Alienation of a FSA
Indirect Restraint on Alienation
To A, as long as liquor is not sold on the property.
Test 1:
A remainder cannot have the capacity to "cut short" or divest the prior estate(s).
1. An unascertainable or unborn taker.
2. A condition precedent.
3. Subject to RAP.
Contingent Remainder
Does not comply with one or more of the four traditional rules for remainders
Waiting a generation or two to actually see whether the interest becomes one of certainty.
Wait-and-See Reform
Absolute Restraint on Alienation
T A so long as A and her heirs or devisees do not transfer said property.
Test Two:
A remainder cannot follow a "gap in time."
1. Ascertainable beneficiary (taker is real and living)
2. No conditional precedent
3. Not subject to partial or total divestment
Indefeasibly Vested Remainder
Follows any present interest that is not determinable or on condition subsequent
Reversion
Entitles the grantee to exclusive possession of the real estate transferred for the duration of a life, usually the grantees.
Life Estate
Disabling Restraint
To A for life so long as A and her heirs do not transfer to property. (Also a Direct Restraint on Alienation.)
Test Three:
A remainder cannot follow a Fee Simple Defeasible.
1. At least one member of the class is:
a.) Ascertainable
b.) Not subject to condition precedent
2. Transfer is to a class gift that is open
Vested Subject to Open
Follows a Fee Simple on Condition Subsequent or other estate on Condition Subsequent
Right of Re-entry or Power of Termination
A court reforming (modifying) the transfer so that it still carries out the transferor's intent as much as possible but is now valid under the rule.
Cy Pres Reform
Partial Restraint on Alienation.
To A, so long as A and his heirs do not transfer the property outside of the family.
Test Four:
A remainder must be created at the same time and by the same instrument that creates the prior estate(s).
1. A condition subsequent, not precedent
2. Always followed by an Executory Interest
Vested Subject to Complete Divestment
Follows a FSD or any other determinable estate
Possibility of a Reverter
A person who allows you to prove that the contingent interest will vest or fail within the life of that person, or at the death of that person, or within 21 years after that persons death.
Validating Life
Forfeiture Restraint
To A for life, but if A attempts to transfer then O may enter and retake/it will immediately revert back to O.
Which two tests, on their own, typically mean the Future Interest constitutes a remainder?
Map out a Remainder Analysis
1. Is this an indefeasibly vested remainder?
Yes.No. Go to step 2.
2. Is there uncertainty whether there may be more beneficiaries in the future?
Yes. You have a bested subject to open. (Subject to RAP.)
No. Go to step 3.
3.Is the condition subsequent or precedent?
Sub. Vested Subject to Complete Divestment. (Condition follows vesting. Holder becomes divested if she violates the condition.) [I will give you my book, but if you don't get top paper, then I will give it to someone else.]
Pre. Contingent Remainder. (Condition precedes vesting. Holder becomes bested only until condition is met.) (Subject to RAP) [I will give you my book if (and when) you get top paper.]Hierarchy of Estates
Fee Simple > Life Estate > Tenancies
When we know for a certainty that a future interest will either vest, fail, or become possessory.
Last Moment in Time