Future Interests

Elements

To analyze any future interest:

1. Is it in the grantor or a transferee?
   • Grantor: reversion, possibility of reverter, right of re-entry
   • Transferee: remainder or executory interest
2. If a remainder: does it become possessory upon natural expiration of all prior estates?
   • If it cuts short a prior interest → executory interest, not a remainder
3. If a remainder: is it vested or contingent?
   • Vested: holder identified AND no condition precedent
   • Contingent: unidentified holder OR condition precedent
4. Apply RAP: contingent remainders and executory interests must vest or fail within a life in being plus 21 years
5. Check for special rules: destructibility (CL), Rule in Shelley’s Case (CL), Doctrine of Worthier Title

Rule

Future interests are non-possessory property interests that may become possessory in the future. They are classified by (1) whether they are held by the grantor or a transferee, and (2) whether they are vested or contingent.

Elements

To analyze any future interest:

1. Is it in the grantor or a transferee?
   • Grantor: reversion, possibility of reverter, right of re-entry
   • Transferee: remainder or executory interest
2. If a remainder: does it vest upon natural expiration of all prior estates, or does it cut short a prior estate?
   • Cuts short → executory interest, not a remainder
3. If a remainder: is it vested or contingent?
   • Vested: holder identified AND no condition precedent
   • Contingent: unidentified holder OR condition precedent
4. Apply RAP: contingent remainders and executory interests must vest or fail within a life in being plus 21 years — if not, they are void
5. Check for special rules: destructibility (CL), Shelley’s Case (CL), Doctrine of Worthier Title

Future Interests in the Grantor

Reversion

Arises automatically when the grantor conveys less than she has. No express language needed.

• Example: O to A for life. O has a reversion.

Possibility of Reverter

Grantor’s future interest following a Fee Simple Determinable. Arises automatically when FSD is created.

Right of Re-Entry (Power of Termination)

Grantor’s future interest following a Fee Simple Subject to Condition Subsequent. Must be affirmatively exercised; does not arise automatically.

Future Interests in Transferees

Remainder

• Becomes possessory upon the natural expiration of all prior interests
• Cannot divest any prior interest (except the grantor’s reversion)
• Must immediately follow the prior estate

Vested Remainder: (1) identity of recipient known at time of grant, AND (2) no condition precedent

• Vested subject to open (class gift, class not yet closed)
• Vested subject to divestment (vested but subject to condition subsequent)

Contingent Remainder: (1) identity not yet known, OR (2) condition precedent to possession

• Destructibility rule (CL): if a contingent remainder fails to vest at or before the termination of the preceding freehold estate, it is destroyed

Executory Interest

A future interest in a transferee that divests another interest rather than following its natural expiration.

Shifting executory interest: divests another transferee’s interest

• Example: “To A and heirs as long as used as tavern, but if not to B” — B has a shifting executory interest

Springing executory interest: divests the grantor in the future

• Example: “To A for life, then after a year to B” — B has a springing executory interest (the year reverts to O, then springs to B)

Destructibility of Contingent Remainders

A contingent remainder in land is destroyed if it does not vest at or before the termination of the preceding freehold estate. Abolished in most states.

Rule in Shelley’s Case

“To A for life and to A’s heirs thereafter” — the remainder merges with the life estate to give A a FSA. Abolished in most states.

Doctrine of Worthier Title

“To A for life, then to O’s heirs” — remainder to grantor’s heirs becomes a reversion in O. Abolished in some states.

Policy

• Limits “dead hand” control of property
• Reduces transaction costs from uncertainty of future interests
• RAP further limits contingent interests to prevent long-term restraints on alienation

Key Cases

Case	Rule
Mahrenholz v. County Board of School Trustees	Distinguishing FSD from FSSCS; “used for school purposes only” read as FSD (durational)
Symphony Space, Inc. v. Pergola Properties, Inc. (N.Y. 1996)	Option to purchase violated RAP; traditional RAP applied strictly
In re Schneider’s Estate	Illustration of contingent remainder and the destructibility rule

Covered In

• Property