1 00:00:00,040 --> 00:00:03,000 Welcome back to the Deep Dive. Today we are not just talking 2 00:00:03,000 --> 00:00:08,080 about laws, we are talking about the invisible grid that covers 3 00:00:08,080 --> 00:00:10,160 every single square inch of the planet. 4 00:00:10,160 --> 00:00:12,160 It really is. It's the operating system of the 5 00:00:12,160 --> 00:00:14,000 physical. World exactly. 6 00:00:14,000 --> 00:00:17,520 We are tackling estates and future interests and I know what 7 00:00:17,520 --> 00:00:20,200 some of you are thinking. You hear property law and your 8 00:00:20,200 --> 00:00:23,760 mind goes to, I don't know, closing costs on a condo or 9 00:00:23,760 --> 00:00:26,760 maybe a fight over a fence line. Sure, the practical stuff. 10 00:00:26,760 --> 00:00:29,720 But looking at these materials, the treatises the bar prep 11 00:00:29,720 --> 00:00:31,960 outlines, this is so much weirder than that. 12 00:00:32,200 --> 00:00:35,800 This is about time travel. It is about ghosts controlling 13 00:00:35,800 --> 00:00:38,160 land from beyond the grave. It really is. 14 00:00:38,160 --> 00:00:40,600 I always call it the Grand Central Station of the legal 15 00:00:40,600 --> 00:00:42,560 world. If you're a law student, this is 16 00:00:42,560 --> 00:00:44,400 the architecture that holds up well. 17 00:00:44,760 --> 00:00:47,720 Everything else I say, well, if you don't get this, you can't 18 00:00:47,720 --> 00:00:50,200 really understand trusts. You can't understand why your 19 00:00:50,200 --> 00:00:53,280 landlord has the right to evict you, and you certainly can't 20 00:00:53,280 --> 00:00:56,480 understand how generational wealth is, you know, built or 21 00:00:56,480 --> 00:00:59,680 destroyed over time. And our mission today is to 22 00:00:59,680 --> 00:01:03,040 decode that architecture. We're going to take this stack 23 00:01:03,040 --> 00:01:07,160 of once, frankly archaic rules. I mean, some of these date back 24 00:01:07,160 --> 00:01:09,640 to feudal England, and we're going to try to synthesize them 25 00:01:09,880 --> 00:01:12,040 into a single coherent narrative. 26 00:01:12,280 --> 00:01:15,160 Right, The plan is to move from present earnership, what you 27 00:01:15,160 --> 00:01:18,440 have right now, to the future, what someone else might get down 28 00:01:18,440 --> 00:01:21,400 the road. Then we tackle the final boss, 29 00:01:21,760 --> 00:01:26,560 the rule against perpetuities. The RAP. 30 00:01:27,560 --> 00:01:30,440 I have heard this described as the section of the bar exam that 31 00:01:30,440 --> 00:01:33,760 makes grown adults weep. That is not an exaggeration. 32 00:01:33,760 --> 00:01:36,680 I've seen it happen. It is the most heavily tested, 33 00:01:36,680 --> 00:01:40,480 highly technical and, you know, completely unforgiving area of 34 00:01:40,480 --> 00:01:42,960 the common law. But the secret is, it's also a 35 00:01:42,960 --> 00:01:45,280 logic puzzle. If you know the rules, you can 36 00:01:45,280 --> 00:01:46,840 beat it. OK, before we start laying 37 00:01:46,840 --> 00:01:48,960 bricks, we really need to frame the stakes here. 38 00:01:49,160 --> 00:01:51,760 The source material we're working from highlights 3 core 39 00:01:51,760 --> 00:01:54,720 challenges that make this specific topic such a nightmare 40 00:01:54,720 --> 00:01:55,680 for students. Right. 41 00:01:55,720 --> 00:01:58,400 And the first one is all about precise language. 42 00:01:58,600 --> 00:02:01,880 In normal life if I say hey I'm giving this house to my cousin, 43 00:02:01,920 --> 00:02:03,480 everyone gets what I mean. Simple enough. 44 00:02:03,760 --> 00:02:07,160 In property law, that sentence is a complete disaster waiting 45 00:02:07,160 --> 00:02:09,759 to happen. You have to parse every single 46 00:02:09,759 --> 00:02:13,040 word in a deed or will with surgical precision. 47 00:02:13,360 --> 00:02:17,480 A single word, sometimes just a comic in shift a multi 48 00:02:17,480 --> 00:02:20,440 $1,000,000 inheritance into absolutely nothing. 49 00:02:20,440 --> 00:02:24,600 It honestly feels like coding. One wrong line of syntax and the 50 00:02:24,600 --> 00:02:27,800 whole program just crashes. That is a perfect analogy. 51 00:02:27,800 --> 00:02:30,200 It really is. The second challenge is what the 52 00:02:30,200 --> 00:02:33,320 guides call temporal sequencing. The timeline. 53 00:02:33,360 --> 00:02:36,360 The timeline. Most people view property as, 54 00:02:36,360 --> 00:02:38,440 you know, dirt on the ground, a physical thing. 55 00:02:38,440 --> 00:02:40,880 You have to start viewing it as a timeline. 56 00:02:41,040 --> 00:02:43,560 Who gets the baton and exactly when do they get it? 57 00:02:43,560 --> 00:02:45,200 It's all about the sequence of events. 58 00:02:45,280 --> 00:02:47,520 And the third one is the interaction of interests. 59 00:02:47,800 --> 00:02:50,080 This is one that really blew my mind when I first encountered 60 00:02:50,080 --> 00:02:52,360 it. The idea that you can have 3/4 61 00:02:52,440 --> 00:02:55,800 or maybe 10 different people all holding an interest in the same 62 00:02:55,800 --> 00:02:57,440 piece of land at the exact same moment. 63 00:02:57,440 --> 00:03:00,920 Yes, and they all own something. One person might be living there 64 00:03:00,920 --> 00:03:03,520 right now, in the present. Another person has the right to 65 00:03:03,520 --> 00:03:06,680 kick them out, but only if they, say, start a fire. 66 00:03:06,800 --> 00:03:09,280 A third person has a right to the property that won't even 67 00:03:09,280 --> 00:03:12,760 kick in until the year 2080. And a fourth person has a right 68 00:03:12,960 --> 00:03:15,600 only if that third person dies without any children. 69 00:03:16,360 --> 00:03:19,000 They all own a piece of the puzzle right now, but their 70 00:03:19,200 --> 00:03:21,400 bundles of rights are completely different. 71 00:03:21,400 --> 00:03:23,800 It's like a layering of different realities on one spot. 72 00:03:23,800 --> 00:03:24,880 That's a great way to think about. 73 00:03:24,880 --> 00:03:25,800 It. So let's start at the very 74 00:03:25,800 --> 00:03:27,920 bottom. The foundation, yeah. 75 00:03:27,960 --> 00:03:30,600 The. Absolute Baseline of ownership. 76 00:03:30,600 --> 00:03:33,200 The fee simple absolute. This is it. 77 00:03:33,200 --> 00:03:36,800 This is what 99% of people mean when they say I own my house. 78 00:03:37,240 --> 00:03:40,800 It is the highest, most complete form of ownership known to the 79 00:03:40,800 --> 00:03:42,920 law. The definitions I'm seeing 80 00:03:42,920 --> 00:03:46,400 describe it as having a potentially infinite duration. 81 00:03:46,840 --> 00:03:50,920 It's perpetual, it's freely transferable, it's divisible 82 00:03:51,040 --> 00:03:54,160 which means you can leave it in a will, and it's inheritable. 83 00:03:54,160 --> 00:03:55,720 Correct. It is the whole bundle of 84 00:03:55,720 --> 00:03:59,120 sticks, as they say everything. But here is where we immediately 85 00:03:59,120 --> 00:04:01,640 hit that first challenge. Precise language. 86 00:04:02,000 --> 00:04:04,320 How do you actually create this thing? 87 00:04:05,160 --> 00:04:07,440 Because under the old common law, you couldn't just say to 88 00:04:07,440 --> 00:04:09,600 Alice, you had to use magic words. 89 00:04:09,600 --> 00:04:12,840 You did, You had to say to Alice and her heirs. 90 00:04:13,040 --> 00:04:17,120 OK, let's stop right there and unpack and her heirs, because 91 00:04:17,160 --> 00:04:19,680 materials are practically screaming that this is a massive 92 00:04:19,680 --> 00:04:22,000 exam track. When I write to Alice and her 93 00:04:22,000 --> 00:04:26,480 heirs, does Alice's son Bob get an interest in the land right 94 00:04:26,480 --> 00:04:28,400 now? Absolutely not, and this is the 95 00:04:28,400 --> 00:04:31,640 crucial distinction you have to master between words of purchase 96 00:04:31,640 --> 00:04:33,680 and words of limitation. OK, break that down. 97 00:04:33,840 --> 00:04:38,600 To Alice are words of purchase that tells us who is getting the 98 00:04:38,600 --> 00:04:41,880 land. The purchaser and her heirs are 99 00:04:41,880 --> 00:04:44,520 words of limitation. They just define the size or the 100 00:04:44,520 --> 00:04:46,360 duration of the estate Alice is getting. 101 00:04:46,360 --> 00:04:49,960 It's historical shorthand for Alice is getting the biggest 102 00:04:49,960 --> 00:04:53,480 estate possible, the fee simple. So the heirs get nothing. 103 00:04:53,800 --> 00:04:58,200 Not a thing. 0 zip. A living person has no heirs. 104 00:04:58,200 --> 00:04:59,840 You only have heirs the moment you die. 105 00:04:59,840 --> 00:05:02,680 So if Alice gets this grant of land on Tuesday, and on 106 00:05:02,680 --> 00:05:05,080 Wednesday she decides to sell it to a developer to build a 107 00:05:05,080 --> 00:05:07,520 shopping mall, her children cannot sue. 108 00:05:07,960 --> 00:05:10,240 They had no legal interest. They just had a hope. 109 00:05:10,800 --> 00:05:13,240 What the law calls a mere expectancy. 110 00:05:13,440 --> 00:05:16,240 I have to assume modern law has, you know, chilled out on this a 111 00:05:16,240 --> 00:05:17,600 bit. We don't still require those 112 00:05:17,600 --> 00:05:19,960 magic words, do we? Thankfully, no. 113 00:05:20,120 --> 00:05:23,440 Today, in pretty much every US state, if you just write to 114 00:05:23,440 --> 00:05:27,360 Alice, the law presumes you meant to convey a fee simple 115 00:05:27,360 --> 00:05:30,360 absolute. We default to the biggest 116 00:05:30,360 --> 00:05:34,520 possible estate. But, and this is a big but for 117 00:05:34,520 --> 00:05:36,680 exams, right? If you are looking at an old 118 00:05:36,680 --> 00:05:40,120 deed or more likely a bar exam question that's written to test 119 00:05:40,120 --> 00:05:43,280 this, you have to look for and his heirs. 120 00:05:43,400 --> 00:05:46,120 OK. And just to be crystal clear, is 121 00:05:46,120 --> 00:05:49,040 there any future interest that accompanies a fee simple 122 00:05:49,040 --> 00:05:51,320 absolute? No, that is the whole point of 123 00:05:51,320 --> 00:05:52,280 it. It lasts forever. 124 00:05:52,280 --> 00:05:55,160 There is no remainder for someone else, no reversion back 125 00:05:55,160 --> 00:05:57,200 to the grantor. The timeline is full. 126 00:05:57,320 --> 00:05:58,440 It's done. Got it. 127 00:05:58,720 --> 00:06:01,080 OK, before we move into the really complicated stuff, the 128 00:06:01,080 --> 00:06:03,440 outline says we have to mention the dinosaur of the room, the 129 00:06:03,440 --> 00:06:05,600 fee tail. The fee tail. 130 00:06:05,800 --> 00:06:08,320 You will almost never see this in modern practice in the US, 131 00:06:08,320 --> 00:06:11,320 but it explains so much about history and frankly it explains 132 00:06:11,320 --> 00:06:14,440 the plots of half the Jane Austen novels or shows like like 133 00:06:14,440 --> 00:06:16,520 Downton Abbey. Right, the whole entail drama. 134 00:06:16,520 --> 00:06:19,840 The language for this one is to A and the heirs of his body. 135 00:06:19,840 --> 00:06:23,080 The heirs of his body. It sounds very biological. 136 00:06:23,080 --> 00:06:24,720 It sounds like something out of Game of Thrones. 137 00:06:24,920 --> 00:06:28,160 It effectively is. The fee tale was designed by 138 00:06:28,160 --> 00:06:32,000 medieval aristocrats to keep land in the family bloodline 139 00:06:32,000 --> 00:06:34,800 period. It passes directly to your 140 00:06:34,800 --> 00:06:37,440 lineal descendants, your kids, your grandkids, and so on. 141 00:06:37,920 --> 00:06:39,840 You could not sell it outside the family. 142 00:06:39,840 --> 00:06:43,160 You could not alienate it. So if I'm the Lord of the Manor 143 00:06:43,320 --> 00:06:46,520 and I hold the estate in Fetail, and let's say I'm completely 144 00:06:46,520 --> 00:06:49,760 broke, I can't sell the land to pay my gambling debts. 145 00:06:49,840 --> 00:06:51,880 Well, you can sell your life interest in it. 146 00:06:52,040 --> 00:06:54,760 The person who buys it can use it for as long as you're alive. 147 00:06:54,760 --> 00:06:57,800 But the moment you die, the land automatically snaps back to your 148 00:06:57,800 --> 00:07:00,440 first born son. The buyer loses everything. 149 00:07:00,600 --> 00:07:03,320 It was designed to ensure the great family estate stayed 150 00:07:03,320 --> 00:07:06,120 intact for generations. But in the United States, we 151 00:07:06,120 --> 00:07:08,720 hate that idea, right? Our whole system is built on the 152 00:07:08,720 --> 00:07:10,920 idea that land should be easily bought and sold. 153 00:07:10,920 --> 00:07:14,280 Exactly the court policies marketability of title. 154 00:07:14,720 --> 00:07:17,240 So virtually all states have abolished the fee tail. 155 00:07:17,400 --> 00:07:20,800 If you try to create 1 today, if you write to A in the heirs of 156 00:07:20,800 --> 00:07:24,000 his body in a deed, the court will just cross it out and say 157 00:07:24,000 --> 00:07:26,440 congratulations A you have a fee simple absolute. 158 00:07:26,600 --> 00:07:28,200 And you can sell to whomever you want. 159 00:07:28,200 --> 00:07:31,080 Sell it, mortgage it, do whatever you want with it. 160 00:07:31,120 --> 00:07:34,960 OK, dinosaur buried. Now let's move to where the real 161 00:07:34,960 --> 00:07:38,800 trouble begins for students. The defeasible fees. 162 00:07:39,280 --> 00:07:42,240 The outline calls this the Triage Strategy. 163 00:07:42,360 --> 00:07:44,400 This is huge, and triage is the right word. 164 00:07:44,800 --> 00:07:47,960 A de feasible fee is ownership that is conditional. 165 00:07:48,200 --> 00:07:51,120 It looks like a fee simple. It feels like a fee simple, but 166 00:07:51,120 --> 00:07:52,960 there's a catch. There's a string attached. 167 00:07:53,040 --> 00:07:56,600 It's like saying here are the keys to a new car, but on the 168 00:07:56,600 --> 00:07:59,840 strict condition that you never drive it past 50 mph. 169 00:08:00,040 --> 00:08:02,520 Perfect analogy. If you violate that condition, 170 00:08:02,520 --> 00:08:05,680 you can lose the property. It's de feasible, meaning it can 171 00:08:05,680 --> 00:08:15,360 be defeated. Let's walk through them. 172 00:08:15,480 --> 00:08:19,280 First up, fee simple, determinable or FSD. 173 00:08:19,560 --> 00:08:23,320 Right, the hallmark of the FSD is time, the magic words. 174 00:08:23,320 --> 00:08:26,440 You are looking for all durational words like so long 175 00:08:26,440 --> 00:08:30,160 as, until, while, during. Do you mean an example? 176 00:08:30,240 --> 00:08:33,679 Sure, a classic one is to the school board, so long as the 177 00:08:33,679 --> 00:08:35,600 land is used for a playground. OK. 178 00:08:35,600 --> 00:08:37,919 So long as that's our trigger, Hase. 179 00:08:38,159 --> 00:08:40,200 Now here's the crucial question about the mechanism. 180 00:08:40,799 --> 00:08:43,960 The school board gets the land, 10 years go by, they're short on 181 00:08:43,960 --> 00:08:47,200 cash, so they decide to Ave. over the playground and build 182 00:08:47,200 --> 00:08:48,880 the arking lot to generate revenue. 183 00:08:49,560 --> 00:08:51,120 What happens at that exact moment? 184 00:08:51,120 --> 00:08:54,400 Boom, automatic termination. Automatic They don't need a 185 00:08:54,400 --> 00:08:56,000 lawsuit. They don't need a notice. 186 00:08:56,160 --> 00:08:58,600 No lawsuit needed. The school board's ownership 187 00:08:58,600 --> 00:09:02,040 ceases to exist the second the first paver goes down on that 188 00:09:02,040 --> 00:09:04,560 playground. The property title snaps back to 189 00:09:04,560 --> 00:09:06,480 the original Grand Tour like a rubber band. 190 00:09:06,760 --> 00:09:09,160 And that snapback, that thing The Grand Tour was holding all 191 00:09:09,160 --> 00:09:12,880 along, that has a name, it's a future interest. 192 00:09:12,880 --> 00:09:15,680 It's called the Possibility of Reverter, and reverter is a 193 00:09:15,680 --> 00:09:18,720 great memory aid because it implies an automatic return. 194 00:09:18,840 --> 00:09:20,800 It just reverts, no action required. 195 00:09:20,960 --> 00:09:25,720 OK, so FSD, durational language, automatic termination, 196 00:09:26,160 --> 00:09:28,840 possibility of reverter. Now let's compare that to the 197 00:09:28,840 --> 00:09:32,600 second type, the fee simple subject to condition subsequent 198 00:09:33,080 --> 00:09:35,480 FSSCS. Right, this one does not use 199 00:09:35,480 --> 00:09:37,680 time words, it uses conditional words. 200 00:09:37,680 --> 00:09:41,280 You're looking for phrases like but if provided that on 201 00:09:41,280 --> 00:09:43,840 condition that. So using our example it would be 202 00:09:43,840 --> 00:09:46,760 to the school board, but if they stop using it for a playground. 203 00:09:46,760 --> 00:09:49,760 Sounds very similar, right? But the legal mechanism is a 204 00:09:49,760 --> 00:09:52,280 whole different ball game. If the school board builds that 205 00:09:52,280 --> 00:09:55,400 parking lot, the estate does not end automatically. 206 00:09:55,520 --> 00:09:57,760 It doesn't. No, the violation of the 207 00:09:57,760 --> 00:10:00,640 condition just gives the Grand Tour the option to take the 208 00:10:00,640 --> 00:10:04,200 property back the right to act. School board is technically 209 00:10:04,200 --> 00:10:06,400 still the owner even though they've broken the rule. 210 00:10:06,400 --> 00:10:08,600 They haven't been divested of title yet. 211 00:10:08,600 --> 00:10:10,680 Correct. They remain the owner in fee 212 00:10:10,680 --> 00:10:14,280 simple until the grantor takes some kind of affirmative action, 213 00:10:14,280 --> 00:10:18,200 files a lawsuit for rejectment, or makes a formal reentry onto 214 00:10:18,200 --> 00:10:20,600 the land to reclaim it. In the future, interest here 215 00:10:20,600 --> 00:10:24,720 obviously isn't a possibility of reverter, it's something else. 216 00:10:24,720 --> 00:10:28,080 No, because it's not automatic. It's called a right of entry or 217 00:10:28,080 --> 00:10:29,960 sometimes a power of termination. 218 00:10:30,280 --> 00:10:31,960 The name tells you exactly what it is. 219 00:10:31,960 --> 00:10:34,640 You have the power to terminate the estate, but you have to 220 00:10:34,640 --> 00:10:36,960 choose to use it. It's not a self executing 221 00:10:36,960 --> 00:10:39,120 process. Now this is where the exam tip 222 00:10:39,120 --> 00:10:41,880 from the outline comes in, and this is where the rubber really 223 00:10:41,880 --> 00:10:43,480 meets the road for a law student. 224 00:10:44,200 --> 00:10:48,040 Why does this difference between automatic termination for an FSD 225 00:10:48,440 --> 00:10:53,240 and elective termination for an FSSCS actually matter? 226 00:10:53,880 --> 00:10:56,800 Why should a listener care? Adverse possession. 227 00:10:56,960 --> 00:10:59,960 This is the big one. Imagine the school board builds 228 00:10:59,960 --> 00:11:03,720 that parking lot in 1990. The statute of limitations for 229 00:11:03,720 --> 00:11:06,240 adverse possession is, say, 20 years. 230 00:11:06,440 --> 00:11:08,640 OK. If the original grant was a fee 231 00:11:08,640 --> 00:11:11,720 simple determinable, the forfeiture was automatic. 232 00:11:12,040 --> 00:11:15,160 The school board ceased to be the rightful owner in 1990. 233 00:11:15,320 --> 00:11:18,040 From that moment on, their possession of the land was 234 00:11:18,040 --> 00:11:21,000 hostile to the grantor. They were basically trespassing. 235 00:11:21,120 --> 00:11:23,360 So the clock for adverse possession starts ticking 236 00:11:23,360 --> 00:11:25,360 against the The Grand Tour immediately in 1990. 237 00:11:25,360 --> 00:11:28,000 Immediately, if the Grand Tour is asleep at the switch and 238 00:11:28,000 --> 00:11:30,080 doesn't notice for 20 years, too bad. 239 00:11:30,440 --> 00:11:32,960 The school board might now own the land again, but this time in 240 00:11:32,960 --> 00:11:35,040 fee simple absolute through adverse possession. 241 00:11:35,040 --> 00:11:37,200 Wow. But what if it was a fee simple, 242 00:11:37,200 --> 00:11:38,680 subject to conditions subsequent? 243 00:11:38,960 --> 00:11:41,920 Well, the school board is still the rightful owner until the 244 00:11:41,920 --> 00:11:44,360 Grand Tour exercises their right of entry. 245 00:11:45,120 --> 00:11:48,200 So the clock for adverse possession generally does not 246 00:11:48,200 --> 00:11:51,520 start to run until the Grand Tour actually demands possession 247 00:11:51,520 --> 00:11:54,520 back and is refused. The Grand Tour could 248 00:11:54,520 --> 00:11:57,840 theoretically wait much longer before acting, and the statute 249 00:11:57,840 --> 00:11:59,400 of limitations wouldn't have run out. 250 00:11:59,520 --> 00:12:01,560 So that is a huge, huge distinction. 251 00:12:01,840 --> 00:12:06,160 It effectively means the grantor who used the automatic FSD 252 00:12:06,160 --> 00:12:10,400 language is at a higher risk of losing the land forever if they 253 00:12:10,400 --> 00:12:12,400 aren't paying close attention. Precisely. 254 00:12:12,400 --> 00:12:14,160 It's a major trap. OK. 255 00:12:14,360 --> 00:12:17,360 The third and final type in our defeasible fee triage. 256 00:12:17,760 --> 00:12:20,320 The fee simple subject to executory limitation. 257 00:12:20,400 --> 00:12:22,840 This is the rude one. In the first two types, if the 258 00:12:22,840 --> 00:12:25,240 condition is broken, the property goes back to the Grand 259 00:12:25,240 --> 00:12:27,040 Tour. It reverts or the Grand Tour can 260 00:12:27,040 --> 00:12:29,080 reenter. In this one, if the condition is 261 00:12:29,080 --> 00:12:30,880 broken, the property goes to a third party. 262 00:12:31,160 --> 00:12:34,400 So to the school board, so long as it's used as a playground, 263 00:12:34,680 --> 00:12:37,080 but if it ceases to be used as a playground, then to the General 264 00:12:37,080 --> 00:12:38,480 Hospital. Exactly. 265 00:12:38,760 --> 00:12:41,920 The General Hospital is a third party, a transferee. 266 00:12:42,080 --> 00:12:45,280 They hold the future interest and because it's a third party 267 00:12:45,280 --> 00:12:48,200 that's going to take possession, we call that future interest an 268 00:12:48,200 --> 00:12:50,680 executory interest. Why executory? 269 00:12:50,680 --> 00:12:52,640 What does that mean? Think execute. 270 00:12:53,080 --> 00:12:56,040 It cuts off the previous owner. It doesn't wait for the estate 271 00:12:56,040 --> 00:12:59,120 to end naturally. It executes the prior estate. 272 00:12:59,120 --> 00:13:01,120 It divests it. OK, that makes sense. 273 00:13:01,760 --> 00:13:04,600 Before we move on from these, I want to touch on the defenses 274 00:13:04,600 --> 00:13:08,240 the outline mentions. Let's say I granted land 50 275 00:13:08,240 --> 00:13:11,280 years ago, so long as no alcohol has ever sold on the premises. 276 00:13:11,760 --> 00:13:14,400 But now the entire neighborhood is a trendy district full of 277 00:13:14,400 --> 00:13:17,400 bars and restaurants. Can the Grand Tour's air still 278 00:13:17,400 --> 00:13:19,400 enforce that? Maybe not. 279 00:13:19,520 --> 00:13:22,720 Modern courts, especially in places like California, really 280 00:13:22,720 --> 00:13:25,400 dislike these dead hand controls on land. 281 00:13:25,680 --> 00:13:28,520 They value marketability and efficient land use, so they 282 00:13:28,520 --> 00:13:30,520 might apply a number of equitable defenses. 283 00:13:30,560 --> 00:13:32,600 Like what? Well, what is obsolescence or 284 00:13:32,600 --> 00:13:34,960 changed conditions? The court could say, look, the 285 00:13:34,960 --> 00:13:36,480 purpose of this condition is gone. 286 00:13:36,480 --> 00:13:38,160 The neighborhood has completely changed. 287 00:13:38,200 --> 00:13:41,360 Enforcing this no longer provides any real benefit to the 288 00:13:41,360 --> 00:13:43,440 Grand Tour. So it's just a nuisance at that 289 00:13:43,440 --> 00:13:44,280 point. Exactly. 290 00:13:44,480 --> 00:13:47,480 Another is latches. That's an equitable doctrine 291 00:13:47,480 --> 00:13:50,400 that basically says you waited too long to assert your right. 292 00:13:50,720 --> 00:13:53,360 If the violation happened 10 years ago and you never said a 293 00:13:53,360 --> 00:13:55,880 word, you can't just show up now and complain. 294 00:13:56,200 --> 00:13:58,120 Or even public policy. Right. 295 00:13:58,320 --> 00:14:00,960 If the condition is an unreasonable restraint on 296 00:14:00,960 --> 00:14:05,000 alienation, meaning it makes the land basically impossible to 297 00:14:05,000 --> 00:14:09,520 sell, or if it violates public policy, like a condition based 298 00:14:09,520 --> 00:14:12,040 on racial discrimination, the court will just avoid the 299 00:14:12,040 --> 00:14:14,040 condition itself. It makes sense. 300 00:14:14,240 --> 00:14:18,480 Property law wants land to be used productively, not locked up 301 00:14:18,480 --> 00:14:21,160 by ghost stories from 1920. Exactly. 302 00:14:21,240 --> 00:14:24,280 The law, at the end of the day, generally favors the free use of 303 00:14:24,280 --> 00:14:26,640 land by the living over the restrictions imposed by the 304 00:14:26,640 --> 00:14:28,560 dead. Speaking of current versus 305 00:14:28,560 --> 00:14:31,160 future owners, let's move to the section of the outline that 306 00:14:31,160 --> 00:14:34,440 usually involves the most personal family drama life 307 00:14:34,440 --> 00:14:37,640 estates. To a for life, this is an estate 308 00:14:37,640 --> 00:14:40,680 that is measured not by time, but by the heartbeat of a 309 00:14:40,680 --> 00:14:43,520 specific human being. It's temporary ownership. 310 00:14:43,640 --> 00:14:45,720 You get it until you die, and then it's over. 311 00:14:45,960 --> 00:14:48,560 Or, and this is where it gets a little strange, you can measure 312 00:14:48,560 --> 00:14:51,600 it by someone else's life. That's called a life estate. 313 00:14:51,600 --> 00:14:54,040 Pure card fee. That's French for for another 314 00:14:54,040 --> 00:14:57,080 life, for example, to A for the life of B. 315 00:14:57,160 --> 00:15:00,720 Which leads to a morbid but very common exam question. 316 00:15:01,160 --> 00:15:05,400 If I hold a life estate Pruotrovie, so I own the land 317 00:15:05,400 --> 00:15:09,280 for as long as you are alive and I die before you do, what 318 00:15:09,280 --> 00:15:11,600 happens to the land? Well, the measuring life, your 319 00:15:11,600 --> 00:15:14,120 life is still going, so the estate isn't over. 320 00:15:14,440 --> 00:15:17,160 My interest, which is the right to the land for the rest of your 321 00:15:17,160 --> 00:15:20,120 life, actually passes to my heirs through my will. 322 00:15:20,440 --> 00:15:23,320 They get to keep the land until you finally kick the bucket. 323 00:15:23,320 --> 00:15:25,200 It's a temporary inheritable asset. 324 00:15:25,200 --> 00:15:27,000 Now Every life estate has a pairing. 325 00:15:27,280 --> 00:15:29,920 It has a partner. If I give a life estate to AI 326 00:15:29,920 --> 00:15:31,480 have to say where the rest of the timeline goes. 327 00:15:31,800 --> 00:15:33,320 Someone has to get it after a dies. 328 00:15:33,400 --> 00:15:36,320 Right, the timeline must be full, and there are two 329 00:15:36,320 --> 00:15:38,800 possibilities. If the property comes back to 330 00:15:38,800 --> 00:15:41,920 me, the grantor, after A dies, then I'm holding a future 331 00:15:41,920 --> 00:15:45,000 interest called a reversion. If I direct it to go to someone 332 00:15:45,000 --> 00:15:48,880 else, say to be after A dies, then that third party B holds a 333 00:15:48,880 --> 00:15:50,440 future interest called a remainder. 334 00:15:50,600 --> 00:15:54,360 And this relationship, the one between the life tenant who has 335 00:15:54,360 --> 00:15:58,040 the property now and the remainder man who gets it later, 336 00:15:58,280 --> 00:16:01,040 creates immediate built in conflict. 337 00:16:01,160 --> 00:16:04,400 Absolutely, The life tenants incentive is short term. 338 00:16:04,560 --> 00:16:06,640 They want to extract maximum value. 339 00:16:06,640 --> 00:16:09,520 Now let's cut down all the ancient oak trees and sell the 340 00:16:09,520 --> 00:16:11,800 timber. The remainder men has a long 341 00:16:11,800 --> 00:16:14,160 term incentive. They want the property to be 342 00:16:14,160 --> 00:16:17,880 pristine when they get it later. Don't you dare touch my future 343 00:16:17,880 --> 00:16:19,840 trees. Enter the doctrine of waste. 344 00:16:20,400 --> 00:16:23,440 This is the set of rules that acts as the referee for that 345 00:16:23,440 --> 00:16:25,480 conflict. It's the law stepping in to 346 00:16:25,480 --> 00:16:27,160 balance those competing interests. 347 00:16:27,160 --> 00:16:29,720 The airline breaks this down into three species of waste. 348 00:16:29,720 --> 00:16:33,520 First, voluntary waste. This is active affirmative 349 00:16:33,520 --> 00:16:37,120 destruction, overt conduct that decreases the value of the 350 00:16:37,120 --> 00:16:38,720 property. You can't burn down the house, 351 00:16:38,880 --> 00:16:41,640 you can't smash all the windows, and historically you couldn't 352 00:16:41,640 --> 00:16:43,560 just strip mine the land for its minerals. 353 00:16:43,560 --> 00:16:45,600 But wait, what if the land is a coal mine? 354 00:16:46,200 --> 00:16:48,080 What if that's the only real value it has? 355 00:16:48,200 --> 00:16:50,920 Can the life tenant use it? That's a great question, and 356 00:16:50,920 --> 00:16:53,280 there's a specific rule for natural resources. 357 00:16:53,800 --> 00:16:57,760 The general rule is that a life tenant cannot exploit resources 358 00:16:57,760 --> 00:17:01,160 like coal, oil, or timber unless they fit into one of the 359 00:17:01,160 --> 00:17:04,280 exceptions. The mnemonic that students use 360 00:17:04,400 --> 00:17:07,839 is PRG. OK, let's walk through PRG. 361 00:17:07,960 --> 00:17:11,839 So PU stands for Prior use. This is also known as the Open 362 00:17:11,839 --> 00:17:14,400 Minds doctrine. If the mine was already open and 363 00:17:14,400 --> 00:17:17,280 active before the life estate was created, the law assumes the 364 00:17:17,280 --> 00:17:19,720 grants were intended for the life tenant to keep mining. 365 00:17:20,000 --> 00:17:23,520 You can continue the existing operation even to depletion, but 366 00:17:23,520 --> 00:17:25,960 you cannot open new mines. OK, that seems logical. 367 00:17:25,960 --> 00:17:28,280 What's next? R is for repairs. 368 00:17:28,840 --> 00:17:31,200 The life tenant can cut a reasonable amount of timber to 369 00:17:31,200 --> 00:17:33,520 say, fix the fence or repair the roof on the House. 370 00:17:33,800 --> 00:17:35,240 That's considered good husbandry. 371 00:17:36,000 --> 00:17:38,960 G is for grant. If the document that created the 372 00:17:38,960 --> 00:17:42,520 life estate, the deed or the will explicitly says A has the 373 00:17:42,520 --> 00:17:44,600 right to mine this land, then go ahead. 374 00:17:44,920 --> 00:17:47,920 The grant itself gives permission and E is for 375 00:17:47,920 --> 00:17:50,880 exploitation. This is a narrow one, but if the 376 00:17:50,880 --> 00:17:53,960 land is literally useless for anything except for mining, like 377 00:17:53,960 --> 00:17:57,560 it's a rocky quarry with no topsoil for farming, then the 378 00:17:57,560 --> 00:17:59,280 life tenant may be able to exploit it. 379 00:17:59,360 --> 00:18:01,920 Otherwise, the gift of a life estate would be worthless. 380 00:18:02,360 --> 00:18:03,880 Got it. So that's voluntary waste. 381 00:18:04,520 --> 00:18:06,560 The second type in the outline is permissive waste. 382 00:18:06,800 --> 00:18:09,600 This is neglect. This is the life tenant simply 383 00:18:09,600 --> 00:18:12,160 sitting on the porch swing while the roof leaks and ruins the 384 00:18:12,160 --> 00:18:14,480 foundation. It's waste that results from a 385 00:18:14,480 --> 00:18:17,280 failure to act. The life tenant has a legal duty 386 00:18:17,280 --> 00:18:19,720 to maintain the property in a reasonable state of repair. 387 00:18:19,800 --> 00:18:21,280 Does that mean they have to pay for everything? 388 00:18:21,280 --> 00:18:23,560 A whole new roof. The standard is that they have 389 00:18:23,560 --> 00:18:27,600 to pay for ordinary repairs to keep the property wind and water 390 00:18:27,600 --> 00:18:30,280 tight. And critically, they have to pay 391 00:18:30,280 --> 00:18:32,160 the carrying costs of the property. 392 00:18:32,520 --> 00:18:35,120 That means property taxes and the mortgage interest. 393 00:18:35,360 --> 00:18:38,200 Just the interest on the mortgage, not the principal. 394 00:18:38,200 --> 00:18:40,000 Correct, that's the standard split. 395 00:18:40,520 --> 00:18:43,360 The life tenant pays the interest which is seen as the 396 00:18:43,360 --> 00:18:45,600 cost of renting the money for the property. 397 00:18:46,120 --> 00:18:48,760 The remainder men who will eventually get the benefit of 398 00:18:48,760 --> 00:18:51,520 the paid off property is responsible for the mortgage 399 00:18:51,520 --> 00:18:53,600 principal. That seems like a fair division 400 00:18:53,600 --> 00:18:57,360 of the burden. Now the third type, ameliorative 401 00:18:57,360 --> 00:18:59,200 waste. This is the tricky one. 402 00:18:59,440 --> 00:19:02,200 This is when the life tenant makes changes to the property 403 00:19:02,200 --> 00:19:03,840 that actually increase the value. 404 00:19:04,320 --> 00:19:07,600 Like, that seems incredibly inefficient from an economic 405 00:19:07,600 --> 00:19:09,800 standpoint. It is, which is why the modern 406 00:19:09,800 --> 00:19:12,800 view has almost completely reversed that today a life 407 00:19:12,800 --> 00:19:16,280 tenant is generally permitted to make substantial alterations and 408 00:19:16,280 --> 00:19:19,720 even demolish old structures if local market conditions have 409 00:19:19,720 --> 00:19:22,680 changed and the changes are something a prudent owner would 410 00:19:22,680 --> 00:19:26,680 do to maximize the Land's value. But the life tenant can't charge 411 00:19:26,680 --> 00:19:28,800 the remainder men for the upgrade, right? 412 00:19:29,040 --> 00:19:31,600 I can't decide to build a swimming pool and then send the 413 00:19:31,600 --> 00:19:33,960 bill to the person who gets the house in 20 years. 414 00:19:34,120 --> 00:19:36,520 That's right, you can improve the property at your own 415 00:19:36,520 --> 00:19:39,720 expense, but you generally cannot force the future owner to 416 00:19:39,720 --> 00:19:42,920 pay for your renovation project. OK, we have arrived at the deep 417 00:19:42,920 --> 00:19:45,280 end of the pool. This is the section on 418 00:19:45,280 --> 00:19:48,480 classifying future interests. This is where students panic. 419 00:19:48,480 --> 00:19:51,400 It feels like algebra and the names all sound the same. 420 00:19:51,720 --> 00:19:55,360 But the episode guide gives us a very structured 3 step 421 00:19:55,560 --> 00:19:58,480 hierarchical analysis, a decision tree. 422 00:19:59,120 --> 00:20:01,960 The advice is if you follow this, you won't get lost. 423 00:20:02,200 --> 00:20:04,400 Correct. Do not try to intuit this stuff. 424 00:20:04,400 --> 00:20:06,880 Follow the steps religiously. Step one. 425 00:20:07,600 --> 00:20:10,640 Identify the holder who has the future interest. 426 00:20:10,880 --> 00:20:12,640 Is it the grantor or someone else? 427 00:20:12,760 --> 00:20:15,520 Exactly, this is your first and most important cut. 428 00:20:16,040 --> 00:20:19,840 Is the future interest held by the grantor or is it held by a 429 00:20:19,840 --> 00:20:22,080 transferee, meaning any third party? 430 00:20:22,720 --> 00:20:24,480 If it's the grantor, you can relax a little. 431 00:20:24,600 --> 00:20:26,520 It's simple. There are only three 432 00:20:26,520 --> 00:20:30,920 possibilities, A reversion, a possibility of reverter, or a 433 00:20:30,920 --> 00:20:33,400 right of entry. We've already met two of those. 434 00:20:33,880 --> 00:20:36,880 And the key thing is all of these are considered vested 435 00:20:36,880 --> 00:20:39,360 interests. The rule against perpetuities 436 00:20:39,360 --> 00:20:41,360 generally doesn't touch them. You're safe. 437 00:20:41,720 --> 00:20:44,280 But if it's a transferee. Then the alarm bell should go 438 00:20:44,280 --> 00:20:46,520 off. Now gets complicated. 439 00:20:46,680 --> 00:20:49,440 It must be either a remainder or an executory interest. 440 00:20:49,520 --> 00:20:51,520 And to tell those two apart, we have to go to Step 2. 441 00:20:51,520 --> 00:20:53,120 Step 2. Does it follow natural 442 00:20:53,120 --> 00:20:55,960 termination? Or, in plain English, is the 443 00:20:55,960 --> 00:20:57,480 future interest polite? Exactly. 444 00:20:57,480 --> 00:20:59,520 A remainder is polite, It stands in line. 445 00:20:59,520 --> 00:21:02,000 It waits patiently for the preceding estate, like a life 446 00:21:02,000 --> 00:21:03,880 estate to end naturally through death. 447 00:21:04,280 --> 00:21:07,080 It never cuts anyone off and never divest the prior interest. 448 00:21:07,200 --> 00:21:11,480 So if I say to A for life then to BB is just waiting for A to 449 00:21:11,480 --> 00:21:12,640 die? 5 natural causes. 450 00:21:12,880 --> 00:21:14,800 B isn't doing anything to push A out. 451 00:21:15,320 --> 00:21:17,160 Brie has a remainder. Correct. 452 00:21:17,320 --> 00:21:21,000 But now we have to go a level deeper and classify what kind of 453 00:21:21,000 --> 00:21:23,640 remainder B has. Is it vested or is it 454 00:21:23,640 --> 00:21:25,280 contingent? OK, let's run through the 455 00:21:25,280 --> 00:21:27,280 different flavors of vested remainders first. 456 00:21:27,680 --> 00:21:31,520 The first is an indefeasibly vested remainder to A for life 457 00:21:31,560 --> 00:21:34,840 than to BB is an existing ascertained person. 458 00:21:34,880 --> 00:21:36,800 There are no conditions B has to meet. 459 00:21:37,280 --> 00:21:42,200 B is getting that land, period. Even if B dies tomorrow before 460 00:21:42,400 --> 00:21:45,840 AB's heirs will get the land, when A eventually dies, it's a 461 00:21:45,840 --> 00:21:49,640 sure thing. Right now for flavor #2 vested 462 00:21:49,640 --> 00:21:51,720 remainder subject to complete divestment. 463 00:21:51,800 --> 00:21:54,760 That sounds ominous. It means B has the right now, 464 00:21:55,040 --> 00:21:57,720 but could lose it later if a certain condition happens, for 465 00:21:57,720 --> 00:22:00,560 example to A for life, then to B. 466 00:22:00,560 --> 00:22:03,440 But if B ever fails to pass the bar exam, then the property 467 00:22:03,440 --> 00:22:06,480 shall go to C. So B is vested, he has the spot 468 00:22:06,480 --> 00:22:08,560 in line, but there's this condition subsequent hanging 469 00:22:08,560 --> 00:22:10,560 over his head that can strip it away before he ever gets 470 00:22:10,560 --> 00:22:13,360 possession. Precisely, C holds an executory 471 00:22:13,360 --> 00:22:16,720 interest that could divest B. And the third flavor of vested 472 00:22:16,720 --> 00:22:18,680 remainder. Vested remainder subject to 473 00:22:18,680 --> 00:22:20,560 open. This is the one for class gifts. 474 00:22:20,600 --> 00:22:23,520 Right to A for life, then to A's children. 475 00:22:24,120 --> 00:22:27,400 Let's say when the grant is made, A has one child, Bob. 476 00:22:27,920 --> 00:22:31,080 Bob's remainder is rested. He's in, but A it's still alive. 477 00:22:31,600 --> 00:22:35,280 A could have more kids, so Bob's share is subject to open to let 478 00:22:35,280 --> 00:22:38,360 any new siblings in. If A has a second kid, Carol, 479 00:22:38,640 --> 00:22:41,880 Bob's 100% share suddenly drops to 50%. 480 00:22:42,080 --> 00:22:44,080 The size of his slice of the pie can shrink. 481 00:22:44,520 --> 00:22:47,400 And there's a rule here about when the class stops growing, 482 00:22:47,680 --> 00:22:51,040 the rule of convenience. Yes, this is a rule of, well, 483 00:22:51,120 --> 00:22:52,960 convenience for administering property. 484 00:22:53,360 --> 00:22:57,440 The class closes physiologically when the parent A dies, but it 485 00:22:57,440 --> 00:23:00,120 can also close as a matter of law when any member of the class 486 00:23:00,120 --> 00:23:01,920 can demand possession. What does that mean? 487 00:23:02,240 --> 00:23:04,400 So when A dies, the life estate ends. 488 00:23:04,600 --> 00:23:07,960 Bob, as a remainder man, can go to the court and say, give me my 489 00:23:07,960 --> 00:23:10,560 share Now. At that point, the class closes. 490 00:23:10,680 --> 00:23:13,480 We don't wait around for 20 years to see if A's frozen sperm 491 00:23:13,480 --> 00:23:16,400 might produce more children. We close the circle so Bob and 492 00:23:16,400 --> 00:23:18,840 Carol can get their property and move on with their lives. 493 00:23:19,040 --> 00:23:21,400 OK, those are the vested ones. What makes a remainder A 494 00:23:21,400 --> 00:23:25,200 contingent remainder instead? A remainder is contingent if one 495 00:23:25,200 --> 00:23:28,720 of two things is true. First, the taker is unborn or 496 00:23:28,720 --> 00:23:31,960 unascertained. For example to A for life, then 497 00:23:31,960 --> 00:23:34,840 to A's heirs. A is alive, so he has no heirs 498 00:23:34,840 --> 00:23:36,480 yet. We don't know who they are, so 499 00:23:36,480 --> 00:23:39,520 their interest is contingent on them being born and identified. 500 00:23:39,520 --> 00:23:41,800 Or second, there is a condition precedent. 501 00:23:42,040 --> 00:23:44,720 This is a condition that must be met before the remainder men can 502 00:23:44,720 --> 00:23:47,800 even get in line to A for life, then to B. 503 00:23:47,800 --> 00:23:50,920 If B graduates from college, B hasn't graduated yet. 504 00:23:50,920 --> 00:23:53,440 Graduating is a condition president to his interest even 505 00:23:53,440 --> 00:23:55,480 becoming vested. That distinction between a 506 00:23:55,480 --> 00:23:58,080 condition precedent and a condition subsequent is the 507 00:23:58,080 --> 00:23:59,680 famous comma rule. Trap isn't. 508 00:23:59,800 --> 00:24:02,400 It it is, it is incredibly pedantic, but it's something you 509 00:24:02,400 --> 00:24:05,720 have to watch for on an exam. The grammar matters. 510 00:24:06,120 --> 00:24:08,960 If the conditional language appears before the grant to the 511 00:24:08,960 --> 00:24:12,480 remainder man is finished to be. If he graduates, it's a 512 00:24:12,480 --> 00:24:15,080 condition precedent, which makes it a contingent remainder. 513 00:24:15,480 --> 00:24:19,520 If the grant seems complete to be and then you see a comma and 514 00:24:19,520 --> 00:24:22,600 a divesting clause. But if he drops out then to see, 515 00:24:22,960 --> 00:24:25,560 it's a condition subsequent which makes it a vested 516 00:24:25,560 --> 00:24:28,640 remainder subject to divestment. And one is that tiny grammatical 517 00:24:28,640 --> 00:24:31,600 difference matter so much. Because the rule against 518 00:24:31,600 --> 00:24:35,040 perpetuities loves to destroy contingent remainders, but it 519 00:24:35,040 --> 00:24:37,120 usually leaves vested remainders alone. 520 00:24:37,160 --> 00:24:40,320 It's a critical difference. Which brings us to step three of 521 00:24:40,320 --> 00:24:43,120 our decision tree. We established that remainders 522 00:24:43,120 --> 00:24:46,560 are polite and wait their turn. What if the future interest is 523 00:24:46,560 --> 00:24:49,400 rude? Then it's an executory interest. 524 00:24:49,600 --> 00:24:52,040 An executory interest does not wait patiently. 525 00:24:52,040 --> 00:24:55,000 It cuts short another estate. It shoves its way to the front 526 00:24:55,000 --> 00:24:56,880 of the line and divests the prior interest. 527 00:24:56,880 --> 00:24:58,680 And there are. Two types of this rude interest 528 00:24:58,720 --> 00:25:01,720 shifting and springing. A shifting executory interest 529 00:25:01,720 --> 00:25:05,200 cuts short a transferee it divests another grantee. 530 00:25:05,400 --> 00:25:10,320 The classic example to A, but if B returns from Rome, then to B. 531 00:25:10,400 --> 00:25:14,200 The classic example A has the property and fee simple, but 532 00:25:14,200 --> 00:25:17,600 then B comes back from Rome. B's interest doesn't wait for 533 00:25:17,600 --> 00:25:20,640 A's estate to end, it cuts A's ownership short. 534 00:25:21,000 --> 00:25:24,480 The interest shifts from one transferee A to another B. 535 00:25:24,600 --> 00:25:26,600 And a springing executory interest. 536 00:25:26,600 --> 00:25:29,560 A springing executory interest cuts short the grantor. 537 00:25:29,560 --> 00:25:33,640 To A if and when he marries. Right now A is single, so who 538 00:25:33,640 --> 00:25:35,840 has the land? The grantor holds it. 539 00:25:36,160 --> 00:25:38,880 But if A gets married next year, the interest springs out of the 540 00:25:38,880 --> 00:25:41,520 Grand Tour and goes to A, cutting the Grand Tour's holding 541 00:25:41,520 --> 00:25:43,440 period short. The memory 8IN the outline here 542 00:25:43,440 --> 00:25:46,400 is graphic but effective. An executor cuts off your head. 543 00:25:46,440 --> 00:25:47,880 Right. It's a good way to remember an 544 00:25:47,880 --> 00:25:49,600 executory. Interest cuts someone off. 545 00:25:49,800 --> 00:25:52,760 If it cuts off another person, another transferee, it's 546 00:25:52,760 --> 00:25:54,560 shifting. If it springs out from the Grand 547 00:25:54,560 --> 00:25:57,160 Tour, it's springing. OK, we have built the 548 00:25:57,160 --> 00:25:59,640 foundation, we have the language, the timeline, the 549 00:25:59,640 --> 00:26:02,840 classification system. Now we have to face the monster 550 00:26:02,840 --> 00:26:06,280 at the end of the book, The rule against perpetuities or RAP. 551 00:26:06,680 --> 00:26:09,320 The file boss. Let's start with the philosophy. 552 00:26:09,600 --> 00:26:11,720 Why on earth does this rule exist? 553 00:26:11,840 --> 00:26:15,160 Is it just a mechanism to torture law students? 554 00:26:15,240 --> 00:26:18,920 It certainly feels that way sometimes, but no, it's a policy 555 00:26:18,920 --> 00:26:22,720 battle between the dead hand of past owners and the needs of the 556 00:26:22,720 --> 00:26:25,840 living. Old English aristocrats wanted 557 00:26:25,840 --> 00:26:29,600 to control their land forever. From the grave to my son for 558 00:26:29,600 --> 00:26:32,480 life, then to his first son for life, then to his first son for 559 00:26:32,480 --> 00:26:34,840 life. They wanted to create a dynasty 560 00:26:34,840 --> 00:26:37,320 where the land could never be sold, ever. 561 00:26:37,320 --> 00:26:39,400 Tying it up forever. Exactly. 562 00:26:39,720 --> 00:26:41,320 And the courts eventually said no. 563 00:26:41,920 --> 00:26:45,120 Society needs land to be marketable, We need it to be put 564 00:26:45,120 --> 00:26:48,400 to its best and highest use. We can't have it goes from year 565 00:26:48,400 --> 00:26:51,480 1600 telling us who owns a farm in downtown London in the year 566 00:26:51,480 --> 00:26:54,360 2024. So they created a cut off a time 567 00:26:54,360 --> 00:26:57,240 limit on how long a future interest can remain uncertain, 568 00:26:57,560 --> 00:26:59,960 hanging in the air like a dark cloud over the title. 569 00:27:00,120 --> 00:27:02,400 That's exactly what it is. And here's the rule itself. 570 00:27:02,560 --> 00:27:06,600 No interest is good unless it must vest, if at all, not later 571 00:27:06,600 --> 00:27:09,480 than 21 years after some life and being at the creation of the 572 00:27:09,480 --> 00:27:10,880 interest. It sounds like a Riddle from a 573 00:27:10,880 --> 00:27:12,560 fantasy novel. It's barely English. 574 00:27:12,840 --> 00:27:15,440 It is a logic puzzle and the only way to solve it is to apply 575 00:27:15,440 --> 00:27:18,160 a rigid methodology. The source guide gives us a 576 00:27:18,160 --> 00:27:21,120 great one. Create kill count. 577 00:27:21,240 --> 00:27:23,680 But before we even run that strategy, we have to remember 578 00:27:23,680 --> 00:27:26,680 step one from the guide. Identify the interest. 579 00:27:26,920 --> 00:27:29,400 RIP does not apply to every future interest. 580 00:27:29,400 --> 00:27:32,000 Correct, this is a huge time saver on an exam. 581 00:27:32,080 --> 00:27:35,080 The rule hates uncertainty, so it only applies to interest that 582 00:27:35,080 --> 00:27:38,200 are not yet vested. Specifically, 1 contingent 583 00:27:38,200 --> 00:27:42,800 remainders, 2 executory interests 3 and vested 584 00:27:42,800 --> 00:27:45,080 remainders subject to open because we don't know for sure 585 00:27:45,080 --> 00:27:46,440 how many people will be in the class. 586 00:27:46,840 --> 00:27:49,720 If you have a reversion, a possibility of reverter, a right 587 00:27:49,720 --> 00:27:53,200 of entry, or an indefeasibly vested remainder, you are safe. 588 00:27:53,640 --> 00:27:56,680 Just right RIP does not apply and move on. 589 00:27:56,920 --> 00:27:59,640 OK, so let's take a suspect interest from the outline to A 590 00:27:59,720 --> 00:28:02,600 for life, then to the first of A's children to reach the age of 591 00:28:02,600 --> 00:28:04,480 30. At the time of the grant, A is 592 00:28:04,480 --> 00:28:06,920 alive and has one child, a 5 year old named Ben. 593 00:28:06,920 --> 00:28:09,440 Let's run the method. Step one, create the interest. 594 00:28:09,760 --> 00:28:12,360 We have a contingent remainder for an unknown child reaching 595 00:28:12,360 --> 00:28:14,560 30. Right, it's contingent because 596 00:28:14,720 --> 00:28:18,920 no child has yet reached 30. Now Step 2, identify the 597 00:28:18,920 --> 00:28:23,120 validating life or is the guide says the measuring life then 598 00:28:23,480 --> 00:28:25,560 kill them. Who is the measuring life here? 599 00:28:25,800 --> 00:28:28,400 A is the measuring life. His life is relevant to the 600 00:28:28,400 --> 00:28:30,520 condition because he's the one who can produce the children. 601 00:28:30,840 --> 00:28:34,160 So for purposes of our logical test, we imagine that A drops 602 00:28:34,160 --> 00:28:36,520 dead right now, at the moment the interest is created. 603 00:28:36,560 --> 00:28:39,800 OK, A is dead now. Step 3 count 21 years. 604 00:28:39,920 --> 00:28:42,160 We Fast forward 21 years from A's death. 605 00:28:42,400 --> 00:28:45,800 The the question is, at that point, is it possible that we 606 00:28:45,800 --> 00:28:47,880 still don't know for sure who gets the land? 607 00:28:47,920 --> 00:28:49,560 Let's play it out with the worst case scenario. 608 00:28:49,600 --> 00:28:52,880 Yeah. What if just before A died, he 609 00:28:52,880 --> 00:28:55,000 had another child, a daughter named Carol. 610 00:28:55,080 --> 00:28:57,520 So when A dies, Ben is five and Carol's a newborn. 611 00:28:58,000 --> 00:29:00,880 Now we count forward 21 years. Ben is now 26. 612 00:29:00,880 --> 00:29:02,880 Carol is 21. Has any child reached 30? 613 00:29:02,880 --> 00:29:04,400 No. Do you know for sure if any 614 00:29:04,400 --> 00:29:05,600 child will reach 30? No. 615 00:29:05,760 --> 00:29:08,920 Ben could die in a car crash at 29 and Carol could die at 28. 616 00:29:08,920 --> 00:29:12,920 So 21 years after the death of the measuring life A the 617 00:29:12,920 --> 00:29:15,200 interest is still contingent. It's still hanging in the air. 618 00:29:15,200 --> 00:29:17,320 We don't know who will take. So violates the rule. 619 00:29:17,520 --> 00:29:20,560 It violates the rule, and the consequence of common law is 620 00:29:20,560 --> 00:29:23,360 brutal. The entire gift to the first 621 00:29:23,360 --> 00:29:26,760 child to reach 30 is void AB initio from the beginning. 622 00:29:27,200 --> 00:29:29,960 You take a red pin, you strike that entire clause from the 623 00:29:29,960 --> 00:29:33,360 deed, and you read what's left. Which would just be to A for 624 00:29:33,360 --> 00:29:36,240 life. So after A dies it goes back to 625 00:29:36,240 --> 00:29:38,520 the Grand Tour as a reversion. Precisely. 626 00:29:38,560 --> 00:29:42,800 And this ruthless logic is what leads to those insane common law 627 00:29:42,800 --> 00:29:45,440 assumptions. You said we have to ignore all 628 00:29:45,440 --> 00:29:47,400 common sense. You have to leave common sense 629 00:29:47,400 --> 00:29:50,000 at the door. The common law, to make sure the 630 00:29:50,000 --> 00:29:54,320 rule is absolutely watertight, presumes 2 clinically insane 631 00:29:54,320 --> 00:29:56,800 things. First, the fertile octogenarian. 632 00:29:57,120 --> 00:30:01,040 The law conclusively presumes that an 80 year old woman or man 633 00:30:01,280 --> 00:30:02,920 is capable of having another child. 634 00:30:03,600 --> 00:30:05,760 Not at all. So if a grant is to my 635 00:30:05,760 --> 00:30:09,120 grandchildren and the only living child is an 85 year old 636 00:30:09,120 --> 00:30:11,800 daughter, you cannot say oh the class is closed because she 637 00:30:11,800 --> 00:30:14,960 obviously can't have more kids. The common law says maybe she 638 00:30:14,960 --> 00:30:18,280 can and that theoretical magically conceived baby could 639 00:30:18,280 --> 00:30:21,480 be born after the grant. Live for a long time and throw 640 00:30:21,480 --> 00:30:23,240 off your whole perpetuities timeline. 641 00:30:23,280 --> 00:30:24,800 That's absurd. What's the second one? 642 00:30:24,960 --> 00:30:27,480 The unborn widow. This is a classic bar exam trap. 643 00:30:27,480 --> 00:30:31,320 A grant reads to my son a for life, then to his widow for 644 00:30:31,320 --> 00:30:33,360 life, then to a surviving children. 645 00:30:33,520 --> 00:30:37,120 It looks fine. A is married to Martha Marthy is 646 00:30:37,120 --> 00:30:39,560 a life in being. But the term is widow, not 647 00:30:39,560 --> 00:30:42,720 Martha. A could divorce Martha and A 648 00:30:42,960 --> 00:30:46,160 could, years from now, marry someone else, someone who hasn't 649 00:30:46,160 --> 00:30:47,960 even been born yet at the time of the grant. 650 00:30:47,960 --> 00:30:48,880 The unborn. Widow. 651 00:30:49,000 --> 00:30:51,040 Right. Imagine A divorces Martha and 652 00:30:51,040 --> 00:30:52,600 marries a woman who's born next year. 653 00:30:52,960 --> 00:30:56,280 Then a dies. Now this unborn widow who was 654 00:30:56,280 --> 00:30:59,440 not a life in being at the grant has the life estate. 655 00:30:59,440 --> 00:31:00,720 Let's say she lives for 80 years. 656 00:31:01,000 --> 00:31:04,680 Then she dies and only then does the interest for A's surviving 657 00:31:04,680 --> 00:31:07,600 children finally vest. That moment of vesting could be 658 00:31:07,600 --> 00:31:10,440 80 years after A the life and being died. 659 00:31:10,680 --> 00:31:12,680 That is way, way more than 21 years. 660 00:31:12,920 --> 00:31:15,880 So the gift to A's children fails under the common law RAP. 661 00:31:16,240 --> 00:31:18,240 That is just madding. You're telling me a multi 662 00:31:18,240 --> 00:31:21,120 $1,000,000 estate plan could fail because of a theoretical 663 00:31:21,120 --> 00:31:23,680 imaginary second wife who doesn't even exist? 664 00:31:23,840 --> 00:31:27,600 Yes, that is the unforgiving ruthlessness of the common law 665 00:31:27,600 --> 00:31:31,520 rule against perpetuities. Now, thankfully, modern law has 666 00:31:31,520 --> 00:31:34,920 realized this is just stupid. Most states have reformed the 667 00:31:34,920 --> 00:31:37,240 rule. Many now use a wait and see 668 00:31:37,240 --> 00:31:38,640 approach. How does that work? 669 00:31:38,720 --> 00:31:41,480 Instead of speculating about fertile octogenarians and unborn 670 00:31:41,480 --> 00:31:45,000 widows, we just wait. The Uniform Statutory Rule 671 00:31:45,000 --> 00:31:48,000 Against perpetuities, for example, gives the interest 90 672 00:31:48,000 --> 00:31:49,520 years to see if it actually vests. 673 00:31:50,000 --> 00:31:51,320 If it does within 90 years, great. 674 00:31:51,360 --> 00:31:54,400 If not, then it fails. We deal with what actually 675 00:31:54,400 --> 00:31:57,120 happens, not what might. Happen or they use Cypress right 676 00:31:57,120 --> 00:31:59,600 where the court just rewrites the document to fix it. 677 00:31:59,680 --> 00:32:02,600 Yes, that's another Reforma. The term means as near as 678 00:32:02,600 --> 00:32:05,240 possible. If the grantor wrote to the 679 00:32:05,240 --> 00:32:08,760 first child to reach 25 and that violates the rule, the court 680 00:32:08,760 --> 00:32:12,240 will just take a pen and change 25 to 21 to save the gift and 681 00:32:12,240 --> 00:32:14,600 honor the grantor's intent as nearly as possible. 682 00:32:14,680 --> 00:32:17,400 OK, we have survived RAP. Let's finish up with something a 683 00:32:17,400 --> 00:32:19,600 bit more relatable. Concurrent estates. 684 00:32:19,600 --> 00:32:22,360 Co ownership roommates. Right. 685 00:32:22,760 --> 00:32:25,760 How do multiple people own the same property at the same time? 686 00:32:26,120 --> 00:32:28,960 The big two you need to know are joint tenancy and tenancy in 687 00:32:28,960 --> 00:32:31,080 common. Let's start with joint tenancy. 688 00:32:31,640 --> 00:32:35,040 The outline calls this the Vegas Marriage of Property law. 689 00:32:35,720 --> 00:32:39,080 It has the defining feature the right of survivorship. 690 00:32:39,200 --> 00:32:41,960 This is the absolute key. If you and I own a house as 691 00:32:41,960 --> 00:32:45,080 joint tenants and I die, my share vanishes. 692 00:32:45,600 --> 00:32:47,680 Poof. It is absorbed instantly and 693 00:32:47,680 --> 00:32:50,080 automatically by you, the surviving joint tenant. 694 00:32:50,200 --> 00:32:53,480 My will is irrelevant. My kids get nothing from the 695 00:32:53,480 --> 00:32:55,280 house. This is great for avoiding 696 00:32:55,280 --> 00:32:57,400 probate court. It's an automatic transfer, but 697 00:32:57,400 --> 00:32:59,320 it could be terrible if you want to leave your share of the 698 00:32:59,320 --> 00:33:02,160 property to your family. Exactly, and because of this 699 00:33:02,160 --> 00:33:05,200 unnatural result of disinheriting errors, the law 700 00:33:05,200 --> 00:33:07,000 makes it hard to create a joint tenancy. 701 00:33:07,720 --> 00:33:09,200 You need what are called the four unities. 702 00:33:09,480 --> 00:33:13,840 The mnemonic is TTIP. Let's breakdown T type PT. 703 00:33:13,840 --> 00:33:16,200 Is for time. We must get our interests at the 704 00:33:16,200 --> 00:33:18,040 same time. T is for title. 705 00:33:18,160 --> 00:33:20,600 We must get our interests from the same document, the same 706 00:33:20,600 --> 00:33:22,000 deed. I is for interest. 707 00:33:22,000 --> 00:33:25,760 We would have equal identical shares. 5050, not 6040. 708 00:33:26,000 --> 00:33:28,680 And P is for possession. We both have the right to 709 00:33:28,680 --> 00:33:31,320 possess the whole property. And if you break any of these 4 710 00:33:31,320 --> 00:33:33,880 unities at any point, you shatter the joint tendency it's 711 00:33:33,880 --> 00:33:34,840 severed. Right. 712 00:33:35,080 --> 00:33:39,840 And the mnemonic for severance is spam, sale, partition and 713 00:33:39,840 --> 00:33:42,600 mortgage sometimes. Let's talk about sale. 714 00:33:43,000 --> 00:33:46,360 If we are joint tenants and I secretly sell my half interest 715 00:33:46,360 --> 00:33:48,480 to My Cousin Vinny without your permission. 716 00:33:48,480 --> 00:33:51,000 Among you do that you have broken the unities of time and 717 00:33:51,000 --> 00:33:52,680 title. The joint tenancy is severed. 718 00:33:52,960 --> 00:33:56,160 It's destroyed, Vinny, and you are now tenants in common. 719 00:33:56,200 --> 00:33:58,320 The right of survivorship is gone forever. 720 00:33:58,760 --> 00:34:02,680 If you die, your share now goes to your heirs, not to Vinny. 721 00:34:03,040 --> 00:34:04,600 OK. And what about mortgage? 722 00:34:04,600 --> 00:34:05,880 This is the one that depends on the state. 723 00:34:05,880 --> 00:34:08,719 Yeah, this is a classic majority minority rule issue. 724 00:34:09,280 --> 00:34:11,960 If I take out a mortgage on my 50% share without telling you, 725 00:34:12,320 --> 00:34:16,280 does that act of mortgaging sever the joint tenancy In a 726 00:34:16,280 --> 00:34:19,440 title theory state, which is the old minority view, yes. 727 00:34:19,880 --> 00:34:22,400 The mortgage is seen as an actual transfer of title to the 728 00:34:22,400 --> 00:34:24,960 bank for security. Unity of title is broken 729 00:34:25,239 --> 00:34:28,520 severance, but in a lien theory state, which is the overwhelming 730 00:34:28,520 --> 00:34:31,400 majority of you today, No, a mortgage is just a lien. 731 00:34:31,400 --> 00:34:33,719 It's a charge on the property, not a transfer of title. 732 00:34:34,040 --> 00:34:37,000 The unities remain intact and the joint tenancy survives. 733 00:34:37,239 --> 00:34:39,560 Good distinction. So then we have the alternative, 734 00:34:39,560 --> 00:34:42,560 the tenancy, in common. This is the default form of Co 735 00:34:42,560 --> 00:34:45,520 ownership. If a deed is ambiguous, if it 736 00:34:45,520 --> 00:34:50,040 just says to A&B, the law presumes the grantor meant to 737 00:34:50,040 --> 00:34:53,400 create a tendency in common. And its features are basically 738 00:34:53,400 --> 00:34:56,440 the opposite of a joint tenancy. Pretty much there is no right of 739 00:34:56,440 --> 00:34:59,000 survivorship. When I die, my share goes to my 740 00:34:59,000 --> 00:35:01,000 heirs. The shares do not have to be 741 00:35:01,000 --> 00:35:03,640 equal. I could own 99% and you could 742 00:35:03,640 --> 00:35:06,520 own 1%. The only unity required is 743 00:35:06,520 --> 00:35:09,080 possession. We both have the right to walk 744 00:35:09,080 --> 00:35:11,920 on every inch of that land, regardless of our ownership 745 00:35:11,920 --> 00:35:14,120 percentage. That right to possess the whole 746 00:35:14,120 --> 00:35:17,200 brings up the concept of ouster. Right, since we both have the 747 00:35:17,200 --> 00:35:19,960 right to possess the whole property, I can't charge you 748 00:35:19,960 --> 00:35:22,840 rent just for living there while I choose to live somewhere else. 749 00:35:23,240 --> 00:35:26,240 And you can't charge me unless I commit ouster. 750 00:35:26,520 --> 00:35:30,120 Ouster is a wrongful exclusion. That means I change the locks, I 751 00:35:30,120 --> 00:35:32,880 throw your stuff out on the lawn and I tell you get out and never 752 00:35:32,880 --> 00:35:35,360 come back. The moment I do that, I have 753 00:35:35,360 --> 00:35:36,800 violated your right of possession. 754 00:35:37,000 --> 00:35:39,960 Now I owe you your share of the fair market rental value of the 755 00:35:39,960 --> 00:35:41,680 property. And what about rent we get from 756 00:35:41,680 --> 00:35:43,560 renting the property to third parties? 757 00:35:43,720 --> 00:35:45,480 That you always have to share pro rata. 758 00:35:46,080 --> 00:35:48,640 If I rent out a room in our shared house to a college 759 00:35:48,640 --> 00:35:51,120 student, I cannot pocket all that cash. 760 00:35:51,480 --> 00:35:54,080 I have to give you your percentage of the net profits. 761 00:35:54,080 --> 00:35:58,360 Wow, we have covered a massive amount of ground from the fee 762 00:35:58,360 --> 00:36:01,160 simple through the whole hierarchy of de feasible fees, 763 00:36:01,360 --> 00:36:04,960 the drama of life estates and waste, the logic tree for future 764 00:36:04,960 --> 00:36:09,160 interest, the absolute nightmare of RIP and finally the mechanics 765 00:36:09,200 --> 00:36:12,640 of concurrent estates. It is a lot, but if you look at 766 00:36:12,640 --> 00:36:15,520 the summary hierarchy from the guide it falls into a logical 767 00:36:15,520 --> 00:36:18,000 pattern. Fee simple is the baseline. 768 00:36:18,160 --> 00:36:21,440 De feasible fees introduce conditions, life estate, split 769 00:36:21,440 --> 00:36:24,800 time, future interests fill in the gaps in the timeline. 770 00:36:25,200 --> 00:36:28,720 RAP police is that timeline to prevent uncertainty and 771 00:36:28,720 --> 00:36:31,160 concurrence dates split the ownership among people at the 772 00:36:31,160 --> 00:36:33,160 same time. Before we sign off, you flagged 773 00:36:33,160 --> 00:36:35,800 a final exam trap in the outline that connects all this to 774 00:36:35,800 --> 00:36:37,880 recording acts. Yes, just briefly. 775 00:36:38,120 --> 00:36:41,280 All these wonderful ownership interests are only truly safe if 776 00:36:41,280 --> 00:36:43,680 they're properly recorded in the Public Land Records Office. 777 00:36:44,040 --> 00:36:46,120 You have to watch out for the problem of the wild deed. 778 00:36:46,200 --> 00:36:47,320 A wild. Deed. 779 00:36:47,520 --> 00:36:50,840 A wild deed is a recorded deed that a searcher can't sign 780 00:36:51,080 --> 00:36:52,960 because it's disconnected from the chain of title. 781 00:36:53,640 --> 00:36:57,880 Imagine A sells to BB, doesn't record the deed, he just puts it 782 00:36:57,880 --> 00:37:01,360 in his desk drawer. Then B sells to C&C, properly 783 00:37:01,360 --> 00:37:04,600 records her deed. A future searcher looking up the 784 00:37:04,600 --> 00:37:07,600 grander A won't find the A to B deed, and therefore won't find 785 00:37:07,600 --> 00:37:10,600 the B to C deed. C's deed is wild. 786 00:37:10,880 --> 00:37:12,520 It's out there, but it's off the grid. 787 00:37:12,840 --> 00:37:15,800 C might lose the land to a later bonafide purchaser who buys 788 00:37:15,800 --> 00:37:18,080 directly from A. And the shelter rule, that's a 789 00:37:18,080 --> 00:37:20,200 protective rule. It says that if you buy a 790 00:37:20,200 --> 00:37:22,760 property from a bonafide purchaser, someone who bought 791 00:37:23,040 --> 00:37:26,880 honestly for value without notice of a Trier claim, you get 792 00:37:26,880 --> 00:37:28,800 shelter under their protected status. 793 00:37:29,280 --> 00:37:30,960 Even if you know about a prior bad claim. 794 00:37:31,000 --> 00:37:33,120 If the person you bought it from didn't, you were safe. 795 00:37:33,280 --> 00:37:34,960 It protects the marketability of their title. 796 00:37:35,120 --> 00:37:37,280 Fascinating stuff. It really is a whole world. 797 00:37:37,680 --> 00:37:40,160 I want to leave our listeners with a provocative thought. 798 00:37:40,560 --> 00:37:43,960 We have spent an hour talking about Sizon and feudal concepts 799 00:37:43,960 --> 00:37:47,720 from the 1600s, but think about the modern world of digital 800 00:37:47,720 --> 00:37:52,000 assets, NFTS and the blockchain. Is a smart contract on a 801 00:37:52,000 --> 00:37:55,080 platform like Ethereum which automatically transfers a 802 00:37:55,080 --> 00:37:58,560 digital token if a certain verifiable condition is met? 803 00:37:58,720 --> 00:38:01,800 Just a rigorously enforced executory interest. 804 00:38:01,800 --> 00:38:04,160 It absolutely is. That's a brilliant connection. 805 00:38:04,480 --> 00:38:07,400 A smart contract is effectively a fee simple, subject to an 806 00:38:07,400 --> 00:38:10,760 executory limitation, but it's written in computer code rather 807 00:38:10,760 --> 00:38:13,240 than. Indeed, the Oracle that verifies 808 00:38:13,240 --> 00:38:16,160 whether the condition occurred is just the modern automated 809 00:38:16,160 --> 00:38:19,040 equivalent of the court determining if the condition was 810 00:38:19,040 --> 00:38:21,200 breached. The transfer is automatic and 811 00:38:21,200 --> 00:38:24,040 ruthless, just like a shifting executory interest. 812 00:38:24,280 --> 00:38:26,720 So the more things change, the more they stay the same. 813 00:38:26,720 --> 00:38:29,360 The feudal architecture is still there, just in a new digital 814 00:38:29,360 --> 00:38:31,280 form. Thank you for guiding us through 815 00:38:31,280 --> 00:38:32,440 this maze. My pleasure. 816 00:38:32,520 --> 00:38:34,480 It's a fun puzzle once you see how the pieces fit. 817 00:38:34,840 --> 00:38:38,120 And to you, the learner, next time you walk past a building or 818 00:38:38,120 --> 00:38:40,640 a plot of land, don't just see dirt and bricks. 819 00:38:40,920 --> 00:38:44,160 Try to see the invisible layers of time and rights hovering over 820 00:38:44,160 --> 00:38:46,520 it. That is the matrix of property 821 00:38:46,520 --> 00:38:48,400 law. Thanks for listening to the deep 822 00:38:48,400 --> 00:38:50,520 dive. All right, everyone, if you're 823 00:38:50,520 --> 00:38:53,480 in law school, you've probably heard the horror stories about 824 00:38:53,480 --> 00:38:56,400 estates and future interests. It always sounds like this 825 00:38:56,440 --> 00:38:58,760 ancient, impossibly complex puzzle, right? 826 00:38:59,160 --> 00:39:02,200 But here's the secret. It's really just a system, a 827 00:39:02,200 --> 00:39:04,720 framework for slicing U ownership overtime. 828 00:39:05,120 --> 00:39:07,720 And today we are going to crack that code together. 829 00:39:08,440 --> 00:39:10,520 So here's our game plan. We're going to start with the 830 00:39:10,520 --> 00:39:13,440 basics, the whole universe of what it means to own property. 831 00:39:13,640 --> 00:39:16,680 Then we'll get into the feasible fees, you know, ownership with 832 00:39:16,680 --> 00:39:18,960 strings attached. From there, we'll cover life 833 00:39:18,960 --> 00:39:21,600 estates and the doctrine of waste, then dig into the nitty 834 00:39:21,600 --> 00:39:24,080 gritty of future interests, telling the difference between 835 00:39:24,080 --> 00:39:26,080 remainders and executory interests. 836 00:39:26,280 --> 00:39:29,160 And Yep, we'll finish with the big one, the infamous rule 837 00:39:29,160 --> 00:39:31,600 against perpetuities. Let's get into it. 838 00:39:32,440 --> 00:39:34,760 All right. First up, the universe of 839 00:39:34,760 --> 00:39:37,960 estates. Or to put it another way, how 840 00:39:37,960 --> 00:39:40,640 long is forever? So let's kick things off with 841 00:39:40,640 --> 00:39:44,480 the most basic question of all. What in the world is an estate 842 00:39:44,480 --> 00:39:46,760 in land? You know, this is a concept that 843 00:39:46,760 --> 00:39:50,320 trips up a lot of students and it's mostly because it's not 844 00:39:50,320 --> 00:39:53,280 just about who's got the keys to the house right now. 845 00:39:54,040 --> 00:39:58,160 The key thing to get, and I mean really get, is that we are 846 00:39:58,160 --> 00:40:02,600 defining ownership across time. It's a temporal dimension. 847 00:40:02,920 --> 00:40:05,880 So think of it like this. Imagine a timeline for a piece 848 00:40:05,880 --> 00:40:07,960 of land. Every single grant we're going 849 00:40:07,960 --> 00:40:10,920 to look at carves out a piece of that timeline for someone. 850 00:40:11,080 --> 00:40:13,800 It tells you how long the current owner gets it and just 851 00:40:13,800 --> 00:40:15,600 as important, who's next in line. 852 00:40:15,960 --> 00:40:19,200 If you can master that idea of temporal sequencing, you are 853 00:40:19,200 --> 00:40:21,360 well on your way to acing this part of the exam. 854 00:40:22,240 --> 00:40:25,760 OK, Section 2, fee simple and a feasible fees. 855 00:40:26,080 --> 00:40:29,000 This is where we talk about the baseline of ownership and all 856 00:40:29,000 --> 00:40:30,440 the conditions you can attach to it. 857 00:40:30,960 --> 00:40:32,720 So let's establish our starting point. 858 00:40:32,720 --> 00:40:36,480 You know, the absolute baseline of ownership, the biggest, most 859 00:40:36,480 --> 00:40:38,680 complete package of rights you can possibly have. 860 00:40:39,040 --> 00:40:42,080 And then we'll see how grantors get clever and start attaching 861 00:40:42,080 --> 00:40:45,720 strings to it. And here it is, the fee simple 862 00:40:45,720 --> 00:40:49,320 absolute or FSA. This is your default setting. 863 00:40:49,400 --> 00:40:51,560 It's the highest form of ownership there is. 864 00:40:51,840 --> 00:40:54,520 So here's the exam tip. If you see a grant that just 865 00:40:54,520 --> 00:40:58,600 says 2A or 2A, N is heirs and there is nothing else, no, so 866 00:40:58,600 --> 00:41:01,440 long as no. But if that's it, it, it's a fee 867 00:41:01,440 --> 00:41:03,240 simple absolute. Don't overthink it. 868 00:41:03,360 --> 00:41:05,320 Don't go searching for conditions that aren't there. 869 00:41:05,560 --> 00:41:08,480 This is total ownership. You can sell it, you can will 870 00:41:08,480 --> 00:41:11,400 it, your heirs can inherit it. It is, for all intents and 871 00:41:11,400 --> 00:41:14,840 purposes, forever. OK, that's simple enough. 872 00:41:15,200 --> 00:41:17,880 But what if the person giving away the land wants to control 873 00:41:17,880 --> 00:41:20,000 what happens to it even after they're gone? 874 00:41:20,320 --> 00:41:22,560 You know, they want to reach out from beyond the grave and 875 00:41:22,560 --> 00:41:24,880 dictate its use. Well, that's where we get into 876 00:41:24,880 --> 00:41:26,680 what are called the feasible fees. 877 00:41:27,040 --> 00:41:30,040 So in this example, the grantor has given the property away But, 878 00:41:30,200 --> 00:41:33,640 and it's a big but, there's a string attached, a condition 879 00:41:33,640 --> 00:41:36,320 that can make the school board lose the land entirely. 880 00:41:37,040 --> 00:41:39,400 So this leads us to the core analysis for your exam. 881 00:41:39,760 --> 00:41:42,600 What estate does the school board have and what future 882 00:41:42,600 --> 00:41:46,080 interest does the grantor have? See every single one of these de 883 00:41:46,080 --> 00:41:48,240 feasible fees creates 2 things at once. 884 00:41:48,520 --> 00:41:51,520 A present estate and the person getting the land and a future 885 00:41:51,520 --> 00:41:54,640 interest in someone else. Your entire job is to identify 886 00:41:54,640 --> 00:41:57,920 both parts of that equation and the only clues you have, the 887 00:41:57,960 --> 00:42:01,280 only thing that matters are the exact words used in the grant. 888 00:42:01,960 --> 00:42:04,480 OK, this table right here, this is gold. 889 00:42:04,680 --> 00:42:07,840 Seriously, this is your exam CHEAT SHEET for de feasible 890 00:42:07,840 --> 00:42:10,040 fees. It all comes down to the magic 891 00:42:10,040 --> 00:42:12,480 words. So look at that top row fee. 892 00:42:12,480 --> 00:42:15,560 Simple, determinable. The magic words are durational 893 00:42:15,720 --> 00:42:20,120 so long as while until. If you see those, you know two 894 00:42:20,120 --> 00:42:22,440 things. One, termination is automatic. 895 00:42:22,680 --> 00:42:25,320 The second, the condition is broken, poof, the estate is 896 00:42:25,320 --> 00:42:27,160 over. And two, the future interest it 897 00:42:27,160 --> 00:42:29,400 creates in the grantor is a possibility of reverter. 898 00:42:30,160 --> 00:42:32,880 Now compare that to the second row, fee simple, subject to 899 00:42:32,880 --> 00:42:35,040 condition subsequent. The words here are different, 900 00:42:35,040 --> 00:42:38,320 they're conditional. But if provided that, and here's 901 00:42:38,320 --> 00:42:40,880 the key difference, termination is not automatic. 902 00:42:41,240 --> 00:42:42,800 The grantor has to actually do something. 903 00:42:42,880 --> 00:42:44,840 They have to exercise their right of entry. 904 00:42:45,400 --> 00:42:47,400 That distinction between automatic and elective 905 00:42:47,400 --> 00:42:49,800 termination, it's everything on an exam. 906 00:42:50,400 --> 00:42:52,800 And this brings us to a really important policy point. 907 00:42:52,800 --> 00:42:56,200 You need to remember, courts absolutely hate making people 908 00:42:56,200 --> 00:42:58,080 forfeit their property. They just don't like it. 909 00:42:58,640 --> 00:43:01,440 So if the language in the grant is even a little bit ambiguous, 910 00:43:01,640 --> 00:43:04,000 they will bend over backwards to avoid that forfeiture. 911 00:43:04,440 --> 00:43:07,160 Their first move will be to try and read it as just a promise, a 912 00:43:07,160 --> 00:43:09,800 covenant, instead of a condition that ends the estate. 913 00:43:10,360 --> 00:43:13,440 But if they absolutely have to find a defeasible fee, they'll 914 00:43:13,440 --> 00:43:16,120 almost always prefer the FSCS. Why? 915 00:43:16,560 --> 00:43:18,960 Because it's not automatic. It forces the grander to take 916 00:43:18,960 --> 00:43:21,400 action, which gives the current owner a chance to save their 917 00:43:21,400 --> 00:43:24,040 estate. OK, part three. 918 00:43:24,080 --> 00:43:28,000 Life estates and waste or ownership for a lifetime. 919 00:43:28,520 --> 00:43:30,760 So we've talked about controlling property using 920 00:43:30,760 --> 00:43:33,760 conditions, but what if the grantor wants to measure 921 00:43:33,760 --> 00:43:37,320 ownership by time instead? Specifically by the length of a 922 00:43:37,320 --> 00:43:39,920 human life? Well, that brings us right to 923 00:43:39,920 --> 00:43:42,480 our next major topic, the life estate. 924 00:43:43,120 --> 00:43:45,960 So when O grants 2A for life, what happens? 925 00:43:46,240 --> 00:43:49,160 Well, here's the absolute number one rule for life estates. 926 00:43:49,320 --> 00:43:51,520 They always create a future interest. 927 00:43:51,800 --> 00:43:53,400 Always. Think about it. 928 00:43:53,440 --> 00:43:55,680 It's a ticking clock measured by A's life. 929 00:43:55,920 --> 00:43:58,800 When A dies, the property has to go somewhere, right? 930 00:43:59,080 --> 00:44:02,080 The only question is where? If it goes back to the original 931 00:44:02,080 --> 00:44:05,880 grantor O, we call that future interest a reversion, it reverts 932 00:44:05,880 --> 00:44:07,960 back. But if it goes forward to some 933 00:44:07,960 --> 00:44:11,800 third person, let's say B, then B has what we call a remainder. 934 00:44:12,480 --> 00:44:15,240 And you can see how this immediately creates a conflict, 935 00:44:15,520 --> 00:44:17,680 right? You've got the life tenant, A, 936 00:44:17,760 --> 00:44:20,600 who wants to get as much out of the property as possible right 937 00:44:20,600 --> 00:44:22,600 now. But then you have the future 938 00:44:22,600 --> 00:44:26,040 interest holder, whether it's O or B, who's thinking, hey, don't 939 00:44:26,040 --> 00:44:29,760 trash the place, I'm getting it. Next, the law has to solve this 940 00:44:29,760 --> 00:44:32,360 tension, and it does so with the doctrine of waste. 941 00:44:32,480 --> 00:44:35,560 The rule is pretty simple. The life tenant has a duty not 942 00:44:35,560 --> 00:44:38,320 to permanently screw up the property for the next person in 943 00:44:38,320 --> 00:44:40,560 line. They can use it, they can profit 944 00:44:40,560 --> 00:44:42,200 from it, but they can't wreck it. 945 00:44:42,760 --> 00:44:45,440 So for an exam, you've got to be able to spot which of these 946 00:44:45,440 --> 00:44:47,600 three types of waste is happening first. 947 00:44:47,600 --> 00:44:49,640 You have voluntary or affirmative waste. 948 00:44:49,800 --> 00:44:52,880 This is the easy one. It's overt destructive conduct, 949 00:44:53,080 --> 00:44:56,000 you know, tearing down a perfectly good building. 2nd is 950 00:44:56,000 --> 00:44:58,440 permissive waste. This is waste by neglect. 951 00:44:58,680 --> 00:45:01,360 You let the roof leak until it caves in, you don't pay the 952 00:45:01,360 --> 00:45:03,040 property taxes, that kind of thing. 953 00:45:03,400 --> 00:45:05,200 And then there's the third one, the one that always seems a 954 00:45:05,200 --> 00:45:06,960 little weird. Ameliorative waste. 955 00:45:07,240 --> 00:45:10,200 This is when the life tenant actually improves the property, 956 00:45:10,280 --> 00:45:13,920 but in a way that fundamentally changes its character, something 957 00:45:13,920 --> 00:45:16,960 the future owner might not want. And yeah, believe it or not, 958 00:45:16,960 --> 00:45:19,040 they generally can't do that without permission. 959 00:45:19,720 --> 00:45:21,600 All right, let's move on to Part 4. 960 00:45:21,600 --> 00:45:25,040 Future interests. The basics, let's classify what 961 00:45:25,040 --> 00:45:27,080 comes next. OK, so we've been throwing 962 00:45:27,080 --> 00:45:29,080 around a bunch of terms for future interests, right? 963 00:45:29,480 --> 00:45:33,080 Possibility of reverter, right of entry, reversion, remainder. 964 00:45:33,320 --> 00:45:36,120 It can get a little jumbled, so let's just pause here for a 965 00:45:36,120 --> 00:45:39,200 second and organize all of this into a nice clean framework that 966 00:45:39,200 --> 00:45:40,920 you can actually use on your exam. 967 00:45:41,520 --> 00:45:44,480 And this chart right here, this lays out the entire universe. 968 00:45:44,760 --> 00:45:47,560 And your very first question, the first step in your analysis 969 00:45:47,560 --> 00:45:50,360 should always be who holds the future interest. 970 00:45:50,720 --> 00:45:53,120 Is it the grantor who originally gave the property away? 971 00:45:53,560 --> 00:45:55,960 If the answer is yes, then you only have three choices. 972 00:45:56,160 --> 00:45:58,840 Ossibility of reverter, right of entry, or a reversion. 973 00:45:59,000 --> 00:46:00,680 That's it. But if the interest is held by 974 00:46:00,680 --> 00:46:03,280 some third party, a transferee, then you're down to just two 975 00:46:03,280 --> 00:46:05,320 options. It's either a remainder or an 976 00:46:05,320 --> 00:46:07,920 executory interest. Starting with that one question 977 00:46:07,920 --> 00:46:09,560 will simplify your life immensely. 978 00:46:10,160 --> 00:46:14,240 OK, Next up, remainders versus executory interests. 979 00:46:14,560 --> 00:46:17,880 And let me tell you, this is the most common exam trap. 980 00:46:18,160 --> 00:46:20,240 All right, now we're getting to what is, I think, the single 981 00:46:20,240 --> 00:46:21,920 trickiest distinction for most students. 982 00:46:22,120 --> 00:46:24,720 It's where exams love to trip you up, and that is telling the 983 00:46:24,720 --> 00:46:27,320 difference between a remainder and an executory interest. 984 00:46:27,640 --> 00:46:30,000 If you can nail this distinction, you are way ahead 985 00:46:30,000 --> 00:46:32,520 of the game. The whole difference comes down 986 00:46:32,520 --> 00:46:36,560 to one word, timing. Or maybe think of it as manners. 987 00:46:36,920 --> 00:46:38,920 A remainder is, well, it's polite. 988 00:46:39,120 --> 00:46:41,320 It waits patiently for the preceding estate to come to its 989 00:46:41,320 --> 00:46:43,520 natural end. A life estate ends when the 990 00:46:43,520 --> 00:46:45,560 person dies and the remainder kicks in. 991 00:46:45,760 --> 00:46:48,080 No drama. And executory interest, on the 992 00:46:48,080 --> 00:46:50,960 other hand, is a rude It doesn't wait, it cuts in line. 993 00:46:51,120 --> 00:46:54,440 It divests or cuts short a prior interest before it would have 994 00:46:54,440 --> 00:46:56,720 naturally ended. This is why you often see them 995 00:46:56,720 --> 00:46:59,120 following the feasible fees. The second that condition is 996 00:46:59,120 --> 00:47:02,400 broken, bam, the executory interest swoops in and takes 997 00:47:02,400 --> 00:47:04,360 over. So once you've decided you're 998 00:47:04,360 --> 00:47:06,160 dealing with a remainder, you're not done yet. 999 00:47:06,240 --> 00:47:08,560 You've got to classify it. Is it vested or is it 1000 00:47:08,560 --> 00:47:10,480 contingent? And luckily, this is a really 1001 00:47:10,480 --> 00:47:13,680 simple two-part test. Just ask yourself, one, is the 1002 00:47:13,680 --> 00:47:16,080 person who's supposed to take it known and alive? 1003 00:47:16,080 --> 00:47:17,920 In other words, is the taker ascertained? 1004 00:47:18,200 --> 00:47:21,280 And two, is there any condition they have to fulfill before they 1005 00:47:21,280 --> 00:47:23,600 get the property? If you can say yes, we know who 1006 00:47:23,600 --> 00:47:26,400 it is, and no, there are no conditions, then you have a 1007 00:47:26,400 --> 00:47:29,160 vested remainder. If the taker is unknown or if 1008 00:47:29,160 --> 00:47:31,240 there's a condition precedent, then it's a contingent 1009 00:47:31,240 --> 00:47:32,760 remainder. It's that simple. 1010 00:47:33,440 --> 00:47:36,440 And that brings us to our final section, the one everyone's been 1011 00:47:36,440 --> 00:47:39,080 waiting for. The rule against perpetuities. 1012 00:47:39,240 --> 00:47:42,320 The law's final backstop. OK, here we go. 1013 00:47:42,640 --> 00:47:45,720 It's time to face the beast, the rule that strikes fear into the 1014 00:47:45,720 --> 00:47:47,440 hearts of law students everywhere. 1015 00:47:47,720 --> 00:47:50,560 The rule against perpetuities. Let's call it rap. 1016 00:47:51,120 --> 00:47:54,320 All rap is really is a backstop. It's the law's way of saying, 1017 00:47:54,320 --> 00:47:56,560 look, you can't control your property from the grave forever. 1018 00:47:57,000 --> 00:47:59,560 It prevents granders from tying up land with weird contingent 1019 00:47:59,560 --> 00:48:02,120 interests that might not resolve for hundreds of years. 1020 00:48:02,920 --> 00:48:06,640 Yeah, I know no interest is valid unless it must vest, if at 1021 00:48:06,640 --> 00:48:09,240 all, not later than 21 years after some life and being. 1022 00:48:09,480 --> 00:48:12,040 It sounds like something out of a Dickens novel, but please 1023 00:48:12,040 --> 00:48:13,520 don't get intimidated by the language. 1024 00:48:13,720 --> 00:48:17,280 The absolute best way to handle rap is to turn off your common 1025 00:48:17,280 --> 00:48:20,040 sense and treat it like a ruthless logic puzzle. 1026 00:48:20,520 --> 00:48:22,720 Your job is not to see if the grant might work out. 1027 00:48:22,840 --> 00:48:24,560 Your job is to try and prove it will fail. 1028 00:48:24,720 --> 00:48:27,920 You're looking for that one fatal flaw, and here is your 1029 00:48:27,920 --> 00:48:30,040 first and most important shortcut. 1030 00:48:30,400 --> 00:48:33,200 Ramp does not apply to everything, thank goodness. 1031 00:48:33,520 --> 00:48:37,000 It only applies to three specific interests, Contingent 1032 00:48:37,000 --> 00:48:40,320 remainders, executory interests, and vested remainders subject to 1033 00:48:40,320 --> 00:48:42,000 open, which are basically class gifts. 1034 00:48:42,360 --> 00:48:44,680 So if you're analyzing an interest and you've identified 1035 00:48:44,680 --> 00:48:47,720 it as a possibility of reverter, a right of entry, or a reversion 1036 00:48:47,720 --> 00:48:50,200 held by the grantor, you stop, you're done. 1037 00:48:50,440 --> 00:48:53,440 Ramp is not an issue. Same goes for a totally vested 1038 00:48:53,440 --> 00:48:55,960 remainder. This is a huge time saver on an 1039 00:48:55,960 --> 00:48:59,040 exam. Now when WRA does alley you need 1040 00:48:59,040 --> 00:49:02,920 to follow this four step rocess. Do it the same way every single 1041 00:49:02,920 --> 00:49:04,920 time. One, identify the future 1042 00:49:04,920 --> 00:49:06,000 interest. We just covered that. 1043 00:49:06,160 --> 00:49:09,440 Two, state the condition, what has to happen for this interest 1044 00:49:09,440 --> 00:49:12,400 to actually vest. Three, find a measuring life. 1045 00:49:12,600 --> 00:49:14,720 This has to be a person who was alive when the interest was 1046 00:49:14,720 --> 00:49:16,760 created. And four, here's the killer 1047 00:49:16,760 --> 00:49:18,960 question. Can we know from absolute 1048 00:49:18,960 --> 00:49:21,880 certainty that the interest will either vest or fail for good 1049 00:49:22,040 --> 00:49:24,200 within 21 years of the death of our measuring life? 1050 00:49:24,360 --> 00:49:26,160 And when I say certainty, I mean it. 1051 00:49:26,280 --> 00:49:30,600 If you can dream up any bizarre, crazy what if scenario where we 1052 00:49:30,600 --> 00:49:33,160 might not know the interest is void, it's gone. 1053 00:49:33,720 --> 00:49:36,120 And this is where we get into the famous rap traps, These 1054 00:49:36,120 --> 00:49:38,000 absurd scenarios that you have to consider. 1055 00:49:38,440 --> 00:49:42,200 First, the fertile octogenarian. For the purposes of rap, anyone 1056 00:49:42,200 --> 00:49:45,040 at any age is considered capable of having another child. 1057 00:49:45,440 --> 00:49:47,160 It's a conclusive legal presumption. 1058 00:49:47,640 --> 00:49:51,120 Then there's the unborn widow. If a grant says to my son's 1059 00:49:51,120 --> 00:49:53,360 widow, that widow is not a life in being. 1060 00:49:53,560 --> 00:49:55,680 Why? Because his current wife could 1061 00:49:55,680 --> 00:49:58,160 die and he could remarry someone who wasn't even born yet when 1062 00:49:58,160 --> 00:50:00,640 the grant was made. These aren't common sense. 1063 00:50:00,720 --> 00:50:04,080 They're logical traps and they are classic exam fact patterns. 1064 00:50:04,840 --> 00:50:07,680 So let's put it all together with one last challenge. 1065 00:50:07,840 --> 00:50:11,440 Look at this grant to A for life, then to A's first child to 1066 00:50:11,440 --> 00:50:13,600 pass the bar exam. So what interests are created 1067 00:50:13,600 --> 00:50:15,400 here? And does that grant violate the 1068 00:50:15,400 --> 00:50:17,600 rule against perpetuities? I want you to take the whole 1069 00:50:17,600 --> 00:50:20,560 framework we just built, identify the estates, classify 1070 00:50:20,560 --> 00:50:23,280 those future interests, state the condition for vesting, and 1071 00:50:23,280 --> 00:50:25,440 then run it through that merciless logic of rap. 1072 00:50:25,720 --> 00:50:27,720 Can A's first child to pass the bar take the property? 1073 00:50:28,280 --> 00:50:31,280 You know, mastering this kind of step by step analysis, that's 1074 00:50:31,280 --> 00:50:33,480 the real key. That's how you go from being 1075 00:50:33,480 --> 00:50:36,240 intimidated by this stuff to absolutely owning it on your 1076 00:50:36,240 --> 00:50:36,680 exam.