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The Law of Land Conveyances, Possibility of Reverter, and Virginia’s Common Law Heritage

On June 23, 2016, the Virginia Supreme Court unanimously reversed the Fairfax County Circuit Court (“trial court”) in the case styled, Hamm v. Hazelwood, No. 151158, 2016 Va. LEXIS 96 (June 23, 2016). The Court’s opinion, penned by Justice D. Arthur Kelsey, held valid a deed of gift’s “contingent reversionary interest” in the grantor and her heirs. That category of real property interest, known at common law as “a possibility of reverter,” remains alive and well in Virginia.

Even more, the Court’s opinion provided excellent 21st century insight into Virginia’s common law heritage respecting land conveyances. The Court strongly reaffirmed the notion that subject to certain time-honored prohibitions against “unreasonable restraints on alienation,” a land owner “has the power to convey his real property to whomever he wishes under whatever conditions they agree to.”

In Hamm, the grantors, i.e., “parties of the first part,” Dorothy Bigelow Hamm (“Mrs. Hamm”) and her husband, “[i]n 1989…executed and recorded a deed of gift transferring her one-half interest in a parcel of property to her sister, Melba Bigelow Clarke”. The deed reserved a life estate in the realty to Mrs. Hamm, and contained a very strictly-worded proviso regarding the conveyance to Melba, as the “party of the second part.”

The PROPERTY hereby conveyed shall AUTOMATICALLY REVERT to Dorothy Bigelow Hamm, one of the parties of the first part, in the event Reginald Wayne Clarke, son of the party of the second part, ever acquires any interest therein by grant, inheritance or is otherwise permitted to occupy, even temporarily, any portion of said property.

Obviously, Reginald did not enjoy Mrs. Hamm’s favor. Mrs. Hamm died in 2004, extinguishing her life estate. In her will, she left “any interest she had in the property to her son, Edward.” In 2012, Melba died intestate, survived by “six children, including Reginald, and three grandchildren.” Thus, Melba’s intestacy effectively set the stage. What was the legal effect of Mrs. Hamm’s proviso in the deed of gift, now that Reginald stood poised to succeed to an ownership interest in the realty?

Melba’s administrator, Hazelwood, “filed a petition for aid and direction seeking a judicial order declaring that the possibility-of-reverter provision in the deed was void as an impermissible restraint on alienation.” Edward Hamm, to who the property’s fee simple title potentially would revert, argued for the provision’s legality, contending that it “was a lawful possibility of reverter limited in scope and in time to the life of a single person, Reginald.” The trial court ruled for Hazelwood, and Edward appealed.

In reversing the trial court, the Supreme Court recognized the traditional freedom enjoyed “by a lawful owner” in conveying real property. Normally, absent words of limitation, “Virginia law treats it as a transfer of a fee simple ‘unless a contrary intention shall appear,’” quoting in part Va. Code §55-11. And a grantor may signify a contrary intention by including “an express reservation of a contingent interest.”

Yet, the Court noted the freedom of alienation “is not absolute…[p]erhaps the best-known boundary is the historic maxim against unreasonable restraints on alienation.” So, did Mrs. Hamm’s proviso constitute such an unreasonable restraint? No, concluded the Court. The prohibition does “not apply to a condition against alienating to a particular person….or to any of his heirs, or of the issues” of that person. A restraint on alienation typically becomes unreasonable, and thus void, only when it is “general as to time and person,” effectively limiting all of the grantee’s power of alienation. Indeed, the Court stated, “[w]e are unaware of precedent, however, holding that all lesser forms of restraint – no matter their scope or duration – are per se repugnant. To the contrary, courts generally uphold conditions that affect later alienation of rights if, ‘under all the circumstances of the case, the restraint is found to be reasonable.’” Here, the Court quoted the Restatement (Second) of Property: Donative Transfers §4.2, and also cited other authorities.

In analyzing Mrs. Hamm’s language, the Court made three key findings. First, in the deed of gift, Mrs. Hamm did not convey an “absolute fee simple” to Melba. Instead, read in context, her language did “not purport to make the conveyance wholly unconditional,” and nowhere contradicted the possibility-of-reverter provision. In the Court’s words, “She intended to convey a fee simple defeasible upon a condition subsequent not a fee simple absolute.”

Second, Mrs. Hamm’s proviso did not “impose a restriction on alienability with an unlimited scope and duration.” Quite the contrary, Mrs. Hamm directed it “at a single individual, Reginald, for the limited period of his life.” Therefore, it represented a restriction “reasonably limited in time and scope.”

Finally, the proviso fell squarely within the classification of a common law possibility of reverter. Here, the Court distinguished between a “reversion,” i.e., a “vested interest in praesenti, with enjoyment in futuro,” and a “possibility of reverter.” The latter, at common law, did not constitute a present or future estate, but instead, “a possibility of having an estate.” A possibility of reverter does not constitute a vested interest in real property, however, “it is a property interest…inheritable at common law.” Pursuant to Va. Code §55-6, such a property interest “may be transmitted also by deed or will.”

In sustaining the proviso’s enforceability, the Court noted that it “had the practical effect of precluding Melba or her successors in interest from ever selling or devising the property to Reginald, for the very act of doing so would trigger the reversionary condition.” Nevertheless, in this instance, a long-established rule of real property law controlled: “If it is the clearly expressed intention of the parties to create an estate upon a condition subsequent, the courts must give effect to such intention.”

In concluding, the Court directed very specific relief: “We reverse the circuit court’s holding that the possibility-of-reverter provision in the 1989 deed of gift was void. The case is remanded for entry of a final order consistent with this opinion. The final order shall be filed in the land records and may include, in the court’s discretion, an additional award of fiduciary compensation.” The Court thus ensured that Mrs. Hamm’s intentions, and the Court’s decision, would receive full effect.

Based on my thirty-five years of experience at the Virginia bar, I believe that lawyers may be divided generally into two great camps. On the one hand are those that relish the complexity, (and sometimes, the obscurity) of the historic rules of land conveyancing. On the other hand, perhaps the majority, are those that upon passing the Bar examination, “wash their hands” of real property law.

No matter your camp, I encourage you to read Hamm. In straightforward language, it reacquaints us with several foundational common law principles. Likewise, it reaffirms those principles’ modern vitality in Virginia. So, whether you regularly practice real property law, or, simply intend to keep abreast of the Court’s recent decisions, this opinion represents a “must read” for Virginia lawyers. (Its facts would make for a classic Bar exam question, too.) Oh, and by the way, don’t forget to read Justice Kelsey’s “pithy” and informative footnotes!

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Mr. Thomas serves appellate clients from throughout the Commonwealth of Virginia in Virginia's appellate tribunals, the State Corporation Commission, and the U.S. Court of Appeals for the Fourth Circuit. 

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