MBE and NY Distinctions (Property) Flashcards Preview

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Flashcards in MBE and NY Distinctions (Property) Deck (60):
1

Mortgages: Foreclosure

Priorities of Mortgagees & Equitable Redemption

Priorities

Creditors MUST properly record interest.

Rule: 1st in time, first in right

Exceptions:

Purchase Money Mortgage (loan for land acquisition)
Subordination agreements are permissible

 

Equitable Redemption

Rule: prior to foreclosure, mortgagor can redeem land and free from mortgage (but pre-payment penalty ok)

Pay missed payments + interests & costs
Acceleration Clause Valid: full balance due if default
Clogging Equity of Redemption Void: no waiver

 

Statutory Redemption MBE: some states allow redemption after foreclosure (right to possession w/i statutory period); mortgagor pays foreclosure sale price

NYS: NO statutory right of redemption

 

 

2

Water Rights

Allocating Water in Watercourse

Riparian: land bordering watercourse share rights; no unreasonable interference w/others; residential land  has priority over commercial land).

 

Prior Appropriation: right to divert can be acquired; first in time, first in right

 

Groundwater

Surface owner can reasonably use; NOT wasteful

 

Surface Water

Common Enemy Rule: landowner can change drainage/other improvements to combat the flow; no unnecessary harm to another’s land

 

3

Mortgages: Foreclosure

Foreclosure

 

Mortgagee looks to land for debt satisfaction:

Judicial proceeding yields sale of land; proceeds go to (1) attorney fees, costs; (2) each interest in priority; (3) surplus back to debtor

 

Deficiency: when sale does NOT cover amount of loan, mortgagee can bring another action

 

Junior & Senior Lienholder: once mortgage is foreclosed, debts are paid in priority, but land cannot be looked to again for satisfaction of junior lienholders.

BUT if junior forecloses, senior lienholders can STILL look to the land; land sold by junior lienholder at foreclosure sale taken subject to senior lienholders.

 

4

Lateral Support

Possessor’s Rights

Eminent Domain

Lateral Support

Excavation causes collapse of buildings on adjacent land: liability only for negligence, UNLESS Π can show that excavation would have caused collapse even on unimproved land (w/o buildings), then S/L

 

Possessor’s Rights

Trespass: invasion of land by tangible object;

      remedy = ejectment

Nuisance: substantial/unreasonable interference (no tangible invasion; e.g. odors or noise); BUT interference w/hypersensitive Π NOT nuisance

 

Eminent Domain

Government’s 5th Amendment power to take land (1) for public use, (2) in exchange for just compensation

Actual takings and regulatory takings that completely bar productive use ARE eligible for just compensation
Can be statutorily given to private entity (power/cable co.)

5

Mortgages

Mortgage

Conveyance of an interest in land

as collateral for repayment of a loan.

 

Rights:

Mortgagor has title and right to possession;
Mortgagee has a lien (look to land if default).

 

Legal and Equitable Mortgages

Legal Mortgage: in writing (SOF) using property interest in land as collateral for loan.

 

Equitable Mortgage: physical handover of deed to creditor to secure loan (parol evidence freely admissible in dispute; BUT if creditor sells to BFP, debtor can only sue for damages; BFP owns land.

 

6

Mortgages: Mortgagor’s Transfer of the Mortgaged Land

Transfer of Mortgaged Land

 

Lien from mortgage stays on land if properly recorded (recording statutes protect both BFPs and Mortgagees).

 

When mortgaged land is sold (OàA):

Assume Mortgage: A is primarily liable, O is secondarily liable.
Take Subject to Mortgage: A takes NO personal liability, but mortgage stays w/land so if O defaults mortgagee can foreclose (b/c mortgage stays with land).

7

Recording Systems:

Title Problems

What is the Shelter Rule?

What is a Wild Deed?

Estoppel by Deed?

Shelter Rule

OàA (does NOT record); OàB, BFP (records), BàC (C is B’s heir, and has knowledge of OàA transaction (NOT a BFP)

C takes shelter in B’s BFP status (steps into B’s shoes).
Shelter Rule: protect B, BFP’s right to transfer land

 

Wild Deed

OàA (does NOT record), Aà B (B records)

Wild deed is a recorded deed that has a grantor (here A) unconnected to the chain of title (b/c A never recorded OàA transfer).
Rule: wild deed incapable of giving record notice to subsequent BFPs.
Here, if OàC(BFP; records), then the AàB wild deed does NOT give C notice; C wins in both RNJ or NJ).

 

Estoppel By Deed

One who conveys property in which she has no interest, but subsequently acquires an interest is estopped from later denial of the validity of the initial transfer.

8

Mortgages:

Transfer of Mortgage Interest

How does a mortgagee transfer the mortgage interest?  What is the impact of a transfer on mortgagor defenses?

 

Mortgagee can transfer interest: (1) endorse note and deliver to transferee; (2) execute separate note of assignment.

 

Transferee = holder in due course if: (1) note is negotiable; (2) original note endorsed by mortgagee; (3) original delivered to transferee (4) transferee takes in good faith w/o notice of illegality; (5) transferee must pay value for note.

 

Defenses:  holder in due course is free from personal defenses against original mortgagee (e.g. lack of consideration; fraud in the inducement; unconscionability; waiver). BUT is subject to Real Defenses: M-A-D F-I-F-I4

                  Material Alternation

                  Duress

                  Fraud in the Factum

                  Incapacity

                  Illegality

                  Infancy

                  Insolvency

9

Purchase and Sale of Land:

3 Types of Deeds and Covenants Contained Therein

3 Types of Deeds & Covenants Therein

 

Quitclaim Deed: absolutely no covenants

 

General Warranty Deed: 6 covenants & warranties against ALL defects in title (1st 3: present: breached at delivery; SOL runs from delivery; 2nd 3: future: only breached if grantee is disturbed in possession & SOL runs from disturbance)

Seisin: grantor owns property
Right to Convey: no restraints on power to convey
Against Encumbrances: no servitudes/mortgages

Quiet Enjoyment: no fut. disturbance by 3rd party title claim
Warranty: grantor will defend grantee against future 3rd party claims to title (if Quiet Enjoyment is breached).
Further Assurances: grantor will perform future acts reasonably necessary to protect grantor’s claim to title

 

Statutory Special Warranty Deed (Bargain and Sale Deed): 2 promises grantor makes only on own behalf: (1) hasn’t conveyed to another; (2) free from grantor’s encumbrances

 

10

Recording Systems & BFPs

What is the difference between a notice jurisdiction (NJ) and a race notice jurisdiction (RNJ) (NYS)?

 

Identifying a Notice Statute & Race Notice Statute

Notice (NJ): “A conveyance of an interest in land shall NOT be valid against any subsequent purchaser for value without notice thereof, unless the conveyance is recorded.”

 

If the 1st conveyance is not recorded it is NEVER valid against subsequent BFP ($, no notice).

 

Race Notice (RNJ): “Any conveyance of an interest in land shall NOT be valid against any subsequent purchaser for value without notice thereof, whose conveyance is 1st recorded.”

 

“Whose conveyance is first recorded” means that whoever records their interest first wins.

11

Purchase and Sale of Land

What is required for a valid closing/transfer of deed?

Transfer of Title From Buyer to Seller: L-E-A-D

Lawfully Executed and Delivered

 

Lawful Execution of a Deed

Writing/signed by grantor (unambiguous description of land (just enough for ID of property), BUT NO consideration)

 

Delivery of Deed (Legal Construct)

Test of Present Intent, NOT Physical Delivery “I want to give you Blackacre now.” = delivery.
Delivery by escrow permissible.

Express rejection defeats delivery.

 

No parol evidence: oral conditions on deed accompanying delivery are voidable

 

12

Recording Systems & BFPs

Introduction & Summary

BFPs and Race Notice & Notice Jurisdictions

 

Scenario: Grantor illegally conveys same parcel of property first to A and then to B

 

Definition of Bona Fide Purchaser:

Purchases Land for Value

Not donees (unless Shelter Rule)/heirs/devisees

W/o Notice of Another’s Claim to Land

A-I-R: Actual; Inquiry (whatever exam would reveal); Record (properly recorded)

 

Race Notice (RNJ) vs. Notice Jurisdictions (NJ)

RNJ: whichever party records first wins (NY)
NJ: last BFP wins regardless of who records first

13

Purchase/Sale of Land

What are the 2 steps in the conveyance of real estate?

2 Steps of A Conveyance of Real Estate

 

Step 1: Land contract which endures UNTIL

 

Step 2: Closing where deed becomes operative document

14

Purchase and Sale of Land

What happens if land is destroyed after contract but before deed?  Implied promises in contract?

 

Destruction of Land Under Contract But Not Conveyed

MBE: once contract is signed, risk of loss is with buyer

Equitable Conversion: equity regards as done that which ought to be done

NYS: risk of loss w/seller until buyer takes possession or title

 

2 Implied Promises in Land Contract

Marketable Title at Closing: 3 Circums. of Unmarketable

Adverse Possession: even tiny portion rests on AP
Encumbrances: servitudes/mortgages if not waived
Zoning Violations

No False Statements of Material Fact

Material Lies/Material Omission of Latent Defects: waiver does NOT excuse fraud/omission

NYS Property Condition Disclosure Act: S must provide statutory form for residential sale 1-4 units before contract (NOT condo, co-op, new construction)

No implied warranties: fit/habtbl (except new home)

15

Adverse Possession

Adverse Possession

 

C   ontinuous for Statutory Period

O   pen and Notorious (type of use owner would

     make, including rental to 3rd party)

A   ctual

H   ostile

 

Subjective intent or knowledge that a party is on the land of another is irrelevant
Tacking: adverse possessor can tack his time on to the time of a predecessor as long as 2nd possessor didn’t take from 1st through adverse possession.
Disability: if a true owner is disabled (age, insanity, imprisonment) at inception of possession, statutory period will not run until disability cured.
Special Purpose Use: if the use is a special purpose use and not an occupation à easement.

 

NY: adverse possessor must have reasonable belief that she has a right to the land...

 

 

16

Purchase and Sale of Land:

Content of Land Contract

Content and Requirements of the Land Contract

 

SOF: Land contract must be in writing, signed by party against whom enforcement is sought.  Contract:

Describes the Land
States Consideration for the Land

 

One Exception to SOF: Doctrine of Part Performance

Oral Agreement + 1 of following = Specific Performance

B Takes Physical Possession
B Pays All or Part of Purchase Price
B Makes Substantial Improvements to Land

 

If size of parcel < parcel in land contract, Π can sue for

specific performance AND
pro rata ê in contract price.

17

Servitudes: Covenants

How do you determine if a covenant runs with the land?

Does a covenant run with the land?

 

First analyze BURDEN then BENEFIT

 

Burden: W-I-T-H-N (Horizontal Privity)

W riting: original promise

I   ntent: original parties intended covenant to run

T   ouch/Concern Land: (homeowners assn. fees and covenant not-to-compete DO run)

H  orizontal and Vertical Privity

N  otice: party against whom covenant is offered had notice when he took (record/constructive)

 

Benefit: W-I-T-V (Vertical Privity ONLY)

W riting:

I   ntent:

T   ouch/Concern Land:

V  ertical Privity ONLY

 

18

Servitudes:

Implied Equitable Servitude

What is the general or common scheme doctrine?

Implied Equitable Servitude:

General/Common Scheme Doctrine

 

2 Elements (If P seeks injunction):

 

Subdivider had general development scheme embodied in deed restriction.
Purchaser of lot had notice of restriction

A  ctual Notice: of deed restriction in prior deeds

I    nquiry Notice: by sight development obviously conforms to restriction

R   ecord Notice: imputed to buyer who doesn’t check publicly recorded documents (NOT NY)

 

Defense: pervasive changed conditions to entire area/subdivision.

 

19

Servitudes: Covenants

Distinguish between horizontal and vertical privity (to determine whether covenant runs).

Horizontal Privity

 

Nexus between original covenanting parties, requiring parties to be in succession of estate:

Original promising parties were grantor/grantee
Original promising parties were landlord/tenant
Original promising parties were mortgagor/mortgagee

 

High Standard: if NOT met; burden does NOT run w/land so covenant does NOT run (W-I-T-H-N)

 

 

Vertical Privity

Nexus between original party to the covenant and subsequent parties to whom land is transferred:

Simply requires non-hostile nexus: land was sold or inherited (anything BUT adverse possession)

 

20

Servitudes:

Equitable Servitude

Equitable Servitude (Express) W-I-T-N-E-S

 

Promise concerning land that equity will enforce against successors (injunctive relief)

 

W riting: (express)

I    ntent: intended for promise to run

T   ouch and Concern

N  otice: to assignee of burdened land

E   quitable

S   ervitude:

 

No privity is required for an equitable servitude.

21

Servitudes: Easements

What are the 8 ways to terminate an easement?

Termination of Easements E-N-D C-R-A-M-P

 

E    stoppel: servient T detrimentally reasonably relies on dominant T’s assurance of easement termination

 

N   ecessity: unless created by express grant, easement created by necessity ends when necessity ends

 

D   estruction of Servient Land: w/no fault of dominant T

 

C   ondemnation of Servient Land by Eminent Domain

 

R    elease: written release from dominant T

 

A   bandonment By Dominant T’s Physical Action: make use of the easement permanent physical impossibility

 

M  erger of 2 Parcels of Land in 1 Owner: and future separation does NOT revive easement

 

P    rescription: interference w/ easement according to adverse possession (C-O-A-H).

22

Servitudes: Covenants

Covenants

 

Contractual limitation/promise regarding land, but does NOT grant property interest (like an easement).

 

Restrictive Covenant: promise to refrain from doing something related to land (not build commercial bldg)

Affirmative Covenant: promise to do something related to land (maintain a fence)

 

Distinguishing Covenants and Equitable Servitudes:

Π seeks monetary damages: Covenant
Π seeks injuction/equitable relief: Equitable Servitude

 

23

Servitudes: Easements

What are the 4 ways

to create an

affirmative easement?

Creation of Affirmative Easement: P-I-N-G

 

P   rescription: adverse possession (C-O-A-H): (Continuous use for statutory period (NYS: 10 yrs); Open/notorious; Actual use; Hostile (no permission)

 

I    mplication: from existing use: (1) use is apparent; (2) parties expect survival b/c reasonably necessary to dominant tenement’s survival (look at cost/difficulty of alternatives)

 

N  ecessity: if grantor conveys landlocked tenement easement will be implied

 

G  rant: deed of easement for +1 year (SOF): in writing & in compliance w/deed requirements

24

Servitudes:

License and Profit

License: a mere privilege, freely revocable, to enter land (weakest of the servitudes family)

Tickets (e.g. movie)
Neighbors Taking at the Fence: when oral “easement” violates SOF, becomes license

Estoppel: ONLY when licensee has invested substantial $/labor in reasonable reliance

 

Profit: name for an easement that entitles holder to take soil or substance of soil

Minerals, timber, oil

25

Landlord-Tenant Law:

Assignment and Liability

Privity of Estate & Contract

T1 assigns lease to T2:

Privity of Estate

T2 & LL: YES à liable for covenants in lease that run with land (pay rent; repair; pay taxes)

T1 & LL: NO

 

Privity of Contract

T2 & LL: NO à NOT liable for ALL promises in original lease

T1 & LL: YES à secondary liable to each other if person w/direct liability unavailable for damages.

 

Example: LL leases to T1 who assigns to T2 who assigns to T3 who flagrantly damages property.

LL can sue T3 (direct wrongdoer): privity of estate
LL can sue T1 (original T): privity of contract

LL cannot sue T2: no privity of estate or contract (absent contrary explicit agreement)

 

Sublessee is NOT in privity of Contract or Estate w/LL,

ONLY T1 and SL and T1 & LL are liable to each other.

 

26

Servitudes: Easements

What is an easement?

What are the characteristics & different species of easements?

Introduction to Easements

 

Nonpossessory interest entitling holder (dominant tenement) to some use of another’s land (servient tenement)

 

Affirmative: go onto land and do something
Negative: bar servient landowner from doing something

L-A-S-S: Light; Air; Support (underground); Streamwater from artificial flow (irrigation); MUST be written/signed

 

Easement Appurtenant: directly benefits property of dominant tenement (must be 2 pieces of property)

Transfer: passes automatically EVEN w/o mention; except if purchaser of servient land is BFP w/o notice

 

Easement In Gross: personal pecuniary benefit to holder, NOT land; (put up a billboard; swim in another’s pond).

Transfer: NOT transferable UNLESS commercial purpose

 

Scope: limited to terms of creation; no unilateral expansion

 

27

Landlord-Tenant Law: Assignment & Sublease

Assignment: T may freely transfer interest in whole.

NYS: default rule is no assignment

 

Sublease: T may freely transfer interest in part.

NYS: default rule T in building w/4 or more units has right to sublease subject to LL consent
Which CANNOT be unreasonably withheld

 

 

LL may expressly prohibit both in lease; but once LL consents to 1 interest transfer by particular T, LL CANNOT object to further transfers.

 

28

Landlord-Tenant Law:

Landlord Tort Liability

What is the rule and the 5 primary exceptions?

Caveat Lessee and 5 Exceptions

 

T beware, but 5 exceptions: C-L-A-P-S

C ommon Areas:
L atent Defects: duty to warn ONLY
A ssumption of Repairs: if undertaken must be done w/reasonable care
P ublic Use Rule: public space; b/c of nature of defect (latent) & length of lease, T won’t repair (e.g. convention center) (exception applies even if T promises to repair)
S hort Term Use of Furnished Dwelling:

29

Landlord-Tenant Law:

Leasehold/Nonfreehold Estates

What are the

4 leasehold estates?

4 Leasehold Estates

 

Tenancy for Years (fixed term w/termination date)
Periodic Tenancy (fixed period, e.g. month-to-month)
Tenancy at Will (express but then can be terminated by either party at will)
Tenancy at Sufferance (created so LL can collect rent for wrongful holdover).

30

Landlord-Tenant Law

What are the 4 landlord duties to tenants?

 

Duty to Deliver Possession

English Rule (far majority): LL must put T in actual possession  (breach entitles T to damages).

 

Implied Covenant of Quiet Enjoyment

Resid/comm. T’s enjoyment of premises w/o LL interference
Breach can be by actual wrongful eviction (lockout)
Constructive Eviction (S-I-N-G):

Substantial Interference: chronic prob. b/c LL fails to act
Notice: T gives LL notice of prob., and LL fails to correct
Goodbye: L vacates after reasonable time w/o response

LL NOT generally liable for other Ts, except (1) common areas, and (2) duty not to permit nuisance on premises
Trespass is actionable even if it doesn’t rise to level of constr. evic

 

Implied Warranty of Habitability

Res. Ts non-waivable right: resid. fit for human habitation
Remedies (M-R3): Move Out/Terminate; Repair/Deduct; Reduce/Withhold Rent (Escrow); Remain/Sue for damages (c.f. constructive eviction requires T to leave).

 

Retaliatory Eviction Prohibited

31

Landlord-Tenant Law:

Leasehold/Nonfreehold Estates

Tenancy at Sufferance

Tenancy at Sufferance

 

Created so LL can recover rent from T who wrongfully holds over past expiration.

 

NYS: LL’s acceptance of rent subsequent to expiration of term creates implied periodic tenancy.

32

Landlord-Tenant Law

What are the

3 tenant duties?

Duty to 3rd Parties

T must keep premises in reasonably good repair
T responsible for injuries to 3rd party EVEN if LL has expressly promised to make repairs (T may seek indemnification)

 

Tenant’s Duty to Repair

T must maintain; make ordinary repairs
T may NOT commit waste: voluntary (overt harmful); permissive (neglect); ameliorative (↑ value).
Fixtures: if T removes a fixture commits voluntary waste

Once moveable chattel, by virtue of annexation to real property, objectively shows intent to improve (heating systems, custom storm windows, furnace, certain lights)
Fixture? (1) express agreement? (2) removal cause substantial harm? Yes: objective evidence of perm.

Express Covenant & Natural Disaster: absent express agreement, no-fault destruction allows T to terminate lease

 

Tenant’s Duty to Pay Rent

T Breaches/In Possession: (1) LL can evict through courts & sue for rent; (2) continue relationship & sue for rent; BUT NO self-help (lockout = treble damages).

T Breaches/Leaves: (S-I-R) LL can (1) treat as T surrender; (2) ignore and charge T rent (minority); (3) re-lease/mitigate; T pays deficiency

33

Landlord-Tenant Law:

Leasehold/Nonfreehold Estates

Tenancy for Years

Tenancy for Years

 

aka Estate for Years or Term of Years

 

Lease for any fixed period of time; if you know the termination date it is a tenancy for years.

 

NO Notice Requirement for Termination: b/c agreement states at outset when lease expires

 

+1 yr (366 days) must be in writing (SOF)

34

Landlord-Tenant Law:

Leasehold/Nonfreehold Estates

Tenancy at Will

Tenancy at Will

 

Tenancy for NO fixed period

 

E.g. “To T for as long as LL desires.”

 

Must be expressly agreed-to: if not, court will treat as implied periodic tenancy.

 

NYS: LL must give at least 30 days notice of termination.

35

Concurrent Estates: Tenancy in Common

Tenancy in Common (TIC)

 

Each co-tenant (CT) owns individual part w/ right to enjoy whole (violation is wrongful ouster).
Devisable, descendible, and alienable: b/c there is NO right of survivorship.
Rent: No rent from CT in exclusive possession (w/o ouster), but if CT rents all/part of TIC to 3rd party, must pay other CTs proportionate share of rental income.
Adverse possession: unless ouster, NO adverse possession b/c NO hostility.

Exception: implied ouster if NYS adverse possession statute satisfied (20 yrs continuous possession).

Responsibilities: each CT responsible for:

Proportionate share carrying costs (tax/mortgage)
Proportionate share of costs of necessary repairs (if notified by repairer)

Limitations:

CT cannot improve land (end of TIC, CT can pay/get pd for é or ê in value due to “improvements”
CANNOT waste; other CTs can bring action during life of CT

Severance: (1) voluntary; (2) in-kind; (3) forced sale

36

Landlord-Tenant Law:

Leasehold/Nonfreehold Estates

Periodic Tenancy

Periodic Tenancy (PT)

 

Continues for successive intervals until LL or T gives proper notice of termination.

 

Express Creation: “month-to-month”

 

Implied Creation: 3 Ways to create Implied PT

Nothing express, but rent pd at set intervals
Oral lease for +366 days (viol. SOF); interval is based on intervals when rent is tendered.
If LL elects to holdover residential lessee who stayed on past conclusion of the original lease, PT based on interval of payment.  Commercial lease of greater than 1 yr becomes a 1 yr periodic.

 

Termination: notice at least duration = to period (1 yr reduced to 6 mnths); must end at the end of natural lease period (e.g. ends on 1st, termination on 1st)

37

Concurrent Estates:

Joint Tenancy (JT)

How is a JT created?

Creation of JT: 4 Unities (T S-I-P)

 

T  ime: created at the same time
S  ame Title: by the same instrument
I   dentical equal interests
P  ossess: identical rights to possess whole

 

PLUS

 

Grantor must make clear & explicit statement of the right of survivorship (at C/L “. . . and their heirs forever” was sufficient).

 

Straw: b/c of 4 unities, if grantor wants to create JT w/self and 3rd party, has to create straw (convey to straw, straw conveys back to grantor and 3rd party so 4 unities are present).

(NY eliminated need for straw: convey directly to self/3rd party)

 

38

Concurrent Estates:

Tenancy by the Entirety

Tenancy by the Entirety

 

Arises presumptively between husband/wife as fictitious 1 person w/right of survivorship

Survivorship CANNOT be defeated by either spouse independently attempting conveyance.
Creditors of 1 spouse can’t touch T.E.

NYS: if 1 spouse mortgages her interest, creditors can enforce against debtor spouse’s share ONLY,
BUT, must preserve non-debtor spouses rights including right of survivorship.

39

Concurrent Estates:

Joint Tenancy (JT)

What are the distinguishing characteristics of a JT?

Distinguishing Characteristics of a JT

 

Right of Survivorship: when one JT dies, her share passes to other JT(s).

 

Transfers: Right is alienable but NEVER devisable/descendible (b/c survivorship).

40

Concurrent Estates:

Joint Tenancy (JT)

How can parties sever JT?

Severance of Joint Tenancy (S-P-A-M)

 

S    ale: if 1 JT sells her interest (even secretly), severs JT (buyer gets tenancy in common),

BUT JT intact between remaining JTs IF +2 JTs. 
Equitable conversion: simply entering into contract to sell severs JT.

P    artition: 3 ways to partition and sever JT

Voluntary Agreement: peaceful severance
Partition in Kind: judicial action for physical division if in best interests of all parties
Forced Sale: judicial action if sale in best interests of all; proceeds divided proportionally

A    nd

M  ortgage

Title Theory: mortgage/lien severs (minority rule)
Lien Theory: mortgage/lien does NOT sever (NYS)

41

Rule Against Perpetuities (RAP)

What are the 2 bright-line rules concerning C/L RAP?

Gift to open class conditioned on members living beyond 21 violates the C/L Rap.

E.g. “A for life then A’s kids who reach 30.”
Since A is alive (Fertile Oct. Rule) class is open; regardless of age of A’s kids, they could die, and A could have another kid, and then die.

 

Shifting executory interests that have no time limit w/i which it must vest violates C/L RAP

E.g. “A, so long as land is used for farming, and if not, to B.”
Land could stop being used for farming hundreds of years later (+21 yrs from A’s death)
When clause is stricken: “A, so long as land is used for farming.”  NOW, FSD w/ POR (no RAP: grantor).
BUT, if after clause is stricken, no longer makes sense, then entire condition is stricken.
E.g. “A, but if land ceased to be used for farming, to B.”  When “to B” stricken: nonsense, so A has FS.

 

42

Concurrent Estates

What are the 3 kinds of concurrent ownership?

Concurrent Ownership

 

 

Joint Tenancy (JT): 2 or more owners with the right of survivorship

 

Tenancy By the Entirety (TE): marital interest between H&W w/right of survivorship

 

Tenancy in Common: 2 or more owners w/NO right of survivorship

43

Rule Against Perpetuities (RAP)

What is the charity exception to the RAP?

A gift from one charity to another charity CANNOT violate the RAP.

“Red Cross, as long as used for Red Cross purposes, and if NOT to YMCA.

Shifting executory interest: Ordinarily void b/c time for vesting is indefinite.
BUT, OK, b/c of charity exception.

44

Rule Against Perpetuities (RAP)

MBE RAP Reforms

MBE RAP Reforms

 

 

2 Reforms to C/L RAP (both rejected by NY):

 

Wait & See: wait until end of measuring life to adjudicate future interest (no more parade of horribles).

 

USRAP: provides alternative 90 year vesting period.

45

Future Interests:

3 Species of Vested Remainders

Indefeasibly Vested Remainder

E.g. “A for life, remainder to B.”
Certain to acquire w/no strings (known/exists, devisable & descendible)

 

Vested Remainder Subject to Complete Defeasance

E.g. “A for life, remainder to B but if B dies <25, to C.” 
Condition subsequent could terminate possession.
A à LE; B à VRSCD; C à shifting executory interest; grantor à reversion (B dies < 25, no C)

 

Vested Remainder Subject to Open

E.g. “A for life, then B’s kids” (A is alive; B alive w/2 kids)
Remainder vested in group (at least 1 now qualified to take), but additional members could still qualify.

If B has more children/is pregnant while A is alive.

Class is open until any member can demand possession (Rule of Convenience).

Closes: B dies (no more kids) OR A dies b/c R of C.

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Rule Against Perpetuities (RAP)

What is the RAP, and

what is the 4-step

approach for assessment?

Rule Against Perpetuities (RAP)

 

Certain future interests (including right of first refusal) are void if any possibility, no matter how remote, that the given interests may vest more than 21 years after the death of a measuring life.

 

Step 1: Identify future interest: RAP only applies to (1) contingent remainders, (2) executory interests & (3) vested remainders subject to open.

 

Step 2: Identify conditions precedent to vesting of suspect future interest.

 

Step 3: find the relevant measuring life (life relevant to the condition which determines vesting.

 

Step 4: Ask à will we know, w/absolute certainty, w/i 21 yrs of measuring life if future interest holders can take?

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Future Interests:

Contingent Remainders

What are the

3 doctrines limiting contingent remainders?

Contingent Remainders and Limiting Doctrines

(All 3 abolished in NY; Worthier Title: transfers after ‘67;

destructibility/Shelly’s Case abolished generally)

 

Rule of Destructibility

E.g. “To A for life, then if B is 21 to B.”

C/L: if still contingent when preceding estate ends, contingent remainder destroyed, reversion to grantor.

Today: grantor/heirs hold subject to grantee’s (B’s) springing executory interest

 

Rule in Shelly’s Case (Law: Intent Irrelevant) (Grantee’s Heirs)

E.g. “A for life, then on A’s death, to A’s heirs.”

C/L: pres (A) and future (heirs) interests merge: A à FS absolute

Today: A has L.E.; unknown heirs have contingent remainder; grantor has reversion if A dies w/o heirs.

 

Doctrine of Worthier Title (Default: Subject to Intent) (Grantor’s Heirs)

E.g. “A for life, then grantor’s heirs.”

W/Rule: cntgnt. remainder void; A has L.E.; grantor has reversion

Free land for transfers: A & grantor together can sell land

NY: A has L.E., O heirs: cntgnt. remainder (unacertained: Sinead)

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Future Interests:

Executory Interests

What are the 2 species of executory interests?

Shifting Executory Interest

E.g. “A but if A uses land for non-residential purposes w/i 20 yrs, to B.”
Follows a defeasible fee and cuts short someone other than the grantor
B has a shifting executory interest; A has FS subject to B’s Shifting E.I.

 

Springing Executory Interest

E.g. “To A if he marries.”
Cuts short against the grantor.
A has springing executory interest; grantor has FS subject to A’s Springing E.I.

 

NY: Remainders Subject to Condition Subsequent

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Future Interests

What are the 6 future interests capable of creation?

Summary of Future Interests

 

 

Retained By the Grantor

Possibility of Reverter: FSD
Right of Entry/Termination: FS Subject to Condition
Reversion: leftovers after grantor transfers less than started with (A for life; left after A’s life: reversion)

 

Retained By Transferee

Vested Remainder ((1) indefeasibly; (2) subject to complete defeasance; (3) subject to open)).
Contingent Remainder (unascertained person or condition precdent)
Executory Interest ((1) shifting; (2) springing)

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Future Interests

Contingent Remainders

Contingent Remainders

 

Remainders are contingent because:

Created in Unascertained Person

E.g. “A for life, then B’s heirs” (Sinead Rule: we don’t know B’s heirs until B dies.)

 

Subject to a Condition Precedent

E.g. “A for life, then if B graduates from law school to B.”

 

Once person identified and takes or condition is satisfied: taker has indefeasibly vested remainder.

 If unsatisfied, grantor has reversion (leftovers).

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Present Interests:

Life Estates

What are the limitations on a life tenant’s use

of the property?

Privileges and Limitations on L.T.’s Use of Property

 

Privilege: L.T. entitled to ordinary uses/profits of land.

Limitation: Can’t commit waste: voluntary or permissive (unless there is substantial/permanent neighborhood change).

Vol./Affirm.: Can’t consume/exploit natural resources on the land, UNLESS P-U-R-G-E

Prior Use (if land previously so used)
Reasonable Repairs (and maintenance)
Grant
Exploitation (only use, e.g. quarry)

Permissive/Neglect:

maintain land in reasonably good repair
pay all ordinary taxes to extent of profits from land; if none, then to fair rental value (if LT occupies)

Ameliorative: can’t ↑ value w/o consent from all future interest holders

 

Future Interests: reversion to grantor; remainder to 3rd party

 

52

Future Interests

What is a remainder?

Remainder: Sociable, Patient, & Polite

 

Definition: future interest in grantee: becomes possessory upon expiration of prior estate.

 

Sociable: always travels w/preceding estate of known/fixed duration.

 

Patient/Polite: Cannot cut short prior grantee; wait until preceding estate expires.

NEVER follows defeasible fee

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Defeasible Fees:

Fee Simple Subject to Executory Limitation

Fee Simple Subject to Executory Limitation

 

Same as FSD, except instead of reverting to grantor, property reverts to 3rd Party.

 

Future Interest: Shifting Executory Interest

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Present Estates:

Life Estate

What are the 2 types

of life estates? Characteristics

Life Estates

 

Life Estate: measured by grantee’s life

Not devisable/descendible: death ends life estate

L.E. Per Autre Vie: measured by life of 3rd party (“to A for B’s life”)

Devisable/descendible if measuring life continues.

 

Alienable: but can ONLY transfer what you have.

Future Interest: Reversion at end of measuring life.

 

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Defeasible Fees:

Fee Simple Subject to Condition Subsequent

Fee on Condition

Fee Simple Subject to Condition Subsequent

On Condition

 

 

Similar to FSD, except grantor MUST

reserve the right to re-enter and re-take (reacquire) in order to terminate

(which is the future interest).

 

It is NOT automatic.

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Defeasible Fees

What are the 2 primary rules of construction for defeasible fees?

Rules of Construction for Defeasible Fees

 

B/c court disfavor land limitations, clear durational language must be used

Hope, desire, intention NOT enough

 

Absolute restraints on alienation (“until she attempts to sell”) are VOID.

MUST have durational language.

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Present Estates:

Fee Simple Absolute

Fee Simple Absolute

 

Absolute Ownership (freely devisable, descendible, alienable).

Creation: “To A” OR “To A and his Heirs.”

No future interests (Sinead O’Connor rule)

58

Defeasible Fees

Fee Simple Determinable

Fee on Limitation

Fee Simple Determinable

On Limitation

 

As soon as the condition is violated, the property automatically is forfeited and reverts back to grantor: “so long as,” “until,” “during.”

 

Though devisable, descendible, and alienable, can ONLY be done WITH limitation.

 

Only Future Interest: Possibility of Reverter

F-S-D-P-O-R

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Present Estates:

Defeasible Fees

What are the 3

defeasible fees?

3 Defeasible Fees

 

Fee Simple Determinable (FSD)

Fee on Limitation

Fee Subject to Condition Subsequent

Fee on Condition

Fee Simple Subject to Executory Limitation

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The Present Estates

Chart of 4 Present Estates:

(1) fee simple absolute; (2) fee tail; (3) three defeasible fees; (4) life estate

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