Bar Exam: Real Property Future Interests Remainder vs Executory Interest Vested vs Contingent

Future Interests: Remainder vs Executory Interest, Vested vs Contingent

What Is This?

Future interests in property law refer to the rights or interests that a person has in a piece of property, but have not yet come into possession of. There are two types of future interests: remainder and executory interest. A remainder is a future interest that will become a present interest at some point in the future, while an executory interest is a future interest that can only be enforced if a certain condition is met.

Why It Matters

Understanding future interests is crucial in property law, as it can affect the ownership and use of property. For example, a person may have a vested remainder, which means they have a guaranteed right to possess the property at some point in the future, but an executory interest may be subject to certain conditions that must be met before it can be enforced.

Core Concepts

• Vested Remainder: A vested remainder is a future interest that is guaranteed to become a present interest at some point in the future. It is not subject to any conditions and is considered a present interest for all purposes except the actual possession of the property.
• Contingent Remainder: A contingent remainder is a future interest that will only become a present interest if a certain condition is met. It is not guaranteed to become a present interest and is considered a future interest until the condition is met.
• Executory Interest: An executory interest is a future interest that can only be enforced if a certain condition is met. It is not a present interest and can only be enforced at a future time.

How It Works (or Architecture)

Imagine a scenario where a person, John, leaves his property to his daughter, Jane, with the condition that she must get married before she can take possession of the property. In this case, Jane has a vested remainder, but it is subject to a condition (getting married) before she can take possession of the property. If Jane gets married, she will have a present interest in the property, but if she does not get married, the property will pass to someone else.

Hands‑On / Getting Started

Prerequisites

• Basic understanding of property law
• Familiarity with contract law

Step‑by‑Step Minimal Example

Suppose John leaves his property to Jane with the condition that she must get married before she can take possession of the property. To create a vested remainder with a condition, you would need to:

1. Create a trust or will that leaves the property to Jane with the condition that she must get married.
2. Specify the condition in the trust or will, such as "Jane shall take possession of the property only if she gets married."
3. Identify the person or entity that will take possession of the property if Jane does not get married.

Expected Outcome

The expected outcome is that Jane will take possession of the property if she gets married, but if she does not get married, the property will pass to someone else.

Common Pitfalls & Mistakes

• Failing to specify the condition: Failing to specify the condition that must be met before the vested remainder can become a present interest can lead to confusion and disputes.
• Using the wrong type of interest: Using the wrong type of interest (e.g. using a contingent remainder instead of a vested remainder) can lead to unintended consequences.
• Failing to identify the person or entity that will take possession of the property if the condition is not met: Failing to identify the person or entity that will take possession of the property if the condition is not met can lead to confusion and disputes.

Best Practices

• Clearly specify the condition: Clearly specify the condition that must be met before the vested remainder can become a present interest.
• Use the correct type of interest: Use the correct type of interest (e.g. vested remainder instead of contingent remainder) to avoid unintended consequences.
• Identify the person or entity that will take possession of the property if the condition is not met: Identify the person or entity that will take possession of the property if the condition is not met to avoid confusion and disputes.

Tools & Frameworks

Real‑World Use Cases

• Estate Planning: Estate planning involves creating trusts or wills that specify how property will be distributed after a person's death. Future interests, such as vested remainders and executory interests, are often used in estate planning to ensure that property is distributed according to the person's wishes.
• Contract Law: Contract law involves creating contracts that specify the terms and conditions of a transaction. Future interests, such as vested remainders and executory interests, are often used in contract law to ensure that the terms and conditions of a transaction are met.
• Property Law: Property law involves the creation, transfer, and ownership of property. Future interests, such as vested remainders and executory interests, are often used in property law to ensure that property is transferred and owned according to the law.

Check Your Understanding (MCQs)

Question 1

What is a vested remainder?

A) A future interest that will only become a present interest if a certain condition is met.
B) A future interest that is guaranteed to become a present interest at some point in the future.
C) A present interest that is subject to a condition.
D) A future interest that can only be enforced if a certain condition is met.

Correct Answer

B) A future interest that is guaranteed to become a present interest at some point in the future.

Explanation

A vested remainder is a future interest that is guaranteed to become a present interest at some point in the future. It is not subject to any conditions and is considered a present interest for all purposes except the actual possession of the property.

Why the Distractors Are Tempting

• A is tempting because it describes a contingent remainder, which is a future interest that will only become a present interest if a certain condition is met.
• C is tempting because it describes a present interest that is subject to a condition, which is not a vested remainder.
• D is tempting because it describes an executory interest, which is a future interest that can only be enforced if a certain condition is met.

Question 2

What is an executory interest?

A) A future interest that will only become a present interest if a certain condition is met.
B) A future interest that is guaranteed to become a present interest at some point in the future.
C) A present interest that is subject to a condition.
D) A future interest that can only be enforced if a certain condition is met.

Correct Answer

D) A future interest that can only be enforced if a certain condition is met.

Explanation

An executory interest is a future interest that can only be enforced if a certain condition is met. It is not a present interest and can only be enforced at a future time.

Why the Distractors Are Tempting

• A is tempting because it describes a contingent remainder, which is a future interest that will only become a present interest if a certain condition is met.
• B is tempting because it describes a vested remainder, which is a future interest that is guaranteed to become a present interest at some point in the future.
• C is tempting because it describes a present interest that is subject to a condition, which is not an executory interest.

Question 3

What is the difference between a vested remainder and a contingent remainder?

A) A vested remainder is a future interest that will only become a present interest if a certain condition is met, while a contingent remainder is a future interest that is guaranteed to become a present interest at some point in the future.
B) A vested remainder is a future interest that is guaranteed to become a present interest at some point in the future, while a contingent remainder is a future interest that will only become a present interest if a certain condition is met.
C) A vested remainder is a present interest that is subject to a condition, while a contingent remainder is a future interest that can only be enforced if a certain condition is met.
D) A vested remainder is a future interest that can only be enforced if a certain condition is met, while a contingent remainder is a future interest that is guaranteed to become a present interest at some point in the future.

Correct Answer

B) A vested remainder is a future interest that is guaranteed to become a present interest at some point in the future, while a contingent remainder is a future interest that will only become a present interest if a certain condition is met.

Explanation

A vested remainder is a future interest that is guaranteed to become a present interest at some point in the future, while a contingent remainder is a future interest that will only become a present interest if a certain condition is met.

Why the Distractors Are Tempting

• A is tempting because it describes the opposite of the correct answer.
• C is tempting because it describes a present interest that is subject to a condition and a future interest that can only be enforced if a certain condition is met, which is not the difference between a vested remainder and a contingent remainder.
• D is tempting because it describes a future interest that can only be enforced if a certain condition is met and a future interest that is guaranteed to become a present interest at some point in the future, which is not the difference between a vested remainder and a contingent remainder.

Learning Path

• Basic Understanding: Start by learning the basic concepts of property law, including the different types of interests in property.
• Intermediate Understanding: Once you have a basic understanding of property law, learn about the different types of future interests, including vested remainders and executory interests.
• Advanced Understanding: Once you have an intermediate understanding of future interests, learn about the different types of conditions that can be used to create vested remainders and executory interests.

Further Resources

• Books:
• "Property Law" by James E. Krier
• "Contract Law" by Grant Gilmore
• Courses:
• "Property Law" by Harvard Law School
• "Contract Law" by Stanford Law School
• Official Docs:
• "Uniform Trust Code" by American Bar Association
• "Uniform Commercial Code" by American Bar Association
• Communities:
• Property Law Subreddit
• Contract Law Subreddit
• Open‑Source Projects:
• Property Law Open‑Source Project
• Contract Law Open‑Source Project

30‑Second Cheat Sheet

1. Vested Remainder: A future interest that is guaranteed to become a present interest at some point in the future.
2. Contingent Remainder: A future interest that will only become a present interest if a certain condition is met.
3. Executory Interest: A future interest that can only be enforced if a certain condition is met.
4. Present Interest: A present interest is a right or interest that is currently being exercised.
5. Future Interest: A future interest is a right or interest that will be exercised at a future time.

Related Topics

• Trusts: Trusts are a type of property interest that involves the transfer of property from one person to another for the benefit of a third person.
• Wills: Wills are a type of property interest that involves the transfer of property from one person to another after their death.
• Contracts: Contracts are a type of property interest that involves the transfer of property from one person to another in exchange for something of value.