12.001 Springing Executory Interest

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Requirement 12.001

Springing Executory Interest

 

 Rule Against Perpetuities – Term Mineral Reservation:  By warranty deed dated October 24, 1953, and recorded in Deed Book 275, page 157, Federal Farm Mortgage Corporation conveyed the captioned property to Pedro Zambini. In that deed, Federal Farm Mortgage Corporation reserved to itself one-half of the minerals underlying the property for a term of twenty-five years from October 24, 1953, and so long thereafter as production is obtained from the land or mining or drilling operations are being conducted on it. The grant conveyed to Zambini fee simple absolute interest in an undivided one-half of the mineral estate and a springing executory interest in the other undivided one-half of the mineral estate, which would vest, if ever, at the termination of the interest reserved by Federal Farm Mortgage Corporation.
 Zambini’s springing executory interest is susceptible to the harsh results of the Rule Against Perpetuities, since it is not certain to vest within the period permissible under the Rule. The Alabama Supreme Court has not considered the effect of the Rule Against Perpetuities upon such an interest. There is a substantial risk, however, that the court would hold invalid a springing executory interest such as that involved here. The result of such a holding would be to vest in Federal Farm Mortgage Corporation a fee simple interest in one-half the minerals underlying the Captioned Property.
 The curative materials establish that no oil, gas, or other minerals were produced from the captioned property and that no operations were conducted on that property during the last year of the twenty-five year term of the reserved mineral interest. Therefore, any risk of title failure arising from the reserved interest will involve only the application of the Rule Against Perpetuities.
 Requirement:  Prior to obtaining any interest in the leases set out in this opinion, the oil company must either accept the above described risk of title failure or obtain a conveyance from the United States of America of the interest acquired by Federal Farm Mortgage Corporation under the above described deed.

 

Copyright 2011 by Edward G, Hawkins. All rights reserved.