LL & T / Land Sale Ks / Conveyances / Deeds & Recording Flashcards

Question

Is a LL required to give a tenant at sufferance notice to vacate the premises before taking steps to recover possession of the property?

Answer 1

Absent an applicable statute, the **landlord is not required to give** the tenant at sufferance **notice to vacate the premises** before taking steps to recover possession of the property. A tenancy at sufferance (i.e., holdover tenancy) continues until the tenant vacates the premises, is evicted, or is bound to a new tenancy.

Answer 2

Mnemonic: **ECHO** * **E**xclusive – physical presence on land not shared with owner * **C**ontinuous – presence is continuous & uninterrupted for statutory period * **H**ostile – possession is without owner's consent * **O**pen, notorious & actual – possession is apparent or visible to reasonable owner

Answer 3

Under the Shelter Rule, a person who receives a property interest from a BFP is entitled to the same protection under the recording act as the BFP. This is true even if that person would not otherwise be protected by the recording act because the person acquired title to the property by gift, intestate succession, or devise. In a race-notice jurisdiction, a purchaser who lacks notice of an earlier property interest (BFP) and records first will prevail. And under the Shelter Rule, a person who receives a property interest from a BFP is entitled to the same protection under the recording act as the BFP.

Answer 4

Under the "estoppel by deed" doctrine, a grantor who conveys an interest in land by warranty deed before actually owning it is estopped from later denying the effectiveness of that deed. When the grantor acquires ownership of the land, the after-acquired title is transferred automatically to the prior grantee.

Answer 5

An equitable servitude is a promise to do or not do something on land that is enforceable at equity by injunction. An **express equitable servitude** is enforceable if it meets the following requirements: 1) *Writing* – servitude is in a writing that satisfies the statute of frauds (here, the deed from the man to the developer) 2) *Intent to run* – promising parties intended for the servitude to bind their successors in interest (here, the deed says "heirs and assigns") 3) *Touch and concern* – servitude relates to the use, enjoyment, or occupation of the dominant and servient estates (here, the servitude restricts land use to single-family residences) 4) *Notice* – person to be bound had actual, record, or inquiry notice of the servitude (here, the woman and subsequent purchasers have notice from the developer's properly-recorded deed).

Answer 6

Unless otherwise stated, an implied covenant of marketable title is part of a land-sale contract, regardless of the type of deed created. Under this covenant, the seller promises to deliver title that is reasonably free from doubt and under no threat of litigation, such that a reasonable person would accept and pay for it. However, under the merger doctrine, any obligations contained in the land-sale contract merge into the deed and are extinguished at closing.\* As a result, these obligations are enforceable only if they are contained in the deed. \*As a result, a violation of a land-sale contract must be raised before or upon closing.

Answer 7

Under the doctrine of merger, the seller's duties in a contract for the sale of real property—including the duty to deliver marketable title—merge into the deed at closing. As a result, these duties are enforceable thereafter only if they are contained in the deed. *\*However, obligations that are collateral to and independent of the conveyance (e.g., the seller's obligation to remove his/her personal property prior to closing) are usually not subject to the doctrine of merger.*

Answer 8

Unless the land-sale contract states otherwise, the doctrine of equitable conversion places the risk of loss on the buyer once the contract is formed and can be specifically enforced. A majority of jurisdictions apply the doctrine of equitable conversion when a land-sale contract is silent regarding the risk of loss (as seen here). * Under this doctrine, the risk of loss is placed on the party with equitable title at the time the property was destroyed unless the other party is at fault for the loss. * The seller retains legal title to real property during the pendency of the sales contract (i.e., during the executory period), but the buyer receives equitable title once the contract is formed and can be specifically enforced.\* \*Under the Uniform Vendor and Purchaser Risk Act (adopted by a minority of jurisdictions), the seller retains the risk of loss unless and until the buyer takes possession or title is transferred.

Answer 9

A tenant's duty to pay rent is excused when the government condemns (ie, takes ownership through eminent domain) the e**ntire leased property for the remainder of the lease term.** But when the government condemns only a portion of the property (or all the property for less than the remainder of the lease), the landlord–tenant relationship is unaffected and the tenant remains liable for rent. However, the tenant is entitled to compensation from the government for the condemned portion of the property (or the time he/she was not in possession).

Answer 10

1) Death of one co-tenant 2) Mutual agreement of the parties in writing 3) Issuance of a divorce decree 4) Execution by a joint creditor (e.g., foreclosure)

Answer 11

**_Recording act_** 1) ***Race*** * Interest holder who records first will prevail 2) ***Notice*** * Subsequent bona fide purchaser (BFP) without notice of earlier interest will prevail 3) ***Race-notice*** * Subsequent BFP who lacks notice of earlier interest & records first will prevail **_Common law_** 1) ***First in time*** * Earlier interest holder will prevail over subsequent interest holders

Answer 12

A grantee's status as a donee is relevant in a suit between an earlier interest and the donee... It is of no consequence in a suit between the donee and a subsequent purchaser for value. The manner in which the earlier interest was acquired is irrelevant.

Answer 13

If tenant breaches his leasehold duties, landlord’s options depend on whether tenant retains possession (i.e., remains on premises) **_Tenant retains possession — landlord may:_** 1) File for notice of eviction, or 2) Continue the lease and sue for rent due **_Tenant abandons premises — landlord may:_** 1) **Surrender** — treat the abandonment as tenant’s surrender and accept it, releasing the tenant from the lease, 2) **Ignore (minority rule)** — hold tenant liable for unpaid rent, or 3) **Re-let (majority rule)** — lease premises to new tenants and hold the breaching tenant liable for any losses **No self-help** — landlord may not engage in self-help upon tenant’s breach (e.g., forcibly removing tenant or tenant’s belongings, changing locks, etc.) **Security deposit** — required at beginning of most leases to secure landlord against damages and/or abandonment * Landlord must return deposit to tenant once lease terminates * Landlord may subtract damages she has suffered **Retaliatory eviction —** landlord is prohibited from retaliatory eviction if a tenant lawfully reports housing code violations

Answer 14

**Landlords have the following implied duties to tenant:** *1) Duty to deliver possession* * _Majority_ — actual possession * Landlord must deliver physical possession to tenant * _Minority_ — legal possession (i.e., right to possess) * New tenant is responsible for any holdovers on property * Tenant’s remedy for breach = money damages * 2) Implied covenant of quiet enjoyment* * 3) Implied warranty of habitability* * 4) Tort liability*

Answer 15

A tenant who sublets—ie, transfers his/her interest to a third party (sublessee) for less than the remainder of the lease term—is individually liable for the landlord's entire harm arising from a breach of the lease by the sublessee. **_However, the sublessee has no liability to the landlord._**

Answer 16

A tenancy at will is a leasehold estate that has no specific term and continues so long as the landlord and the tenant desire. If only one party is expressly given the right to terminate the leasehold, the lease may be deemed unconscionable and both parties will have the ability to terminate it.

Answer 17

**Wild, uncultivated crops (i.e., fructus naturales):** * Are *_considered part of the real property_* on which they grow, and they pass automatically with the land. The prior owner has no right to reenter the land to remove the crops. **Planted, Cultivated Crops (i.e., fructus industriales):** * Crops that are purposely planted and cultivated (i.e., fructus industriales) are considered the landowner's *_personal property_* and, similarly, are generally conveyed with the land.

Answer 18

YES. A grantor can deliver the deed to the grantee through an independent third party. **But if the third party's transfer to the grantee is conditioned on the grantor's death, then the grantor's delivery of the deed to the third party must evidence the intent to make a present gift to be effective.** * This typically occurs when the grantor relinquishes the right to take back the deed by placing it beyond the grantor's control.

Answer 19

A deed is a legal instrument that transfers ownership of real property from the owner (grantor) to another (grantee). **_But for a transfer by deed to be effective, the deed must be:_** 1) *delivered* by the grantor – demonstrates the grantor's present intent to convey ownership to the grantee AND 2) *accepted* by the grantee – presumed if the transfer is beneficial to the grantee. **Delivery is presumed when the deed has been recorded in the county land records since the recording creates a rebuttable presumption that the deed is intended to be presently operative.** **Physically handing over a deed is not required and does not conclusively prove a grantor's present intent to convey property**

Answer 20

**Defects rendering title unmarketable** * *Future interest* if future-interest holder has not agreed to transfer title * *Private encumbrance* (eg, mortgage, covenant, option, easement) * *Significant physical defect* (eg, incurable encroachment) * *Title acquired by adverse possession* & not quieted by judicial decree * *Zoning-ordinance violation* All land-sales contracts have an **implied warranty** that the seller will convey marketable title to the buyer upon closing unless otherwise stated. Title need not be perfect to be marketable, but **it must be free from an unreasonable risk of litigation** such that a reasonable person would accept and pay for it. Therefore, title can be rendered unmarketable by a future interest if the holder of that interest does not agree to the transfer. ***If the seller cannot convey marketable title by the time of closing, then the buyer can refuse to close.***

Answer 21

A deed transfers ownership of real property once it is ***delivered*** (presumed when it has been recorded) and ***accepted*** (presumed when the transfer benefits the grantee). ## Footnote **Once these requirements are met, the grantee owns the property and the transfer cannot be canceled (i.e., transfer is irrevocable)—even if the land record office later returns the deed to the grantor.**

Answer 22

NO. Contracts for the sale of land are enforceable only if they comply with the statute of frauds. This statute requires that these contracts be in writing, be signed by the party against whom enforcement is sought, and contain all essential terms. Essential terms often include: * the identity of the parties * words of intent to buy or sell * a description of the property AND * the sales price. **However, time for performance is not an essential term. Instead, courts will infer that performance within a reasonable time was intended.**

Answer 23

Unless otherwise provided, the doctrine of equitable conversion places the risk of loss on the party with equitable title to the property. ## Footnote **The buyer acquires equitable title once a real estate contract is formed and can be specifically enforced.**

Answer 24

A **right of first refusal** (ROFR) is a preemptive right that gives its holder the opportunity to acquire property from a seller before it is transferred to a third party. Such a provision is valid if it complies with the **statute of frauds**—i.e., *is in a writing that is signed by the party to be charged and contains all essential terms*—and its terms are reasonable. Reasonableness is determined by balancing the utility of the purpose served by this restraint against the likely harm that would result from enforcing it.

Answer 25

A real estate contract is executed when the seller promises to deliver marketable title and the buyer promises to pay the purchase price. **However, courts presume that these promises need not be performed until closing or a reasonable time thereafter—unless the parties set a strict closing deadline.** ***The closing date will be strictly enforced when:*** * the contract specifically states that "time is of the essence" * circumstances indicate that it was the parties' intention to strictly adhere to the closing date *OR* * one party gives the other party notice that time is of the essence within a reasonable time prior to closing. *If time is not of the essence,* then strict adherence to the set closing date is not required in equity. Therefore, a party's failure to perform on the closing date is not grounds to rescind the contract so long as the party can perform within a reasonable time thereafter. **However, a party who fails to perform on the closing date nevertheless breaches the contract and is liable at law for incidental losses (e.g., taxes, interest).**

Answer 26

NO. ## Footnote In most jurisdictions, judgment creditors are not purchasers for value since the attachment of a judgment lien to a debtor's property is merely security for a preexisting debt—i.e., no new value has been paid.

Answer 27

In a majority of jurisdictions (including this one), the s**eller of a residence** has a duty to disclose **all material physical defects** that are **known** to the seller and c**annot be reasonably discovered by the buye**r. **_A defect is material if it:_** * **substantially** affects the value of the residence * impacts the h**ealth or safety** of a resident or * affects the **desirability** of the residence to the buyer. If the seller fails to make such disclosures, then the buyer may rescind the sale or seek damages.

Answer 28

Due to the doctrine of equitable conversion, a judgment obtained against a seller after the execution of a land-sale contract is not enforceable against the real property—even if the claim arose before the contract was executed.

Answer 29

1) be in writing and **signed** **by the grantor** 2) **identify** the grantor and the grantee 3) **describe** the property being transferred AND 4) contain **words of transfer** (eg, "deed over," "transfer," "give").

Answer 30

Under this act, the risk of loss falls upon the owner because the buyer did not have possession of the warehouse at the time of the destruction of the warehouse.

Answer 31

NO. Deed is void. Fraudulent documents are ineffective to convey title, even if bona fide purchasers rely upon them.

Answer 32

The right of a tenant upon condemnation depends upon whether the condemnation is partial or complete. If the condemnation is partial, meaning only a portion of the leased property is taken, the tenant must continue to pay rent.

Answer 33

An implied covenant of marketable title is part of a land sales contract unless the parties agree otherwise. ## Footnote **However, the seller is not required to deliver marketable title until the closing.**

Answer 34

Under the doctrine of equitable conversion, a purchaser receives equitable title to property when he/she enters an enforceable sales contract (eg, by paying the sale price). Equitable title is a real property interest that gives the purchaser the right to obtain full ownership of the property upon closing (eg, when the seller delivers the deed). ***_Example_***: Although the buyer left his entire estate to the church, the cottage would only be part of that estate if the buyer had an interest in the cottage when he died. He did not have legal title upon death since the seller had not yet delivered the deed. But under the doctrine of equitable conversion, the buyer did have equitable title—ie, the right to obtain full ownership of the property (ie, legal and equitable title) upon closing. That is because an enforceable sales contract was formed when the buyer's mother exercised the option to buy the cottage on his behalf. Since equitable title is a real property interest, it passed to the church under the buyer's will. The church then obtained legal title to, and full ownership of, the cottage upon closing—when the seller delivered the deed to the mother

Answer 35

A deed effectively transfers ownership of a landowner's (grantor's) real property to another (grantee) when it is delivered to, and accepted by, the grantee. **To deliver a deed through a valid death escrow, the grantor must:** 1) give the deed to an escrow agent (eg, attorney) with instructions to transfer it to the grantee upon the grantor's death and 2) relinquish the right to take back the deed (ie, by placing the deed beyond his/her control).

Answer 36

1) Only for new homes a. warrants use of adequate materials and workmanship b. includes latent construction defects

Answer 37

**In a majority of jurisdictions**, a seller of a residence has a duty to disclose all known material physical defects to the buyer. 1) The defect must not be **readily observable or known** to the buyer. 2) To be **material**, the defect must substantially: a. affect the **value** of the residence b. impact the **health or safety** of a resident, OR c. affect the **desirability** of the residence to the buyer. 3) When a seller fails to make such disclosures, the buyer may rescind the sale or seek damages. * Some states limit this duty to commercial sellers (e.g., builders); other states impose this duty on all sellers. Even in a jurisdiction that does not require an affrimative disclosure by the seller, a buyer can sue the seller for misrepresentation or fraudulent concealment. General disclaimers (e.g., “property is sold as is”) that, in some states, are suffcient to disclaim this duty are n**ot sufficient to preclude the seller’s liability for misrepresentation or fraudulent concealment.**

Answer 38

Under the **common law** doctrine of merger, obligations contained in the contract of sale, such as the seller’s *duty to deliver marketable title, or a description of the size or location of the property*, are **merged** **into the deed and cannot thereafter be enforced unless the deed contains the obligation.** However, this doctrine **generally is not applicable to obligations that are collateral to and independent of the conveyance itself**, *such as the obligation of the buyer to perform some act on the property after acquisition or the obligation of the seller to remove the seller’s personal property.* **In addition, the merger doctrine does not prevent a buyer from bringing a fraud claim against the seller for fraudulent assertions in the land sale contract, even after closing.** Note that the term “merger” is used in other real property contexts, such as the merger of property interests (e.g., acquisition of both the land that is subject to and the land that is benefited by a restrictive covenant). Such a merger results in the extinguishment of the property right (e.g., the restrictive covenant).

Answer 39

1. **_Damages:_** a) Both the buyer and the seller can recover expectation damages **based on the difference between the contract price and the market value on the date of performance**. b) In some jurisdictions (about half), if the seller’s breach resulted from an inability to deliver marketable title, *but the seller acted in good faith*, **then the buyer’s damages are limited to the buyer’s out-of-pocket expenses**. c) In addition, a buyer or seller **can recover incidental damages,** such as *expenses associated with a title search or survey of the property*. **_1A. Buyer’s deposit as liquidated damages_** a) A real property contract usually requires the buyer to make a deposit of a portion of the purchase price (sometimes referred to as “earnest money”). b) In addition, the contract typically contains a liquidated damages clause that provides for the seller to retain the buyer’s deposit in the event that the buyer breaches the contract and refuses to purchase the property. c) In general, for a liquidated damages clause to be enforceable, the amount of liquidated damages must be reasonable. i) Traditionally, many courts have found a deposit of no more than 10% of the purchase price to be reasonable as a liquidated damages amount. ii) However, courts may consider factors such as t**he sophistication of the buyer and the nature of the transaction (commercial versus residential)** in determining the reasonableness of the seller’s retention of the buyer’s deposit. iii) **In addition, a court may refuse to enforce a liquidated damages clause when the seller suffers no actual loss.** When the contract is silent as to dispensation of the deposit in the event of a default by the buyer, courts consider the same factors, and usually allow the seller to retain the deposit when reasonable. **2.** **_Specific Performance_** a) The buyer is entitled to specific performance for a seller’s breach of a contract to sell a real property interest because the buyer’s remedy at law is considered inadequate due to the unique nature of land. b) Under the t**heory of mutuality of remedies,** the seller is also permitted to seek specific performance and force the buyer to purchase a real property interest, *although some courts have rejected this theory because the seller typically receives money rather than real property.* c) When the buyer seeks specific performance with respect to property **for which there is a title defect** (e.g., an encumbrance), **the buyer may also obtain an abatement in the purchase price to compensate the buyer for the defect.**

Answer 40

Under the **d****octrine of equitable conversion**, although the seller retains legal title to real property during the pendency of the sales contract, equitable title passes to the buyer upon entering the contract. The seller effectively holds the property in trust for the buyer, and he has a duty to keep up the property. However, as the holder of legal title, the seller has the right to possess the property. **Equitable conversion does not apply if the contract is not specifically enforceable.**

Answer 41

When an action is maintained against the seller for a claim that arose prior to the execution of the contract, a judgment obtained against the seller a**fter the execution of the contract is not enforceable against the real property.** Under the doctrine of equitable conversion, the seller’s interest is **converted by the contract** into an **interest in the proceeds from the sale**; *it is no longer an interest in the real property itself.*

Answer 42

Most states, under the doctrine of equitable conversion, **place the risk of loss during the time between the execution of the contract and the closing on the buyer**, r*egardless of whether the buyer takes possession of the property.* **An exception is recognized** when the **loss is attributable to the seller’s intentional or negligent actions**. * The **Uniform Vendor and Purchaser Risk Act** (adopted by a minority of jurisdictions) keeps the risk of loss with the seller, unless and until the buyer takes possession, or title is transferred. * *For the Act to apply, a material part of the property must be destroyed.*

Answer 43

Unless the contract requires otherwise, the seller does not have a duty to carry casualty insurance. - Because the buyer has an equitable interest in the property, t**he buyer may obtain such insurance**. - When the risk of loss is on the buyer and the **seller has casualty insurance,** *the seller is generally required to give the buyer credit against the purchase price in the amount of the insurance proceeds when a casualty occurs.*

Answer 44

When one of the contracting parties dies prior to the performance date of the contract: 1) the *seller’s* interest may be treated as **personal property** and 2) the *buyer’s* interest may be treated as a **real property interest** for the purposes of distributing the property pursuant to either’s will. **A. _Seller’s death_** - When the seller-decedent has devised his real property interests, the **proceeds from the sale of the property under contract are treated as personal property** that passes to the devisee of the seller-decedent’s personal property. - **The devise of the real property itself is treated as having been adeemed**. - In jurisdictions that have adopted an anti-ademption statute, *the devisee of the seller-decedent’s real property is entitled to the sale proceeds.* **B. _Buyer’s death_** - The person entitled to the buyer-decedent’s real property, such as the devisee of the buyer-decedent’s real property pursuant to the buyer- decedent’s will, **_can compel the transfer of the property to herself_**.

Answer 45

1. If the grantor purportedly gives property to a grantee through a third party and places a condition on the transfer of the deed by the third party to the grantee, ***whether delivery has taken place depends on the grantor’s language***. * If the grantor retains an absolute right to recover the deed, **then no valid delivery exists because transfer of title was not clearly intended.** **_Example 1:_** A executes a deed that transfers real property to B. The deed itself contains no conditions. A gives the deed to C to hold and says, “Give this deed to B on his 21st birthday, *unless I ask for the deed back before then.”* * Because A retained an absolute right to recover the deed, A did not have the intent to make a present transfer. 2. If the grantor does not retain a right to retrieve the deed, then the key is whether the grantor intends to make a present gift of a property interest. * If so, the grantor cannot later void the gift. Instead, the conditional transfer is treated as creating a future property interest in the grantee. **_Example 2:_** A executes a deed that transfers real property to B. The deed itself contains no conditions. A gives the deed to an independent third party, C, and says, “I want B to have this property when she has her first child. Please give the deed to her then.” Since A gave C the deed with the intent of presently creating an executory interest in B, B currently has an executory interest in the real property. 3. When the third party’s transfer of the deed to the grantee is conditioned on the death of the grantor, the grantor’s transfer of the deed to the third party must evidence the intent to make a present gift. * When the grantor’s intent is that the gift itself be effective only upon the grantor’s death, the transfer can be ineffective due to a failure to comply with the requirements for a testamentary transfer (i.e., the Statute of Wills). **_Example 3:_** A executes a deed that transfers real property to B. The deed itself contains no conditions. A gives the deed to an independent third party, C, saying, “I want B to have this property upon my death. Please give the deed to her then.” *Because A gave C the deed with the intent of presently creating a remainder interest in B, the transfer is effective.* **_Example 4:_** A executes a deed that transfers real property to B. The deed itself contains no conditions. A gives the deed to an independent third party, C, saying, “I want B to have this property if she outlives me. Please give the deed to her then.” Because A gave C the deed with the intent of making a testamentary transfer (i.e., requiring that B survive A in order to take the property), the transfer is ineffective unless the requirements for a testamentary transfer were satisfied.

Answer 46

When a contract for the sale of real property calls for the seller to give the deed to an independent third party (i.e., an escrow agent) and conditions the release of the deed to the buyer on the happening of an event, typically payment of the purchase price, t**he escrow agent is obligated to transfer the deed to the buyer if and when the condition occurs.**

Answer 47

When there is a ***written*** contract, the grantor **cannot require the escrow agent to return the deed prior** to the failure of the condition to occur. When the contract is ***oral***, the grantor can reclaim the deed from the escrow agent **because the Statute of Frauds requires a writing for a land sales contract to be enforceabl**e.

Answer 48

When the escrow agent delivers the deed to the buyer prior to the performance of the condition, **title to the property remains with the seller.** * **This is true even when the buyer then transfers the property to a third party**, *even a person who purchases the property in good faith (i.e., a bona fide purchaser).* * **_An exception exists when the seller permits the buyer to possess the property._**

Answer 49

**In general, title to the property remains in the seller until the condition is satisfied.** - Once the condition is **satisfied**, title **automatically vests** in the buyer. - The date of transfer can relate back to the date that the grantor deposited the deed in escrow when, before the condition is satisfied: 1) the *grantor* dies, 2) the *grantor* becomes incapacitated or marries, or 3) the **grantee** dies.

Answer 50

Acceptance is required for a transfer to be complete, a**nd the grantee is generally presumed to have accepted any beneficial conveyance.** Acceptance relates back to the time the deed was transferred, **unless a bona fide purchaser or creditor of the grantor would be negatively affected by doing so**. *If the grantee rejects the deed, no title passes and the grantor holds the title.* \*\****If the grantee accepts the deed and then changes his mind even a moment later, his return, destruction, or cancellation of the deed is ineffective to transfer ownership of the property back to the grantor.***\*\* * A new, valid deed must be executed in order for the grantee to convey the property back to the original grantor.

Answer 51

While the creation of an agency relationship does not generally require a writing, under the equal-dignities rule, when the act performed by an agent on behalf of the principal is required to be in writing by law, the agent’s authority must also be in writing. * **Consequently, when an agent signs a deed (or a real property instrument that is subject to the Statute of Frauds, such as a contract for the sale of real property), the agent’s authority must also be in writing.** **_Exceptions_**: * An officer of an entity such as a corporation who has the authority to act on behalf of the entity by virtue of the officer’s status may sign a deed without specific authorization of the corporation to do. * In addition, a person whose only act is signing a specific deed at the grantor’s request (i.e., an amanuensis) may do so without written authorization. **_Estoppel of a principal_** * A principal-grantor may be estopped from asserting the lack of writing as a defense when the principal has made a manifestation of an agent’s authority that induces detrimental reliance by a third party.

Answer 52

1. **_Signature on the deed_** * A deed ***is valid*** if an agent with authority signs only the principal’s name. * A deed ***is not valid*** at law if an agent with *authority signs only her own name,* but the deed may be enforced in *equity as between the parties* and subsequent purchasers with notice of the existence of the agency.

Answer 53

A grantor who conveys a real property interest is subject to the same capacity requirements as a person who enters into a contract. In addition, a deed may be subject to reformation or rescission on the same grounds as a contract (e.g., fraud, undue influence, duress) (see MBE Contracts outline I.E.1.–5.).

Answer 54

Generally, a co-tenant in a joint tenancy or a tenancy in common can convey only his interest in jointly owned property. A deed executed by a co- tenant that purports to be a conveyance of the entire jointly owned property ***has the effect of conveying only that co-tenant’s interest.*** **A purported conveyance of a physical portion of jointly owned property is void.**

Answer 55

A purchaser need only purchase without notice of the prior interest to prevail under a notice statute. * Notice statutes tend to protect **subsequent purchasers against interest holders** who could have but failed to record documents describing their interests. **_EXAM NOTE:_** Notice statutes are commonly tested on the MBE and usually contain words such as “in good faith” or “without notice.” **_Example of a notice statute_**: “No conveyance or mortgage of real property shall be good against subsequent purchasers for value and without notice unless the same be recorded according to law.” **_EXAM NOTE_**: *R**emember that a purchaser need not record in order to prevail over a prior interest in a notice jurisdiction, but he must record to prevail against a subsequent purchaser*.

Answer 56

A minority of states have race statutes, *under which a purchaser who records first prevails, regardless of his knowledge of any prior conflicting interests.* **_Example of a race statute:_** “No conveyance or mortgage of real property shall be good against subsequent purchasers for value unless the same be first recorded according to law.”

Answer 57

**A race-notice statute requires a subsequent purchaser to take the interest without notice of a prior conflicting interest and be the first to record.** **EXAM NOTE**: Look for words in the statute such as “in good faith” in conjunction with phrases such as “first duly recorded,” which are present in a race-notice statute. **_Example of a race-notice statute:_** “No conveyance or mortgage of real property shall be good against subsequent purchasers for value and without notice who shall first record.” **EXAM NOTE**: The recording acts provide that prior conveyances and mortgages that would prevail under the common-law rule may be defeated by certain “subsequent purchasers for value” who meet the requirements of the recording act (e.g., took without notice, recorded first, or both). In other words, the recording acts operate by protecting the claim of certain subsequent purchasers who would have lost under the common law “first in time, first in right” rule. ***Remember that when a recording act does not apply, the common law “first in time, first in right” rule applies.***

Answer 58

Grantees who acquire title of property by gift, intestacy, or devise are ***not protected by the recording act against prior claims to the same property, even when those claims are not recorded.*** **_Example_**: A sells Blackacre to B, who forgets to record the deed. In the interim, A gives a deed to his daughter, C, who promptly records her deed. *C will not defeat B’s ownership because C did not pay value for the property.*

Answer 59

Creditors are protected only against claims that arise after a judgment against the debtor is recorded, unless otherwise indicated by statute. * Note that a lawsuit may be pending that could affect title to the property. * In such case, any party to the action may record a **lis pendens** (a notice of pending action), which serves as notice to third parties of the claims pending in the lawsuit. **_Example:_** B makes a loan to A and A grants B a mortgage interest in Blackacre as security for the loan. C, a creditor of A, not knowing of the deed to B, then records a judgment lien against Blackacre. * *C is not protected against B’s unrecorded interest because it preceded the recording of C’s lien.*

Answer 60

**Most jurisdictions protect a purchaser of property at a judicial sale against all unrecorded interests subject to the recording act.** **_Example 3_**: B makes a loan to A and A grants B a mortgage interest in Blackacre as security for the loan. C, a creditor of A, not knowing of the deed to B, then records a judgment lien against Blackacre. C is not protected against B’s unrecorded interest because it preceded the recording of C’s lien. _***Example*:**_ Assume the same facts as those in the example 3, above. * C obtains an order requiring a sheriff to levy on the lien and Blackacre is sold at a judicial sale. * D purchases Blackacre at the sale. ***D takes Blackacre free of B’s mortgage interest.***

Answer 61

The covenant of warranty is a future covenant that guarantees that the grantor will defend against a third party’s lawful (i.e., valid) claim for title. **This covenant, however, does not require the grantor to defend against a third party’s wrongful claim.** * In essence, this covenant does not require the grantor to defend against all title claims brought by a third party against the grantee, **but to be responsible for the litigation costs if the third party’s claim is successful.**

Answer 62

If a survivorship contingency is stated in a conveyance, then the majority view is that the contingency applies at the termination of the interest that precedes distribution of the remainder.

Answer 63

(i) the leased property can be and is restored to its former condition after the removal, and (ii) the removal and restoration is made within a reasonable time. **_Although a reasonable time for removal generally does not extend beyond the termination of the lease, it may do so when_** (i) the termination is not due to a breach by the tenant, and (ii) the date of termination is not foreseeable by the tenant sufficiently far enough in advance to permit removal before the termination of the lease.

Answer 64

NO. ## Footnote In determining the landlord’s damages, the majority rule is that the doctrine of anticipatory repudiation ***does not apply to leases and the landlord is not entitled to damages with respect to future rents that would have been due under the lease***. In states that ***do apply the doctrine of anticipatory repudiation to leases***, damages are generally measured by the difference between future rent that would be owed under the unexpired term and either (i) the reasonable rental value of the premises for such term or (ii) the actual rent collected on a re-letting of the premises for such term. This means that the landlord could collect, at most, the value by which the future rents would have exceeded a reasonable rental value for the property.

Answer 65

The Rule Against Perpetuities does not apply to an option or right of first refusal ***granted in a lease to a current leasehold tenant.***

LL & T / Land Sale Ks / Conveyances / Deeds & Recording Flashcards

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