Bar Exam — MBE (Multistate Bar Exam)Real PropertyHard
A landowner executed a deed conveying Blackacre 'to my son, John, but if John ever sells alcohol on the premises, then to my daughter, Mary.' The deed was properly delivered and recorded. John subsequently opened a small brewery on Blackacre and began selling craft beer. What interest does Mary hold in Blackacre?
- AA shifting executory interest.
- BA right of entry (power of termination).
- CA contingent remainder.
- DA possibility of reverter.
Show answer & explanationAnswer & explanation
Correct answer: A. A shifting executory interest.
John receives a fee simple subject to an executory limitation. Mary's interest is a shifting executory interest because it will divest John's fee simple automatically upon the condition (selling alcohol) occurring, and it is in a third party (Mary), not the grantor. If the interest were to revert to the grantor, it would be a possibility of reverter, but here it goes to a third party.
Why the other options are wrong
- B. A right of entry is retained by the grantor after conveying a fee simple subject to condition subsequent; here, the interest is conveyed to a third party.
- C. A contingent remainder follows a life estate or term of years and is contingent on an event or an unascertained person.
- D. A possibility of reverter is an interest retained by the grantor after conveying a fee simple determinable; here, the interest is conveyed to a third party.
Shifting Executory Interest
An executory interest that divests a prior estate in a transferee (someone other than the grantor).
- Divests an interest in another grantee, not the grantor.
- Takes effect upon the happening of a condition subsequent.
- Can follow a defeasible fee or a remainder.
Memory trick: If condition, then to ANOTHER = Shifting Executory