Real estate workshop Flashcards
An elderly grandfather who wanted to ensure
that his property would remain in the family
after his death included the following clause in
his will: “I give my house in the city to my son,
but if he ever tries to sell it while he is alive, I
want it taken away from him and given to my
grandson.” The grandfather’s will was properly
executed.
When the grandfather later died, what
interests did the son and grandson take in the
property?
(A) The son took a fee simple.
(B) The grandson took a fee simple.
(C) The son took a fee simple subject to an
executory interest, and the grandson took
an executory interest.
(D) The son took a fee simple determinable, and the grandson took a contingent
remainder.
Restraint on alienation thing.
The son received a fee simple in the property. The grandfather attempted to give his son a fee
simple, but placed a restraint on alienation. Direct restraints on alienation of a fee simple are void.
The grant is simply read as if it had been “O to A in fee simple.” The grandson gets nothing.
Thus, (A) is correct
(C) is incorrect because of the
rule prohibiting restraints on alienation of a fee simple. Absent the rule on restraints, these would
be the interests taken by the son and grandson.
A woman owned 400 acres of land, half of
which was densely wooded and the other half of
which was almost entirely occupied by a large
gravel pit which supplied gravel for her small
landscaping business. A small house located on
the edge of the pit was in very poor condition
and had been vacant for many years. The woman
transferred the 400 acres to her son for life,
with the remainder going to a local charity on
the son’s death. Now the son wants to increase
gravel production and expand the pit by tearing
down the house. He also wants to cut the trees
on the wooded half and sell them for profit. The
local charity, holder of the remainder, sues to
enjoin the son from doing any of these things.
How will the court likely rule?
(A) The charity can stop both the gravel mining and the tree cutting and can block the
destruction of the house.
(B) The charity can stop neither the gravel
mining nor the tree cutting but can block
the destruction of the house.
(C) The charity can stop the tree cutting but not
the gravel mining or the destruction of the
house.
(D) The charity can stop the gravel mining and
the tree cutting but not the destruction of
the house because it is dangerous and unfit
for use.
The charity can stop only the tree cutting. The charity would be suing the life tenant on a theory
of waste. Both the gravel mining and the tree cutting could be voluntary waste. Generally, a
life tenant can only maintain the property and not sell off any of the natural resources, such as
trees and gravel. But there is an exception for existing exploitation of these resources. Because
the gravel mine was operating prior to the son’s taking of the life estate, that preexisting use is
protected and the son is not liable for continuing the mining of gravel.
But the trees do not fall under this exception. Because the property had not been in use as a tree farm, the general rule applies and the cutting of the trees would be waste. The destruction of the house might be considered ameliorative waste—the destruction of improvements on the life estate that increase the value of the property (i.e., they make the gravel mining more profitable). Generally, a life tenant cannot tear down improvements simply because the life tenant wants to make a more profitable use of the land.
But an exception exists when changed conditions have made the destruction of the improvement reasonably necessary. Here, the house was on the edge of the pit, vacant because of its very poor condition. Changed conditions (the encroachment of the pit) have made
the house reasonably unsuitable, so the life tenant can tear it down.
An uncle who owned a large tract of wooded
land in fee simple had always opened his land
to hunters from the local hunting club, and had
often expressed the wish that they be permitted
to continue to use it after he died. On his 75th
birthday, he conveyed the land to his niece and
nephew, who were members of the hunting
club. The deed was a general warranty deed
conveying the property in fee simple absolute.
A few days later, the niece had a serious dispute
with the nephew and the other members of the
hunting club, and she quit the club. The uncle
then executed a written agreement with the
nephew stating that the conveyance of the land
to the niece and nephew was in trust for the
benefit of the local hunting club for a period of
10 years, with the niece and nephew as trustees,
and then to the niece and nephew in fee simple.
Several months later, the uncle died. When the
next hunting season drew near, the nephew told
the niece that members of the hunting club were
once again planning to hunt on the property.
The niece threatened to have anyone hunting on
the property other than the nephew arrested for
trespassing. The nephew brought an action for
appropriate legal or equitable relief to establish
his rights and the rights of the hunting club.
What, if any, relief should the court provide?
(A) Deny the nephew any relief, because the
niece has done nothing that would constitute an ouster of the nephew.
(B) Partition the land into two separate tracts
so that the nephew may permit the hunting
club to use his half.
(C) Order the niece to permit the hunting club to
hunt on the land, because the uncle created
an inter vivos trust with the requisite formalities for the benefit of the hunting club.
(D) Order the niece to permit the hunting club
to hunt on the land, because the nephew is
equally entitled to possession of all of it and
can allow members of the hunting club to
hunt on the property as his guests.
B The court should partition the land into two separate tracts. A court will presume that the devise
to the niece and nephew gave them a tenancy in common. Hence, each of them has the right to
possess all portions of the property; neither of them has the right to exclusive possession of any
part. However, any tenant in common has a right to judicial partition of the property, either in
kind or by sale and division of the proceeds. When co-tenants are squabbling and cannot come
to any agreement, the remedy of partition terminates the co-tenancy and divides the common
property. Since the niece and nephew cannot agree on the use of the land by members of the
hunting club, the court will probably partition the property
D) is wrong despite the fact that the nephew is entitled to possession and use of
all of the land to the same extent as the niece. Since the co-tenants cannot agree on this particular
use of the land by members of the hunting club, a court will grant whichever tenant is before it the
remedy of partition.
The owner of a house purchased a new home
but decided to keep his old residence for a few
months until the real estate market improved.
He rented it to a tenant with the understanding
that the tenant might have to move out in a few
months if the house was sold. The tenant paid
the owner the agreed rent of $100 per week
every Friday.
During the next few months, the owner’s
business suffered serious setbacks so he decided
to sell his new home and move back into his old
one. He informed the tenant that he would have
to vacate the old home, but the tenant refused
to vacate and tendered the $100 rental payment
the following Friday, which the owner refused to
accept.
The owner immediately filed suit to eject the
tenant. The jurisdiction requires that a statutory written notice be served on any tenant
whose term is for less than month-to-month or
is not for a fixed term at least three days prior
to commencement of eviction proceedings.
No written notice of any kind was given to the
tenant.
How should the owner characterize the tenant
to gain immediate possession of his home?
(A) As a tenant from month to month.
(B) As a tenant from week to week.
(C) As a licensee.
(D) As a trespasser ab initio.
(C) The owner’s best argument is that the tenant is a licensee. A license is a privilege to enter onto
another’s property. It may be revoked at any time merely by a manifestation of the licensor’s intent
to end it. (A) is wrong because a month-to-month tenant would benefit from the common law right
to a period of notice equal to the tenancy, i.e., one month. (B) is wrong for a similar reason. The
tenant would be entitled to one week’s notice of termination. (D) is wrong because the tenant is
clearly not a trespasser ab initio since he entered onto the premises with permission.
A woman owned two adjacent parcels. The
east parcel fronts on a poor unpaved public road,
while the west parcel fronts on a major highway.
Fifteen years ago, the woman conveyed the east
parcel to her son “together with a right-of-way
25 feet wide over the north side of the west
parcel to the highway.” At that time, the east
parcel was improved with a 10-unit motel.
Ten years ago, the woman died. Her will
devised the west parcel “to my son for life,
remainder to my daughter.”
Five years ago, the son executed a deed
purporting to convey the east and west parcels to
his friend in fee simple. The friend then enlarged
the motel to 12 units.
Six months ago, the son died and the daughter
took possession of the west parcel. She brought
an appropriate action to enjoin the friend from
using the right-of-way.
Who should prevail?
(A) The daughter, because merger extinguished
the easement.
(B) The daughter, because the friend has
overburdened the easement.
(C) The friend, because he has an easement by
necessity.
(D) The friend, because he has the easement
granted by the woman to her son.
(D) The friend should prevail. The deed from the woman to her son granted the son an express
easement. That easement was never terminated by merger and the friend, the owner of the motel
property on the east parcel, still has a valid easement over the daughter’s property, the west parcel.
(A) is incorrect because, for there to be a merger which will extinguish an easement, the duration
of the servient estate must be equal to or longer than the duration of the dominant estate (and
therefore the easement). In this case, the son owned the east parcel in fee simple but owned only
a life estate in the servient estate, the west parcel. Therefore, because the duration of the servient
estate was shorter, there was no merger of the two estates and the easement was not extinguished
by the son’s partial ownership of the servient estate. The friend likewise never owned the west
parcel in fee simple because all that was owned by the son, his grantor, was a life estate in the
west parcel.
A man and a woman who owned two adjacent
properties executed and recorded reciprocal
easements to five-foot strips of land on the
border of their properties for the purpose of
constructing a 10-foot-wide common driveway
to their street, on which each of them had only
five feet of frontage. After the driveway had
been constructed, the town constructed a new
road abutting the woman’s property in the rear.
The woman constructed a new driveway to that
new street, and soon thereafter ceased using the
common driveway. One year later, the woman
sold the property to a buyer, who used the new
driveway for four years and did not use the old
one. The man then commenced using the entire
10 feet of the old driveway by parking his cars
on both sides, and the buyer commenced an
action to prevent the man’s use of the five feet
of the driveway on the buyer’s land. The period
for acquiring title by adverse possession in the
jurisdiction is five years.
What is the likely outcome of the action?
(A) The buyer will prevail because nonuse is
insufficient to cause abandonment of the
easement.
(B) The buyer will prevail because he is a bona
fide purchaser.
(C) The man will prevail because the easement
was abandoned by the woman and the
buyer through their use of only the new
driveway.
(D) The man will prevail because the period
required for adverse possession is five
years.
(A) The buyer will prevail. The easement in this case is an easement by grant. That easement was
not used for five years, but there were neither acts which would have terminated that easement
by adverse possession, nor was there a manifested intent to abandon. Exam Tip: Don’t be fooled
by very long periods of nonuse in the facts—make sure there is an act showing intent to
permanently abandon the easement; otherwise, there can be no termination. That the woman
constructed a new driveway and she and the buyer ceased using the common driveway does
not manifest an intent to permanently abandon the easement. Neither the woman nor the buyer
blocked their access to the common driveway or stated an intention to never use it again. They
could have started using the common driveway again at any time. Therefore, the easement was not
terminated by mere nonuse, and the buyer will prevail as the successor to the easement granted to
the woman.
(B) is incorrect. While it correctly states that the buyer will prevail, his success does
not depend on his status as a bona fide purchaser. The buyer holds the easement solely because it
is appurtenant to the land which he purchased. His good faith in purchasing the land and paying
value for it did not enlarge his rights.
An owner of two abutting lots on a street
deeded the north parcel to a buyer and inserted
in the deed the following language: “Grantee,
his heirs and assigns shall not plant any shrubbery within 10 feet of the boundary line.” The
buyer recorded. The buyer later deeded the
north parcel to a friend and did not include the
language about the shrubbery in the deed. The
friend planted a row of shrubbery within five
feet of the common boundary.
If the owner sues the buyer’s friend to require
him to remove the shrubbery, what is the likely
result?
(A) The owner will prevail because there is a
covenant running with the land.
(B) The owner will prevail because the deed
from the buyer to the friend carried with it
an implied promise not to plant shrubbery
within 10 feet of the common boundary of
the two parcels.
(C) The friend will prevail because the deed
from the buyer to the friend created only a
personal contract between them.
(D) The friend will prevail because there was
no writing signed by the buyer, the friend’s
predecessor in title.
(A) The owner will prevail because the covenant runs with the land. The covenant in the original deed
from the owner to the buyer will be enforceable against the buyer’s successor, the friend, only if
the covenant runs with the land, either at law or as an equitable servitude. With the facts presented,
the owner would prevail under either theory. This covenant was created by a signed writing. The
buyer’s acceptance and recording of the deed containing the covenant is the legal equivalent of
his signature. Therefore, the covenant is enforceable between the original parties. Moreover, the
covenant was intended to run with the land and bind the grantee’s successors. The provision states
that it binds the “grantee, his heirs and assigns.” The covenant also clearly touches and concerns
the land, because it controls the grantee’s land use (for the benefit of the grantor’s adjoining land).
There is horizontal privity because the covenant was created in the deed from the owner to the
buyer, which also created the buyer’s estate. Also, the friend is in vertical privity with the buyer,
because the friend purchased from the buyer. Therefore, the covenant runs at law to the buyer’s
successor, the friend. The fact that the covenant was recorded in the friend’s chain of title would
also give him constructive notice of the covenant such that it could be enforced against him as an
equitable servitude. Under either theory, the owner will prevail. (B) is incorrect because reliance on
an “implied promise,” which does not accurately reflect any recognized rule of law, is misplaced.
This obligation is enforceable as a covenant running with the land. A successor to land subject
to a covenant which runs with it would be bound by the covenant even if the original contracting
party and the successor specifically disavowed the contractual obligation.
(C) is incorrect. The covenant in the deed from the owner to the buyer did create an enforceable contract between the two. However, that mere contract became a covenant running with the land enforceable at law or as
an equitable servitude against the buyer’s successors in title, so the owner will prevail.
(D) is incorrect because the covenant was created by a signed writing. While the Statute of Frauds normally
requires a writing signed by the party to be charged for a contract relating to land to be enforceable, the buyer’s acceptance and recording of the deed containing the covenant is the legal equivalent of
his signature. Therefore, the covenant is clearly enforceable between the original parties, and as a
covenant running with the land is also binding on their successors, including the friend.
A landowner contracted in writing to sell
a lot to a brother and a sister, as joint tenants,
for $60,000. The brother and the sister put up
$6,000 as earnest money. Before the closing
date, the landowner died. Shortly thereafter,
and also before the closing date, a garage on
the lot burned down. The garage had a fair
market value of $6,500 and was a complete
loss. After the fire, the brother demanded that
the executor of the landowner’s estate return the
$6,000, because the brother and sister were no
longer interested in the property. The executor
refused and told the brother that he expected
the brother and sister to tender the $54,000 due
on the property when the closing date arrived.
The brother and sister did not do so. The brother
filed suit demanding a refund of the $6,000.
The executor countersued, demanding specific
performance by the brother and sister or, in the
alternative, monetary damages.
Absent any applicable statutes, how should the
court rule?
(A) In favor of the executor, by requiring specific performance of the brother and sister.
(B) In favor of the executor, by assessing
damages against the brother and sister.
(C) In favor of the brother, by ordering the
executor to refund the earnest money.
(D) The court should rule that the executor is
not entitled to either damages or specific
performance and that the brother is not
entitled to a refund of the earnest money
(A) The court should require specific performance of the brother and sister. When a transfer of
land is preceded by a contract for sale, the risk of loss to the property during that time interval
is imposed on the buyer in most jurisdictions. Thus, despite a loss due to fire or other casualty
(assuming it was not due to the fault of either party), the buyer must still pay the contract price at
the closing date unless the contract provides otherwise. Consequently, the brother and sister were
still under a duty to tender the amount due on the property. Their failure to do so puts them in
breach of contract, allowing the executor to obtain specific performance (payment of the balance
due on the contract). (B) is incorrect because the preferred remedy for the executor is specific
performance. While the executor could obtain a damage remedy based on the difference between
the contract price and the market value of the land on the date of the breach, that would leave
him with the task as executor of trying to resell the property. Because land is considered unique,
a buyer is entitled to specific performance of the contract. The seller (the executor) can also get
specific performance if the buyer is in breach.
(C) is incorrect because, as discussed above, the
destruction of the garage does not allow the brother and sister to avoid performing the contract.
They bore the risk of loss and could not obtain a refund of the earnest money even if the executor
had not sought to enforce the contract. (D) is incorrect because the contract can be specifically
enforced. The reason that the buyer bears the risk of loss is that the doctrine of equitable conversion treats the buyer as the equitable owner of the land once the contract is signed. Hence, the
landowner’s death would not prevent the brother and sister from specifically enforcing the contract
by requiring the executor to transfer legal title. This same remedy (specific performance) is available to the landowner’s executor, who is regarded as being owed a debt of the balance due on the
contract. The executor can therefore require payment of the balance as specific performance of
the contract.
An owner conveyed her property to a buyer,
who put the deed in his suitcase and took off
for a five-month tour of the world. The owner,
knowing that the buyer had left the country, sold
the property to an investor who was not aware
of the previous transaction. The investor did not
record her deed. When the buyer returned from
his trip, he recorded his deed. A month later,
the investor conveyed the property to a developer. The developer knew that the buyer held a
deed to the property but completed the transaction anyway. Instead of recording, however,
the developer immediately filed an appropriate
action against the buyer and against the investor
to determine ownership of the property.
The property is situated in a jurisdiction
containing the following statute: “Any conveyance of an interest in land, other than a lease for
less than one year, shall not be valid against any
subsequent purchaser for value, without notice,
unless the conveyance is recorded.”
How should the court rule?
(A) The buyer has rights superior to those of
both the investor and the developer.
(B) The investor has rights superior to those of
both the buyer and the developer.
(C) The developer has rights superior to those
of both the buyer and the investor.
(D) The developer has rights superior to those
of the investor, but the buyer has rights
superior to those of the developer.
(C) The court will rule that the developer has rights superior to those of the other parties. Under
a notice statute, which is the statute applicable here, the general rule is that a subsequent bona
fide purchaser (“BFP”) will prevail over a prior grantee who failed to record before the BFP’s
purchase; if the prior grantee has previously recorded, the subsequent purchaser ordinarily will
be deemed to have record notice of the prior conveyance and will not be a BFP. Here, the owner
resold the property to the investor before the buyer recorded his deed to the property; thus, the
investor had no record notice of the transfer. Because the investor also had no actual knowledge or
inquiry notice (the buyer was out of the country), she qualifies as a BFP. Finally, under the shelter
rule, a person who takes from a BFP will prevail against any interest that the transferor-BFP
would have prevailed against. Thus, even though the developer knew that the buyer held a deed to
the property, the developer prevails against the buyer because the investor would have prevailed
against the buyer. (A) is incorrect because, as discussed above, the buyer’s recording came too
late under the notice statute. If this jurisdiction instead had a race-notice statute, the buyer would
prevail because he recorded before another BFP recorded. (B) is incorrect because, while the
investor would have superior rights to the buyer, the investor does not have superior rights to the
developer because the investor conveyed the property to the developer. (D) is incorrect because, as
discussed above, the developer can rely on the shelter rule to prevail against the buyer even though
the developer was aware of the buyer’s interest in the property
Exam Tip: On complex recording questions, the order of transfers and recordings is critical,
so make a quick marginal chart of transactions:
1. Owner to buyer, no recording
2. Owner to investor (BFP), no recording
3. Buyer records
4. Investor to developer, no recording & developer knows of buyer’s deed
A first-time home buyer financed the purchase
of a house with a $100,000 mortgage she took
out with a bank. The mortgage was recorded.
A few years later she borrowed $5,000 from a
finance company to pay for a foreign trip, using
her house as security. The finance company
promptly and properly recorded its mortgage on
the property. One year after that, she borrowed
$40,000 from an equity company to pay for
an addition on the house. The equity company
promptly and properly recorded the mortgage
it took on the property. Shortly thereafter, she
lost her job and was unable to make payments
on either the finance company’s or the equity
company’s mortgages, but she was able to make
payments on the bank’s mortgage. The finance
company filed foreclosure of its mortgage and
included the equity company in the action, and a
purchaser bought the property at the foreclosure
sale.
What is the purchaser’s obligation regarding
the bank’s mortgage and the equity company’s
mortgage?
(A) The purchaser takes the property subject to
both mortgages.
(B) The purchaser takes the property subject to
neither mortgage.
(C) The purchaser takes the property subject
to the equity company’s mortgage, but not
subject to the bank’s mortgage.
(D) The purchaser takes the property subject to
the bank’s mortgage, but not subject to the
equity company’s mortgage.
(D) The purchaser takes the property subject only to the bank’s mortgage. A foreclosure sale wipes
out all junior mortgages (those that came later in time than the mortgage that was foreclosed)
but does not wipe out senior mortgages (those that came earlier). Because the bank’s mortgage
preceded the finance company’s, it is senior and is not wiped out. The purchaser takes subject to
this mortgage. Thus, (B) is wrong. Although the purchaser is not personally liable on this debt (he
did not sign the note, only the original buyer did), he must pay the mortgage or face foreclosure
by the bank. Because the equity company’s mortgage came later than the finance company’s, it
is a junior interest that is wiped out as long as the holder of the junior interest is included in the
foreclosure action (which occurred here). Thus, (A) and (C) are wrong. If, after paying the cost of
the foreclosure and paying off the finance company’s mortgage, there is money left over from the
sale, it will first go to paying off the equity company’s mortgage. But regardless of whether the
equity company’s mortgage is paid off, the purchaser takes completely free of this obligation
