Hypo 2

Sarah owns a house on Bays Avenue that she had been renting out to Morehead State students. About the time her last batch of renters moved out, Sarah learned her cousin, Veronica, had fallen on hard times and needed a place to live while her kids were in school. Veronica has three children: a freshman at MSU, a sophomore at Rowan County, and a third-grader at McBrayer Elementary.

Say Sarah puts the house in Veronica's name, " ... for as long as your kids are in school" and when the last of Veronica's kids' graduates, Veronica is to deed the house back to Sarah.

Q3: What kind of estate is this?

1. It's a determinable fee in favor of Veronica with an absolute reversionary interest reserved for Sarah.
2. It's a life estate in favor of Veronica with a contingent remainder interest reserved for Sarah.
3. It's a life estate in Veronica's favor with an absolute remainder interest reserved for Sarah.
4. It's a determinable fee in favor of Veronica with a contingent reversionary interest reserved for Sarah.

Q4: This time, assume Sarah gives her cousin a life estate in the property. Considering Veronica's duty not to commit waste, choose all the correct statements below (there are multiple correct answers on this one).

1. She may sell the house and keep the proceeds.
2. She can abandon the property.
3. She has to pay the mortgage note to prevent the bank from foreclosing on this house.
4. She can completely remodel the home to her taste.
5. She can use the property to open her own business and can keep all the profits for herself.
6. She has to pay real estate taxes on the property to prevent the county from seizing it.