41. Who has what interest in the land?

A life estate is an interest in land that lasts only for the life of the holder. The holder of a life estate has a full right to possess the land or transfer their interest during their lifetime, but must refrain from engaging in waste, activity that would prevent the next person in line from putting the property to full use. When a life estate is granted, a future interest in who will possess the property after the life estate terminates is also created.

A vested remainder is an absolute right to receive title when a presently-existing interest in real property ends. It is certain to transfer after the existing interest expires, and is not dependent on any conditions or other events occurring. A «vested remainder» is created by deed or by a decree of distribution of an estate given by will. A vested remainder is a present interest in the property, to be enjoyed at a future date, in which the estate is invariably fixed to belong to a particular person after the current estate has been terminated. Vested remainders have always been alienable inter vivos, devisable, and descendible. This means that a person can sell or convey their remainder just like a present interest in land.

B is correct. As explained above, the creation of a life estate necessitates the creation of a future interest, either in the grantor or another person. Life estates terminate, and estates do not, so who will possess the property after the life estate is a very important issue. Generally, the future interest that accompanies a life estate is a reversion back to the grantor. If the future interest is held by someone other than the grantor, it is a remainder or executory interest. A remainder is vested if it is both created in a certain person and not subject to any conditions precedent.

Here, the grantor conveyed a life estate to a friend, with a remainder to the friend's neighbor and heirs. The neighbor died and left his entire estate to a charity. A decedent's estate includes all their property, including vested remainders because there are no restrictions on the alienability of vested remainders. Thus, the neighbor's vested remainder belongs to the charity, who will have present possessory rights when the friend's life estate ends.

A is incorrect. This answer choice implicates the doctrine of estoppel by deed. This doctrine (also known as after-acquired title) is a particular estoppel doctrine in the context of real property transfers. Under the doctrine, the grantor of a deed (generally the seller of a piece of real property) is estopped (barred) from denying the truth of the deed. However, the neighbor's daughter never had any title to convey to the friend because any interest she could have inherited was already devised by the neighbor to the charity.

C is incorrect. The phrase «to the neighbor and her heirs» does not create a special interest in the property for the daughter. This phrase signals what kind of interest is being given to the neighbor. «To the neighbor and her heirs» means that the neighbor had a vested remainder in the land in fee simple, without any other parties holding future interests.

D is incorrect. The Rule Against Perpetuities (RAP) invalidates any interest in property if there is any chance that the interest may vest more than 21 years after some life in being at the creation of the interest. The neighbor's remainder is both subject to and valid under the RAP. Using the neighbor's life as the measuring life, the interest will vest within 21 years of the death of the measuring life, and therefore is valid.