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• Further Reading

Robert C. Ellickson, Order without Law: How Neighbors Settle Disputes (1991) (exploring how social norms can deviate from formal law in determining the rights of a property owner).

Robert C. Ellickson, Property in Land, 102 Yale L.J. 1315 (1993) (comparative study of different modes of organizing rights to land).

George P. Fletcher, The Metamorphosis of Larceny, 89 Harv. L. Rev. 469 (1976) (detailing the historical evolution of larceny toward greater emphasis on intent).

Henry E. Smith, Self-Help and the Nature of Property, 1 J.L. Econ.

& Pol’y 69 (2005) (examining the importance of self-help in securing property in different contexts).

Lior Jacob Strahilevitz, The Right to Destroy, 114 Yale L.J. 781 (2005) (providing examples of legal rules and social norms governing destruction of property).

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rule is a directive that prescribes an unambiguous response to a defined set of circumstances. “Maximum speed 65 mph” is an example. Rules are designed to be applied without any need for the exercise of discretionary judgment. Thus, rules are said to have the capacity to control behavior ex ante, before the behavior governed by the rule takes place. By contrast, a standard is a directive that describes a goal or purpose in a particular set of circumstances. “Drive at a reasonable speed given road conditions” is a standard. Application of a standard requires the exercise of discretionary judgment. Hence it is often said that whether one has conformed one’s behavior to a standard can only be determined ex post, typically by some higher authority, after the behavior governed by the standard takes place.

The common law system for dividing property over time was developed by legislatures, judges, and lawyers to allow persons to prescribe what would happen to their property after their death. The aspiration was that people with significant property could, in consultation with a competent lawyer, create a temporal division of the property by will, deed, or trust that would precisely match their intentions about who would take what and when in the future. Because of the rule-like nature of the system, those having an interest in the property after the death of the owner, again with the help of lawyers, could faithfully carry out these intentions without recourse to litigation.

The resulting system tells us a great deal about what it is like to be governed by rules. On the one hand, the categories are sufficiently numerous and the operating principles sufficiently flexible that they can accommodate virtually any set of intentions. Consequently, the system promotes individual autonomy in determining how property will be distributed after death. It also appears that the rules have been generally successful in avoiding litigation (although not entirely of course). On the other hand, the system is complex and difficult to master. Only a lawyer can maneuver through the somewhat arcane rules with confidence. And the rules have an increasingly musty feel as time marches on. Updating and

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simplification would be highly desirable, but legislatures tend to have much more pressing things to attend to. The legal profession, which has invested so much in mastering the rules, has little incentive to work for streamlining that would allow accountants, Internet-based providers, or paraprofessionals to take over the task of estate planning.

The common law system of temporal classifications of interests assumed its most highly articulated form with respect to interests in land, often called “estates” in land. During the period of the development of the common law in England, land was the most important source of wealth and status. Land is also an extremely durable asset, so divisions of interests over time were both feasible and potentially problematic, insofar as they could tie up the ownership and use of an important asset for long stretches of time. Today it is often assumed that this complex system of estates also applies to personal property. Yet one rarely sees the categories of the estate system applied to personal property, except in the context of trusts composed of personal property in stocks and bonds, and (very occasionally) to works of fine art. The primary reason for this is probably that personal property is less durable than land. We take up trusts in Chapter 6.

If one were designing a system of estates in land and future interests from scratch, one might start with something called full ownership. Next we would want to divide property temporally between an owner who has a present possessory interest less than full ownership, and one or more owners of future rights. Conceivably, we could have a system composed of just full ownership, one type of present interest, and one type of future interest, and allow some tweaking of present interest and future interest in terms of how long they last, and in the case of the future interest, when it becomes possessory. This would make property law much simpler, and little if anything of social value would be lost. England has moved in this direction through legislative reforms. American law reformers have regularly proposed a similar simplification of American law, so far with little to show for their efforts.

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For the time being, therefore, the student of American law must learn a more elaborate vocabulary of full ownership, present possessory interests, and future interests, bequeathed to us from the common law. This system traces back to the feudalism that grew up especially after the Norman Conquest in 1066. Under the feudal system, the king would grant limited rights or tenures to lords in return for services; these lords in turn would grant lesser interests or tenures in return for services; and the process would continue all the way on down to peasants who actually worked the land, again in return for services. Feudalism was abolished during and after the English Civil War of the seventeenth century, and for our purposes, the feudal legacy is mostly important in terms of the terminology used to describe the various types of present and future interests (still sometimes called “tenancies”). Perhaps the best way to think of the interests we are about to describe is as variations on our ideal of full ownership, present interest, and future interest, with the additional complication that many of the interests have distinguishing features so tightly built into them that they affect the name of the interest. For historical reasons these interests are also said to be “freehold interests,” as opposed to nonfreehold (leasehold) interests (see Chapter 6, on leasing), which were subject to fewer formalities upon transfer. The freehold-nonfreehold distinction is today of limited relevance.

The chart on the next page summarizes the principal categories of full ownership, present possessory interests, and future interests that characterize the system of estates in land derived from the common law.

In considering how this system operates, it helps to think of each of the interests (other than full ownership) as part of a pair of inter- ests—the present possessory estate and the corresponding future interest or interests. Each paired set of interests sums to the equivalent of full ownership. Or to put it another way, when full ownership is divided over time, the parts that are created include a present interest paired with one or more future interests that exhaustively distribute all of what the full owner had before the division took place.

Under the common law system, the interest that corresponds to full ownership is called the fee simple absolute (or fee simple or fee for short) in the case of land and full or absolute ownership in the case of personal property. One creates a fee simple in A by granting “to A and his/her heirs,” “to A in fee simple,” or (these days) simply “to A.” If the traditional “and his/her heirs” language is used, it is important to recognize that this is just a phrase. A does not have heirs until A dies, and so we say the word “heirs” here is part of the “words of limitation” (words that describe the interest). Only “words of purchase” tell us who gets the interest, and in all three formulations that part is “to A.”

The fee simple not only gives the full package of rights, duties, and powers we saw in Chapter 4, it is also indefinite along the temporal dimension—it comes to no natural end. When the owner dies, a successor by will or intestacy simply steps into the fee owner’s shoes. The fee simple is a present possessory interest, but, because it is of indefinite length, it leaves no room for a future interest. So in this one case there is no paired future interest that corresponds to the present interest. The present interest is everything.

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The most common form of present interest—that is, a present possessory interest less than a fee simple—is the life estate. A life estate, as in “to A for life” grants full rights of possession to life tenant A (“tenant” is sometimes used to refer to the holder of an interest, in an echo of feudalism) during A’s natural life, but only for the duration of A’s natural life. The interest abruptly comes to an end upon the death of the holder of the life estate. The holder of a life estate can transfer the interest to someone else, but that person will hold only until the death of the original life tenant. The transferee in these circumstances is said to have a life estate per autre vie—a life estate for the life of another.

Because a life estate is of more limited duration than a fee simple, there is always something left over at the end of the life estate, and so a life estate is always paired with one or more future interests. Here, the most basic division is between a future interest retained by the grantor and a future interest in some person other than the grantor. If the future interest holder is the grantor him or herself, the future interest is called a reversion. This can be explicit as where O grants “to A for life, and then to O.” Or it can be implicit, as where O grants simply “to A for life.” Because there is something left over after the grant to A, the system of estates in land implies a reversion in the grantor. If the grantor holds a reversion and is dead when A dies, the land reverts to the grantor’s successors, because the reversion passes under the grantor’s will, or if the grantor has no will, by intestate succession to the grantor’s legal heirs.

If the person who gets the land after the life tenant is someone other than the original grantor, the future interest is called a remainder. So if O grants “to A for life, then to B,” B has a remainder. Remainders are further subdivided into vested remainders and contingent remainders. Some remainders have a built-in uncertainty about them. Thus, some remainders are contingent, as where O grants “to A for life and then to B if she has passed the bar.” Here the remainder is contingent on the event of B’s passing the bar. Once B has passed the bar, the remainder becomes a vested remainder (vested in interest, but not yet vested in possession—that will

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occur only when A dies). Another type of uncertainty can revolve around who exactly will have the remainder. So for example, if O grants “to A, then to the children of B,” we don’t know until B has died who the set of B’s children might be. (If B already has children such a gift is said to be “vested subject to open” or “vested subject to partial divestment.”)

These various distinctions among future interests that follow a life estate are relevant primarily because of the Rule Against Perpetuities (or RAP, considered more fully below). Reversions in the grantor, whether express or implied, are regarded as vested from the moment they are created, and are not subject to the RAP. Likewise, vested remainders are immune from invalidation under the RAP. Contingent remainders, however, can be invalidated if it they might vest after the period defined by the RAP. This applies to remainders that are contingent because of some condition that must be satisfied before the vesting (such as passing the bar) as well as to remainders that are contingent because the identity of the remainder-persons has not yet been established (as in a gift to “children”).

The only other significant category of estates consists of a variation on one theme—the defeasible fee. A defeasible fee is like the fee simple absolute except that it can end upon the happening of some event—so it too is less than a fee simple absolute. Defeasible fees are largely encountered today in connection with charitable gifts. For example, a grantor will give Blackacre “to the school district, so long as it is used for school purposes.” The objective is to limit the future use of the property to the particular charitable purpose that the grantor seeks to promote, here, its use as the site for a school. If the donee, the school district, ceases to use the property for school purposes, it suffers a forfeiture of the charitable gift—which is a powerful incentive to abide by the donor’s wishes.

Defeasible fees can be classified along two dimensions: according to whether the condition that can lead to forfeiture of the defeasible fee operates automatically or not, and according to whether the corresponding future interest belongs to the grantor or to some

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person other than the grantor. Because there are two choice points here—automatic versus nonautomatic and future interest in grantor versus third party—one would think that there would be four types of defeasible fees; but one would be wrong. Instead there are just three.

Consider the situation in which the future interest is in the grantor, that is, defeasible fee plus grantor future interest. Here the terminology of the present possessory interest—the defeasible fee—varies according to whether the future interest kicks in automatically or not. If it is automatic, we have a fee simple determinable. The corresponding future interest is called a possibility of reverter. So if O grants Blackacre “to A so long as drugs are not consumed on the premises,” this is a fee simple determinable. Use of drugs is called the “limitation event” that causes the defeasible fee to forfeit automatically, and the property automatically vests in the grantor (or the grantor’s successors) through the possibility of reverter. Durational language such as “as long as,” “so long as,” while,” or “during” is characteristic of the fee simple determinable and its automatic ending feature.

What if the defeasible fee followed by a future interest in the grantor is not automatic? Here the defeasible fee is called a fee simple subject to a condition subsequent. The corresponding future interest is a right of entry (also sometimes called a power of termination). The future interest holder (the grantor or the grantor’s successor) must take some action to cause the defeasible fee to forfeit. If the holder of the right of entry takes no action, then the fee simple subject to a condition subsequent goes along as before. So if O grants Blackacre “to A, but if drugs are consumed on the premises then O has the right of entry,” A has a defeasible fee called a fee simple subject to a condition subsequent. The language “but if,” “on condition that,” “provided that,” “provided however,” and “if ” are all ways of expressing the condition. If the condition is fulfilled, here if drugs are consumed, then O, pursuant to the right of entry, must use self-help or a lawsuit to get A out in order to secure the forfeiture.

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Now consider the situation where the grantor sets up a defeasible fee but follows it with an interest in someone other than the grantor, that is, some third party. Here there is one complex of interests, the fee simple subject to an executory limitation. The corresponding future interest is an executory interest. So if O grants Blackacre “to A as long as drugs are not consumed, then to B,” A has a fee simple subject to an executory limitation and B has an executory interest. This future interest is taken to be automatic; although there is a dearth of authority on the matter, there does not seem to be a future interest in a third party that is nonautomatic (along the lines of the fee simple subject to a condition subsequent). This may seem like an odd gap, but mostly it does not matter, especially because the same result could be accomplished by creating a fee simple subject to a condition subsequent and a right of entry in the grantor and transferring the right of entry to a third party—the labels and rules do not change.

The only other set of paired interests you may encounter (if only in works of historical fiction) is the fee tail. This was created by statute in the thirteenth century as a way of keeping land within a particular family for as long as the family dynasty lasted. It was created by granting land “to A and the heirs of his (or her) body.” The present interest, called a fee tail or an estate in tail, was similar to a life estate in that it lasted for the life of the first generation of offspring of the grantor (typically the eldest male). This was followed automatically by a life estate in the (eldest male in the) next generation, and then by a life estate in the third generation, and so on, until the family line fizzled out, at which point there was a reversion to the grantor (and the grantor’s successors). The fee tail was problematic because it tied up land for a very long period of time, making transfers of property and mortgaging property difficult. It was abolished long ago in England and in virtually every state in the United States. Different states follow different rules about what happens if some poorly advised person tries to convey land “to A and the heirs of his (or her) body.”

One last detail remains. Sometimes a grantor will want to create a future interest that cuts off a preceding interest before its