Estates in Land in Florida

Florida follows the traditional concept of recognizing a limited number of well-defined estates in land. The term “estates” refers to interests in land that either are or may become possessory. Estates that have no present right to possession but which will or may become possessory at some time in the future are called future interests. Each estate or interest is created by the use of appropriate words in the conveying instrument, and, once created, possesses such characteristics as have been recognized and sanctioned as applicable to that estate by the law of the jurisdiction. This article delineates the types of estates that are recognized in Florida.

I. Freehold Possessory Estates in Severalty

Freehold Estate Defined

A freehold estate is an interest in real property of indefinite duration. It can consist of a life estate, or any other estate greater than a life estate.

Freehold estates include:

• Fee simple absolute [see IA];
• Fee simple determinable [see IB];
• Fee simple subject to condition subsequent [see ID]; and
• Life estate [see ID].

A. Fee Simple Absolute

1. Definition: Approximates complete ownership.
2. Typical conveyance: “To Ronald Roe and his heirs,” or simply “To Ronald Roe” provided that no qualifying or limiting words follow in other parts of the deed.

 

Definition and characteristics

The “fee simple absolute,” or “fee simple” is the largest estate in real property known to the law. It represents the most comprehensive group of rights that a person may have in land,                             including the right to exclusive possession, use and enjoyment. The estate is one of general inheritance. It is inheritable by collateral, as well as lineal heirs with the potential to continue indefinitely. Alternatively, the holder of a fee simple is free to assign, convey or devise all or part of the estate.

Creation

a. Common Law Requirement to Include Words of Inheritance

A fee simple absolute may be created by deed or will. At common law, in order to create a fee simple absolute in an inter vivos transfer, a deed was required to contain the word “heirs” as a word of inheritance. In a will, on the other hand, equivalent expressions denoting the intention to create a fee simple were considered sufficient. Thus, a deed containing the phrase “to B” or “to B forever” or “to B and his assigns” only gave B a life estate. A deed “to B and her heirs,” however, indicated that B took a fee simple. The words “and her heirs” were interpreted as words of limitation, not words of purchase.  Words of limitation describe the quantum of the estate granted, while words of purchase indicate to whom the estate is granted. In a conveyance, “to A and her heirs,” therefore, if the heirs take at all, they will take be descent and not as a result of the deed itself. They may never obtain the estate because A, the fee simple owner, may freely alienate the estate or devise it to whomever the owner pleases.

b. Words of Inheritance Not Required After 1903

In 1903, the Florida legislature abolished the necessity of including words of inheritance to create a fee simple estate.

Although section 689.10 dispenses with the requirement of using the word “heirs,” inclusion of the word is still advisable.

Inclusion of the word “heirs” will preclude any ambiguity or construction of a different estate, since real property practitioners and judges recognize that the phrase “and her heirs” creates a fee simple. In addition, standard printed deed forms generally include the word.

For example, the conveyance by A, a fee simple owner, “to B and her heirs so long as the land is used for residential purposes and when the land is no longer used for residential purposes it will revert to A and his heirs” creates a fee simple determinable in B.  During such an estate the grantor retains a possibility of reverter [see IVB].

If the stated event occurs, an estate in fee simple determinable always reverts to the grantor, his or her heirs or assigns. If the interest following the fee estate passes to a third person, on the other hand, then the original determinable estate created is called a fee simple subject to a special limitation or subject to an executory interest [see IVD]. For instance, the conveyance “to B and her heirs so long as the land is used for residential purposes and when the land is no longer used for residential purposes then to C and her heirs” creates a fee simple subject to an executory interest in B and C.

Prior to the occurrence of the terminating event, the holder of a fee simple determinable – e.g., B in the conveyance described above – has all the rights and liabilities of a fee simple absolute owner. In that example, B has an absolute right to exclusive possession, use and enjoyment of the property. She is free to assign, devise or convey her interest. The holder of a determinable fee, however, cannot convey an absolute fee without joining those persons who would take upon occurrence of the contingency. Thus, in the example above, when B transfers the land, the contingency is transferred along with it.

B. Fee Simple Determinable

1. Definition: An inheritable estate that will automatically terminate on breach of an expressed condition.
2. Typical conveyance: “To Donald Dough and his heirs for so long as used for church purposes, and if the land is not so used, it shall immediately revert to the grantor, his heirs or assigns.”

 

Definition and Characteristics

A fee simple determinable, also known as a “base fee” or “qualified fee,” is an inheritable estate that will automatically terminate on the happening or non-happening of a contingency annexed to the conveyance.

For example, the conveyance by A, a fee simple owner, “to B and her heirs as long as the land is used for residential purposes and when the land is no longer used for residential purposes it will revert to A and his heirs” creates a fee simple determinable in B. During such an estate the grantor retains a possibility of reverter [see IVB].

If the stated event occurs, an estate in fee simple determinable always reverts to the grantor, his or her heirs or assigns. If the interest following the fee estate passes to a third person, on the other hand, then the original determinable estate created is called a fee simple subject to a special limitation or subject to an executory interest [see IVD]. For instance, the conveyance “to B and her heirs so long as the land is used for residential purposes and when the land is no longer used for residential purposes then to C and her heirs” creates a fee simple subject to an executory interest in B and C.

Prior to the occurrence of the terminating event, the holder of a fee simple determinable – e.g., B in the conveyance described above – has all the rights and liabilities of a fee simple absolute owner. In that example, B has an absolute right to exclusive possession, use and enjoyment of the property. She is free to assign, devise or convey her interest. The holder of a determinable fee, however, cannot convey an absolute fee without joining those persons who would take upon occurrence of the contingency. Thus, in the example above, when B transfers the land, the contingency is transferred along with it.

Creation and Construction

A fee simple determinable is normally introduced by a phrase such as “so long as,” “until” or “during that time.” In addition, the conveyance may contain an explicit reverter clause. Particular words, however, are not required. If the language of the conveyance clearly evinces the parties’ intent to create an estate that would automatically expire upon occurrence of a stated event, then a court is likely to treat the estate as a determinable fee.

Generally, however, conditions or limitations in a grant are not favored by the law and will be strictly construed.

Grantors commonly attach two types of contingencies to a conveyance of a fee simple determinable. First, grantors often endeavor to restrict the use of land. “To B for so long as used for park purposes,” is an example of this type of determinable fee, as is “to B during the time that no motor vehicles are driven across the premises.” This form of restriction may potentially endure forever.

Second, a fee can be determined upon the occurrence of a collateral event. For instance, a conveyance “to B until she remarries,” also creates a fee simple determinable. The contingency in this latter category, however, can be rendered impossible to occur. If this happens the determinable fee is enlarged into a fee simple absolute. For instance, in the conveyance “to B until she remarries,” B can only remarry during her lifetime. Hence, upon the death of B, the determinable fee is enlarged into a fee simple absolute.

Courts will specifically enforce determinable fees that are not contrary to law or public policy. A devise by a man to his widow “so long as she remains single” does not violate public policy and is therefore enforceable. Such a devise is not considered an invalid restraint on marriage, but only a measure of the duration of the devised estate

C. Fee Simple Subject to Condition Subsequent

1. Definition: An inheritable estate that may be terminated by the grantor or his successors on breach of a condition expressed in the conveyance.
2. Typical conveyance: “To Larry Land and his heirs but if the premises are used for other than religious purposes, the grantor, his heirs or assigns, may re-enter and possess the estate as formerly.”

 

Definition and Creation

A fee simple subject to condition subsequent is a fee simple estate that gives the grantor the right to terminate the estate upon failure or non-performance of the stated condition. A conveyance, therefore, “to B, upon condition that B never sells alcoholic beverages on the premises, and if B sells alcoholic beverages, then A, the grantor, has a right to reenter the land and terminate B’s estate” creates a fee simple subject to condition subsequent. Prior to the grantor’s reentry due to a breach, B, the holder of the present fee estate, has all the rights and liabilities of an owner in fee simple absolute [see IA]. While the holder has the present fee estate, the grantor retains a “right of reentry” or “power of termination” [see IVB].

A fee simple subject to condition subsequent is generally introduced by a phrase such as “provided that”, “on condition that,” or “but if”. An express reverter clause giving the grantor the right to terminate the estate also should be included in the conveyance. Although no precise form is required to create an estate subject to a condition subsequent, the intent of the parties must be clearly expressed because forfeiture conditions will be strictly construed.

If the language setting forth the condition is ambiguous or if a reverter clause is omitted, modern courts are likely to construe a limitation on use as a covenant and not a condition. A covenant is a legal restriction on the use of land, the breach of which gives rise to damages. True conditions, on the other hand, will be specifically enforced by divesting the title from the present holder if the condition is broken. When the intent of the parties is unclear, courts will construe the instrument in favor of the grantee, because the law discourages forfeiture.

A restriction contrary to law or public policy will not be enforced either as a covenant or a condition. By Florida statute, reverters and forfeiture provisions that are of unlimited duration constitute unreasonable restraints on alienation and are, therefore, contrary to public policy. Such provisions are made void and unenforceable 21 years from the date of the conveyance creating the provision.

When a condition subsequent is breached, the fee estate continues in full force until the grantor takes some affirmative action to terminate the estate. Traditionally, his or her heirs or assigns, to actually reenter the land, send a notice of forfeiture or make a formal demand for possession. Today, commencement of an action to regain the land is sufficient to revest title in the grantor.

Distinguished from a Fee Simple Determinable

The distinction between a fee simple determinable, discussed in IB, and a fee simple subject to condition subsequent is a subtle but important one. The words creating the former limit the duration of the estate to the period prior to the occurrence of the stated contingency, while the words creating the latter merely permit the estate to be terminated when the contingency occurs. The test is whether the estate automatically expires on the happening of the stated event, in which case it is a fee simple determinable, or whether the grantor has the power to terminate the estate by some affirmative action, in which case it is a fee simple subject to condition subsequent. For

instance, the conveyance, “to B so long as B runs the family business, and when B ceases to run the family business the estate automatically terminates and reverts to the grantor,” creates a fee simple determinable. A conveyance “to B provided that B runs the family business, and if B ceases to run the family business, the grantor has the right to terminate the estate,” gives rise to a fee simple subject to condition subsequent.

D. Life Estate

1. Definition: An estate measured by the life of a human being.
2. Typical conveyance: “To Betty Bookkeeper for life,” or to “Alice Arnette for as long as she lives and remains a widow.” It may also be created by operation of law as in the descent of a homestead.

 

Defined

A life estate is a freehold interest the duration of which is measured by the life of a particular human being. The conveyance “to B for life,” creates a life estate in B, measured by the length of B’s life. Legal life estates resulting from voluntary conveyances are rare, while equitable life estates, in the form of trusts, are common. Thus, individuals typically convey or devise property to a trustee for the benefit of a certain person for his life, but rarely make an outright conveyance to the life beneficiary.

Creation

a. Express and Implied

A grantor may expressly convey a life estate by deed or will, as in the conveyance, “to B for life” or “to A until her death.”

A grantor may reserve a life estate to herself or himself, while conveying the remainder in fee simple. For instance, if the grantor, G, conveys “to A and his heirs, subject however to a life estate in G,” G has successfully reserved a valid life estate for herself.

A life estate may also arise by implication from a conveyance that necessarily ends upon the death of a particular individual. For example, a transfer “to B for so long as he wishes to live in Albert Lea” was held to be a life estate determinable. A conveyance “for as many years as desired by the party of the second part,” however, was found to create a tenancy at will. The issue of whether a conveyance created a life estate determinable or a tenancy at will lurked in the background of Maszewski v. Piskaldo, in which a life tenant, an 83 year-old man, and the holder of the remainder, a 79 year-old woman, lived together on the premises at issue. The two agreed that “during their lifetimes, they shall live together … neither shall have the right to dispossess the other from the premises. However … there shall be non inhibition against leaving said premises.” Sometime later the man changed the locks on the door and effectively dispossessed the woman. In an action to enforce the contract, a majority of the district court found no mutuality of obligation because the woman never had the right to dispossess the man, a life tenant. Thus, although the majority did not say so, it treated the woman as a tenant at will, perhaps only as a licensee.

Courts have also struggled to decide whether a devise such as “to A, for so long as she remains a widow,” constitutes a fee simple determinable or a life estate determinable. As a result of the statute abolishing the necessity of words of limitation to create a fee simple, the preferred construction is that of a fee simple determinable. The test is whether the grantor intended the estate to end on the death of the grantee. This ambiguity could be reduced, or eliminated, by use of express life estate language such as “to A, for so long as she lives and remains a widow,” or “to A, until death or remarriage.” Life estates may also be created subject to conditions subsequent.

b. Operation of Law

Life estates also may result from operation of law. Perhaps, the most important example of a legal life estate arises under Florida’s homestead provisions. Legal life estates also arise under the statutes abolishing the fee tail and the Rule in Shelley’s case [see IE].

c. Per Autre Vie

Life estates may be per autre vie, that is, for the life of a person other than the holder of the estate. The conveyance “to A, for the life of B,” creates such an estate. More commonly, however, a life estate per autre vie, will come into existence if a life tenant conveys his or her interest. Hence, if A has a life estate and conveys that interest to B, B has an estate for the life of A. Even if a life tenant purports to convey a fee simple to a purchaser without knowledge, only a life estate is conveyed.

Termination

A life estate, naturally, is not an inheritable estate. It terminates at the death of the life tenant, or in the case of an estate per autre vie, at the death of the measuring life.

A merger of a life estate and the remainder will terminate the life estate and creates a fee simple. Also, under rare circumstances, a life tenancy may terminate by adverse possession by the life tenant.

Rights and Duties of Life Tenant and Remainderman

During his or her lifetime a life tenant is free to alienate his or her interest in the real property. The estate conveyed ends upon the death of the measuring life.

E. Estates and Rules Not Recognized

E(1).    Rule in Shelley’s Case – Abolished in Florida

The Rule, Its Effect, and Relevance

The classic statement of the Rule in Shelley’s Case is as follows:

It is a rule of law, when the ancestor by any gift or conveyance takes an estate of freehold, and in the same gift or conveyance an estate is limited either mediately or immediately to his heirs in fee or in tail, that always in such case the heirs’ are words of limitation of the estate and not words of purchase; that is to say, the estate of the ancestor is not a life or other freehold estate with remainder to the heirs or heirs of the body, but an estate in fee or an estate tail according to circumstances.

The rule is a highly technical one, and led to much litigation and in many cases without a doubt to the defeat of a testator’s intentions. It probably originated in the wish of the laws to preserve to the lords their right of wardship, which would have been ousted by the heir taking as purchaser and not as successor. The rule’s practical effect was to preserve the incidents of feudal tenure by allowing the heirs of the grantee to take only by succession when the grantee died, and not by the grant of the remainder to them. The true significance of the rule was that it created a situation when the life estate merged with the future interest to transform the limitation.

Application of Rule

The effect of the Rule in Shelley’s Case was to take the remainder from the heirs and vest it in the life tenant. Thus, under the Rule, a conveyance “to A for life, then to his heirs” resulted in A obtaining both the life estate and the remainder in fee. The doctrine of merger then applied to combine the two estates and give A a fee simple absolute.

Abolition of Rule

The Rule in Shelley’s Case was abolished in 1945 by the enactment of section 689.17 of the Florida Statutes.

The statute better effectuates the intent of the grantor than did the Rule. Hence, a conveyance today “to A for and during his natural life and then to his heirs” results in A getting a life estate in accordance with the tenor of the instrument. The remainder in fee simple is given, per stirpes, to A’s lineal descendants.

If A has no lineal descendants when the conveyance takes effect, the remainder is contingent [see IVC2]. As soon as a lineal descendant is born, however, the remainder vests subject to partial divestment. If, therefore, the life tenant, A in the foregoing example, has had one or more lineal descendants, all of whom predecease him, the land would pass to the heirs, devisees or transferees of A’s deceased lineal descendants. The statute, however, does not provide any guidance when the grantee life tenant dies without ever having had any lineal descendants. The most likely construction is that the grantor retains a reversion and at the time the life tenant dies without issue the land reverts to the grantor or his or her heirs or assigns.

E(2). Fee Tail – Abolished in Florida

Historical Background

The fee tail was first recognized at common law after the enactment of the Statute de Donis in 1285. Prior to this statute a conveyance “to A and the heirs of her body” created a fee simple conditional. In such an estate the grantee, A, obtained a fee simple conditioned on her having heirs of her body. The grantor retained a possibility of reverter.  As soon as A had a child, the condition was satisfied and A’s estate was automatically enlarged into a fee simple absolute for most purposes. She could then convey a fee simple absolute and by the simple expediency of a reconveyance circumvent any further restrictions inherent in the original conditional nature of the fee. The Statute de Donis converted the fee simple conditional into a fee tail.

Definition and Characteristics of Fee Tail

The Statute de Donis converted the fee simple conditional into a fee tail. A fee tail was an inheritable estate, but it was inheritable by lineal heirs only, not collateral heirs.  A tenant in tail could not convey the estate except for a period commensurate with his own life. He or she could not, naturally, devise the estate because it descended to lineal heirs. Thus, a conveyance “to B and the heirs of his body,” would pass to B for life, then to B’s lineal descendants, if any. Then to the next generation of lineal descendants and so on. If any tenant in tail died without lineal descendants, the estate would either pass to a designated remainderman or revert to the grantor, his or her heirs or assigns, according to the creating instrument.

Creation and Construction

Common phrases used to create an estate tail included “heirs of the body,” “bodily heirs,” “issue of the body,” or “bodily issue.”

The term “bodily heirs” or its equivalent had to be used as words of limitation, not purchase, and had to refer to an indefinite failure of issue. That is, the grantor must have intended that the estate would pass from generation to generation, for a potentially infinite duration, as long as lineal descendants of the grantee existed.

Abolition of Fee Tail

Florida first abolished the fee tail in 1829. In a case where the statute abolishing the fee tail will be properly applied, the first tenant would take only a life estate from the conveyance. A remainder in fee simple would be given to his or her lineal descendants per stirpes. The remainder in favor of the lineal descendants is determined at the time of the first taker’s death. The remainder, therefore, is contingent until that death, even if lineal descendants have been born to the first taker during his or her lifetime.

Comparison of Statutes Abolishing Fee Tail and Rule in Shelley’s Case

A conveyance such as “to A for life and then to the heirs of his body,” would seem to trigger both the statute prohibiting the fee tail and the statute abolishing the Rule in Shelley’s case. The language of the two statutes, however, indicates that the statute abolishing the Rule in Shelley’s case governs such a conveyance. By its terms, section 689.17 applies to “any instrument purporting to create an estate for life in a person with remainder to her or his … heirs of her or his body,” while Section 689.14 explicitly applies only to “any instrument purporting to create an estate tail.”

The decision as to which statute controls this situation is important for two reasons. First, the remainder resulting from an erstwhile fee tail is contingent until the death of the first taker, while the remainder created under the statute abolishing the Rule in Shelley’s case vests at the birth of the first lineal descendant of the first taker. Second, Section 689.14 does not indicate to whom the estate passes if the first taker dies without lineal descendants. Section 689.17, on the other hand, explicitly directs that the estate passes to the designated remainderman and in absence of a designation, reverts to the grantor.

II. Concurrent Estates

A. Tenancy in Common

1. Definition: An estate held jointly by two or more persons in such a manner that on the death of one co-owner his interest descends to his heirs or passes under his will. Each party is considered as owning a separate undivided interest that he can effectively transfer or encumber as he pleases. There is no right of survivorship.
2. Typical conveyance: “To Larry Land and Perry Purchaser and their heirs.” 

 

Characteristics

In a tenancy in common, each cotenant owns an undivided interest in the property. There is no right to survivorship in a tenancy in common.

The only unity necessary for a tenancy in common is unity of possession. Accordingly, tenants in common need not have the same interest, nor need their interests arise at the same time, nor need they take from the same instrument. Thus, one cotenant may have a one-half interest, another a one-fourth interest, and two others a one-eighth interest; one may have acquired his interest by descent 10 years ago and another may have acquired his interest by conveyance just yesterday.

Each tenant in common, although owning only an undivided interest and having no exclusive right to possession, has a separate estate that is freely alienable, attachable by creditors, descendible to heirs, and devisable by will.

A tenancy in common differs from both a joint tenancy [see IIB] and a tenancy by the entireties [see IIC] in that there is no right of survivorship in a tenancy in common.[1] When a tenant in common dies, his or her interest passes to his or her personal representatives, creditors, heirs, or devisees. It does not pass to the other tenants by operation of law.

Creation

A tenancy in common may be created in a number of ways. A conveyance to two or more persons other than husband and wife creates a tenancy in common, unless the conveying instrument expressly provides for the right of survivorship. A transferee of a tenant in common becomes a tenant in common with the other cotenants. In addition, a joint tenant with right of survivorship can convert his or her estate into a tenancy in common by conveying his or her interest inter vivos to another person or to himself or herself.

A husband and wife may own land as tenants in common if the conveying instrument clearly expresses the intent to create such an estate rather than a tenancy by the entireties. A tenancy by the entireties [see IIC] automatically becomes a tenancy in common on dissolution of marriage unless the judgment of dissolution provides otherwise. In addition, if one spouse kills the other spouse, the entireties estate is severed and the surviving spouse becomes a tenant in common with the victim’s heirs.

B. Joint Tenancy with Right of Survivorship

1. Definition: An estate jointly held by two or more persons so that on the death of one co-owner the entire title vests in the survivors until there is only one survivor at which tine he owns it absolutely in severalty. The estate may be terminated by acts of the parties prior to the death of the co-owners, however.
2. Typical conveyance: “To Ronald Roe and Donald Dough and their heirs as joint tenants with the right of survivorship and not as tenants in common.”

 

Introduction

Any number of related or unrelated individuals may hold property as joint tenants.  as with a tenancy in common, each cotenant in a joint tenancy owns an undivided interest in the land rather than an interest in severalty in part of the land. In both a joint tenancy and a tenancy in common, each cotenant has an equal right to possession and control of the property. This right, known as unity of possession, is the only unity necessary for a tenancy in common. In contrast, the following three additional unities are required for the creation of a joint tenancy: (1) unity of time, (2) unity of title, and (3) unity of interest.  In other words, the joint tenants must take title to the property at the same time, from the same instrument, and in the same proportionate share.

The principle feature of a joint tenancy is the right of survivorship. Property that is held in a joint tenancy does not pass by descent on the death of a joint tenant, but instead vests by operation of law in the surviving joint tenant or tenants. The interest of a joint tenant terminates at the moment of death and vests in the surviving joint tenants.  Accordingly, there is nothing to pass to the deceased tenant’s heirs, devisees, or surviving spouse. As a result of the survivorship feature, the property passes without the trouble and expense of probate, although the property does not escape federal or state death taxes.

Creation

A joint tenancy must be expressly created. Although no certain words are necessary to create a joint tenancy, an instrument must provide for a right of survivorship or the instrument will not create a joint tenancy. However, a survivorship provision is not necessary to create an estate by the entireties [see IIC].

If a joint tenancy with right of survivorship is desired, it is recommended that the following language be used in the instrument: “To A and B and their heirs as joint tenants with the right of survivorship and not as tenants in common.” This leaves nothing for construction as the intent is clear. The words “joint,” “jointly,” or “joint tenancy” are insufficient to create a right of survivorship.

A joint tenancy with right of survivorship may be the result of an unsuccessful attempt to create an estate by the entireties. For example, in one case, a conveyance to “husband and wife, as an estate by the entirety with full rights of survivorship” created a joint tenancy instead of an estate by the entireties because the grantees were not actually married.

The owner of property may create a joint tenancy in the property by conveying the property to a third party who will then convey the property to the owner and another party as joint tenants with right of survivorship. However, the same result can be achieved without the use of a third party by a deed from an owner to himself or herself and another, if the deed discloses an intention to create a joint tenancy with the right of survivorship. This result appears to be inconsistent with the requirement that the four unities be present, as in this situation the tenants do not take title at the same time or from the same instrument. However, the result is practical and can be justified on the theory that the grantor does not retain his or her prior title or interest, but instead takes a new estate together with the grantee.

Severance

a. Conveyance by Joint Tenant

Any joint tenant can sever a joint tenancy and convert it into a tenancy in common by conveying his or her undivided interest to another person. Thus, if A and B are joint tenants who each own a one-half interest and A conveys his interest to C, C and B become tenants in common. The unities of time and title are thus destroyed. Similarly, if A, B and C are joint tenants and A conveys his one-third interest to D, D becomes a tenant in common as to his one-third and B and C remain joint tenants as to their two-thirds. As a result, D’s one-third interest will pass through devise and descent, but B and C will have a right to survivorship in each other’s one-third interest.

A conveyance by a joint tenant severs the tenancy even if the joint tenant retains some form of interest in the property. For example, a joint tenant severs the joint tenancy by conveying the property to another but reserving a life estate in the property. Likewise, a joint tenant’s conveyance of his or her interest to himself or herself and his or her spouse severs the joint tenancy, and the original tenants and the spouse become tenants in common.

A joint tenant may also sever the joint tenancy by conveying his or her interest in the property to himself or herself.

b. Judicial Sale

A judicial sale of one tenant’s interest severs the joint tenancy as to that interest.  Thus, if A and B hold the property as joint tenants and A’s interest is sold to X at a judicial sale, B and X will hold the property as tenants in common. If A, B, and C hold the property as joint tenants and A’s interest is sold to X at a judicial sale, X becomes a tenant in common as to X’s one-third share, but B and C remain joint tenants as to their two-thirds.

c. Executory Contract to Convey Interest

If one joint tenant enters into a valid contract to convey his or her interest but dies before the contract is performed, that tenant’s interest in the property does not inure to the surviving cotenant but descends through the deceased’s estate to be distributed in accordance with the terms of his or her will.

d. Conveyance to One Joint Tenant

A joint tenancy is also terminated if all but one of the cotenants convey their respective interests to the non-conveying cotenant. Under such circumstances the grantee cotenant becomes sole owner.

Effect of Homicide

An intentional and unlawful killing or one joint tenant by the other joint tenant severs the interest of the decedent. Thus, the decedent’s interest passes as the property of the decedent and the killer gets no rights by survivorship. However, the killer does not forfeit his or her interest in the jointly held property. Instead, he or she holds an undivided interest in the property as a tenant in common with the decedent’s heirs. The statute that governs the effect of homicide on a joint tenancy applies to joint tenancy and tenancies by the entirety

C. Tenancy by the Entireties

1. Definition: An estate jointly held by husband and wife so that on the death of one the entire estate vests in the survivor. Neither party may effectively convey or encumber the estate without the joinder of the other.
2. Typical conveyance: “To Barry A. Barrister and Bercine B. Barrister, his wife, and their heirs.”

 

Characteristics

Only a husband and wife may own property as tenants by the entireties. A tenancy by the entireties is essentially a joint tenancy modified by the common-law doctrine that a husband and wife are one person. A tenancy by the entireties exists as long as the four unities required for a joint tenancy [see IIB] plus a fifth unity, the marriage of the parties, are present. Assuming the first four unities are established, the intent of spouses to hold real property in tenancy by the entireties is presumed.

The right of survivorship is an important feature of a tenancy by the entireties.  Because of the right of survivorship, property that is held by the entireties does not pass by descent but vests by operation of law in the surviving spouse. The right of survivorship exists in a tenancy by the entireties without any written provision establishing such right.

A tenancy by the entireties may not be terminated by either spouse acting alone.  the inability of either spouse acting alone to terminate the tenancy is the major difference between a tenancy by the entireties and a husband-and-wife joint tenancy.

Creation

a. Devise, Transfer, or Conveyance by Third Party

A devise, transfer, or conveyance of real property to named parties who are husband and wife is presumed to create a tenancy by the entireties.

In creating an estate by the entireties, it is customary to describe the grantees as husband and wife. For example, property may be conveyed “To John A Smith and Mary B. Smith, husband and wife” or “To John A. Smith and Mary B. Smith, his wife.”  Designating the grantees as husband and wife is desirable so that the chain of title will clearly indicate the type of estate and the examiner will not have to speculate as to whether the grantees are tenants by the entireties or some other type of cotenants. However, even if the grantees are not designated as husband and wife, they will still take as tenants by the entireties if they are in fact married.

A tenancy by the entireties can only exist between husband and wife. Designation of the grantees as husband and wife cannot be effective to create an estate by the entireties if in fact the grantees are not married. If the grantees are not married, a tenancy in common or joint tenancy will result instead.

b. Creation by Direct Conveyances Between Spouses

i. Prohibited at Common Law

A spouse who holds title to real property as a separate owner is authorized by statute to create a tenancy by the entireties in both spouses. However, at common law a spouse could not create a tenancy by the entireties by a direct conveyance. Because an estate by the entireties is a special type of joint tenancy requiring all of the four unities plus the additional unity created by marriage, it was necessary at common law for both parties to take their interest at the same time from the same conveyance. Thus, if either spouse owned land individually, he or she could not directly convey to the other spouse to create an estate by the entireties. Instead, the owner-spouse was required to first convey the property to a third party who would then reconvey the land to the husband and wife.

ii. Statutory Provision

In Florida, direct conveyances between husband and wife are specifically authorized by statute. The statute provides that the spouse holding title to real property can create a tenancy by the entireties by either conveying the property to the other spouse by a deed that declares that its purpose is to create a tenancy by the entireties or by conveying the property to both spouses. The grantee-spouse need not joint in the execution of the deed.

For example, if H owns land in fee simple and wishes to create an estate by the entireties, he may do so by executing a conveyance to “H and W, his wife, for the purpose of creating an estate by the entireties.” Likewise, H may execute a conveyance to “W for the purpose of making the grantor and grantee tenants by the entireties.

iii. Homestead Property

The Florida Constitution now provides that a homestead owner may by deed transfer the title to the homestead to an estate by the entirety with his or her spouse. Although the Constitution ordinarily requires the joinder of both husband and wife in a conveyance of the homestead, joinder is not required for an interspousal conveyance of solely owned homestead property to husband and wife to create an estate by the entireties.

c. Ineffective Attempts to Create the Estate

As previously stated [see IIC2a], a tenancy by the entireties cannot be created unless the parties are in fact husband and wife.

The estate that results from ineffective attempts to create an estate by the entireties depends on the circumstances and equities of each case. A tenancy in common will be the usual result. However, if the conveyance mentions a right of survivorship, either a joint tenancy or a tenancy in common with an executory interest in favor of the survivor may result. In the latter case, each tenant would have an undivided interest subject to defeasance on the death of the cotenant and subject also to an executory interest in the other half that will become possessory on surviving the other cotenant.

Alienability and Rights of Creditors

a. Joint Action Generally Necessary

Neither spouse has a separate right in property owned by the entireties.  Therefore, neither spouse can sell, mortgage, or otherwise encumber entireties property without the consent of the other spouse or the right to act as the other spouse’s agent.

In general, to transfer or to encumber entireties property both spouses must join in the deed, conveyance, or mortgage.

b. Debts and Liens

Joint creditors of both spouses can attach property held by the entireties and sell it to satisfy the obligations jointly incurred by husband and wife. However, unlike property held in a joint tenancy or a tenancy in common, entireties property is not available to answer for the individual debts of either spouse. Therefore, individual creditors of either the husband or wife cannot attach that spouse’s separate interest in an estate by the entireties.

c. Interspousal Transactions

Interspousal transactions are an exception to the rule that neither tenant can individually convey his or her interest in entireties property. Either spouse can effectively convey or release to the other spouse his or her interest in entireties property, thereby vesting in the other spouse an absolute fee simple title. Thus, if H and W are tenants by the entireties, H can effectively vest absolute ownership in W by conveying or quitclaiming all his interest in the estate to her. The joinder of the grantee-spouse is unnecessary for the conveyance to be effective.

Termination of Tenancy by the Entireties

a. Dissolution of Marriage

A tenancy by the entireties automatically becomes a tenancy in common on dissolution of marriage, unless the judgment of dissolution provides otherwise. On dissolution, each former spouse holds an undivided one-half interest in the former entireties property.

b. Conveyance of Property

Tenants by the entireties may terminate the entireties estate by conveying the entireties property. Both spouses must join in the conveyance unless one spouse is conveying his or her interest to the other spouse [see 3c above]. The spouses may convey the property to a third party or they may convey the property to themselves as tenants in common or as joint tenants.

c. Homicide

If one spouse unlawfully and intentionally kills the other spouse, the surviving spouse’s right of survivorship in any property that the spouses held by the entireties terminates. In this situation, the decedent’s share of the entireties property passes as the decedent’s property. Although the wrongdoing spouse loses the right of survivorship, he or she does not otherwise lose his or her interest in the property. Accordingly, the surviving spouse becomes a tenant in common with the decedent spouse’s heirs, with the surviving spouse owning a one-half interest in the property.

Partition

In General

Partition refers to the process whereby two or more co-owners of property effect a dissolution of their common ownership and convert it into several ownerships of fractional portions of the original common property. Property may be partitioned if the cotenants hold as tenants in common or joint tenants.  Property that is held as an estate by the entireties may not be partitioned.

2. Voluntary Partition

Co-owners may voluntarily partition their jointly owned property by conveying proper interests to each other so that each acquires complete ownership of a portion of the land. Such a voluntary partition is no more than an application of each cotenant’s power to convey.

It is also possible to effect a partition by a valid written agreement signed by all of the contenants or by conduct ratifying another cotenant’s conveyance of a specific part of the land to an outsider.

3. Partition by Judicial Action

A suit for partition may be brought by one or more joint tenants or tenants in common.

III. Property Rights Between Spouses

A. Elective Share

The surviving spouse of a decedent is entitled to an elective share equal to thirty percent of the decedent’s elective estate.

Elective Share of Surviving Souse of Decedent Dying on or After October 1, 2001

Overview of Law Determining Elective Share of Surviving Spouse

The surviving spouse of a decedent who was domiciled in Florida at the time of death is entitled to an elective share equal to 30 percent of the decedent’s elective estate.

Elective Estate Consists of Aggregate Value of Statutory Components

The elective estate consists of the aggregate value of nine components enumerated by statute. The components relevant to the decedent’s real property interests include:

• Probate Estate.
• Interests in Joint Tenancy with Right of Survivorship or Tenancy by the Entirety.
• Revocable Transfers Prior to Death.
• Retained Right to Income or Principal from Transferred Property.
• Near Death Transfers.
• Property Transferred in Satisfaction of Elective Share

Exclusions Relevant to Real Property from Computation of Elective Share

The following interests, with particular relevance to real property, are expressly excluded from the computation of the elective estate:

• Prior Irrevocable Transfers.
• Transfers for Adequate Consideration.
• Transfers with Spouse’s Written Consent.
• Decedent’s Share of Community Property.
• Property Possessed Through General Power of Appointment.
• Homestead Property.

Elective Share Is in Addition to Right to Homestead, Exempt Property, and Family Allowance.

The elective share is in addition to the surviving spouse’s rights to homestead, exempt property and the family allowance.

B. Homestead

A homestead held in the deceased owner’s name descends to the spouse for life with a remainder to the lineal descendants.

Exemption of Homestead from Forced Sale

a. Overview of Homestead Exemption from Forced Sale

In order to protect and preserve the interest of the family in the family home, and to protect individuals from utter destitution, increase family stability, provide a refuge from economic     misfortunes, and encourage property ownership and individual financial independence, the Florida Constitution provides an exemption from forced sale for the family homestead.

There is no relationship between the homestead exemption from forced sale and the homestead exemption from real property taxes.

b. Claimant Must Be Natural Person Residing in Florida

Any natural person who resides in Florida may claim an exemption on property used as a homestead. While citizenship is not a prerequisite for claiming the exemption, foreign nationals who have no permanent resident status in the United States cannot qualify for the exemption on real property they own in Florida.

Property That Qualifies for Exemption

a. Acreage and Contiguity Requirements for Property Inside and Outside Municipality

The homestead exemption from forced sale may be applied to:

• Up to 160 acres of contiguous land and improvements located outside municipality, or
• Up to one-half acre of contiguous land, on which the exemption is limited to the residence of the owner or the owner’s family.

Obligations That Are Enforceable Notwithstanding Homestead Exemption

a. Liens Specified as Enforceable by Constitution Notwithstanding Exemption

The constitutional exemption of homestead property from forced sale expressly does not protect the homestead from liens related to the following

• Property taxes and assessments on the homestead property;
• Obligations, such as mortgages, contracted for the purchase, improvement, or repair of the homestead property; or
• Obligations, such as construction liens, contracted for house, field, or other labor performed on the realty.

b. Equitable Liens in Cases of Fraud or Reprehensible Conduct, or to Prevent Unjust Enrichment Are Enforceable

There is well-settled authority for the proposition that the homestead cannot be used as a shield against fraudulent or reprehensible conduct and that under such circumstances, an equitable lien might arise that may be enforced against the homestead.

Survivors’ Rights Regarding Homestead Property

If the owner is survived by a spouse or a minor child, the homestead property cannot be testamentarily devised. However, if there is no minor child, it may be devised to the owner’s spouse in fee simple absolute.

The testator may not devise less than a fee simple interest to the surviving spouse. This means, for example, that a devise of a life estate is invalid. Similarly, the testator may not devise the homestead property to the surviving spouse and another person as tenants in common. Any devise of less than 100 percent to the surviving spouse is invalid.

If the owner dies leaving neither a spouse nor lineal descendants, and the homestead property is not devised, it descends as any other intestate property. If a spouse or lineal descendants survive, the surviving spouse is entitled to a life estate in the property, with a vested remainder to the lineal descendants who survive at time of the owner’s death per stirpes. The homestead property is not regarded as an asset of the estate and is not subject to administration by a personal representative. The rules regarding descent of homestead property do not apply to property that the decedent and the surviving spouse owned as tenants by the entirety.

Courts have held that homestead property can become part of the probate estate in unusual circumstances, however. For example, homestead property that is devised to a testamentary trust loses its homestead status and becomes merely an asset of the trust and subject to claims of the estate’s creditors. Similarly, homestead property can become part of the probate estate when the will specifically orders that the property be sold and the proceeds be divided among the heirs.

Homestead Exemption May Be Waived Under Specified Circumstances

a. Waiver of Homestead Right Is Generally Against Public Policy

As a general rule, a waiver of homestead rights as part of a debtor-creditor transaction is against public policy.

b. Waiver by and Between Spouses As Authorized by Statute

Rights to homestead property may be waived voluntarily, in whole or in part, before or after marriage, by written contract, agreement, or waiver, signed by the waiving party in the presence of two witnesses.

Circumstances Under Which Homestead May Be Considered to Have Been Alienated

a. Homestead May Be Alienated by Mortgage, Sale, or Gift

The owner of homestead real estate may alienate the homestead by mortgaging it, selling it, or giving it away. If the owner is married, his or her spouse must join in the transaction.

When a spouse fails to joint in a transfer of title by deed, whether the result of a sale or a gift, the prevailing view is that the deed is void, as to the heirs of the homestead and as to the non-joining spouse.

When a spouse fails to join in a mortgage encumbering the homestead, however, one court has determined that the mortgage is not void; rather it is “ineffectual” as a lien until either the spouse joins in the mortgage, or the property loses its homestead status.

b. Title to Homestead Property May Be Transferred to Estate by the Entirety

In addition to alienating a homestead by mortgage, sale, or gift, a married owner may by deed transfer the title to an estate by the entirety with the spouse. Although the Florida Constitution ordinarily requires the joinder of both husband and wife in a conveyance of the homestead [see a above], joinder is not required for an interspousal conveyance of solely owned homestead property to husband and wife to create an estate by the entireties.

Direct conveyances between spouses, including conveyances of homestead property, are specifically authorized by statute. The statute provides that the spouse holding title to real property can create a tenancy by the entirety by either conveying the property to the other spouse by a deed that declares that its purpose is to create a tenancy by the entireties, or by conveying the property to both spouses. The grantee-spouse need not join in the execution of the deed.

c. Proceeds from Sale of Homestead Are Generally Exempt from Creditors’ Claims

Just as the homestead itself is exempt, the proceeds from the sale of a homestead are exempt from creditors’ claims if the vendor shows that he or she intended in good faith before and at the time of the sale to reinvest the proceeds in another homestead within a reasonable time. Only as much of the proceeds as are reinvested, or intended to be reinvested, in another homestead are exempt. Any surplus is treated as general assets of the debtor. The funds must not be commingled with the debtor’s other money. They must be held separately and for the sole purpose of acquiring another home.

Limitation on Homestead Exemption in Bankruptcy

A debtor in bankruptcy may not exempt any interest in homestead property in excess of $125,000 if the property was acquired within 1,215 days before the bankruptcy petition was filed.

IV. Future Interests

Part I.  Traditional Types of Future Interests

Nature of Future Interests

Under the Anglo-American system of estates in property, which commonly classifies ownership on the basis of time of possession, a future interest may be described as an interest in property, real or personal, in which the privilege of possession is future and not present. Although future interests do not encompass present possessory rights, they are considered present interests in property with present legal significance. For example, most future interests can be transferred before they become possessory.  Describing them as “future” interests, therefore, can be misleading, since that term refers exclusively to possessory rights to the property. A future interest is a fraction of the total package of rights in property. The total aggregate of rights is contained in the fee simple absolute [see IA]. Thus, whenever a present possessory interest less than a fee simple absolute is created, a future interest is created at the same time.

A. Reversion

1. Definition: An undisposed residue left in the grantor after he conveys a lesser estate than that which he had.
2. Typical conveyance: Garry Grantor, owner in fee simple absolute, conveys to “Barry Barrister for life.” After this conveyance, Grantor has a reversion in fee simple.

 

Definition and Characteristics

When the owner of an estate transfers a lesser estate in the same property to another party, the interest remaining in the grantor is called a reversion. A reversion, therefore, is always retained by the grantor or the grantor’s heirs.

A reversion is a present vested interest, leaving the reversioner a present fixed right to possession in the future. As a vested interest, the reversion is not subject to the rule against perpetuities [see VI]. In addition, a reversion is freely alienable, descendible, and devisable.

Creation

Reversions typically arise automatically by operation of law, without the need for explicit acts or language of the parties. Thus, if an owner in fee simple absolute conveys a life estate, term for years, or lesser interest, he or she retains a reversion.

A reversion may exist even though the estate is not certain to return to the grantor. For instance, when a transferor creates a contingent remainder in fee simple, the grantor retains a reversionary interest, although the conveyance may dispose of the transferor’s entire interest. Thus, a conveyance “to A for life and then to B if she becomes an attorney,” results in a life estate for A, a contingent remainder for B, and a reversion to the grantor. Should B not become an attorney, then the estate will revert to the grantor on A’s death. Should B become an attorney, however, before the termination of A’s life estate, then the reversion is defeated.

At common law, a reversion existed in the grantor after the conveyance of a fee tail, unless the grantor designated a remainderman to take the estate upon failure of issue of the tenant in tail [see IE]. Similarly, pursuant to Florida statute, a conveyance “to A and the heirs of his body” results in A getting a life estate, A’s lineal descendants getting a contingent remainder, and the grantor retaining a reversion. If A died without lineal descendants, the land would revert to the grantor; if A died with lineal descendants, however, the contingent remainder would vest in the descendants and forever defeat the grantor’s reversion [see IE].

B. Reverter Rights

Possibility of Reverter

1. Definition: The interest retained by a grantor after the creation of a fee simple determinable.

Typical conveyance: Garry Grantor conveys to“Donald Dough and his heirs for as long as used for fraternal purposes, and if the land is not so used, it shall immediately revert to the grantor, his heirs or assigns.” After this conveyance, Grantor has a possibility of reverter.

Right of Re-entry or Power of Termination.

1. Definition: The interest retained by the grantor after the creation of a fee simple subject to a condition subsequent.
2. Typical conveyance: Garry Grantor, owner of fee simple absolute, conveys to “Donald Dough and his heirs but if the premises are not used for fraternal purposes, then the Grantor, his heirs or assigns, may re-enter and possess the estate as formerly.” After this conveyance Garry Grantor has a right of re-entry or a power of termination, the two terms being used interchangeably.

 

Definitions and Usage

Possibilities of reverter and rights of re-entry (also known as powers of termination) are collectively referred to as reverter rights. Although, at common law, possibilities of reverter and rights of re-entry are two separate and distinct types of interests, as a practical matter in Florida, few legal differences arise from categorizing an interest as one or the other and the Florida statutes treat the two types of interests identically.

The possibility of reverter and right of re-entry, like the reversion, are future interests that remain in the grantor when an estate is transferred. They differ from a reversion in that a reversion arises only when the transferor conveys a lesser estate than that which he or she holds, while reverter rights may arise when the grantor conveys an estate that is equal to that which he or she holds.

A possibility of reverter remains in the grantor when he or she conveys a determinable estate [see IB]. The conveyance by A, a fee simple owner, “to B and her heirs so long as the land is used for residential purposes and when the land is no longer used for residential purposes it will revert to A and his heirs” creates a fee simple determinable in B, while the grantor retains a possibility of reverter.

A determinable estate automatically terminates upon breach of the condition expressed in the conveyance. The property reverts to the grantor and the possibility of reverter becomes possessory.

On the other hand, in the case of an estate subject to condition subsequent, upon breach of the condition, the property does not automatically revert, but simply gives the grantor the power to terminate the estate of the grantee and reacquire the property.

Alienability

a. Possibility of Reverter

The possibility of reverter is not an estate in land, but only the possibility of having an estate at some future time. As such, it has been described as an uncertain interest in land.

In 1948, the Florida Supreme Court concluded that the possibility of reverter and other “future or contingent interests, possible and existing estates or interests … are now assignable,” and devisable. This pronouncement, though dictum in part, seems to encompass not only the possibility of reverter, but also rights of re-entry, executory interests, contingent remainders, and other “uncertain” interests in land.

b. Right of Re-Entry

The right of re-entry, like the possibility of reverter, is an “uncertain interest” in land, with no right to present possession. Under current law, the right of re-entry seems to be transferable by deed, will, or descent.

C. Remainders

1. Definition: A limitation or interest created in favor of a transferee in such a manner that it may or will become possessory at the termination of prior possessory estates of freehold created in the same instrument.
2. Typical conveyance: Garry Grantor, owner in fee simple absolute, conveys “to Rita Roe for life, then to Nellie Noe for life, and then to Bertha Brown and her heirs.” As a result of this conveyance, Nellie Noe has a remainder that will last for the remainder of her life, and Bertha Brown has a remainder in fee simple absolute.

 

Distinguished from Reversion

A remainder is an estate that will, or may, become possessory in a person other than the grantor, immediately after the expiration of a prior estate created in the same instrument. It is a future interest that passes out of the grantor by express limitation at the same time the grantor also transfers a present possessory estate. A typical remainder arises in B in the conveyance “to A for life, then to B and her heirs.” Remainders can exist in real and personal property.

A remainder, like a reversion, becomes possessory only after expiration of a prior estate. The remainder, however, differs from the reversion in two important ways. First, a remainder always runs to a third person, while a reversion always returns to the grantor. Second, a remainder is created by the affirmative acts or language of the parties, while a reversion can arise in the absence of the intent of the parties.

At common law, a remainder could only arise following a possessory freehold estate, other than a fee simple. A conveyance or lease “to A for ten years and then to B and his heirs,” did not result in a term for years in A and a remainder in B, but rather in a fee simple absolute in B subject to a term for years in A. This resulted from the necessity of transferring seisin presently. Today, however, it is not uncommon for a court to refer to this state of title as being a term in A and a remainder in B.

Today, as at common law, a remainder cannot follow a fee simple. At early common law, only interests favoring the grantor – possibilities of reverters, and powers of termination – could follow a fee simple estate. After the Statute of Uses was enacted, however, it became possible to create interests following fees running to third persons. These latter interests, however, are not remainders, they are referred to as executory interests [see IVD].

Determining Whether Remainder Is Vested or Contingent

A remainder must be classified as either vested or contingent. The law favors the vesting of estates and, whenever possible, remainders are held to be vested rather than contingent. Two primary advantages arise from finding that an estate is vested rather than contingent. First, vested interests are exempt from the rule against perpetuities [see VI], and second, unlike contingent remainders, vested remainders cannot be destroyed [see 5, below].

Many Florida cases have been concerned with identifying whether a remainder is vested or contingent. Underlying these decisions are two questions, the answers to which will determine whether a remainder qualifies as vested.

1. Is the remainder limited to an ascertained life (or lives) in being?
2. Have all conditions precedent, if any, besides the natural expiration of the prior estate, been satisfied?

 

If both questions are answered affirmatively, the remainder is vested. If either of the conditions are not met, the remainder must be contingent. Thus, if the remainderman is not in being, is not ascertained, or is not ready to take the estate immediately upon termination of the preceding estate, then the remainder is contingent.

In answering these questions, the intent of the testator or grantor is always determinative. Whether a remainder is ultimately construed to be vested or contingent in a particular case is determined by effectuating the intent of the grantor or testator. The starting point in determining the transferor’s intent is the language of the instrument. The following examples should help illustrate the distinction between contingent and vested remainders.

1. “To A for life, and then to B and his heirs.” B is a living person when the instrument is executed. This is the classic vested remainder.
2. “To A for life and then to the children of A.” A has no children when the instrument is executed. The remainder is contingent because the remaindermen are not in being. Once a child is born, the remainder vests.
3. “To A for life, remainder to the heirs of B.” B is alive at the time of the conveyance. The remainder is contingent because the heirs are not ascertained, since a living person has no heirs.
4. “To A for life, and if B survives A then to B and his heirs.” A and B are both alive. While A is alive the remainder is contingent since B’s outliving A is a condition precedent to B’s taking. Usually, the condition precedent of survivorship must be explicit.
5. “To A for life and then to B if he becomes a doctor.” B is not a doctor. The remainder is contingent because B must first become a doctor before he can take the estate.

 

A common example of contingent remainders also arises when two remainders, written in the alternative, follow a single estate. The second remainder takes effect if the first fails. These remainders are known as “alternative remainders” or “remainders on a contingency with a double aspect.” For example, the devise “to A for life, then to A’s children surviving, but if A has no children surviving at his death, then to B and her heirs” creates alternative remainders.

Types of Vested Remainders

There are basically three types of vested remainders.

• Indefeasibly vested remainders;
• Vested remainders subject to open; and
• Vested remainders subject to complete defeasance.

An indefeasibly vested remainder, e.g., “to A for life, then to B and her heirs,” is not subject to any condition precedent or subsequent, any contingent remainder, executory interest or power of appointment.

A vested remainder subject to open arises in a transfer to a class. It is created, for example, if a grantor conveys, “to A for life, remainder to the children of B and their heirs,” when B’s first child is born, the interest vests, subject to opening to let in subsequently born children. If a child predeceases A, that child’s interest is not extinguished, but instead passes to his or her heirs. However, the interest of each child is diminshed by the birth of each additional child.

A remainder vested subject to complete divestment is a vested remainder limited by an executory interest, contingent remainder, or a power, which may terminate the remainder. The conveyance, “to A for life, and then to B and her heirs, but if A leaves children surviving then to the children of A,” creates such a remainder in B. Even though the interest is determinable upon the happening of the contingency – A dies with surviving children – this does not affect the remainder’s vested character.

The distinction between a vested remainder subject to complete divestment and a contingent remainder often depends on minor differences in the manner in which the limitation is expressed. For instance, had the above conveyance been expressed, “to A for life and if A leaves no children surviving, then to B and his heirs; but if A has children surviving, to those children and their heirs,” then alternative contingent remainders would have arisen and B would not have a vested interest. Yet, B’s estate would become possessory under the same circumstances in each conveyance. In cases of ambiguous phraseology, courts have preferred to find vested estates.

Characteristics of Remainders

A remainder is an immediately fixed right to future enjoyment, that is, a present interest whose possessory aspects take effect in the future. The remainderman obtains his or her interest at the same time as the holder of the present possessory estate. Therefore, although the remainderman succeeds to the possession of the life tenant or other holder of the particular estate, the remainderman does not derive his or her title from that tenant.  The remainderman takes directly from the original grantor. Thus, in the conveyance “to A for life, then to B and his heirs,” B’s remainder in fee passes from the grantor to B at the same time as the life estate of A passes into possession. No subsequent deed from the grantor can divest B of the estate in remainder, nor in any manner limit or qualify it.

Vested remainders are excluded from the rule against perpetuities, while contingent remainders are subject to it.

Destruction of Contingent Remainders

a. Generally

Florida, virtually alone among American jurisdictions, follows the rule of destructibility of contingent remainders. Simply stated, the rule mandates that all contingent remainders must vest at or before the termination of the preceding freehold estate or the remainder is destroyed. The rule clearly defeats the intent of the grantor or testator and has been virulently criticized. “It has been said that in the past 300 years no court or text writer has ever said one word in its favor.

The more straightforward application of the destructibility rule occurs when the freehold estate naturally expires prior to the vesting of the remainder, that is, prior to the satisfaction of the condition necessary for the remainder to vest. No Florida case has applied specifically to the “natural” destruction of contingent remainders. Nothing in the cases, however, indicates that the rule would not apply in this manner in Florida. Thus, a conveyance “to A for life and if B graduates from law school then to B and his heirs,” results in B having a contingent remainder until B fulfills the condition. Should A die before B graduates from law school, the land will revert to the grantor or testator’s estate, and B’s remainder will be forever lost, notwithstanding that B may be already enrolled and may even be a senior in law school, or that B subsequently graduates from law school.

b. Destruction by Merger

Generally, when a greater estate and a lesser one coincide in the same person without any intermediate estate, the lesser is absorbed or merged into the greater.  Since contingent remainders are not considered “estates,” they do not prevent merger, but instead are simply lost. Hence, if the life estate preceding a contingent remainder comes to be held by the same person who has the vested estate following the contingent remainder, the contingent remainder is destroyed. For instance, if G conveys “to A for life and then to A’s children who survive him,” the children of A have a contingent remainder during the lifetime of A. If during A’s lifetime, G conveys a reversion to A, then the reversion and the life estate will merge in A; A will receive a fee simple absolute and the contingent remainder to A’s children is lost forever. Similarly, if A conveys a life estate to G, or if A and G both convey their estates to X, the respective grantees take fees simple and the contingent remainder in the children is destroyed.

Destructibility by merger, however, does not apply when the prior freehold estate and subsequent vested estate are joined in the same instrument.  For instance, if G devised “to A for life and if B survives A to B for life, then to A and his heirs,” no merger would occur, even though A would have the preceding life estate and the subsequent vested remainder. In addition, at least one Florida court found that no merger would occur if, in the previous example, A obtained a reversion by descent rather than the vested remainder by devise. That is, if A was G’s sole heir at law and G devised “to A for life then if B survives A to B and his heirs,” A would receive the life estate by the devise and the reversion by partial intestacy. Nonetheless, the two interests would not merge. In the two latter examples, however, a merger could be accomplished, and the remainders destroyed, if A transferred the two interests to a third party.

D. Executory Interests

1. Definition: A limitation or interest created in favor of a transferee in such a manner that it cannot take effect as a remainder and which may cut short a preceding possessory estate or follow a fee simple interest. It is always nonvested and created in favor of a third party.
2. Typical conveyance: Garry Grantor, owner in fee simple absolute, conveys to “Barry Barrister and his heirs but if Bertha Barrister, his sister, ever becomes a licensed attorney, then to Bertha Barrister and her heirs.” 

 

Historical Background

The executory interest, also known as a conditional limitation or an executory limitation, is best understood by reference to its historical background. Before the Statute of Uses and the Statute of Wills were enacted, the feudal doctrines concerning seisin prohibited the creation of freehold estates that would commence in the future. Remainders were recognized under the theory that the holder of the present freehold estate took seisin for himself or herself and the remainderman. When the freehold estate terminated, seisin passed instantly to the remainderman. The reversion, possibility of reverter, and right of re-entry were valid because seisin merely returned to the grantor, where it originated. Other future interests, however, were invalid at common law. Hence, the conveyance “to A when she marries” was ineffective, as was B’s interest in the conveyance “to A and his heirs, but if A dies without children, then to B and his heirs.

Equity courts circumvented the strict rules of seisin by recognizing equitable interests, known as uses, which were the functional equivalents of today’s executory interests. After the Statutes of Uses and Wills were enacted, these equitable interests were converted into legal interests, known as executory interests.

Description

a. General Characteristics

An executory interest is not an estate, per se, rather it is an interest that may ripen into an estate. AS such, the holder has no present possessory rights. At common law, executory interests were inalienable inter vivos, but were devisable and descendible. Today, executory interests are alienable, devisable, and descendible. Executory interests are subject to the common law rule against perpetuities [see VI].

The term “executory interest” encompasses any future interest, other than a remainder, that is not retained by the creator of an instrument. Executory interests are distinguishable from other future interests by several characteristics.

• They are always non-vested and contingent. They vest and become possessory simultaneously with the occurrence of the stated future contingency or event. Even if the event is certain to occur, the executory interest is deemed contingent. For instance, B’s interest in the devise, “to A and his heirs in fee simple for ten years and then to B and his heirs” is an executory limitation. In this case, even though ten years is certain to pass, B’s interest is deemed to be non-vested.
• With one exception, an executory interest divests the prior possessory estate, rather than arising after the natural termination of the preceding estate. An executory interest is, therefore, said to vest in derogation of the vested freehold estate. The exception to this rule occurs when an executory interest follows a fee simple determinable. In that case, the executory interest vests when the determinable fee expires naturally.
• On the occurrence of the condition or event, the executory interest becomes possessory automatically, without the necessity of re-entry, demand or notice.

The conveyance “to A when she marries” is known as a “springing executory interest,” because it “springs out” of the grantor. A’s interest is non-vested until she marries, at which time it vests and becomes possessory. The grantor’s fee estate does not terminate naturally, but is cut off by satisfaction of the condition.

The conveyance, “to A and her heirs, but if A dies without children, then to B and her heirs,” creates a “shifting executory interest” in B, because the estate may shift from A to B. While A is alive she holds a fee simple subject to an executory or special limitation and B’s interest is non-vested. If A dies without children, her interest is artificially divested and B’s interest vests and simultaneously becomes possessory.

b. Distinguished from Remainders

Several important characteristics distinguish the executory interest from the remainder. First, the executory interest may exist after a limited fee simple and it can be supported by a term for years, while the remainder can only follow a freehold estate other than a fee. Hence, a conveyance “to A for ten years and then to B and his heirs if B marries C,” gives B an executory interest. The executory interest, unlike the remainder, is not supported by any particular previous estate. Therefore, while a contingent remainder can be destroyed, the executory interest always takes effect upon the happening of the contingency; it cannot be destroyed. An executory interest vests and becomes possessory simultaneously, while a remainder can vest in interest well in advance of becoming possessory. For instance, in the conveyance, “to A for life, remainder to A’s first child,” the child’s interest vests at his or her birth, but will not become possessory until his or her parent, A, dies. Finally, a remainder becomes possessory at the natural expiration of the prior estate, while the executory interest takes effect in derogation of the prior estate. If the language of a transfer is ambiguous, a limitation that may operate as a remainder will not be construed as an executory limitation.

3. Vesting Event Certain to Occur

Particular classification problems arise when the event upon which an executory interest vests is certain to occur. For instance, the conveyance, “to X from and after next January 1” is commonly recognized as creating a springing executory interest in X and leaving a fee simple subject to executory limitation in the grantor. However, the analogous shifting interest created in the conveyance, “to B and his heirs, and from and after five years, to C and his heirs,” has been construed differently. In this instance, it is more common for courts to find that C takes a fee simple subject to a term for years in B or that C takes a remainder following B’s term for years. Differing classifications may alter the legal consequences. Consider, for example, the conveyance, “to A and his heirs, but 99 years after date to B and his heirs.” If the state of title is considered a fee simple in A subject to a special limitation, and an executory interest in B, the executory interest in B is void because it would violate the common-law rule against perpetuities, and hence A has a fee simple absolute. If, however, the conveyance is construed as a term for years in A and a vested remainder in B, or as a fee simple in B subject to a term for years in A, then B’s vested interest is excluded from the rule [see VI].

A similar issue arises when the grantor, G, conveys “to A and his heirs, after the death of G.” One valid construction would be that G retained a fee simple subject to an executory interest and A received a springing executory interest. Florida courts, however, have held that G transferred the fee to A, subject to a reserved life estate.

Part II: Powers of Appointment

1. Definition: A power or authority vested in one other than the fee simple owner to dispose of the property.
2. Typical conveyance: Garry Grantor conveys to “Larry Land for life and to whomever Larry Land shall by will appoint.” After this conveyance, Larry Land has a life estate plus a testamentary general power of appointment.

 

Description and Practical Usage

Simply stated, whenever an owner of real or personal property gives authority to another to direct the disposition of that property, a power of appointment has been created.

The power of appointment offers two important advantages over an outright conveyance or devise. It provides:

1. Flexibility and the ability to postpone the distribution decision; and
2. The realization of tax benefits.

 

Classifications

a. Special and General Powers

Courts classify powers as either special or general, depending on who are the objects or the potential appointees of the particular power. A general power of appointment is exercisable in favor of anyone whom the donee chooses, including the donee. The simple devise, “to A as donee, with the power to appoint the property to A or to any other person,” is such an interest. A special power, on the other hand, is exercisable among those persons specified in the instrument, but may not favor the donee or the donee’s estate. A special power of appointment is created in the conveyance, “to A for life, and on A’s death to one or more of A’s children as A may appoint by will.” Whether a power is classified as general or special may be significant with regard to application of the rule against perpetuities, the tax consequences, and the status of the appointment vis-a-vis creditors.

Special powers are further divided into exclusive and nonexclusive powers.  Special powers are exclusive if the donee has the right to exclude from the appointment one or more objects of the power. The special power, “to A for life, and on A’s death to one or more of A’s children as A may appoint by will,” is likely to be construed as exclusive. Special powers are non-exclusive when the donee has no right of selection.  For instance, the devise, “to A for life and upon A’s death to each of A’s children, in such proportions as A shall appoint by will,” creates a non-exclusive special power of appointment.

b. Testamentary Powers and Powers Presently Exercisable

A power of appointment is also classified according to the time at which the donee is permitted to exercise it. A power is presently exercisable if the donee can make the appointment at the time the power is conveyed to the donee. Such a power is illustrated by the conveyance, “to A, and then to such local charities as A shall appoint by deed or will.” A testamentary power, on the other hand, may only be exercised by will.

c. Collateral Powers and Powers Coupled with an Interest

Another classification for powers of appointment is based on whether the donee has an interest in the power.  A naked power – one that is simply collateral and without interest – arises when authority is given to a stranger to dispose of appointive property in which the stranger neither has nor acquires any estate. If G, the grantor, conveys “to A as trustee, with income to G for life and upon G’s death to such of G’s children as A shall appoint,” then A has a naked or collateral power.

On the other hand, when the donee of the power may derive a present or future interest in the appointive property the donee has a power coupled with an interest. Hence, a general power is necessarily coupled with an interest because the donee may appoint to himself or herself. In addition, A’s power in the devise “to A for life, and upon A’s death to such of A’s children as he shall appoint by will,” is coupled with an interest – i.e., the life estate.

Nature of Powers; Relation Back Doctrine

The nature of a power of appointment, in terms of its substantiality as a property interest, depends on the facts of each case and the purpose for which the power is being evaluated. For most purposes, the power of appointment is regarded solely as a personal right to dispose of property, rather than as an interest in property. The insubstantial status of the power stems from the ancient “relation back” doctrine.

Under the relation back doctrine, the donee is a mere agent with no property interest. As a result, at common law, the creditors of a donee could not reach an unexercised power of appointment, special or general. In addition, since powers are generally regarded as personal rights, involving the discretion and judgment of particular donees, they cannot normally be inherited, delegated, or voluntarily assigned.

General powers of appointment, especially those presently exercisable, are treated as property interests for certain purposes – perhaps most importantly in the context of federal and state tax liability, which may attach to the donee.

Regardless of the exact nature of the power of appointment, both the power itself and the exercise of the power are subject to the rule against perpetuities [see VI].

Creation of Powers of Appointment

A power of appointment may be created by express language or by implication.

V. Destructibility of Contingent Remainders

Definition: If a contingent remainder does not vest at or before the termination of prior freehold estates, it is destroyed. The prior estates may be terminated artificially by merging the freehold and the next vested estate in reversion or remainder, and the destructibility rule still applies. Florida still follows the destructibility rule [see IVC5.].

VI. The Rule Against Perpetuities

Definition: A contingent future interest in order to be valid must vest if at all within lives in being and 21 years from the creation of such interest. This is the common law rule. The common law rule has been substantially revised in Florida.

Introduction

Until January 1, 1979, Florida recognized and followed the common-law rule.  On that date, a comprehensive statutory codification and modification of the rule went into effect. On October 1, 1988, Florida became the fourth state to give effect to the Uniform Statutory Rule Against Perpetuities (FUSRAP).

Effective Date: Applicability

Florida’s Uniform Statutory Rule Against Perpetuities applies to interests created on or after the statute’s effective date, October 1, 1988.

Initial Validity

FUSRAP codifies the validating aspect of the common law rule. That is, an interest that would have satisfied the common-law rule, at its creation, is also initially valid under FUSRAP. According to the Uniform Rule, an interest is valid if there is a certainty that the interest, when created, will either vest or terminate no later than 21 years after the death of a life in being.

Period of the Rule: Gestation Period

FUSRAP tacks on the common-law period of gestation to the perpetuities period.

“Wait and See” Doctrine

FUSRAP utilizes a “wait and see” doctrine. Hence, the validity of an interest turns on actual post-creation events. The wait and see process eliminates the need to identify actual lives in being required under the common-law rule. Instead, the Uniform Rule establishes a gross allowable waiting period of 90 years. In other words, the validity of the interest is held in abeyance, and the interest becomes invalid only if it is still in existence and non-vested when the 90-year waiting period expires.

FUSRAP does not alter common-law presumptions to solve the problems of the fetile octogenarian, the unborn widow, and the administrative contingency. Instead, the Rule allows events to run their natural course. Within the allowable 90-year period, most interests either vest or terminate.

Period of Existence for Trusts Created After December 31, 2000

A nonvested property interest or power of appointment contained in any trust created after December 31, 2000, will not be required to vest for 360 years, in lieu of the 90 years otherwise required for vesting under the Rule Against perpetuities, unless the terms of the trust require that all beneficial interest in the trust vest or terminate within a lesser period. The increase in the required vesting period for powers of appointment contained in these trusts is intended to delay the application of federal estate and generation-skipping tax from 90 to 360 years from the date the trust is created.

VII. The Rule Against Unreasonable Restraints on Alienation

Definition: Florida generally follows the common law rules relating to restraints on alienation. Any restraint on the alienation of a fee simple absolute is void, but forfeiture restraints on lesser interests are generally valid.

Common Law Rule Against Unreasonable Restraints on Alienation

Florida has not enacted any statute prohibiting the suspension of the power of alienation, but it recognizes the common-law rule against unreasonable restraints on alienation. Generally, the right to alienate property is incident to ownership of that property. Accordingly, the law will not permit a grantor to fetter the right of ownership with unreasonable restraints on alienation. Conditions that operate to that effect are held void as against public policy.

Hence, the rule is designed to insure that property is reasonably available for development by prohibiting restraints that remove property from beneficial use for an extended period of time. As such, the rule against restraints on alienation, as contrasted with the rule against perpetuities, concerns the duration of a restraint on property, rather than on the time the interest vests.

Test for, and Effect of, Invalid Restraint

The test that determines whether a restraint on alienation is valid or whether or not it is reasonable. The validity or invalidity of a restraint depends on its long-tern effect on the improvement and marketability of the property. Once that effect is determined, common sense should dictate whether it is reasonable or unreasonable. Courts have traditionally measured the validity of restraints in terms of the reasonableness of their duration, type of alienation precluded, or the size of the precluded class.

When a restraint on an estate is found to be invalid, the estate itself does not fail. Rather, the restriction is adjudged void and the estate continues free of the attempted condition. For instance, G devises “to A in fee simple, but A can only convey or devise the property with G’s or G’s heirs’ consent.” If A sues to quiet title, a court is likely to find the restriction unreasonable. This limitation is ineffective and A will take in fee simple.

Traditional Applications of Rule

A clear example of an invalid restraint on alienation is the provision discussed in 2, above, in which the grantee is prohibited from alienating his or her fee without the consent of the grantor.

Application of Rule to Condominiums

The rapid growth of condominium, cooperative and cluster housing generally has resulted in a more favorable attitude towards restraints on alienation.

The exemption of many condominium restrictions from the rule against perpetuities has probably hastened the relaxation of the rule against unreasonable restraints on alienation.

VIII.   Land Trusts.

A. Nature of Land Trusts

Definition

A land trust is a device by which a trustee holds legal and equitable title to real property under a recorded deed of trust, and the beneficiaries hold personal property rights of use and enjoyment in the property under an unrecorded trust agreement.

This arrangement contrasts with traditional inter vivos and testamentary trusts of real property in several ways. First, in traditional real property trusts, the beneficiaries’ interests are recorded real property interests.

Second, in traditional trusts, a trustee must be granted duties and powers with respect to the property or the trust is invalid as a dry or passive trust, and legal and equitable title will vest in the beneficiaries. In contrast, under a land trust, most of the incidents of ownership of the property may be reserved to the beneficiaries under the land trust agreement. Third-party grantees of the trustee take their interests free and clear of any claims of the beneficiaries.

Thus, under a land trust, the trustee may agree to deal with the property only under the written direction of the beneficiaries and have no duties with respect to management or control of the property. Under such an agreement, the trustee executes deeds, mortgages, and other documents pertaining to legal title, and the beneficiaries collect rents, improve and operate the property, and exercise all the rights of ownership except holding or dealing with the legal title.

Under some land trusts, however, the trustee possesses full powers of management and control of the property, and the beneficiaries merely possess rights to share in any profits that arise from the sale or lease thereof.

Any entity that is qualified to act as a beneficiary, including a limited partnership or a limited liability company, may act as trustee.

Governing Law

The land trust, sometimes called an “Illinois land trust,” arose from Illinois common law.

B. Purposes and Advantages of Land Trusts

Confidentiality of Ownership

Title to the property held in a land trust is recorded in the name of the trustee. The beneficiaries are not named in the deed or in any other recorded document. Thus, land trusts are useful if the beneficiaries of the trust desire confidentiality of ownership.

Third parties who deal with the trustee are entitled to assume that the trustee has full power and authority to dispose of the property. Thus, any grantee, mortgagee, lessee, transferee, or assignee of the property is not obligated to ask the trustee to identify any unnamed beneficiaries or agreements existing between the trustee and any beneficiaries.

Flexibility with Multiple Owners

Conveyances of property held in a land trust may be made solely by the trustee.  Thus, a land trust can help prevent many of the delays associated with transfers of land held in traditional trusts or other forms of multiple land ownership. For example, delays created by the death, incapacity, divorce, or nonresidency of one or more beneficiaries may be avoided. In addition, beneficiaries of a land trust need not execute a witnessed deed to assign their personal property interests in the land. Rather, a beneficiary may transfer an interest through any type of assignment that is sufficient to transfer an interest in intangible personal property.

Another potential advantage of a land trust is that a beneficiary of the trust, unlike a joint tenant, may not divide ownership of the real property by bringing a partition action.

Land trusts may be used by real estate syndicates and condominium associations.  However, the use of land trusts for the management of income property may have unfavorable tax consequences if the trust is not properly organized.

C. Operation of Land Trusts

Creation and Duration

A typical land trust is created by two instruments, the deed in trust and the trust agreement. The deed in trust conveys the real property to the trustee. It must grant the trustee broad powers to manage and dispose of the property.The deed usually also designates that the beneficiaries’ interests are personal property. Such an express provision controls on the issue of whether the beneficiaries held a real or personal property interest.

The trust agreement, which is executed contemporaneously with the deed, establishes the terms of the trust and controls its operation. The agreement states the powers and authority of the beneficiaries and imposes limitations on the trustee’s authority that are not reflected in the deed. However, third parties who deal with the trustee are not subject to the agreement’s provisions.

The deed is recorded in the name of the trustee, but the trust agreement usually contains a provision barring its recordation. Thus, the beneficiaries’ names are not on record.

To avoid problems with the rule against perpetuities, land trusts have traditionally been created for a 20-year period and renewed on expiration of the 20 years. However, a land trust created after December 31, 2000, can be created for as long as 360 years unless the terms of the trust require that all beneficial interests in the trust vest or terminate within a lesser period.

Administration and Transactions

Under the typical land trust agreement, the management of the land trust is the beneficiary’s responsibility, and the trustee only executes deeds, mortgages, and other documents that pertain to legal title to the trust property. A trust agreement that gives the trustee management responsibility may result in tax consequences that are undesirable to the beneficiary, especially if business or income property is involved.

Under the terms of most land trust agreements, the beneficiary may direct the trustee to convey title.

A beneficiary may assign his or her personal property interest in a land trust without regard to the formalities necessary for conveying real estate.

Under most land trust agreements, the beneficiary may execute leases, and the trustee may do so on the direction of the beneficiary.

Liabilities

The land trustee’s personal liability to third parties is limited by statute.

 

excerpted by Mark C. Van Eden, Esq., from Florida Real Estate Transactions, Ralph E. Boyer and William H. Ryan.