united-states california property
Power of termination: how is it different from executory interest?
<p>In CA, all defeasible fees are known as fees simple subject to a condition subsequent, and all executory interests reserved by the grantor after granting such fees are known as powers of termination. </p>

<p>Under common law, it is not permitted to create a defeasible estate (akin to the FSSCS) where the elective right of entry or power of termination was held from its inception by a third party (CA is the exception)</p>

<p>How is this possible? Isn't power of termination the same as executory interest? A third party is allowed to have an executory interest from the inception of the estate. So what gives? What is so special about power of termination? And isn't power of termination unique to CA? Why would other states not permit it if it has nothing to do with them?</p>

<p>Not sure about CA law, but, generally speaking an executory interest is any legal interest that can be exercised in the future, such as the right to buy something in accordance with a contract.  So, while the category of executory interests may include powers of termination, an executory interest does not necessarily imply a power of termination.</p>

<blockquote>
  <p>In CA, all defeasible fees are known as fees simple subject to a
  condition subsequent, and all executory interests reserved by the
  grantor after granting such fees are known as powers of termination.</p>
  
  <p>Under common law, it is not permitted to create a defeasible estate
  (akin to the FSSCS) where the elective right of entry or power of
  termination was held from its inception by a third party (CA is the
  exception)</p>
  
  <p>How is this possible? Isn't power of termination the same as executory
  interest? A third party is allowed to have an executory interest from
  the inception of the estate. So what gives? What is so special about
  power of termination? And isn't power of termination unique to CA? Why
  would other states not permit it if it has nothing to do with them?</p>
</blockquote>

<p>This is quite confusing because CA is using non-standard terminology. (This is in part because CA has a mixed civil law and common law legal heritage because most of CA used to be part of Mexico which was a civil law jurisdiction. It continues to have a civil code, but has been heavily influenced since it became a U.S. state in both substance and procedurally and jurisprudential respects by the common law of the U.S. states that were never part of Mexico or France.)</p>

<p>What CA calls a "power of termination" is what most jurisdictions call a "fee simple subject to condition subsequent". Other jurisdictions have them, but call them something different. In contrast, a defeasible fee estate that reverts to the grantor upon a condition that takes effect by operation of law rather than at the option of the grantor or someone else, is called a fee simple determinable.</p>

<p>Normally, a fee simple subject to an executory limitation includes all defeasible fee estates that upon triggering (either at someone's option, or automatically by operation of law) vest not in the grantor but in a third party. </p>

<p>I would also disagree that a fee simple subject to executory limitation (using the standard terminology, rather than CA's oddball terminology - it also has oddball terms like an estate in severalty which means fee simple ownership without co-owners - that are no longer commonly used anywhere else) was not possible to create at common law.</p>

<p>The situation is further complicated by the fact that legal defeasible estates in real estate have been abolished by statute in many states, and where they still exist, are so rarely used that the legalities of them have become moribund and are often confused because not enough people are familiar with how they are supposed to work and the proper terminology.</p>

<p>Typically, these statutes provide that any deed purporting to create a defeasible estate after the effective date of the statute, will, in fact, create a fee simple estate and the conditions will be null and void. The rule against perpetuities destroys other defeasible estates in those jurisdictions, and eventually, all grandfathered defeasible estates subject to the rule against perpetuities are spent.</p>
