible? You retain the possibility of reverter.
This is not a retained interest. It is created in a transferee. It doesn’t have to become possessory, but it can become possessory. There can’t be any gaps between the termination of the previous possessory estate and the remainder. The common law couldn’t tolerate the idea that ownership was in abeyance. “Who owns it in the meantime? It can’t be nobody! There can’t be any gaps!”
The remainder can become possessory upon the natural termination of the preceding estate. For example, “To A for life, and then to B and her heirs.” A gets a life estate and B gets a remainder which becomes possessory on A’s death.
What about: “To A for life and then to B if B gives A a proper funeral.” What’s a proper funeral? You have to wait until after the person’s dead to have a funeral. There is a necessary gap between A’s life estate and when B’s estate becomes possessory.
We start off with reversions and remainders, and then there are other interests which the common law simply doesn’t allow. The one we just did would simply fail as invalid. Later we’ll get the Statute of Uses, which will validate certain interests that were previously invalid. We’ll call them executory interests.
As part of the definition of reversion, notice that it says that when the grantor transfers vested estates, he retains a reversion.
A remainder is contingent if either or both of two things exist:
1. It is subject to a condition precedent, and/or
2. It is given to an unascertained person.
Notice with the “and/or” that remainders can be “doubly” contingent.
“To A for life and then to B if she quits smoking”: O gives a life estate to A and a contingent remainder to B and O has a reversion in fee simple absolute.
“To A for life and then to the heirs of A and their heirs”: O gives a life estate to A and then a contingent remainder to A’s heirs in fee simple absolute. O keeps a reversion. It’s contingent because we don’t know who A’s heirs will be since A isn’t dead yet. No living person has heirs. Some dead people don’t have heirs either.
There are three types of vested remainders:
1. Vested remainders
2. Vested remainders subject to open (or vested subject to partial divestment) – for example: “To A for life and then to the children of A and their heirs (if A already has at least one child)”. If there are more kids, the existing kids get partially divested.
3. Vested remainders subject to (complete) divestment – “To A for life, then to B and his heirs, but if B marries Z, then to C and his heirs.” Based on a condition subsequent
Remainders change their name based on changes in the relevant facts.
The law is antiquated in two respects:
1. It is based on a time when there was no technology for determining if people can have children.
2. It is based on the presumption that children have to be conceived during the lifetime of the husband. If you have frozen embryos or conception that occurs after the death of the donors, the law won’t know what to do.
Remainders stay remainders, and reversions stay reversions. We classify them at the time they are created. However, remainders can switch between being vested and being contingent.
O has a reversion if he has given away a vested remainder of lesser duration than that which he had. The focus is on vested and not contingent interests.
Future interests are future because they’re not yet possessory. They are interests that the law recognizes. They can be inherited and devised by will.
A vested life estate plus a vested remainder in fee simple absolute equals a possessory interest in fee simple absolute.
A will has no effect to future interests while you’re living.
In order for a remainder to be vested, it can’t be subject to any condition precedent. But conditions precedent exclude a certain group of things that might happen. Vested means not subject to a condition precedent other than the natural termination of the precedent estate.