Rights in real property - Scope

Learning Outcomes

After reading this article, you will be able to identify and distinguish the main types of rights in real property, including present and future interests, estates in land, and the principal limitations on those rights. You will be able to apply these concepts to MBE-style questions, analyze scenarios involving estates, remainders, reversions, and recognize the legal significance of key terms such as fee simple, life estate, and the Rule Against Perpetuities.

MBE Syllabus

For MBE, you are required to understand the legal scope of rights in real property. This includes the classification of estates, the nature of present and future interests, and the limitations imposed by law. In your revision, focus on:

• Differentiating present and future interests in land.
• Identifying types of estates: fee simple, defeasible fees, life estates, leaseholds.
• Recognizing future interests: reversion, remainder, executory interest.
• Applying the Rule Against Perpetuities and restraints on alienation.
• Understanding the effect of limitations and conditions on property rights.

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.

1. Which of the following is a present possessory estate of potentially infinite duration?
   1. Life estate
   2. Fee simple absolute
   3. Fee tail
   4. Reversion
2. A grant "to A for life, then to B if B survives A" creates which future interests?
   1. Vested remainder in B and reversion in grantor
   2. Contingent remainder in B and reversion in grantor
   3. Executory interest in B and reversion in grantor
   4. Vested remainder subject to open in B
3. The Rule Against Perpetuities applies to which of the following?
   1. Fee simple absolute
   2. Reversion
   3. Contingent remainder
   4. Life estate
4. Which of the following is a valid restraint on alienation?
   1. Total restraint on a fee simple
   2. Forfeiture restraint on a life estate
   3. Disabling restraint on a fee simple
   4. Disabling restraint on a vested remainder in fee simple

Introduction

Rights in real property define the legal interests a person may hold in land. These rights are classified by their duration, the time at which they are possessory, and the conditions or limitations attached. Understanding the scope of these rights is essential for analyzing property questions on the MBE.

Types of Estates in Land

Estates in land are divided into present possessory estates and future interests. The main present estates are:

• Fee simple absolute: The broadest estate, potentially infinite in duration, freely transferable and inheritable.
• Defeasible fees: Fee estates that may terminate upon the occurrence of a specified event.
• Life estate: Lasts for the life of a specified person.
• Leasehold estates: Estates for a fixed term, periodic tenancy, tenancy at will, or tenancy at sufferance.

Key Term: Fee Simple Absolute An estate in land of potentially infinite duration, freely transferable, and inheritable, with no conditions or limitations.

Defeasible Fees and Life Estates

A defeasible fee is a fee simple that may end upon the happening of a stated event. The main types are:

• Fee simple determinable: Ends automatically when the specified event occurs. The grantor retains a possibility of reverter.
• Fee simple subject to condition subsequent: Does not end automatically; the grantor must take action to reclaim the property. The grantor retains a right of entry.
• Fee simple subject to executory limitation: Ends automatically upon the event, but the property passes to a third party.

Key Term: Defeasible Fee A fee simple estate that may be terminated upon the occurrence of a specified event.

Key Term: Life Estate An estate measured by the life of a specified person, ending at that person's death.

Future Interests

Future interests are non-possessory rights to property that may become possessory in the future. The main types are:

• Reversion: The interest left in a grantor who conveys less than their entire estate.
• Remainder: A future interest created in a transferee that becomes possessory upon the natural expiration of the prior estate.
• Executory interest: A future interest in a transferee that cuts short a prior estate or follows a gap.

Key Term: Remainder A future interest in a transferee that becomes possessory upon the natural termination of the preceding estate.

Key Term: Executory Interest A future interest in a transferee that divests or cuts short a prior estate or follows a gap in possession.

Limitations on Rights: Rule Against Perpetuities and Restraints

The law limits the creation of certain future interests to prevent property from being tied up indefinitely.

• Rule Against Perpetuities (RAP): No interest is valid unless it must vest, if at all, within 21 years after a life in being at the creation of the interest.
• Restraints on alienation: Total disabling restraints on fee simple estates are void. Forfeiture and promissory restraints may be valid on life estates or in commercial contexts.

Key Term: Rule Against Perpetuities The rule that invalidates certain future interests unless they must vest or fail within 21 years after the death of a relevant life in being.

Worked Example 1.1

O conveys Blackacre "to A for life, then to B and her heirs, but if B does not survive A, then to C and his heirs." What interests are created?

Answer: A has a life estate. B has a vested remainder subject to total divestment (since B's interest can be cut off if she does not survive A). C has a shifting executory interest (since C's interest divests B if B predeceases A). O has no reversion, as the interests are fully disposed.

Worked Example 1.2

O conveys "to D for so long as the land is used for farming, then to E." Is E's interest valid?

Answer: D has a fee simple determinable. E has a shifting executory interest. E's interest is subject to the Rule Against Perpetuities. If the condition could occur beyond lives in being plus 21 years, E's interest is void under RAP.

Exam Warning

On the MBE, be careful to distinguish between a remainder (which follows the natural expiration of a prior estate) and an executory interest (which divests or follows a gap). Mislabeling these can lead to incorrect answers.

Revision Tip

Always check whether a future interest is subject to the Rule Against Perpetuities. Remember: remainders in identifiable persons are usually vested and not subject to RAP, but contingent remainders and executory interests are.

Key Point Checklist

This article has covered the following key knowledge points:

• Estates in land are classified as present possessory estates and future interests.
• Fee simple absolute is the broadest estate; defeasible fees and life estates are limited in duration or subject to conditions.
• Defeasible fees may terminate automatically or upon action by the grantor.
• Future interests include reversion, remainder, and executory interest.
• The Rule Against Perpetuities applies to contingent remainders, executory interests, and some class gifts.
• Total disabling restraints on alienation of a fee simple are void; some restraints are valid on life estates or in commercial contexts.
• Correctly identifying and labeling estates and interests is essential for MBE success.

Key Terms and Concepts

• Fee Simple Absolute
• Defeasible Fee
• Life Estate
• Remainder
• Executory Interest
• Rule Against Perpetuities