Property
Class Notes
Let’s
do some problems!
Problems on the Rule in
Shelley’s Case
1. “To A for life, and then to
the heirs of A”: Initially, it looks like a life estate for A and then a contingent
remainder to the heirs of A. But the
Rule in Shelley’s Case kicks in because, in the same instrument: (1) a life
estate is granted to A, (2) the remainder is granted to A’s heirs, and (3) the
two estates are legal estates. That
means that A simply gets a fee simple absolute and A’s heirs get nothing (but
they might get something when A dies).
2. “To A for life and then to
the children of A”: This purports to give a remainder to A’s children rather than A’s “heirs”.
If A has children, then the children get a vested remainder subject to
open in fee simple absolute and if A has no children, then A’s children get a contingent
remainder in fee simple absolute and O gets a reversion.
3. “To A for life, then to B
for life, then to A’s heirs”: This purports to give a life estate to A, then a vested
remainder for life to B, then a contingent remainder in fee simple absolute to
A’s heirs. After the operation of the
rule, the contingent remainder is defeated and A gets a vested remainder in fee
simple absolute. Note that the Rule
doesn’t operate on vested remainders.
4. “To A for life, then to A’s
heirs, if A survives B”: Here, A is granted a life estate, A’s heirs are
purported to get a contingent remainder in fee simple absolute, and O has a reversion. Does it matter that this remainder is doubly contingent? Yes. A must outlive B. So A still has a life estate, A (also) gets the contingent remainder
in fee simple absolute, and O still has a reversion. Note that we can’t merge A’s interests
because A doesn’t have the whole bundle of sticks.
5. O conveys “To A for life”
and subsequently devises his reversion to the heirs of A: No problem here
because there’s more than one instrument.
A has a life estate and A’s heirs have the reversion. Braunstein says: “It’s a stupid rule.” Note how this is exactly the same as the
first problem! You could even make a
grant “To A for life, then to T in trust for the benefit of A’s heirs.” Then you would have one legal estate and one equitable
estate and the Rule wouldn’t apply.
Note
that the Rule in Shelley’s Case has been abolished almost everywhere because it’s
so easy to get around.
The only way you have an
equitable interest is if there are trustees involved.
Don’t forget that we never
cut off vested estates or remainders with this Rule.
A devise is a gift of real property in a
will. A legacy is a gift of personal property in a will. No devise, legacy, or bequest is of any legal
consequence until the testator dies. (He says that he’s exaggerating a little
bit.)
When
the time comes to distribute the money and you’re not sure who to give it to,
you close the class and just
distribute the money. This is the Rule
of Convenience.
Doctrine of Worthier Title
This
doctrine is very similar to the Rule in Shelley’s Case. But instead of cutting off contingent
remainders created in heirs of the transferee,
it cuts off contingent remainders in the heirs of the transferor.
The
doctrine applies only to inter vivos transfers,
not to wills. The Rule in Shelley’s
Case, on the other hand, applies both to wills and to inter vivos
transfers. How come? Well, once you’re dead, we know exactly who
your heirs are, and then the remainder is vested. There’s nothing contingent about it anymore!
For
example: “To A for life and then to the heirs of O”: This purports to give a life
estate to A followed by a contingent remainder in fee simple absolute to the
heirs of O, plus a reversion in fee simple absolute to O. After the operation of the Doctrine of
Worthier Title, this would simply become a life estate to A followed by a reversion
in fee simple absolute to O. So let’s
say that O devises all of his property to the Red Cross. The Red Cross gets the reversion, and O’s
heirs get nothing.
Don’t
forget: (1) classify, (2) apply the rule, and finally (3) reclassify.
How
about this? “To T, to be held in trust
for O for life and then to O’s heirs”: It turns out that the trust income wasn’t
enough to support O, and O wanted to know if she could terminate the
trust. So let’s classify: T has a legal fee
simple absolute, O has an equitable life estate, and O’s heirs have an
equitable contingent remainder in fee simple absolute. Under the Doctrine of Worthier Title, T would
have the legal fee simple absolute and O would have an equitable fee simple
absolute. That means that O will be able
to terminate the trust because she is the sole beneficiary.
If
O hadn’t been able to use the Doctrine, there would have been no way to
terminate the trust, because some of the trustees are unascertained. If all the beneficiaries agree, then the
trust can be terminated.
The
first three rules we looked at were not all that important. This one is important for drafting purposes
and for the bar exam.
The Rule Against
Perpetuities
We
have seen this rule before. It can be
found in
This
is a Rule that kills contingent remainder that vest too remotely. The remainders that it kills must be contingent
and must have the possibility of staying contingent for too long.
The
most famous statement of the rule is:
No interest in real or personal property
shall be good unless it must vest, if at all, not later than
twenty-one years (plus nine or ten months) after a life or lives in being at
the creation of the interest.
We’re
happy to either have the contingent remainder vest or fail in a timely
way. We just want contingent remainders
to go away! They have to stop being contingent
remainder either because they become
vested or because they become
impossible to occur.
The
part that will drive us batty is the part about “life or lives in being”. The people have to be alive at the time of
the creation of the interest!
As
a matter of public policy, we will let the older generation tie property up for
one generation plus the (former) age of minority in the next generation. Then that’s it! Anything that stays contingent longer than
that offends the rule and will be invalidated.
We don’t like remote vesting! That’s
what we want to get rid of! We will kill any possibility of remote vesting!
We’ll kill contingent remainders that are very unlikely to stick around
too long, just as long as it’s possible
for them to stick around too long. If it
could happen, it’s void.
But it’s only the interests that vest remotely that are void. The other interests will still be good.
The
tendency lately is to relax the Rule Against Perpetuities which favors “dead
hand control” more and more. But the Rule
Against Perpetuities is very technical and gets more so as it gets reformed
(unfortunately).
Problems on the Rule Against
Perpetuities
Do
any of these interests violate the Rule Against Perpetuities?
“To
A for life, and then to B if B attains the age of 30 years”: This doesn’t
violate the Rule. Why not??? A has a life estate and B has a contingent
remainder in fee simple absolute. Let’s
say that B is two years old. B has a contingent
remainder that could last for 28 years.
That doesn’t violate the Rule Against Perpetuities. But why not?
Who is the life in being? When
does B’s interest vest? Or under what
circumstances does B’s interest fail?
The interest could fail within B’s lifetime. If B dies before he reaches the age of 30,
then the contingent remainder fails. If
B stays alive until the age of 30, then the remainder vests. But the thing is that either thing happens within B’s lifetime. B will work as the “measuring life”. A doesn’t work. If you just look at A, it’s possible that the
gift would vest too remotely. The only
person who will work as the measuring life in this problem is B. But B does work.