conditional fee
So seldom does a news item present an opportunity to discuss the concept of a “fee simple defeasible,” that I cannot let the opportunity pass. Marcia Oddi is already on this story at the Indiana Law Blog (on its penultimate day!), and the news story details the struggles of New Albany, Indiana to expand the local hospital. To expand the hospital, they have to take and tear down several low-income level house. The plan was approved, so long as the city found a place to build replacement low-income houses. So they decided to take a local city park and put the houses there.
The trouble is, in giving the land to the city in 1935, the grantor put a condition in the deed that would cause the property to revert to the grantor (or his heirs) if the property was not used as a park. Generally, this type of “condition subsequent” is valid and enforceable, and would give the grantor a right of re-entry (or reverter, depending on how the condition is worded). However, in 1993, Indiana passed a law (now, IC 32-17-10-2) that causes such conditions to expire 30 years after transfer. The statute says that the limitation applies “despite whether the possibility of reverter or right of entry was created before, on, or after July 1, 1993.”
The trouble here is the concept of an ex post facto law, a law that retrospectively changes the legal consequences of a fact or commission of an act, and the Contracts Clause. Article I, Section 10 of the United States constitution forbids the states from enacting ex post facto laws or impairing existing contract rights. Article I, Section 24 of the Indiana Constitution says “No ex post facto law, or law impairing the obligation of contracts, shall ever be passed.” A deed is a subspecies of a contract, so the law passed in 1993, might not pass constitutional muster. However, the prohibition as to impairment of contract obligations does not necessarily extend to state’s power to pass laws in matters affecting the health, safety or general welfare of the public, the basic police powers. Basically, the court will have to balance the state’s interests under the statute against the interests involved in the constitutional provisions.
I see the purpose of the statute. Having valuable tracks of real estate locked in particular uses because 70 year old deed condition, inserted by a long since dead person is inconvenient, to say the least. But I also see some injustice here: The original grantor probably thought he/she was creating a permanent city park, having no idea that the legislature would invalidate the limit on his/her gift some 58 years later. If he/she knew the city could come along and rip up the park, maybe the gift would never had been made.
