Learning Outcomes
After reading this article, you will be able to identify and define executory interests in real property, distinguish between shifting and springing executory interests, and understand their creation, operation, and limitations. You will also be able to apply the Rule Against Perpetuities to executory interests and recognize common MBE pitfalls involving these future interests.
MBE Syllabus
For the MBE, you are required to understand the rules governing future interests in real property, including executory interests. This article focuses on:
- Recognizing and defining executory interests.
- Distinguishing shifting from springing executory interests.
- Identifying how executory interests are created and how they operate.
- Applying the Rule Against Perpetuities (RAP) to executory interests.
- Understanding how executory interests differ from remainders and reversionary interests.
Test Your Knowledge
Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.
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Which of the following is a characteristic of an executory interest?
- It always follows a life estate.
- It must divest or cut short a prior interest.
- It is always held by the grantor.
- It is not subject to the Rule Against Perpetuities.
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In which scenario does a springing executory interest arise?
- O conveys "to A for life, then to B."
- O conveys "to A, but if B returns from abroad, then to B."
- O conveys "to A, to take effect one year after O's death."
- O conveys "to A for life, then to B if B survives A."
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Which of the following statements about the Rule Against Perpetuities and executory interests is correct?
- All executory interests are exempt from RAP.
- Only shifting executory interests are subject to RAP.
- Executory interests must vest, if at all, within the perpetuities period.
- RAP applies only to interests retained by the grantor.
Introduction
Executory interests are a type of future interest in real property that arise when a future interest is created in a transferee (someone other than the grantor) and that interest will cut short or divest a prior estate upon the occurrence of a specified event. Unlike remainders, executory interests do not wait patiently for the natural expiration of the preceding estate; instead, they "spring" or "shift" to divest another interest before its natural termination.
Key Term: Executory Interest A future interest in a transferee that must divest or cut short a prior estate or arise after a gap in possession, rather than waiting for the natural expiration of the preceding estate.
Types of Executory Interests
There are two main types of executory interests tested on the MBE: shifting and springing.
Shifting Executory Interest
A shifting executory interest divests or cuts short the interest of another transferee (not the grantor). It "shifts" from one grantee to another upon the occurrence of a specified event.
Key Term: Shifting Executory Interest An executory interest that divests a prior estate held by another transferee upon the occurrence of a condition.
Springing Executory Interest
A springing executory interest divests the grantor or the grantor's heirs. It "springs" out of the grantor's retained interest, typically after a gap in possession or upon the occurrence of a condition.
Key Term: Springing Executory Interest An executory interest that divests the grantor or the grantor's estate, often after a gap in possession or upon a future event.
Creation and Operation
Executory interests are created by language in a conveyance that makes clear the future interest will cut short a prior estate or arise after a gap, rather than waiting for the natural end of the preceding estate. Typical words include "but if," "then to," or "until."
Examples of Executory Interest Language
- "To A, but if B returns from France, then to B and her heirs." (Shifting)
- "To A, to take effect one year after O's death." (Springing)
Executory interests are always held by a transferee (never the grantor) and are not vested—they are contingent on the occurrence of the stated event.
Comparison with Remainders
Remainders follow the natural termination of the preceding estate (usually a life estate) and never cut short a prior interest. Executory interests, by contrast, always divest or cut short a prior estate or arise after a gap.
Key Term: Remainder A future interest in a transferee that becomes possessory upon the natural expiration of the preceding estate, without divesting it.
Rule Against Perpetuities (RAP) and Executory Interests
Executory interests are subject to the Rule Against Perpetuities. This means they must vest, if at all, no later than 21 years after the death of a relevant life in being at the time the interest was created. If there is any possibility that the interest could vest too remotely, it is void from the outset.
Worked Example 1.1
O conveys "to A, but if B marries before A dies, then to B."
Answer: B has a shifting executory interest. If B marries before A dies, B's interest will divest A's estate. This executory interest is valid under RAP because it must vest, if at all, during A's life.
Worked Example 1.2
O conveys "to A, to take effect one year after O's death."
Answer: This creates a springing executory interest in A, because there is a gap between O's death and A's possession. The interest must vest, if at all, within one year after O's death, so it satisfies RAP.
Worked Example 1.3
O conveys "to A for life, then to B, but if B ever sells alcohol on the land, then to C."
Answer: C has a shifting executory interest. If B sells alcohol, C's interest divests B's estate. If the condition could occur beyond the perpetuities period (e.g., "if B or B's heirs ever sell alcohol"), C's interest would violate RAP and be void.
Exam Warning
Executory interests that follow a fee simple subject to an executory limitation are especially likely to violate RAP if the condition could occur far in the future. Always check whether the interest must vest or fail within the perpetuities period.
Revision Tip
On the MBE, if a future interest in a transferee cuts short a prior estate, label it as an executory interest. If it waits for the natural end of a life estate, it's a remainder.
Key Point Checklist
This article has covered the following key knowledge points:
- Executory interests are future interests in transferees that divest a prior estate or arise after a gap.
- Shifting executory interests divest another transferee; springing executory interests divest the grantor.
- Executory interests are always subject to the Rule Against Perpetuities.
- If an executory interest could vest too remotely, it is void from the outset.
- Remainders differ from executory interests because they never cut short a prior estate.
Key Terms and Concepts
- Executory Interest
- Shifting Executory Interest
- Springing Executory Interest
- Remainder
