mbe property

Question 1

ownership of land

Answer 1

Ownership of real property may be transferred by sale, by gift, or, upon death, by devise or intestate succession.

The seller or donor is called the “grantor,” and the buyer or recipient is called the “grantee.”

Question 2

estates in land

Answer 2

ownership interests: divided in time between present interests and future interest

key distinction is timing of posession

someone must be in possession of the property at all times

example:
o transfers blackacre to a for life, then to ben
anna has the right of possession presently
ben has the right to possession in the future

oliver transfers blackacre to a once she passes the bar exam
oliver has the right to possession presently
anna has the right to possession in the future

Question 3

fee tail

Answer 3

• freehold estate that limits the estate to the grantee’s lineal blood descendants by specific words of limitation
• “and to the heirs of his body”
• has been eliminated in most states; it is treated as a fee simple absolute estate.

Question 4

ownership: fee simple absolute

Answer 4

owns *100% *for all time, can last forever and thus has no accompanying future interest

most common form of property ownership and the broadest ownership interest recognized by law.

magic words: “and his/her heirs”, but even if conveyance is ambiguous, presume it is fee simple

It is “freely alienable”, can transfer inter vivos, by will, or intestacy without restriction.

DO NOT be fooled by words of intent or purpose (precatory words), like: O to A, my hope and wish being that on A’s death, A will give property to B; A has fee simple, B has nothing

A conveys Blackacre “to B and his heirs.” C conveys Whiteacre to “B.” Both conveyances give B a fee simple absolute estate in the property.

Question 5

defeasible fees

Answer 5

May be conditioned by the occurence of an event; the condition will cut short the fee simple

Like fee simple absolute estate, a defeasible fee is ownership of potentially infinite duration.

But, a defeasible fee may be terminated early by the occurrence of an event.

Three defeasible fee simples are:

1. fee simple determinable (so long as, while, during)
2. fee simple subject to a condition subsequent (provided that, on the condition that), and
3. fee simple subject to an executory interest.

A defeasible fee is freely alienable by the owner during his life, and upon his death, it is devisable ( by will) and descendible (by intestacy).

remember: If a statement in a conveyance of real property merely indicates a grantor’s desire, intent, or purpose for which the property is to be used rather than imposing a condition on the ownership of the property itself, the property interest is treated as a fee simple absolute, rather than a defeasible fee.

Question 6

defeasible fee: fee simple determinable

Answer 6

Limited by specific durational language.

Magic words: so long as, while, during, until

Fee simple lasts while period is in play (while land is used as farm, could be forever) but as soon as period ends, fee simple ends

when it ends, there is possibility of reverter, interest automatically reverts back

If the language in the conveyance is ambiguous, courts typically adopt a preference for the fee simple subject to a condition subsequent over a fee simple determinable.

o conveys blackacre, so long as the land is used as a farm (while the land is used a s a farm/during its use as a farm)

Question 7

defeasible fee: fee simple subject to condition subsequent

Answer 7

Limited by specific conditional language

magic words: “but if”, “provided that”, “on the condition”

upon the occurrence of the condition, the grantor (or his successor interest, think who he devised to in will not an inter-vivos transfer) has the right to terminate this estate (not automatic)

O conveys Blackacre to A but if the land is not farmed, O may re-enter and re-take properrty.

If the language in the conveyance is ambiguous, courts typically adopt a preference for the fee simple subject to a condition subsequent over a fee simple determinable.

Question 8

defeasible: fee simple subject to executory interest

Answer 8

will end upon the happening of an event and the future interest will vest in a third party (someone other than grantor)

future interest will cut short or terminate an earlier ninterest

magic words “divest a prior interest”

Like possibility of reverter, upon the occurrence of the stated event, the passage of the estate is automatic; the third party is not required to take any action in order to become the owner of the estate.

executory interest is freely alienable during life, devisable upon death, and if not devised its descendible.

O conveys Blackacre to A and her heird, but if liquor is served on the premises, then to B and his heirs”
B has executory interest because B will cut short A’s interest if liquor is ever being served
A has fee simple subject to executory interest

Question 9

life estate

Answer 9

present estate that is measured by a life

magic words “for life” but if ambiguous, look for grantor’s intent to create an estate that will end upon death of measuring life

termination: ends naturally when measuring life ends

life tenant (or life estate measured by the life tenant’s life) cannot pass the property by will or intestate succession, but they can mortage it/give it away and the new guy gets the life estate, until you die

if possession of land goes back to grantor after life estate ends, grantor retains reversion

if possession of land goes to 3rd party (transferee) after life estaate ends, 3rd party takes a remainder

O conveys Blackacre to A for life. This is life estate measured by A’s life

O conveys Blackacre to A for B’s life, A’s life estate is measured against B’s life (“pur outre vie”)

O conveys Blackacre to A for life, A transfers her interest to B; B’s interest will terminate when A dies

O conveys Blackacre to A for life, A dies leaving B as her sole heir, B does not inherit

Question 10

life estate: doctrine of waste

Answer 10

comes into play when more than one party has an interest in the same piece of real property

The rights of a life tenant are limited by the doctrine of waste.

three types of waste:
1. affirmative waste: caused by voluntary conduct, which causes decrease in value. (dumping hazardous waste on property)
2. permissive waste: caused by neglect toward the property, which causes decrease in value. (tenant failed to take action after storm, property is harmed)
3. ameliorative waste: life tenant/other person in possession changes use of property and actually increases the value (renovating house, constructing dam, fixing fence)

VVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVV
doctrine applies:
* landlord-tenant
* co-tenant out of possession v. tenant in possession (concurrent estates)
* mortgagee (bank/lender) v. mortgagor (borrower), because it impairs the bank’s security interest

VVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVV

a life tenant generally must deliver the property to the future interest holder in substantially the same condition that it was in when she took possession, with allowance for normal wear and tear.

The holder of a future interest, such as a remainder interest, has a license to inspect the property for waste. This license is not subject to revocation by the holder of the current possessory interest in the property.
* remainderman can show up to property to check for waste, even if current owner does not want him to come in

The owner of property in fee simple absolute who divides ownership of the property into a life estate and one or more future interest may alter or eliminate the applicability of this doctrine to the life tenant.

In addition, the future interest holders may consent to the life tenant’s conduct.

look for:
1. multiple parties with simultaenous interest
2. change in value of property due to actions/inactions of party in possession
3. waste substantially change interest taken by party out of possession

Question 11

future interest: remainder

Answer 11

remainder is future interest that follows a life state

a remainder cannot follow a vested fee simple because a future interest followed by a vested fee simple would have to divest the prior interest (Fee simple) but a remainder does not function that way, it waits for the prior interest to be vest

can be vested or contingent

Question 12

life estate: contingent remainder

Answer 12

contingent=
1. given to unascertained or unborn person or
2. its made contingent on anything but natural termination of preceding estate
* basically, remainder becomes contingent when it was subject to a condition precedent or made in favor of someone unknown at the time of the question.
* if contingent remainder does not vest before it becomes possessory, the grantor has a reversion

VVVVVVVVVVVVVVVVVVVVVVVVV
RAP applies only to contingent remainders, not vested remainders

Question 13

life estate: vested remainder

Answer 13

vested=3rd person gets it no matter what
1. given to ascertained grantee and/or
2. not subject to condition precedent;

if remainder fails either of these, it is a contingent remainder

If the holder of a vested remainder dies, interest passes to the holder’s heirs

If contingent remainder does not vest before it becomes possessory, the grantor has a reversion

VVVVVVVVVVVVVVVVVVVVVVVV

vested remainder is subject to complete divestment if the occurence of a subsequent condition will eliminate the remainder interest
example: to my friend for life and then to my heirs, but if none survive my friend, then to my lawyer

O conveys Blackacre to A for life, then to B. A has a life estate; B is ascertainable grantee, there is no condition precedent, so B has vested remainder.

Question 14

class gifts- vested remainder subject to open

Answer 14

1. vested remainder in a class gift and
2. full class membership is unknown

at least one member of the class must be vested, if no one is vested then the remainder is contingent

when all members of class identified, class is closed

VVVVVVVVVVVVVVVVVVV
RAP applies to vested remainder subject to open

Rule of convenience: class-closing mechanism to avoid application of RAP

if the grant does not have an express closing date, the rule closes the class when any member of the class becomes entitled to immediate possession

in property law, presumed party can have a child at any time before the party’s death, regardless of age

O conveys Blackacre to A for life, then to A’s children who reach 21. A has 3 kids B is 24, C is 18, and D is 15. B’s interest is vested remainder. it is subject to open because C and D might make it to 21. We know when the class closes and who the members are 21 yrs after A’s death. If more of A’s children reach 21, they will partially divest B.

Rule of convenience: O conveys to A for life, then to B’s children. B has one child. Class closes when B dies.

Question 15

special cases: doctrine of worthier title

Answer 15

prevents against remainders in a grantor’s heirs

creates a presumption of a reversion to grantor

o conveys to a for life, then to my heirs. o retains reversion under doctrine of worthier title

Question 16

special cases: rule in shelley’s case

Answer 16

• prevents against remainders in a grantee’s heirs
• uses doctrine of merger to create a fee simple

o conveys to a for life, then to a’s heirs. a has FSA under rule in shelley’s case

Question 17

executory interests

Answer 17

subject to RAP

future interest in a third party that is not a remainder and that generally cuts the prior estate short upon the occurrence of a specified condition

1. springing executory interest: divests the grantor
2. shifting executory interest: divests a prior grantee

VVVVVVVVVVVVVVVVVVVVVVVVVV
if there are two parties (grantor+grantee) it is most likely a springing executory interest because the grantee will divest the grantor

if there are three parties (grantor + grantee + grantee), it is most likely a shifting executory interest because a grantee will divest another grantee (the executory interest will shift from one grantee to another)

O conveys blackacre to A for life then to B one yr after A’s death.
A has a life estate, right after A’s death there is a 1 yr reversion to O, B divests O’s interest, B has a springing executory interest

O conveys blackacre to A but if the land is used for commercial purposes, to B. a has a Fee simple subject to execturoy interest. B takes the property if the land is used for commercial purposes. B divests A’s interest, who is prior grantee. B has a shifting executory interst.

O conveys blackacre to A after she is admitted to the bar. A has a springing executory interest. A divests O’s interest, the grantor. O has a fee simple subject to executory interest.

Question 18

rule against perpetuity

Answer 18

prevents remote vesting, we are testing for certainty; this is like a statute of limitations

a life + 21 yrs

when: interest is created
1. inter vivos transfers: interest created at time of grant
2. devise (will): interests created at testator’s death

what: RAP applies to
1. contingent remainders,
2. executory interest (springing and shifting), and
3. class gifts (subject to open), if not closed by rule of convenience
4. vested remainders subject to open

who:
1. relevant life= person who affects vesting, usually mentioned/implied by the grant
2. validating life: person who tells us whether or not the interest vests within the perpetuities perios (lifetime plus 21 yrs)
* validating life must have been alive when interest created
* validating life can validate own interest
* if no validating life, interest is no good and we strike it from grant; if there is a validating life, the interest is good

O conveys Blackacre to A, but if the land is ever used as a business during A’s life, to B.
Interest created at O’s conveyance inter vivos.
B’s executory interest is subject to RAP.
Lives in being are: O, A, and B.
Validating life: we know 21 yrs after A’s life whether this interest vests (whether she used land for busienss purposes)
RAP is not violated, B’s executory interest is valid.

Professor K conveys $1000 to my themis students who are admitted to the bar.
interest created inter vivos.
interest subject to rap is students springing executory interest.
lives in being at creation of interest are professor k and his students.
we know when 21 yrs after his last student dies, whether the interest vested or failed.
no violation, student’s executory interest is valid.

Professor K example is exception to bad as to one, bad as to all rule for class transfers because transfers of specific dollar amount to each class member tested separately, even though RAP may fail as to some members of the class

RAP is not about whether an interests vests/fails, its about whether we will know if it vests or fails, it cannot have uncertainty

O conveys to A for life, then to A’s first child who reacheds age of 22. This violateds RAP. Contingent remainder, possible for that remainder to vest in A’s child more than 21 yrs after A’s life. A’s first child, even if alive, is not validating because child could die. Strike out offensing interest: O conveys to A for life. A now has a life estate. Her first child has nothing. O has possiblity of reverter.

Question 19

rule against perpetuities: special cases–> class gifts

Answer 19

RAP and class gifts:
* if the gift to any member of the class is void under RAP, then the gift is void as to all members of the class.
* the gift is “bad as to one, bad as to all” (all or nothing rule)

exception:
1. transfer of a specific dollar amount to each class member,
2. and transfers to a sub-class that vests at a specific time “to children of b, and upon death of each, to that child’s issue)

remember: property law assumes anyone who is alive can still have children

Question 20

rule against perpetuities: exceptions

Answer 20

charities
* RAP doesnt apply to a gift from one charity to another chairty
* the gift to the alternate charity is not subject to RAP

options
* RAP doesnt apply to an interest held by a current tenant to purchase a fee interest in the leasehold property

Question 21

rule against perpetuities: special cases–> wait and see approach

Answer 21

• The traditional RAP has been softened by reform (e.g., Uniform Statutory Rule Against Perpetuities).
• The most common modern approach is to “wait and see” if an interest subject to RAP vests within the perpetuities period.

The bar exam still tests the traditional RAP though you should be aware of the modern “wait and see” approach.

Question 22

contingent future interests: Options and Right of first refusal

Answer 22

RAP applies only to contingent future interests; interests held by unknown/unborn people or subject to condition precedent.

must satisfy RAP (if it could vest more than 21 yrs after some relevant life in being at creation of interest)
* will almost always violate RAP if it does not provide a termination date that falls within perpetuities period

types:
1. option to purchase: Gives exclusive right to purchase property at specified price, usually within specified time
2. right of first refusal: Gives first opportunity to purchase property if it ever goes up for sale
* This right is generally reasonable if the holder of the right can purchase the property under the same terms offered to another.
* If so, the right of first refusal is valid and enforceable by an injunction.

• option contract for the purchase of real property is formed when one party (the option holder) receives the exclusive right to purchase the property (“exercise the option”) during a specified time period in exchange for consideration.
• under option k:
  1. the grantor cannot revoke the option during the specified time period
  2. the option does not terminate upon the death or incapacity of the grantor, and
  3. the option holder can make a “counteroffer” without losing the right to exercise the option

The option holder must exercise the option pursuant to the terms of the contract.
Mailbox rule does not apply to option contracts.
Grantor must receive acceptance within the time period specified in the contract.
Otherwise, the option holder loses the option and any consideration that was paid.

Question 23

rule against perpetuities: special cases–> cy pres

Answer 23

An equitable doctrine (borrowed from the law of trusts) that allows a court to reform a transfer to avoid RAP.

Question 24

concurrent estates

Answer 24

Ownership or possession of real property by two or more persons simultaneously

concurrent owners each have right to use or possess the whole property.

Exception: Concurrent owners can contract out of the basic rule.

Three Kinds of Concurrent Ownership/Concurrent Estates
1. tenancy in common;
2. joint tenancy;
3. tenancy by the entirety

• ouster: Co-tenant in possession denies another co-tenant access to the property (one tenant changes the locks, or throws out the co-tenant’s stuff)
• Remedies for the ousted tenant:
  1. Get an injunction granting access to the property; and/or
  2. Recover damages for the value of the use while the co-tenant was unable to access the property.

Question 25

concurrent estate: tenancy in common

Answer 25

default concurrent interest; any conveyance to more than one person is *presumed* to be a tenancy in common (TIC) TIC can receive their interests at different times and from different conveyances Concurrent owners have *separate* but *undivided* interests in the property (can be unequal shares, but will still have full use of premises) **NO** rights of survivorship (will go down heir and not the other co-tenant) each co-tenant can transfer the property freely at death as well as during life **VVVVVVVVVVVVVVVVVVVVVV** in two tenant situation, where one co-tenant cannot pay the tax deed, she cannot retain her interest in the property; other co-tenant can quiet title to be ower in fee simple ## Footnote O conveys Blackacre in equal shares to A and B. Their interests are separate because they have equal shares in Blackacre. Their interests undivided because Blackacre is not physically divided, A and B each have right to possess whole of Blackacre O conveys in equal shares Blackacre to A,B,C. A cnnveys her interest to D. B dies and his will gives entire estate to his son E. C, D, E each have 1/3 interest. requires unity of possession (equal right to possess whole property)

Question 26

concurrent estate: joint tenancy

Answer 26

Right of survivorship= surviving joint tenant(s) automatically take the deceased tenant's interest Created when grantor makes clear expression of intent *PLUS* must be survivorship language **magic words**: "as joint tenants with right of survivorship" (***PITT***): To create JT, need four unities 1. *Possession*: Every JT has an equal right to possess the whole of the property 2. *Interest*: JT must have an equal share of the same type of interest. 3. *Time*: Joint tenants must receive their interests at the same time. 4. *Title*: JT must receive their interests in the same instrument of title ***Severance***: If any of the four unities are severed, then the JT is terminated and *turns into TIC* commonly happens in 1. *inter vivor transfer*: transfer during life will destroy the right of survivorship and convert estate into TIC 2. *mortgages*: A joint tenant may only grant a mortgage on his/her own joint-tenancy interest without the other joint tenant's consent. A mortgage executed by one joint tenant will only attach to that tenant's property interest. But whether the jurisdiction follows the lien theory or the title theory is irrelevant when all of the joint tenants execute a mortgage. In this scenario, the mortgagee may enforce the mortgage against all joint interests upon default. if only one joint tenant executes mortgage: under *majority lien theory*, it will not destroy JT; But under *minority title theory*, it severs JT into tic CANNOT DEVISE INTEREST IN PROPERTY TO ANYONE AT DEATH, THE OTHER JT JUST SWALLOWS IT ! 3. *leases*: in some jurisdictions leasing tenant does sever JT and in others its temporary suspension of JT **VVVVVVVVVVVVVVVVVVVVVVVVVV** After severance of interest into TIC: if only one joint tenant remained, that joint tenant will be tenant in common If two or more joint tenants remain after the transfer, then a tenancy in common will exist for the severing tenant, but the remaining joint tenants will retain a joint tenancy with respect to each other *will always stay as tenancy in common unless legally reconveyed as joint tenant* **VVVVVVVVVVVVVVVVVV** If lien placed on one JT, never pays it, that jT dies, the lien is terminated upon the death of the dead JT * any mortgage attached to joint tenant's interest also disappears when that tenant dies and cannot be enforced against the deceased tenant's heir or the surviving tenant. ## Footnote * if multiple JT die= look to who dies first * (where there are three brothers at JTWROS, youngest brother sells his interest to another oldest, oldest brother now has a 1/3 TIC interest along with his 1/3 JTWORS, and when oldest dies middle child absorbs the 1/3 and now has 2/3, whichi will go to his heirs)

Question 27

concurrent estates: tenancy by the entirety

Answer 27

Joint tenancy between married perople Has *right of survivorship* TBE cannot convey *without* the other's consent **magic words**: property conveyed "as tenants by the entirety, with a right of survivorship" If grant is ambiguous, *presume* its JT or TIC

Question 28

Rights & duties of cotenants

Answer 28

*rights*: * Possess & enjoy entire property * Receive proportionate shares of net profits from removal of natural resources * Receive pro rata shares of rent from third parties **VVVVVVVVVVVVVVVVVVVVVVVVVVVV** *duties* * Pay proportionate shares of expenses that may give rise to lien (eg, mortgage, property tax), divided based on ownership interests of each co-tenant * **But a cotenant in sole possession can collect only for the amount that exceeds the property's rental value** * cotenant who pays more than his or her fair share of necessary property related expenses can generally compel the other co-tenant to contribute based on ownership interest of each co-tenant * There is no right to reimbursement from co-tenants for necessary repairs or improvements, unless there was an agreement * However, the co-tenant who makes the repairs can get credit in a partition action. * A co-tenant can collect contribution from the other co-tenants for payments in excess of her share of the operating expenses. **VVVVVVVVVVV** consent between cotenants in common consent required * convey entire co-owned property * obtain exclsuive possession over part of property * bind other cotenants interest in contract with third party (if they do this without consent, like in mortgage, it DOES NOT AFFECT THE COTENANT'S INTEREST, mortgagor can only foreclose on interest of cotenant who consented) no consent required * sell, lease, or devise personal ownership interest * possess entire co-owned property * extract minerals from co-owned property (unless committing waste)

Question 29

concurrent estates: partition

Answer 29

**Equitable Remedy** Available to all holders of a tenancy in common or a joint tenancy Tenants by the entirety do not have the unilateral right to partition. **Effect** The court will divide the property into equal portions. Courts have a preference for a physical division (i.e., a partition in kind). Court will order a partition by sale if the physical partitions: 1. Not even (e.g., land has complicated terrain); or 2. Not fair to all parties. **Proceeds** Proceeds from a partition by sale are divided among the co-tenants based on their ownership interests. **Agreement** Co-tenants can agree not to partition. Such an agreement is enforceable, provided: 1. The agreement is clear; and 2. The time limitation is reasonable.

Question 30

Fair Housing and Discrimination

Answer 30

prohibits discrimination (based on race, color, religion, national origin, sex, disability, and familial status- family and children under 18 and pregnant women) in the sale, rental, and financing of homes and in other housing-related transactions (such as advertising, homeowner’s insurance, and zoning) * prohibits refusing bona fide offer * prohibits discriminating in temrs, conditions, privileges, or services of purchase/rental * prohibits falsely representing dwelling availability for inspection/sale/rental * prohibits inducing sale/renting with discriminatory representations about neighborhood * prohibits denying reasonable modifications to accomodate handicap at occupant's expense also prohibits advertising that states a discriminatory purpose disability provision mandates reasonable accomodations for people with disabilities ***general exemptions***: 1. *Owner-occupied buildings with no more than four living units* (including the owner’s living unit) ***but*** this exemption does not apply to the ad restriction (ads/ making statement indicating limitation/preference based on protected characteristics), *unless* its a sex-based restriction for shared living area 2. *single-family housing* sold/rented without a broker, and 3. housing operated by *religious organizations and private clubs* that limit occupancy to members ***prohibitions***: 1. refusing to rent, sell, or finance a dwelling 2. requiring different rents 3. falseley denying a unit is available 4. providing different services to facilities *except* where making a reasonable accomodation for a disabled tenant 5. stating a discriminatory preference in an ad ***intent*** FHA allows for disparate treatment (intent) and disparate impact (effect) cases ***causation*** prohobited behavior must be linked to protected basis ## Footnote L advertises available 1-bedroom unit in one of his apt. buildings. two applicants apply, a black woman and white male. both filled out app and after running credit and background check, L rented unit to T. L didnt violate fair housing act, no evidence of causation.

Question 31

conflict of laws

Answer 31

*basic rule*: in cases about property, controling law is based upon where property is located *exceptions* 1. instrument desginates applicable jurisdiction 2. cases involving marriage, specifically with respect to classifying property as marital/separate, domicile of party may override law of situs 3. in mortgage cases, where mortgage docs require repayment to be made in another state 4. damages for fraudulent conveyances (not the valiidity of the fraudulent conveyance itself), suit for damages will be law of most interested state (look to where the plainitff's action in reliance and where false misrepresentations made) 5. for determining validity of will, location of testator's domicile is used BUT for the real property devised in will, the law of the state in which the property is located will be used ## Footnote tricky question: where divorce decree in state A ordered husband to transfer title of house in state B to wife and husband did so and but then conveyed a deed to the same house to his friend in state B who recorded first; state A was race-notice and state B was race jurisdiction, the friend would win.

Question 32

lease

Answer 32

creates a contract interest and a property interest

Question 33

tenancies

Answer 33

* four types, which involve a land-lord tenant relationship 1. the tenancy for years 2. the periodic tenancy 3. the tenancy at will 4. tenancy at sufferance **VVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVV** * each of these non-freehold estates normally include a duty on the tenant's part to pay rent * RAP doesnt apply to option to purchase land when its contained within lease of property and may only be exercised during term of lease * typically tenant permitted to assign his ENTIRE interest in leased premises to 3rd party (assignee) * A sublet is NOT AN ASSIGNMENT. * courts split as to whether tenants entire alienable interest includes option to purchase and whether option to purchase contained in lease can be assigned separately from lease

Question 34

tenancy for years

Answer 34

Measured by fixed and ascertainable amount of time (does not have to be for a yr, could be 6 mos) *creation*: agreement by langlord and tenant, with intent to create leashold if the term is logner thana yr , agreement must be signed and in writing because of SOF *termination*: automatically upon expiration of term, notice not required unless lease requires it before the term is over: tenant surrenders lease or tenant/landlord commit a material breach of lease (fail to pay rent) **VVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVV** * option to purchase property may be included in tenant lease so long as option exercised during term of lease ## Footnote At the end of the fixed term, a tenancy for years automatically expires. A tenant who remains on the premises after the lease expires without the landlord's permission is considered a tenant at sufferance.

Question 35

periodic tenancy

Answer 35

Estate that is repetitive and ongoing for a set period of time (month-to-month, year-to-year) Renews automatically at the end of each period until one party gives proper notice (before the start of what will be the last term) of termination *Creation*: Parties must intend to create a periodic tenancy Intent can be express (a signed lease) or implied (payment of rent) *Termination*: Renews automatically until proper notice is given Old approach: In a year-to-year lease, you must give notice at least 6 months in advance. New approach: Shorter notice requirements; many states have lowered to a month’s notice. Most jurisdictions require written notice of termination. Notice is effective on the last day of the period. ## Footnote Larry and Tara did not execute a formal lease agreement. Every month, however, Tara pays rent and Larry accepts the payment. This will create a periodic tenancy by implication. Larry leased Blackacre to Tara on a month-to-month basis. Tara gives notice of termination on February 15. Termination is effective March 31st.

Question 36

tenancy at will

Answer 36

Creation: * Express agreement * Implied when person allowed to possess premises without paying rent Duration * no specific term required * continues so long as landlord and tenant desires Termination * generally, tenant or landlord can terminate * At any time with reasonable notice (unless otherwise agreed) *if only one party is expressly given the right to terminate the leasehold, the arrangement may be deemed unconscionable if, for example, the arrangement is unfair due to one party's superior bargaining power.* * In such a case, both parties are given the ability to terminate the lease.

Question 37

tenancy at sufferance

Answer 37

**creation**: Implied when tenant keeps possession after lease expires (ie, holdover tenancy) temporary tenancy exists when prior tenant either evicts prior tenant /re-rents property to tenant tenant owes landlord reasonable value of her daily use (like rnet from prior lease) as well as reasonably foreseeable special damages **duration** Continues until terminated 1. tenant voluntarily leaves 2. landlord evicts tenant 3. landlord re-rents to tenant **termination** * Landlord evicts * Tenant vacates * Landlord accepts rent (forms periodic tenancy) *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. Therefore, the owner need not provide any notice before seeking to evict the manufacturer—a tenant at sufferance.*

Question 38

landlord-tenant

Answer 38

* day 1 of tenancy, landlord needs to deliver actual physical possession of property, **or else** in breach * **but** under american view = landlord only has duty to deliver legal possession, not actual possession at the start of the lease (protects landlord form new tenant suing landlord because hold-over tenant is still there)

Question 39

tenant duties-- to pay rent, no waste

Answer 39

* **do not** have to pay rent if landlord: 1. premises destroyes, so long as tenant did not cause the damage 2. the landlord completely/partially evicts the tenant (complete: removal of tenant from entire property; partial: removal of tenant from a part of the property) 3. the landlord materially breaches the lease **VVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVV** *breach of implied covenant of quiet enjoyment*: The tenant can withhold rent when the landlord takes actions that make the premises wholly or substantially unsuitable for their intended purposes, and the tenant is constructively evicted. * elements: 1. Premises were unsuitable for their intended purposes (i.e., breach of the covenant of quiet enjoyment); 2. The tenant notifies the landlord of the problem; 3. The landlord does not correct the problem; and 4. The tenant vacates the premises after a reasonable amount of time has passed. *breach of implied warranty of habitability*: The landlord has an obligation to maintain the property such that it is suitable for residential use. We are concerned with conditions that threaten the tenant’s health and safety. *Background points*: * The tenant cannot waive habitability protection; * The landlord’s failure to comply with applicable housing codes constitutes evidence of a breach; Applies to residential properties, usually multi-family buildings; not to commercial leases; IWH and rent: If the premises are not habitable, the tenant may: 1. refuse to pay rent; 2. remedy the defect and offset costs against therent; or 3. defend against eviction. **VVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVV** duty to: *avoid waste* * The duty to avoid waste is a background rule; it does not have to be expressed in a lease in order to apply. * The tenant has a duty not to commit affirmative (voluntary) waste or permissive (neglectful) waste. * A tenant may make changes to the property that increase the property’s value (“ameliorative waste”), unless the landlord and tenant agree otherwise. Landlords usually require permission before a tenant can make the change. *make ordinary repairs + provide notice to landlord*: * In a residential lease, the landlord is presumed to be responsible for repairs. The tenant must notify the landlord of any needed repairs.

Question 40

landlord duties- habitability, make repairs

Answer 40

*duty to mitigate damages* If the tenant abandons the property early or is evicted by landlord, does the landlord have an obligation to mitigate damages by re-renting the property? *Majority rule* * The landlord must make reasonable efforts to re-rent the property. * The landlord must treat leasehold as if it was vacant stock, that is, like any other property she would try to rent ( advertise, allow for viewings). * If the landlord does not make diligent efforts tomitigate, the tenant is relieved from the obligation to continue paying rent. * If the landlord does seek to mitigate, the landlord is entitled to the difference between the original rent and the rent received from the replacement tenant. * The landlord does not have to accept an unacceptable replacement tenant. *minority rule* Minority rule: The landlord does not have to mitigate damages. The minority rule is more common in cases involving commercial leases.

Question 41

Conditions of Leased Premises

Answer 41

The landlord cannot deny the tenant quiet enjoyment. In practice, quiet enjoyment is violated when the landlord, or someone connected to the landlord, renders the premises unsuitable for the intended purpose. *The landlord must control*: * common areas, such as a lobby, hallway, or laundry room; * nuisance-like behavior of other tenants (Remember: Don’t touch the stinky wall!). *The landlord does not have to control:* * Off-premises actions of third parties that are beyond the landlord’s control (e.g., the noisy bar across the street); * In a residential lease, the landlord must provide habitable premises. * If a tenant complains about conditions, the landlord cannot retaliate by evicting the tenant.

Question 42

Landlord and tenant: tort liability and transfers

Answer 42

*tort liability* The tenant owes a duty of care. This extends to invitees, licensees, and foreseeable trespassers. The landlord’s liability to invitees, licensees, and foreseeable trespassers is as follows: * *Common law*: Responsible in negligence for latent (hidden) defects about which the tenant has not been warned; Responsible for faulty work completed by the landlord (or the landlord’s agent) negligently; Responsible for negligence that causes injuries in common areas of the property. Payment of the tort judgment by the association is an expense of the association, and each member is liable for a share of the association’s expenses. * *modern trend* Landlords have a general duty of reasonable care. **VVVVVVVVVVVVVVVVVVVVVVVVVV** Silent lease: If the lease is silent on the issue, a tenant may assign or sublet freely. Permission: If the lease requires the landlord’s permission to transfer, but is silent as to the applicable standard, then: *Majority rule*: A landlord may deny permission to a transfer only for a commercially reasonable reason. *Minority rule:* A landlord may deny permission at her discretion, which means for any reason or no reason at all. *Transferring a landlord’s interest:* A landlord does not need the tenant’s permission before transferring her interest. The new landlord is bound by terms of the existing lease.

Question 43

Sellers of real property: negligence liability arising from dangerous condition on land

Answer 43

injured party **person on land** seller is liable for physical harm caused by natural or artificial condition if:  * condition existed at time of sale * seller knew or should have known condition existed & posed unreasonable risk to persons on land * buyer neither knew nor should have known of condition or risk *and* * seller had reason to believe buyer would not discover condition or realize risk *duration of liability*: If seller created or actively concealed condition: liable until buyer discovers condition & has reasonable opportunity to remedy it Otherwise: liable until buyer has reasonable opportunity to discover & remedy condition **person off land** seller liable for physical harm caused by artificial condition if: * condition existed at time of sale and * seller knew or should have known condition existed & posed unreasonable risk to persons off land

Question 44

seller of real property: defects

Answer 44

sellers required to disclose all known defects that will not be open and obvious to a buyer (latent defect), and are prohibited from concealing such defects in any way

Question 45

landlord tenant: sublease

Answer 45

* original tenant **remains** primarily liable for rent payment * sublease: give away **portion** of your term * t1 **still** owes rent * The subsequent tenant only has rent obligations to the original tenant. * BUT the owner has a right under the lease to receive timely monthly rental payments. If the owner does not receive the payments, the owner has a right to reclaim possession of the property from T2, even if T2 had been making payments to T1.

Question 46

landlord tenant: assignment

Answer 46

* **new** tenant becomes **primarily** liable * **give away rest and reaminde**r of lease term * new guy, t2, pays rent * **if he does not** pay landlord can go after t1 * **unless** novation ## Footnote T1 (through privity of contract) and the assignee (T2) (through privity of estate) are jointly and severally liable for the landlord's entire harm arising from a breach of the lease. sublease is NOT an assignment

Question 47

real estate contract: key elements

Answer 47

(1) must satisfy SOF (in writing, signed by party to be charged, include essential terms like parties description of property and price and paymnet info) * if it does not say parties name but it says the signed this counts as complete (2) Must include parties, price, terms, etc, k principles (3) execution of k = equitable conversion. * *risk of loss* placed with party with equitable title at the time property destroyed, unless other party is at fault for loss. * the seller retains legal title to real property during pendency of sales k (executory period) * but buyer receives equitable title once the k formed and can be specifically enforced. * but Uniform Vendor and Purchaser Risk Act, the risk of loss remains with the seller until the buyer takes possession of or receives legal title to the property. (4) marketable title implied in all real estate k's ( standard is that the seller, at the time of closing, deliver title to the buyer that is free from an unreasonable risk of litigation.) * If a seller cannot convey marketable title, the buyer can rescind the land-sale contract. * But if the buyer accepts the land with the defect and the seller refuses to perform, then the buyer can: (1) rescind the contract and seek restitution, (2) seek specific performance with an abatement of the purchase price, or (3) sue for damages. **VVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVV** *Exceptions to the Statute of Frauds* * Part performance: Partial performance by either the seller or the buyer is treated as evidence that the contract existed. If there is part performance, the buyer CAN STILL order specific performance of the contract even if he still has the deposit (this is like a type of liquidated damage) Look for acts of performance, such as: payment of all or part of the purchase price; posession by the purchaser; or improvements by the purchaser. * Detrimental reliance (also called estoppel): An estoppel doctrine that applies where a party has reasonably relied on the contract and would suffer hardship if the contract were not enforced. **VVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVV** liquidated damages clause allows the seller to retain the buyer's deposit if the buyer breaches the real-estate contract. A breach/failure to perfrom is insufficient to support the validity of the liquidated damages, ***more importantly*** the clause is enforceable so long as the amount of liquidated damages is reasonable (no more than 10 percent of the purchase price) But it may not be enforced if the seller suffered no actual loss. ## Footnote if a k doesnt specify otherwise, title doesnt have to be marketable until date of closing itself. conveyor may sell a property that he doesnt own yet, and purchaser cannot cancel contract before the closing on this basis Under a land-sales contract, the seller can use the proceeds from the sale to eliminate a mortgage obligation on the property. If the proceeds exceed the amount of the outstanding mortgage, then the title defect will be extinguished and the seller can deliver marketable title to the buyer upon closing. buyer may waive the right to have a marketable title zoning is not subject to enforcement by private suit; it can only be enforced by local govt officials equitable conversion: fact pattern will say land-sale k is silent regarding the risk of loss.

Question 48

unmarketable title

Answer 48

variety of defects that make title unmarketable (Calls for recission): * covenants * easement * liens * gaps in chain of title * boundary disputes * existing zoning violations * adverse possession if any of the above apply, then the buyer can refuse to purchase the land (recission) note: zoning violation may render title unmarketable, but mere existence of zoning code does not

Question 49

real estate closing date

Answer 49

* land sale contracts normally provide a settlement date for the closing to occur * When time is not of the essence, a party need not perform until closing or a reasonable time thereafter. * so long as the party can perform within a reasonable time, the other party cannot rescind the contract and must perform. * if there is an express provision in the contract making time of the essence, or an inferred provision, a party can enforce specific performance for a failure to close on the exact date specified OR can rescind the contract, even if the buyer's inability to perform at closing was justified (on date of closing, they were hospitalized-- still not discharged from duty and will rescind) ## Footnote * if the seller is faced with the purchaser's inability close due to a third party's actions, legal concepts relevant for seller to rescind the k are: parol evidence rule, sof, specific performance, and whether time is of the essence

Question 50

land sale contracts: implied warranty of fitness or suitability

Answer 50

Applies to defects in new construction In *most jurisdictions*, both the initial homeowner-purchaser and subsequent purchasers may recover damages. In a *minority of jurisdictions*, only the original buyer can enforce this warranty. Generally, suit for breach of this warranty must be brought within a reasonable time after discovery of the defect (but some jurisdictions have a statutory time period).

Question 51

land sale contracts: duty to disclose

Answer 51

A seller of residential property must *disclose* any known, material physical defects that cannot be reasonably discovered by the buyer. A defect is material if it: (1) substantially affects the value of the residence, (2) impacts the health or safety of a resident, *or* (3) affects the desirability of the residence to the buyer. **VVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVV** seller may disclaim any duty to disclose defects if the disclaimer is sufficiently clear and specific, like where contract specifically noted house sold "As is" no *misrepresentations* regarding condition of house but sale of new house by builder/seller may impose warranty of habitability

Question 52

adverse posession:

Answer 52

stay on property so long, get **TITLE** **must** be on property 1. *exclusive*: Possession cannot be shared with the true owner, although two or more people can join together to create a tenancy in common by adverse possession. 2. *continuous*: Possession must be continuous and uninterrupted for a specific period; Seasonal or infrequent use may be sufficiently continuous if it is consistent with the type of property that is being possessed 3. *open and notorious*: Possession must be open and notorious, such that a reasonable true owner would become aware of the claim; Uses that are hidden are insufficient to satisfy this requirement. 5. *hostile*: The adverse possessor must possess the land without the owner’s permission. **VVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVV** *Tacking* To satisfy the statutory period for adverse possession, an adverse possessor may tack on the predecessor's time if there is privity between them (possessor takes by nonhostile means like by descent, devise, contract, deed). **VVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVV** *Disabilities* The statute of limitations will not run against a true owner who has a disability at the time the adverse possession BEGINS (e.g., infancy, insanity, or imprisonment). * if person began adversely possessing and THEN owner became incapacitated, the time is still running The disability must exist when the trespasser enters the property. *Interruptions* A true owner can interrupt the adverse possession period by ejecting the adverse possessor. This will stop the adverse possession clock. **VVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVV** *Scope of Possession* * Adverse possession generally traces the legal boundaries of the property * Possession is adverse only as to any property owner with the current right to possess the unit at the time that the adverse possession began (if current owner has life estate, adverse possessor has a life estate measured by the true owner's life) * Exception—constructive adverse possession: Adverse possessor enters under color of title from an invalid instrument (e.g., fraudulent deed) and occupies a portion of the property described in the instrument. The adverse possessor is in actual possession of the occupied land and constructive possession of the remaining land described in the deed. * Includes sub-surface rights, unless those rights already belong to a third party * Easements can also be acquired by adverse possession (or prescription). *

Question 53

deed: key elements

Answer 53

**usually** deed is on date of closing also **must** be in writing SOF (in writing, Grantor's signature, Identity of parties, Words of transfer, and Property description) 1. must be **DELIVERY** of deed by **SELLER**= shows Intent to convey 2. acceptance is **PRESUMED** (nothing is needed) by **BUYER** **unless** facts say otherwise 3. **must** include legal description of property (so that a reasonable person can locate the land. metes and bounds= gps location. we usually use street address) 4. identifiable grantees (people getting property) 5. merger of real estate k (upon signing the deed, contents of k merge into deed; become incorporated. k no longer exists. just deed. if you sue, its based on deed. 6. execution of **LEGAL TITLE** (ownership) ## Footnote after closing, deed typically replaces real estate k as emobodiment of parties relationship, under merger most obligations imposed by k of sale discharged unless repeated in deed. **example**: if purchaser contracted for marketbale title but accepts quitclaim deed, purchaser wouldnt be able to sue on contractual provisions if title tursns out to be defective, unless marketable title was included as provisions on deed. real estate k's only relevant during gap between signing and delivery of deed. acquiring title by inheriting it, being gifted it , or buying it doesnt change type of conveyance/any legal rights new owner of title may have if grantee had agent complete paperwork for deed for fim, but dies before deed is delivered, it goes back to

Question 54

deed: equal dignities rule

Answer 54

legal doctrine requiring agent to perform all acts authorized by principal agent can perform acts **only** if the agent's authority is set in writing this is like corollary to the statute of frauds contract would be unenforceable unless reduced in writing contracts subject to SOF= authority to enter into such contract is also subject to SOF

Question 55

types of recording statutes

Answer 55

* race * notice * bfp

Question 56

recording statutes

Answer 56

* one owner, sells, gifts, mortgages, or has liens, and judgments filed against same propery * otherwise, statute does not matter * The "first in time, first in right" rule applies when there is no recording act to determine priorities or when the recording act does not apply (when the later interest was acquired as a gift)

Question 57

recording statute: race based

Answer 57

* first person to courthouse who records deed, wins! * Under a race-recording statute, a purchaser's knowledge of a prior conflicting interest—acquired by actual, constructive (i.e., record), or inquiry notice—is irrelevant. Instead, priority is based solely on who records first. * **magic words**: "first recorded" or :first to record"

Question 58

recording statute: notice

Answer 58

aka: pure notice last (or subsequent) BFP (bona fide purhcaser) with **no** notice- wins Under a notice statute a purchaser for value need only have purchased without notice of the prior interest to prevail. **magic words**: "in good faith" or "without notice" notice: actual, constructive (record), inquiry *actual* – when a purchaser has direct, personal knowledge of a prior interest *constructive* (i.e., record) – when notice is given through proper recording of a prior interest *inquiry* – when a reasonable investigation would have disclosed the existence of a prior interest. like someone's posessions and use of land which is open and notorious; she would have discovered by inspection of proeperty.

Question 59

recording statute: race notice

Answer 59

* **first** bfp who records- wins! * can be identified by the words "***without notice***" PLUS "***first to record***" * under this type of statute, the third-party would prevail over the seller only if the third-party both recorded its mortgage first and took without notice of the seller’s mortgage. ## Footnote remember inquiry notice: notice: under inquiry notice, if grantee is aware of facts or circumstances that would lead a reasonable person to inquire further, she is charged with constructive knowledge of all the facts a reaosnable investigation would have disclosed. like someone's posessions and use of land which is open and notorious; she would have discovered by inspection of proeperty.

Question 60

recording statute: bfp

Answer 60

* bona fide purchaser- someone paid for value and NO notice * paying for value could be mortgager, NOT inheritance, adverse possession, or creditor * notice would be like recording of a deed

Question 61

recording: special rules

Answer 61

*estoppel by deed: after-acquired title*: ensures that if a grantor purports to convey title that he does not actually hold, and he subsequently acquires title to the property, it will automatically effectuate the prior benefit conveyed to the grantee issue becomes whether buyer is considered a subsequent bona fide purchaser and what was his burden in searching title such a buyer may want to search the title before purchasing the land to determine if title is as called for in the k, but such a search is not required grantor may be estopped by grantee from denying conveyed valid title this right is only held by grantee against grantor grantee has no such right against subsequent purchaser When the grantor acquires ownership of the land, the after-acquired title is transferred automatically to the prior grantee. *shelter rule*: A person who takes from a bona fide purchaser protected by the recording act has the same rights as her grantor.

Question 62

notice: wild deed

Answer 62

A recorded deed that is not within the chain of title is a “wild deed.” Although generally a prior transferee of property who has recorded the conveyance is protected from the claim of a subsequent purchaser of the same property, a person who received a wild deed is not protected, even if they recorded. In ANY jurisdiction (race-notice, race, notice, person with WILD DEED IS NOT PROTECTED. Subsequent purchaser will ALWAYS WIN. **VVVVVVVVVVVVVVVVVVVVVV** Example: O sells Blackacre to A, but A does not record. Then, A sells Blackacre to B, and B records. Then, O conveys Blackacre to C, who has no notice of the earlier conveyances to A or B. Next, C records. Then, A records the deed from O to A. B sues C for title to Blackacre. What is the result? Under a race statute, C prevails even though B recorded the deed from A to B before C recorded the deed from O to C, because the deed from A to B was a “wild deed,” outside C’s chain of title. In performing a standard title search, C would have searched in the grantor index for deeds listing O as the grantor from the date the deed granting Blackacre to O was recorded to the date C recorded the deed from O to C. No deed from O to A would have been discovered in such a search, and without finding a deed from O to A, C would not be expected to look for a deed from A to B. Under a notice statute, C prevails because he had no actual notice of the conveyances from O to A and from A to B, and the deed from A to B did not give him constructive notice because it was a wild deed. In a race-notice jurisdiction, C prevails for a combination of the two reasons above: C had no actual or constructive notice of O’s deed to A, and B’s prior recording of the deed from A to B does not count because it is a wild deed.

Question 63

types of deeds:

Answer 63

1. general warranty deed 2. special warranty deed 3. quitclaim deed **VVVVVVVVVVVVVVVVVVVVVV** can be transferred during life or in devise, or if person dies intestate can be transfered by intestate succession **VVVVVVVVVVVVVVVVVVVVVV** *Breach and Remedies* * Breach of the present covenants occurs at the conveyance. * Breach of the future covenants occurs after the conveyance, once there is interference with possession. * Remedies: Damages

Question 64

void v. voidable deed

Answer 64

**Void** * Transfer of deed is invalid & cannot be enforced by bona fide purchaser if: 1. grantor's signature is forged 2. deed is forged (ie, falsely made or materially altered with intent to defraud) ***or*** 3. grantor is deceived about nature of executed document (thinks he is signing something that is not a deed) **Voidable** * Transfer of deed is valid until set aside & may be enforced by bona fide purchaser if: 1. procured by fraudulent inducement **or** 2. party lacks capacity to execute deed (eg, infancy, lack of capacity) **VVVVVVVVVVVVVVVVVVVVVV** *effect of void deed on mortgage* A forged instrument, such as a deed or release from a mortgage, is void and has no effect on property rights, even if relied upon by a bona fide purchaser. A forged release is not effective to terminate the mortgagee’s rights, even though the release was properly recorded and relied on by the buyer. A person cannot rely on a forged instrument. ## Footnote if oriingal mortgagor skips town after forging deed to buyer that states there is no mortgage, new buyer IS liable to bank for loan

Question 65

Practice of law in preparing deeds & closing documents

Answer 65

**Practice of law** * Preparing legal instruments for or giving legal advice to others * Mortgage-lender employees exercising legal discretion * Answering legal questions at closing * In some states, agents/brokers charging separate fee to prepare contract **Not practice of law** * Non-attorneys preparing legal instruments on their own behalf * Mortgage-lender employees completing standard mortgage forms with no exercise of legal discretion * In most states, conducting closing * In most states, agents/brokers preparing standard land-sale contracts in regular course of business

Question 66

presumptive delivery of deed

Answer 66

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. * intent to transfer can also be implied from the grantor's words or other conduct * 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 **VVVVVVVVV** *note on delivery element* if deed is delivered physically to a person, it is presumed to have completed delivery this presumption is not rebuttable since evidence of a oral condition (please do not record it until after i am dead) is inadmissible condition would not be enforceable, and that deed is rightfully that person's to record whenever

Question 67

transfer of deed to third party

Answer 67

**grantor's agent** * Transfer treated as if grantor retained deed, even when grantor instructs agent to deliver deed to grantee at some future time or upon happening of some event **grantee's agent** * Transfer treated as if it was made directly to grantee **Independent third party** * ***Transfer made with condition placed on transfer to grantee:*** * if grantor retains absolute right to recover deed, no transfer * if grantor does not, present transfer treated as present gift that cannot be voided OR conditional transfer creates future interest in grantee * ***Transfer conditioned on death of grantor (death escrow):*** * effective if grantor intends to make present gift * ineffective if grantor intends that gift be effective only upon grantor's death

Question 68

general warranty deed

Answer 68

The grantor of a general warranty deed guarantees that he holds six covenants of title. (1) present covenants * note: The statute of limitations begins to run at the time of conveyance; in most states, subsequent (future) grantees cannot sue an original grantor. 1. covenant of seisin: warrants that the grantor owns the land as it is described in the deed. 2. covenant of the right to convey: guarantees that the grantor has the right to transfer title. 3. covenant against encumbrances: guarantees that the deed contains no undisclosed encumbrances. (2) future covenants * note: Future covenants run with the land and can be enforced by remote (successive) grantees; SOL does not begin to run until the grantee’s rights are encroached. 1. covenants of quiet enjoyment: guarantees that the grantee’s possession will not be interfered with by a third party’s lawful claim for title. 2. warranty: guarantees that the grantor will defend against a third party’s lawful claim for title 3. further assurances: guarantees that the grantor will do whatever is necessary to perfect title should it turn out to be defective-- this covenant is not recognized in all states. ## Footnote THIS HAS NOTHING TO DO WITH PHYSICAL CONDITIONS OF A PROPERTY there are 6 types of warranties (gurantees) on quality of title (ownership) only. NOTHING TO DO WITH PHYSICAL QUALITIES. warranties: I am legal owner of land, i have right to convery land, no one else can stop me from doing it, if someone claims they have right, i will defend it, fix it, and pay for all expenses (you have nothing to worry about)

Question 69

quitclaim deed

Answer 69

* conveys only what title seller has, no promises * once k becomes deed on closing, all claims "quit"; have to bring claims before closing, after closing you can not bring any claims (seller cannot be sued!!!!) * may be giving you perfect title, but no gurantees * buyer beware! ## Footnote not about the physical condition of the property!

Question 70

special warranty deed

Answer 70

conveys clean title promises all is ok **while** current owner lived there ## Footnote not about the physical condition of the property!

Question 71

Doctrines affecting conveyance by will

Answer 71

*escheat* If a decedent dies without a will and without heirs, the decedent’s property goes to the state. *ademption* Causes devise to fail by either: 1. **extinction**: specifically devised property not owned by testator (or destroyed or fundamentally changed, like sold in foreclosure sale) at death 2. **satisfaction**: beneficiary received devised property (or other asset intended to satisfy devise) during testator's life In either case, the devisee takes nothing unless the will expressly states otherwise. * proceeds from the sale of the specifically devised asset—and any property acquired with those proceeds—become part of the general estate. * The general estate will then be distributed in accordance with the remainder of the will. *lapse and anti-lapse* *Lapse*: The intended beneficiary predeceases (i.e., dies before) the testator. Traditionally, the gift fails (lapses) and would fall to the residuary gift. *Anti-Lapse*: Every state has an anti-lapse statute to prevent a gift from failing because an intended recipient predeceased the testator. In most states, to qualify under an anti-lapse statute, the predeceasing beneficiary must be a relative of the testator who dies leaving issue. The statute replaces the intended beneficiary with a family member (the children of the beneficiary) who stands in the shoes of their parent and takes the gift on their behalf.

Question 72

trusts

Answer 72

A device for managing property with bifurcated ownership. One person (the trustee) owns property (legal title) for the benefit of another person (the beneficiary) who holds equitable title. *Charitable Trust*: Trust designed to benefit the public and is charitable in nature *Private Trust*: Trust designed to satisfy some legal purpose by giving property to a person or group for the benefit of another person or group. **VVVVVVVVVVVVVVVVVVVVVVVVVVV** *Settlor*: Person who creates the trust *Beneficiary*: Person who benefits fromthetrust * Holds equitable title (no obligations and all of the benefit); * Has standing to enforce the trust. *Trustee*:Person (can be an entity) who manages the trust property and holds legal title **VVVVVVVVVVVVVVVVVVVVVVVVVVV** Res: Property that is subject to the trust. Generally, a trust must contain property. Bifurcated transfer: Ownership is divided: * Giving someone legal title to act as the owner (trustee) * Giving someone equitable title to benefit from that ownership (beneficiary) **VVVVVVVVVVVVVVVVVVVVVVVVVVV** *Restraints on Alienation* Where do we see these restrictions? * Inter vivos grant of an estate smaller than a fee simple; * Devise of an estate smaller than a fee simple; * restriction on the transferability of an equitable property interest (e.g., a beneficial property interest held in trust), such as a spendthrift clause * Co-tenant agreement; * Covenants that run with the land; * Easements. *Rules about restraints* An *absolute restraint* on alienation is void; A *partial restraint* is valid if it is for a limited time and a reasonable purpose; A restriction on the use of property is generally permissible (covenants). *effect of the restraint on alienation* If the restraint is *valid*: Any attempt to alienate the property will be null and void. If the restraint is *invalid*: The restraint is rejected and the property can be alientated in violation of the restraint.

Question 73

doctrines affecting conveyance by will: exoneration

Answer 73

* Allows beneficiary of specifically devised real property to use estate's remaining assets to pay off any encumbrances (like a purchase-money mortgage) on that property * The common-law exoneration-of-liens doctrine applies when a devisee receives a specific devise of real property (like a house) that is subject to an encumbrance (e.g., mortgage, lien). ## Footnote *Most states have abolished this doctrine, and payment of an encumbrance on devised real property is required only if the will so specifies.

Question 74

mortgages

Answer 74

* security interest in real property held by a lender as a security for debt, usually a loan of money * mortgage is not a debt itself, it is a lender's security for a debt * its a transfer of interest in land from the owner to the mortgage lender, on the condition that this interest will be returned to the owner when the terms of the mortgage have ben satisfied/performed * loan using property as collateral, includes: 1. promissory note= promises to pay back $ and interest 2. mortgage doc= if you do not pay back $, property goes up for sale, and they keep proceeds **VVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVV** * debtor (mortgagor) can freely transfer the mortgaged property to a grantee unless the mortgage states otherwise. * After the conveyance, the mortgage remains attached to the property and the debtor remains personally liable for the debt secured by the mortgage. * debtor is *relieved* of personal liability for the mortgage debt if the lender releases or impairs the mortgaged property. **VVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVV** A mortgage is generally enforceable only to the extent that the underlying obligation is enforceable. A mortgage is subject to the same defenses as the underlying obligation secured by the mortgage (mistake, duress, lack of capacity, statute of limitations)

Question 75

Doctrines affecting conveyance by will: abatement

Answer 75

* Reduces devises that cannot be satisfied by assets remaining after testator's debts are paid * Residuary devises abated first, followed by general & then specific devises

Question 76

mortgage: purchase money

Answer 76

* money borrowed goes to buy the house * ALWAYS HAS PRIORITY * A seller-financed purchase money mortgage generally takes precedence over a third-party (bank) purchase money mortgage. * if you face other debts, the one paid back first is purchase money mortgage

Question 77

mortgage: lien theory

Answer 77

* most states are lien theory states * bank has a lien (like a mark on the title) on property, resident has **LEGAL** title (legal ownership of property) * lien removed when you pay off mortgage ## Footnote Under lien theory, JT would still be JT

Question 78

mortgage: title theory

Answer 78

* bank has **LEGAL** title, resident has equitable interest (right to live there), when they pay off the mortgage they receive the title * bank has the deed * you can **not** sell the home until you pay off mortgage (side note: or you can ask bank for permission?) ## Footnote example: in title theory, you take out mortgage, so now you have given bank title, which is conveyance. If you were joint tenant, it would be severed into TIC.

Question 79

mortgagee in possession

Answer 79

a few situations in which mortgagee entitled to take possession of property before mortgage is paid off or foreclosed upon if mortgagee does so, he is mortgaee in possession when mortgagor abandons the premises and stops paying their mortgage, mortgagee is entitled to take possession and administer property to maintain value of his security interest * once mortgagee takes possession, he has duties that are roughly parallel to those of the actual owner * he must maintain property in reasonable condition and must credit any rents against mortgage debt

Question 81

mortgages: subject to

Answer 81

* when buyer buys land, subject to mortgage, whoever took out the mortgage still keeps the mortgage * but if original owner fails to pay, bank can still foreclose when new owners are there * if there is no mention of whether loan is subject to or assumable, ***presume*** it is **subject to**

Question 82

mortgages: assumable

Answer 82

* an existing mortgage on a property which has not been paid off yet and someone new buys that property with the mortgage * new owner becomes personally liable on the note * bank can go for the 1st person that took out loan or the new person **unless** novation between 1st person with loan and bank, in which case cant go after original party * A buyer who assumed a mortgage as part of the purchase price may not raise defenses (duress, statute of limitations, lack of legal capacity)) that the debtor could have raised to avoid the mortgage obligation, because the buyer would be unjustly enriched. * **but** a donee can * person can receive a property which used to be subject to mortgage and agree to receive it as ASSUMING the mortgage

Question 83

Suretyship rights (Recourse for secondary obligor)

Answer 83

where mortgagor (borrower) transfers property to a transferee (person receiving property) ASSUMING the mortgage 1. specific performance= Court order requiring primarily obligor to specifically perform all or part of his/her contractual duties 2. Reimbursement= Repayment for secondary obligor fulfilling all or part of primary obligor's underlying contractual duties (for example, a transferee defaults on an assumed mortgage and the mortgagor then pays that debt, the mortgagor can seek reimbursement from the transferee under the law of suretyship.) 3. Restitution= Repayment to secondary obligor to avoid unjust enrichment to primary obligor even when no duty exists 4. Subrogation= Secondary obligor given rights of primary obligor & is protected as though an assignment of rights occurred

Question 84

Suretyship rights (Recourse for secondary obligor)

Answer 84

where mortgagor (borrower) transfers property to a transferee (person receiving property) ASSUMING the mortgage 1. specific performance= Court order requiring primarily obligor to specifically perform all or part of his/her contractual duties 2. Reimbursement= Repayment for secondary obligor fulfilling all or part of primary obligor's underlying contractual duties (for example, a transferee defaults on an assumed mortgage and the mortgagor then pays that debt, the mortgagor can seek reimbursement from the transferee under the law of suretyship.) 3. Restitution= Repayment to secondary obligor to avoid unjust enrichment to primary obligor even when no duty exists 4. Subrogation= Secondary obligor given rights of primary obligor & is protected as though an assignment of rights occurred

Question 85

alternative means to establish mortgage

Answer 85

*deed of trust* Operates like a mortgage but uses a trustee to hold title for the benefit of the lender (i.e., the beneficiary of the trust receiving the payments) **VVVVVVVVVVVVVVVVVVVV** *installment land contract* * Debtor agrees to buy land through installment payments & gets immediate possession, but seller keeps legal title until paid in full * Traditionally, a buyer who missed a single payment was deemed to have defaulted on the contract, and the seller could keep all prior installment payments and take back the property * Today, states handle a **buyer's failure to pay** in one of three ways: 1. Allow the seller to retain ownership of the property but require some form of restitution to the buyer 2. Offer the buyer an equitable right of redemption ( buyer can keep the property by paying the full balance of the installment contract at any time prior to the foreclosure sale) 3. **Treat** the **installment land contract** as a **mortgage**, so the **seller must foreclose** to gain title to the property and the **buyer** has an **equitable right of redemption** and other protections * If the installment contract contains an acceleration clause, then the full balance due under the contract is due upon default and the buyer must pay it to redeem the property (does not matter if buyer fulfills other terms of loan, like paying insurance premiums on time. what matters is that if its accelerated, he pays the accelerated amount) **VVVVVVVVVVVVVVVVVVVVVVVVVVV** *absolute deed* transfers title free of all liens and encumbrances—given with the **intent to secure a debt** is generally enforceable as an **equitable mortgage**. * But competing equities (e.g., good-faith purchaser) take precedence over an equitable mortgage. **VVVVVVVVVVVVVVVVVVVVVVVVVVV** *conditional sale and repurchase* The owner sells property to the lender who leases the property back to the owner in exchange for a loan. The lender gives the owner the option to repurchase after the loan is paid off. ## Footnote In a jurisdiction that treats an installment land contract like a mortgage, a buyer in default may redeem the property by tendering to the owner the full balance due under the contract prior to foreclosure.

Question 86

statutory right of redemption

Answer 86

if statute exists, for the Statutory period **after** property has been sold in foreclosure, debtor can pay foreclosure sale price to purchasing party to reclaim the property within a fixed period of time (typically between three months and two years).

Question 87

Common mortgage provisions

Answer 87

**due on sale clause** * Allows creditor to demand entire loan due & payable if debtor defaults **acceleration clause** * Allows creditor to demand entire loan due & payable if debtor sells mortgaged property without permission **Due-on-encumbrance clause** * Allows creditor to accelerate mortgage obligation (demand immediate payment) if debtor obtains second mortgage or otherwise encumbers property **Defeasance clause** * Requires creditor to give debtor legal title to property & release mortgage lien once all payments are made

Question 88

foreclosure: mortgage

Answer 88

* A mortgagee (lender) may foreclose on a mortgage when the obligation to which the mortgage relates is in default (when the mortgagor [debtor] fails to make timely loan payments) * in foreclosure, the mortgagor's interest in the property is terminated * property is generally sold to satisfy the debt in whole/part * priority of morgage is determined by time placed on property * when mortgage is foreclosed, buyer at sale will take title as it existed when mortgage was placed on property This typically occurs when the mortgagor (debtor) fails to make timely payments on the mortgage loan. * ***BUT WHERE*** the owner took a nonrecourse loan (a loan secured by collateral) owner (borrower) is not personally liable, meaning if there is a deficiency they cant hold borrower personally liable to ge the rest of the $ (facts can be confusing, can say borrower took out nonrecourse loan secured by mortgage)

Question 89

mortgage: equitable redemption

Answer 89

* *After* default on the obligation, but *prior* to a foreclosure sale, the mortgagor may retain the property under the doctrine of equity of redemption by paying the amount of the loan obligation currently owed, which, if there is an acceleration clause, can be the full amount of the unpaid loan obligation, plus any accrued interest. * when you owe/are behind on mortgage and are afraid of/are undergoing foreclosure, redemption is paying off what you owe to stop foreclosure * redemption occurs from notice (you get letter that says you owe x. land foreclosure date is y.) of foreclosure up until the date of foreclosure sale * can never be waived * **ALWAYS** retain this right ## Footnote if you see a fact pattern where someone can foreclose after x amount of time, but there is no foreclosure sale mentioned, this is not allowed! there must be a foreclosure sale which is the end point of borrower's time to redemption

Question 90

mortgage: foreclosure--> junior and senior interests

Answer 90

* Lien priority is determined by the "first in time, first in right" rule ***unless a recording act applies*** * under this rule, liens that arise first (senior liens) typically have priority over liens that subsequently arise (junior liens). * ***But if*** the jurisdiction has an applicable recording act, then the recording act will determine priority. * foreclosure will terminate interest junior to mortgage being foreclosed, but will not affect senior interests * junior mortgages, liens, leases, easements and all other interests will be wiped out if they are junior to mortgage being foreclosed * foreclosure does not affect any interest senior to the mortgage being foreclosed * if lien senior to that of mortgageee is default, junior mortgagee has right to pay it off in order to avoid being wiped out by its foreclosure * those with interests subordinate to those of foreclosing party are necessary parties to foreclosure action * failure to include necessary party results in preservation of party's interest despite foreclosure and sale (JUNIOR MORTGAGE!) * buyer takes subject to such an interest and doesnt become personally liable on such senior investments **VVVVVVVVVVVVVVVVVVVVV** Modification of a senior mortgage (or the obligation it secures) generally has no impact on the senior mortgagee's priority over junior mortgages or liens. However, a modification that materially prejudices a junior interest (increase in interest rate) will subordinate the senior mortgagee's interest only as to the modification. The senior mortgagee's original interest will therefore remain superior to the junior interest. Additionally, if an original mortgagee loans an additional amount to a mortgagor that is optional rather than obligatory such amount may *not* enjoy priority over a second mortgage if the original mortgagee has notice of the second mortgage. This is true even though the mortgage by its terms serves as security for future advances. ## Footnote if landowner took out mortgage from two different sources, first source recorded has priority and doesnt need to foreclose a smaller parcel just because there is another source which landowner took mortgage from. pro rata foreclosure might prejudice rights of bank, where two mortgages dont cover different tracts of land. watch out for When there no recording act is provided, the "first in time, first in right" rule is used to prioritize interests. (does not matter if it is junior vs senior interest) if ther is a recording act, value, they offer protection to mortgage (paid value) interests but not necessarily judgment liens.Since recording acts protect purchasers for value

Question 91

mortgage: foreclosure--> proceeds of foreclosure

Answer 91

* proceeds of foreclosure sale used 1. first to pay expenses of sale, attorneys fees, and court costs and then 2. to pay principal and accurued interest on loan that was foreclosed (mortgage obligation), 3. next to pay off any junior liens or other junior interests in order of priorirty (the more recent, the more junior) 4. and finally any remaining proceeds distributed to mortgagor * if the proceeds of the sale are insufficient to satisfy the mortgage debt, the mortgagee can bring a personal action against the mortgagor/debtor for the deficiency

Question 92

mortgage: foreclosure sale types

Answer 92

judicial sale (sall states) * Judicially supervised public sale of mortgaged property nonjudicial sale (half of all states) * Privately conducted public sale of mortgaged property (permitted only if mortgage contains power-of-sale clause) * a trustee can initiate nonjudicial foreclosure in about half of all states if the mortgage or deed of trust contains a power-of-sale clause * trustee to sell the property at a public auction without requesting permission from the court.  * BUT , the debtor can ask a court to overturn the foreclosure if the auction or sales process violated due processor the purchase price was grossly inadequate * Courts have consistently been unwilling to impose a "fair market value" standard on the purchase price, so the lender can credit bid up to the amount of the outstanding debt without paying additional cash * winning bid is often below fair market value. Strict foreclosure (few states) * Foreclosure without sale of mortgaged property **VVVVVVVVVVV** A debtor may give his/her interest in real property to a lender to secure a debt—usually through a mortgage or a deed of trust.  A deed of trust is created when the debtor conveys the property interest to an impartial third party, as trustee, who holds title to the property for the lender's benefit.  If the debtor pays the debt in full, then the trustee must reconvey the property to the debtor.  But if the debtor defaults on loan payments, the trustee can initiate foreclosure proceedings

Question 93

foreclosure substitute

Answer 93

* if there are no other liens against the property, the bank can accept the deed in lieu of foreclosure and receieve a free and clear title to the porperty * if the homeowner gives the bank the property voluntarily, it is a viable foreclosure substitute * the bank will impliedly retain the right to foreclose UNLESS IT HAS ACTUAL KNOWLEGDE OF A JUNIOR LIEN, then it will not be able to foreclose on its mortgage to eliminate that junior lien

Question 94

chain of title: recording deed

Answer 94

* all parties to mortagage/deed of trust can transfer their interests * mortgagor usually transfers by deeding property * mortgagee usually transfers by endorsing the note and executing a separate assignment of the mortgage * mortgage follows note, but note alone is insufficient * note and mortgage must pass to the same person for the transfer to complete ## Footnote where mortgage company sold man's note and mortgage to a bank, delivered to bank written assignment of the same, and bank recorded asignment, then woman purchases same note and mortgage from mortgage company at later date, the bank has already recorded and secured its ownership of assignment, putting woman on notice its te and mortgage

Question 95

subrogation

Answer 95

* where there are multiple mortgages given on a property, and none are purchase money mortgages, priority is determined according to which mortgage came first in time; **BUT** under doctrine of equitable subrogation, a person other than mortgagor who pays off mortgage can step into shoes of now-paid-off- mortgagee * this is done to the extent necessary to prevent unjust enrichment. * subrogee may seek reimbursement from the debtor (the former owner) or enforce the mortgage. * subrogee can also foreclose on property, even in lien theory ## Footnote example: manager and the bookkeeper own the store as tenants in common with equal ownership interests. They they took store subject to mortgage; they are not liable for the mortgage debt. But as cotenants, the manager and the bookkeeper still owe each other a duty to pay their proportionate share of necessary expenses. Here, a necessary expense arose when the bank threated to foreclose on the mortgage and the manager paid the owner's debt in full to prevent the foreclosure. If manager pays off mortgage, she can enforce the mortgage against the bookkeeper's one-half interest in the store to recover the bookkeeper's share of necessary expenses. look at picture

Question 96

rights in land: easements

Answer 96

* one owner lets another do something on their land * not about title!! * not always in writing * if its in writing= **express** * non-possessory right of way * will last as long as you want it to

Question 97

rights in land: easements created by

Answer 97

**express**: * Uses intended by parties OR reasonably necessary to use/enjoy easement if intent is unknown * Expansion of use permitted * If an express easement specifically limits that easement in a particular manner, this limitation is binding on the holder of the dominant estate. * BUT if location of easement is not specified, then the servient-estate owner may fix the easement to a reasonable location * negative easement (or “restrictive covenant”) = prevents the owner from using land in particular ways in order to benefit the land of the holder of the easement. MUST be expressly created by a writing signed by the grantor, and it is typically recognized only in relation to restricting use of light, air, support, or stream water from an artificial flow. **necessity**: * one party is landlocked and only way to public road is to cross your land. * when this happens, a right-of-way for absolute necessity is created by IMPLIED grant over the lot with access to the public road or utility line * only lasts as long as its necessary, could be forever. * Limited to scope of prior use * No expansion of use * **implication**: * implied from prior use that you would have continued right because you have been doing it for a period of time. * no statute here. * lasts forever * Normal uses needed for dominant estate (eg, ingress/egress, utility lines) * Expansion of use permitted **prescription**: * easement version of adverse possession. * use right to land for statutory period of time. lasts in perpetuity. * Limited to scope of adverse use during prescriptive period * No expansion of use * **Exception**: tenants CANNOT acquire a prescriptive easement over the leased premises since they have permission to use them OR other lands owned by their landlord because tenant's stand in their landlord's place during the lease and therefore lack an adverse intent **easement appurtenant:** * when two tracts of land, dominant tenement (benefit of easement) allows the subservient tenement (subject to easement right) to physical use/enjoyment of dominant tract * transfers with the land regardless if mentioned in conveyance **FOR ALL OF THESE, THE SERVIENT OWNER'S USE MUST BE consistent with easement's terms AND does not unreasonably interfere with its use/enjoyment** ## Footnote **owner of the easement has the right as well and duty to:** maintain the easement for its purpose unless the parties otherwise agree, and may be liable for damages caused to the servient estate for negligent or intentional violations of this duty, but is not strictly liable for any damage suffered by the servient estate from the use of the easement. **If the easement is shared** an owner may seek contribution from the other owners of the easement for the cost of reasonable repairs and maintenance, in proportion to their use. The owner of the servient estate also has an obligation to contribute to repair or maintenance of an easement if the servient estate owner uses the easement.

Question 98

rights in land: easements terminated by

Answer 98

easement lasts forever, **unless** legally terminated 1. **abandonment**: stop using it *AND* express intent to not come bank. non-use alone isnt enough 2. **merger**: when the 2 properties are owned by 1 person. you acquire land upon which you have right to enter. 3. **destruction**: servient estate condemned or destroyed by natural forces 4. **prescription**: servient owner prevents use for prescriptive period 5. **Estoppel**: dominant owner estopped from asserting easement 6. **release**: express release in writing satisfying the SOF ## Footnote mnemonic: DAMPER

Question 99

easement: profit

Answer 99

A profit is a nonpossessory right to enter another’s land and remove specific natural resources (such as oil, gas, minerals, timber, or game). * because profit is interest in land, the profit holder is entitled to compensation if the government condemns the property under the power of eminent domain * this is true regardless of whether the profit holder paid value or has an exclsuive right to remove the resources Profits are created and analyzed similarly to easements, except that profits cannot be created by necessity; can be implied based on prior use A profit is terminated by merger when the an owner acquires the property to which the profit was tied (like owner of servient becomes owner of dominant too) As a property right, a profit is subject to the applicable recording act. * regardless of type of recording act, if a new buyer of the land which is being proffited from recorded his deed without notice of the other person's profit, the new buyer’s interest in the land should not be encumbered by the profit, and the court is likely to grant the injunction to stop the profit

Question 100

rights in land: License

Answer 100

* permission to enter land of another, for a period of time, **but** revocable at will by grantor and immediately terminated upon death of either party or conveyance of licensed property * **least** powerful of the rights * not in interest in land, can be oral, does not need to satisfy SOF **VVVVVVV** license may become irrevocable, and the licensor may be estopped from revoking it, if the licensee expands substantial money, labor, or other resources in reliance on the license

Question 101

rights in land: covenants

Answer 101

**Covenants:** A PROMISE concerning the use of the land that runs to successors to the promise. * The remedy for a breach of a real covenant is DAMGES ($) *When an agreement binds a successor, it “runs with the land.”* **Requirements to Run With the Land** (To bind a successor) **1) In Writing** Covenant is in a writing that satisfies the statute of frauds **2) Intent** promising parties intend for the covenant to run to their successors in interest (deeds say “the owners, their heirs, and their assigns”) **3) “Touch and Concern” the land** (Not heavily tested) Covenant relates to the use, enjoyment, or occupation of the land **4) Notice** * *Person to be bound* had notice of the covenant actual or constructive * Inquiry notice only suffices for equitable servitude **5) Privity** (Heavily Tested) *HORIZONTAL PRIVITY* – promising parties simultaneously transfer the land and create the covenant in the same instrument (e.g., the deed). * This means that there must be some shared property interest apart from the covenant itself, such as a landlord-tenant relationship or the relationship between a buyer and seller of land, for the covenant to run with the land and bind a subsequent holder of the property. *VERTICAL PRIVITY* – successors have an unbroken chain of ownership from the original parties. * *Strict Vertical Privity:* successor must take the original party’s ENTIRE interest. (FSA > FSA) * *Relaxed Vertical Privity:* the successor need only take an interest that is CARVED OUT of the original party’s estate. (FSA > FSD) * *RULE:* In order to run the (burden/benefit) of the covenant to the succcesor, they need: To BIND a successor to the promise, succesor needs to have * Horizontal privity AND Strict Vertical privity For a successor to be ABLE TO ENFORCE the promise, successor needs at least: * Relaxed vertical privity ## Footnote person with horizontal and strict vertical privity can also ENFORCE !

Question 102

real covenant: intent

Answer 102

* both parties must have intended that succesors in interest be boiund by terms of covenant * can be inferred from circumstances surrounding creation of covenant/actual language in conveyance * in common law jurisdictions, a purchaser of land that was subject to a covenant takes the land burdened by the covenant * doesn't matter whether purchaser had notice of covenant prior to purchasing * **in recording statute jurisdictions**, if the covenant is not recorded, a bona fide purchaser who has no notice of the covenant and records their own deed will take possession of the land free of the covenant

Question 103

real covenant: touch and concern the land

Answer 103

* covenant must have an effect that makes the land itself more useful or valuable to the benefitted party * performance of burden must diminish the rights, privileges, or powers of the landowner in order to run

Question 104

real covenant: privity

Answer 104

* must have horizontal and vertical privity * **horizontal privity**= at time promisor entered into covenant with promisee, the two shared some interest in the land independent of the covenant * **vertical privity**= successor in interestgto the covenanting party holds the entire durational interest held by the covenantor at the time they made the covenant

Question 105

rights in land: equitable servitude

Answer 105

* also called implied/negative recipricol servitude * restriction on use of lands, looks like restrictive convenant, **but** found in subdivision (common plan **or** scheme) * An equitable servitude can be implied from a common scheme if: 1. the owner intended to create a common scheme, 2. the intended servitude was restrictive, and 3. persons to be bound had notice of the servitude. **But it cannot be enforced against lots sold before the common scheme arose.** * look for restrictive covenant -> breach of covenant -> seeking injunction instead of damages = equitable servitude * equitable remedies: **INJUNCTION** ## Footnote if it says notice act, party must be bfp, meaning covenant will not be enforced against him if he paid and did not have notice (recording deeds with covenants does not show up in a title search, and would not provide notice)

Question 106

equitable defenses

Answer 106

available, including unclean hands (plaintiff not acting in good faith) and laches (unreasonable delay)

Question 107

common interest communities

Answer 107

Real estate development in which individual units/ lots are burdened by a covenant to pay dues to an association The association: * Services: Maintains grounds, provides facilities, etc. * Enforces the covenants: The association is the “heavy” when your neighbor breaks the rules. **VVVVVVVVVVVVVVVVVVVVVVV** *types* * owners associations: where property owners belong and pay dues to association/board * condominiums: where individual units are owned outright, but common areas owned collectively as tenants in common * cooperatives: property is owned by corporation (made up of residents/shareholders) that leases individual units to shareholders (residents) **VVVVVVVVVVVVVVVVVVVVVVV** *governance* *Declaration*: The governing documents that outline the controlling covenants and restrictions, as well as the particulars about the association or board. *Powers*: The board has general powers to manage the common property and administer the residents. For example: * Assessments/fees; * Manage and maintain the common property (clubhouse, gym) * Enforce rules; * adopt reasonably rules to govern the use of common and individually owned property to protect the common property (this is an implied power) *Basic test*: A new rule must be reasonably related to further a legitimate purpose of the association (think: rational basis test). * REMEMBER, the board has power to adopt rules to protect common property, but NOT THE BROADER POWER TO ADOPT ANY RULE RESTRICTING THE USE OF INDIVIDUALLY OWNED PROPERTY WITHIN THE CONDOMINIUM *duties* To the community: The association must deal fairly with members of the community. * Good faith; * prudence; * Ordinary care; * Business Judgment Rule controls (the board is shielded from honest but mistaken business decisions).

Question 108

landlord tenant: fixtures

Answer 108

* fixtures are chattel (property **so** affixed to land) that by removing them, you would damage property * you **can not** take it * **never** infer damages to property * but if you **buy** property with a fixture, you have the right to remove it **VVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVV** Absent an agreement to the contrary, a non-freehold tenant (the tenancy for years/ at will/ at sufferance/ periodic) can remove a fixture that the tenant has attached to the leased property if 1. the leased property can be and is restored to its former condition after the removal, and 2. the removal and restoration is made within a reasonable time. * *reasonable time*: fixtures attached to a leased property by tenants must generally be removed before the lease terminates, but they can be removed within a reasonable time thereafter if the termination was not due to the tenant's breach *and* the tenant could not have foreseen termination early enough to permit removal before the elase terminates. **VVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVV** If the leased premises cannot be restored to its former condition, then the tenant can remove the fixture only with the consent of the landlord. ## Footnote a **trade fixture** is chattel used in a trade or business that is attached to real property, such as a display counter in a retail store or a stove in a restaurant.

Question 109

land use: zoning basics

Answer 109

state and local govt may regulate use of land through zoning laws zoning laws are enacted for the protection and safety of the community segregate incompatible uses from being developed in the same area (residential v. commercial and industrial) *cumulative zoning*: the traditional approach, residential use permitted everywhere, commercial restricted to some areas, industrial allowed in fewest areas *mutually exclusive zoning*: some jurisdictions have developed approach where only one type of use permitted by zone

Question 110

land use: zoning --> nonconforming uses

Answer 110

(1) ***existing nonconforming properties*** When zoning is changed and a structure does not satisfy the zone’s requirements, it is called a “nonconforming use.” The goal of the property owner is to get the nonconforming use grandfathered in *Vested rights*: If the project is in process when the change happens, the developer must have the proper building permits by the time the ordinance takes effect. The developer must also demonstrate the project was in good faith. (2) *post-ordinance nonconforming properties* When the property owner requests a change after the zoning ordinance is in place. *Variance* Owner applies for a variance, essentially permission to violate the zoning rules. 1) *Use variance*: Obtain the right to use property in a manner not permitted by zoning 2) *Area variance*: Focuses on restrictions concerning property development. *Standard* The person applying for a variance must show ALL of the following: * Compliance would create unnecessary hardship; * The hardship arises from circumstances unique to the property; * The owner did not create the hardship; * The variance is in keeping with the overall purpose of the ordinance; and * The variance will not cause substantial harm to the general welfare. ## Footnote note on creating hardship: if man moves into place where zoning requires 2 acres of land for each house, and he moves into 3 acre land and build his house such that he can not add another house on the land for his daughter to take care of him in old age (he faces running out of money and having to go to nursing home), this is self-imposed. he could have built the house another way to comply. no variance is granted

Question 111

land use: nuisance

Answer 111

*Private nuisance* A substantial and unreasonable interference with another individual’s use or enjoyment of his property. * Substantial: One that would be offensive/ inconvenient to an average person in the community. * Unreasonable: The injury out weighs the usefulness of the defendant’s actions. **VVVVVVVVVVVVVVVVVVVVV** *Public nuisance* Unreasonable interference with the health, safety,or property rights of the community. Private party: Must show that she suffered a different kind of harm than the rest of the community. **VVVVVVVVVVVVVVVVVVVVV** *Remedies* Usual remedy is damages If money damages are inadequate or unavailable, the court can impose injunctive relief.

Question 112

land use: water rights

Answer 112

Two basic approaches: (1) *Riparian Rights* Doctrine of riparian rights holds that land owners who border a waterway own the rights to the waterway. The right depends upon whether the landowner is located near the water. Riparians share the right to reasonable use of the water, such that one riparian is liable to another for interference with the other’s use. (2) *Prior Appropriation* First in time, first in right: The first person to usethe water, regardless of where their land is located, has the rights to the water. Beneficia luse: In a prior appropriation jurisdiction, the user must put the water to a beneficial use. Any productive use satisfies this standard.

Question 113

land use: support rights

Answer 113

(1) *Lateral Support Rights* A neighboring landowner cannot excavate so as to cause a cave in (subsidence) on an adjacent owner’s land. Applicable standards: * Did the neighbor’s buildings (structures) contribute to the cave in (look also to see if there has been an improvement to th eland, like they built a factory or barn on it)? If so, the standard to apply to the one excavating is negligence * What if the neighbor’s buildings did not contribute to cave in (look also to see if land was in its natural state)? The standard to apply is strict liability. (2) *Subjacent Support* Think mineral rights. The surface landowners have the right not to have their land subside from the activities of the owners of underground rights.

Question 114

owner of emblements

Answer 114

**planted, cultivated crops** are personal property and will pass with the land ***except*** where they are: * harvested (severed from land), * ripe (mature- some courts only), * planted by tenant with indefinite leasehold ***or*** * planted by adverse possessor under claim of right **wild, uncultivated crops** * part of real property and pass with the land

Question 115

condemnation

Answer 115

**taking of land for public use or because it is unfit for use** *partial condemnation*: * only a portion of the leased property is condemned or the property is temporarily condemned * tenant must continue to make rent payments. * tenant is entitled to compensation for the portion of the property that was condemned or the time he was dispossessed from the leased property. *complete condemnation*: * entire leased property is taken for the balance of the lease term * then the tenant is discharged from his rent obligation and is entitled to compensation for the taking.

Question 116

title insurance

Answer 116

* lender's policy of title insurance ends when loan is repaid * owner's policy of title insurance continues to protect owner if owner is ever successfully sued on a title covenant in a future conveyance * does not matter that buyer conveyed land to another purchasers BOTH owner and lender's title insurance policies protects insureds- NAMED people covered by policy-- from undisclosed title defects by requiring insurer to indemnify (compensate) the insureds for any resulting losses. insurer is only responsible for title defects that * are not disclosed in the insurance policy AND * affect the NAMED insureds

Question 117

mortgagee in possession

Question 118

merger: mortgages

Answer 118

The doctrine of merger applies to mortgages when the same person acquires both: * a mortgagee's (lender's) interest in real property and * the mortgagor's (borrower's) interest in that same property. When this occurs, the mortgage merges into the fee estate and is thereby extinguished.

Question 119

merger: mortgages

Answer 119

The doctrine of merger applies to mortgages when the same person acquires both: * a mortgagee's (lender's) interest in real property and * the mortgagor's (borrower's) interest in that same property. When this occurs, the mortgage merges into the fee estate and is thereby extinguished.

Question 120

transfer of promissory note and mortgage

Answer 120

To finance the purchase of real property, a borrower typically executes two documents that serve as evidence of the debt: * Promissory note – a formal "IOU" that sets forth the terms of the loan.  It is the primary evidence of the debt and is not recorded in the deed records. * Mortgage (or deed of trust) – a lien that secures the loan by attaching the debt to a real property interest and providing a means of enforcement (eg, foreclosure).  It is recorded in the deed records to provide notice of an outstanding debt attached to the real property. A promissory note can be assigned to another (an assignee) independent of the mortgage. * The mortgage automatically transfers with the note once the note has been properly assigned (unless the parties agree otherwise) * A **negotiable promissory note** can be assigned by simply endorsing and delivering the note to the assignee.  * However, a **nonnegotiable promissory note** requires a separate assignment document to transfer ownership.

Question 121

merger: mortgages

Answer 121

The doctrine of merger applies to mortgages when the same person acquires both: * a mortgagee's (lender's) interest in real property and * the mortgagor's (borrower's) interest in that same property. When this occurs, the mortgage merges into the fee estate and is thereby extinguished.

Question 122

transfer of promissory note and mortgage

Answer 122

To finance the purchase of real property, a borrower typically executes two documents that serve as evidence of the debt: * Promissory note – a formal "IOU" that sets forth the terms of the loan.  It is the primary evidence of the debt and is not recorded in the deed records. * Mortgage (or deed of trust) – a lien that secures the loan by attaching the debt to a real property interest and providing a means of enforcement (eg, foreclosure).  It is recorded in the deed records to provide notice of an outstanding debt attached to the real property. A promissory note can be assigned to another (an assignee) independent of the mortgage. * The mortgage automatically transfers with the note once the note has been properly assigned (unless the parties agree otherwise) * A **negotiable promissory note** can be assigned by simply endorsing and delivering the note to the assignee.  * However, a **nonnegotiable promissory note** requires a separate assignment document to transfer ownership.