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Josh's MBE Cards > Property > Flashcards

Property Flashcards

1
Q

Fee Simple

A

Largest estate recognized by law, it can be sold, divided, devised, or inherited and has indefinite or potentially indefinite duration. Presumed unless express contrary intent.

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2
Q

Fee Simple Determinable

A

A fee simple determinable terminates upon the happening of a stated event and automatically reverts to the grantor. Created by durational language such as “for as long as”, “while”, “during”, or “until”.

Automatically creates a possibility of reverter in grantor which is transferable, descendible, and devisable.

NOTE: Statements of motive or intent do not create a determinable fee (e.g, “for the purpose of” or “to be used for”)

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3
Q

Fee Simple Subject to Condition Subsequent

A

An estate where the grantor reserves the right to terminate the estate upon the happening of a stated event. The conditional words must be clear and definitive, not aspirational.

The possible future interest of grantor (the right of entry) must be EXPRESSLY reserved.

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4
Q

Fee Simple Subject to an Executory Interest

A

Where a fee simple estate terminates upon the happening of a stated event (whether determinable or condition subsequent) and passes to a third party.

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5
Q

Conditions and Limitations Violating Public Policy

A
  1. Penalizes marriage

2. Encourage divorce

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6
Q

Fee Tail

A

Only goes to lineal heirs. Most have abolished and it just creates a fee simple.

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7
Q

Life Estate

A

An estate to a person for the duration of their life.

  1. Measured by the life of the grantee.
  2. Measured by the life of another.
  3. Can also be defeasible (i.e., To X for life unless B occurs, then to C”
  4. Life estate holder can themselves transfer their interest to another.
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8
Q

Rights and Duties of a Life Tenant

A

Life Tenant is:

  1. Entitled to ordinary uses and profits of land.
  2. Limited in exploitation of natural resources to situations where (i) necessary for repair or maintenance; (ii) land only suitable for such use; or (iii) expressly permitted or implied by grantor (but only to the extent in existence, cant expand operations).
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9
Q

Life Tenant: Permissive Waste

A

LT is obligated to:

  1. Preserve land and structures in reasonable state of repair;
  2. pay interest on mortgage NOT PRINCIPAL;
  3. pay ordinary taxes on the land; and
  4. pay special assessments for public improvements of short duration.

LT is NOT obligated to:

  1. Insure the premises
  2. Perform any of the aforesaid to the extent it exceeds the total income or profits generated from the land.
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10
Q

Life Tenant: Ameliorative Waste

A

Change that benefits the property. Permissible if:

  1. Market value of future interest is not diminished; AND

A. the remainderman do not object; or
B. a substantial permanent change in the neighborhood conditions has deprive the property in its current form of reasonable productivity or usefulness. (if worthless may seek partition sale).

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11
Q

Reversion

A

Whenever you convey less than you own. All reversionary interests are vested and not subject to RAP.

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12
Q

Remainder

A

A future interest in a third person that can become possessory on a natural expiration of the preceding estate. Cannot divest a prior estate, and NO GAP. Must be EXPRESSLY created (To A for life then to Be and his Heirs)

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13
Q

Indefeasibly Vested Remainder

A

Created in an existing and ascertained person and not subject to a condition precedent, i.e., can take immediate possession upon termination of the prior estate. Is one that is not subject to diminution or divestment.

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14
Q

Vested Remainder Subject to Open

A

A certain vested remainder, but subject to diminution, e.g, birth of additional children who will share in the remainder.

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15
Q

Vested Remainder Subject to Total Divestment

A

A vested remainder that is itself subject to a condition subsequent.

“to a A for life, then to B and his heirs, but if B dies unmarried then to C and his heirs”

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16
Q

Contingent Remainder

A

Remainders (i) created in unborn or unascertained persons; or (ii) subject to a condition precedent.

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17
Q

Contingent Remainder: Subject to Condition Precedent

A

A condition is precedent if it must be satisfied before the remainderman has a right to possession.

“to A for life then to B and his heirs IF B marries C”

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18
Q

Contingent Remainder: Unborn or Unascertained Persons

A

A remainder created in unborn or unascertained persons is contingent because until the remainderman is ascertained, no one is ready to take possession if the preceding estate ends.

“To A for life then to the children of B”

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19
Q

Doctrine of Merger

A

When one person acquires all of the present and future interests in land except a contingent remainder, under common law, the contingent remainder is destroyed.

Example: “from O to A for life then to B’s children” if O buys A’s life estate, it merges and the contingent remainder in B’s children is destroyed.

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20
Q

Rule in Shelley’s Case

A

Old rule in common law: if a life estate given to A and a remainder to A’s children, the remainder is destroyed and A takes both. A RAP issue avoidance mechanism.

THIS IS A WRONG ANSWER ON MBE

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21
Q

Doctrine of Worthier Title

A

Under the DOWT, a remainder in the Grantor’s heirs is invalid and becomes a reversion in the grantor.

“O grants to A for life then to theirs of O” under DOWT, A has a life estate and O has a reversion.

DOWT is a rule of construction, and will not counter express contrary intent in the language (generally only applies if words “heirs” is used).

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22
Q

Executory Interests

A

Executory interests are future interests in third parties that either divest a transferees preceding freehold estate or follow a gap in possession or cut short a grantor’s estate.

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23
Q

Types of Restraints on Alienation

A

Three types:

  1. Disabling restraints under which attempted transfers are ineffective (VOID);
  2. Forfeiture restraints, under which an attempted transfer forfeits the interest (MAYBE VOID); and
  3. promissory restraints under which an attempted transfer breaches a covenant (MAYBE VOID).
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24
Q

Restraints on Fee Simple

A

All absolute restraints on Fee Simple are void. Partial restraints are not.

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25
Q

Joint Tenancy: Definition

A

Is a joint tenancy with a right of survivorship. When one JT dies the property is freed from the concurrent interest (AKA, the other JT takes the whole property.

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26
Q

JT: Creation

A

Must take identical interests, at the same time, by the same instrument, with the same right of possession.

Four Unities:

  1. Time
  2. Title
  3. Interest
  4. Possession

Also requires a CLEAR EXPRESSION of right of survivorship. Otherwise a conveyance to two or more persons is presumed to create a tenancy in common.

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27
Q

JT: Severance

A
  1. A voluntary or involuntary conveyance by a JT of her undivided interest destroys the JT. It is converted to a tenancy in common AS TO THE TRANSFEROR’s INTEREST. If there is more than two JT’s, then JT remains in place for the non-transferring tenants.
  2. Contract to convey a JT’s interest signed by the JT.
  3. Agreement of all JT’s.
  4. Murder of a JT by another, or simultaneous death of all JTs.

Exceptions:

  1. Judgment Lien: does not sever it until foreclosure sale.
  2. Mortgage in LIEN THEORY states.
  3. Usually a lease does not sever but it may under traditional common law.
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28
Q

Tenancy by the Entirety

A

This is a marital estate similar to a JT. If a conveyance to spouses is unclear most presume a TE. Only severed by:

  1. Death
  2. Divorce
  3. Mutual agreement; or
  4. Execution by a joint creditor of BOTH SPOUSES.

Remember requires BOTH SPOUSES.

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29
Q

Tenancy in Common

A

Concurrent estate with no right of survivorship. Presumption of creating a Tenancy in Common where there are multiple grantees.

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30
Q

Rights and Duties of Tenants: Possession

A

Each co-tenant has the right to possess all portions of the property, but has NO EXCLUSIVE right of possession of any part.

A co-tenant out of possession cannot bring a possessory action unless she is OUSTED (e.g., another tenant claims exclusive possession).

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31
Q

Rights and Duties of Tenants: Rents and Profits

A

Right to retain profits from her own use of the property, no need to share profits with other co-tenant.

HOWEVER must share net RENTS from third parties and net PROFITS from exploitation of the land.

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32
Q

Rights and Duties of Tenants: Effect of One Concurrent Owner’s Encumbering the Property

A

A JT or TC may encumber their own interest, but not that of any other tenant.

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33
Q

Rights and Duties of Tenants: Partition

A

Right to seek partition either in kind (physical division) or by sale and division of the proceeds.

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34
Q

Rights and Duties of Tenants: Expenses for Preservation of Property - Contribution

A
  1. A TiC who pays more than their pro rata share of NECESSARY expenses is entitled to contribution from the other TICS provided they have notified the other TICs of the need for repairs.
  2. No right to collect contribution for improvements (even if a tenant is not in possession), but you can deduct from rent paid to other TICs.
  3. Contribution for taxes and mortgages are OK.
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35
Q

Tenancy for Years

A
  1. Normal leasehold (i.e., a lease for X number of years)
  2. Landlord retains “right of entry” (i.e., right to terminate the lease if tenant breaches lease covenants)
  3. Even in absence of ‘right of entry’ in most jurisdictions failure to pay rent authorizes right of reentry.
  4. Surrender can also terminate the lease (must be surrendered in same form as its creation, e.g., writing).
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36
Q

Periodic Tenancy

A

For successive periods e.g., month to month. Created by:

  1. Express agreement; (ex. self-explanatory, a written agreement).
  2. Implication; (ex. “lease for $1,000 a month) or
  3. Operation of law (ex. T remains after expiration and L treats it as a periodic tenancy)

Periodic tenancy automatically renews until proper notice of termination, usually must be one full ‘period’ in advance (i.e., for a month to month, one month in advance, but for a year its only 6 months for some reason).

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37
Q

Tenancy at Will

A

Terminable by either party at any time. Created by:

  1. Express agreement; or
  2. Implication due to periodic rent payments.

If only LL has right to terminate, it will be inferred that TT also has right, but vice versa does not apply.

Terminated by:

  1. Notice + reasonable time to quit;
  2. Operation of law (death, etc.)
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38
Q

The Holdover Doctrine

A

If TT continues in possession after right has expired then LL may:

  1. evict him
  2. bind him to a new periodic tenancy, generally governed by terms and conditions of the prior lease, and generally month to month for residential TT regardless of the prior term (commercial TT can be held to a year to year lease IF the original lease was for 1 year or more, otherwise month to month)
  3. If LL lets TT know of new holdover terms prior the lease expiration, and TT holds over, then these new terms apply. EXCEPT where (i) marginal delay; (ii) delay not TT fault; or (iii) a seasonal lease.
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39
Q

Tenancies at Sufferance

A

Created when Tenant wrongfully remains in possession. It lasts only until the LL takes step to evict the TT, no notice required.

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40
Q

Leases and Covenants

A

Generally a breach of a covenant, where it is a material part of the lease, excuses performance.

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41
Q

Leases and Options

A
  1. Options generally last as long as the lease.

2. Falls within the SOF.

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42
Q

Three Types of Waste

A
  1. Affirmative waste is where TT intentionally or negligently damages property or exploits resources.
  2. Permissive waste, is when TT fails to take reasonable steps to protect premises from damage. TT generally liable for ordinary repairs/wear & tear. If lease shifts this to LL, TT must report it promptly to LL.
  3. Ameliorative waste, when TT takes action that increases its value. Generally liable for restoration, but under the modern view if it is a long term tenancy the TT does not have to.
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43
Q

Destruction of Premises Without Fault

A

If the premises are destroyed without fault by LL or TT neither party has the obligation to restore, and in the absence of lease language to the contrary the TT has the obligation to continue paying rent.

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44
Q

Tenant’s Liability for Covenant to Repair

A
  1. Even if a residential TT covenants to repair, the LL NEVERTHELESS remains obligated to repair under implied warranty of habitability.
  2. If it is a nonresidential TT, then the covenant to repair is enforceable.
  3. A TT who covenants to repair is not usually liable to rebuild after casualty destruction unless the covenant expressly includes it. Covenant may exclude wear and tear, but usually includes it.
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45
Q

Security Deposit

A

May not retain beyond the damages actually suffered. Only able to retain it beyond that if it is a bonus.

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46
Q

Remedy for Failure to Pay Rent

A

Modern law allows a LL to sue for unlawful detainer and evict; old approach only allowed money damages. The ONLY ISSUE IN UNLAWFUL DETAINER is whether TT has right of possession, no counterclaims allowed.

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47
Q

Tenant Abandonment

A

If TT unjustifiable abandons the property, then majority view is LL has the duty to mitigate by seeking to re-let the premises.

  1. If LL does not accept the abandonment, i.e., does not accept the ‘surrender’ by repossessing this for himself, and instead seeks to relet the premises, then TT is liable for the difference between the promised rent and FMV rent.
  2. If LL repossesses the property for himself it is deemed a surrender and TT is free from any rent accruing after abandonment.

NOTE: Under common law rule a LL can simply do nothing and TT remains liable for rent until the end of the lease.

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48
Q

Basic LL Duties

A
  1. At common law LL has no duty to repair or maintain premises. Modified in most states for residential tenancies.
  2. Duty to deliver ACTUAL possession to the TT.
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49
Q

Quiet Enjoyment

A

The implied covenant that neither the LL nor any paramount title holder (e.g., mortgagee who forecloses) will interfere with Tenant’s quiet enjoyment and possession of the premises. Breached as follows:

  1. Actual eviction (i.e., excluded from possession of the ENTIRE leased premises by LL, paramount title holder, or holdover tenant)—terminates TT obligation to pay rent.
  2. Partial eviction by LL ONLY relieves TT obligation to pay rent for entire premises, but partial eviction from a third person results in a proportionate reduction in the rent.
  3. Constructive Eviction:

(i) LL breached a duty to TT
(ii) the breach substantially and materially deprived the TT of the use and enjoyment of premises
(iii) TT gave LL reasonable notice and time to cure; and
(iv) after reasonable time the TT vacated the premises.

TT can then terminate the lease and seek damages.

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50
Q

Implied Warranty of Habitability

A

Implied into RESIDENTIAL leases. NOT WAIVABLE. In the event of a breach the TT may:

  1. Terminate the lease;
  2. Make repairs and offset against future rent;
  3. abate the rent in an amount equal to the fair rental value in light of defects; or
  4. remain in possession, pay full rent, and sue for damages.
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51
Q

Retaliatory Eviction

A

Penalized if done. Presumed if LL acts within a certain amount of time after TT exercisers her rights.

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52
Q

Assignments and Subleases

A

For the exam a transfer will be considered a sublease, rather than an assignment, only when the original TT reserves time for herself.

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53
Q

Lease: Latent Defect

A

If, at the time the lease is entered into, the landlord knows of a dangerous condition that the tenant could not discover upon reasonable inspection, the landlord has a duty to disclose the dangerous condition. Failure to disclose the information about the condition results in liability for any injury resulting from the condition.

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54
Q

Consequences of Assignment

A
  1. Assignee and LL in privity of estate, each is liable to the other for all covenants that run with the land.
  2. Original TT no longer in privity, but TT remains liable on original K obligations.
  3. If Assignee fails to pay rent the LL can sue the assignee OR the original TT.
  4. If Assignee of LL breaches then TT can see LL and Assignee of LL.
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55
Q

Consequences of Sublease

A

Tenant of original lessee, not an assignment. Created when TT ‘assigns’ less than all of the remaining leasehold.

  1. Sublessee NOT personally liable to LL for rent or performance of covenant UNLESS the sublease EXPRESSLY says so.
  2. LL may terminate lease with TT if there is a breach of the lease, which automatically terminates the sublease.
  3. Sublessee cannot enforce any covenants made by the LL in the lease, EXCEPT in a RESIDENTIAL LEASE, might be able to enforce implied warranty of habitability.
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56
Q

Covenants Against Assignment or Lease

A
  1. Strictly construed AGAINST LL (i.e., if it doesn’t SPECIFICALLY prohibit it is permitted).
  2. Valid covenant against assignment will be waived where (i) knows if it and does not object; or (ii) consents and doesn’t expressly reserve rights as to future assignments.
  3. Transfer in violation of lease doesn’t terminate the lease, however LL is then able to sue for damages.
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57
Q

Assignment by Landlords

A

Usually done by deed when LL conveys building. TT consent not needed.

  1. TT must pay new LL.
  2. Covenants that touch and concern land run with the assignment (apply to assignee).
  3. The ORIGINAL LL also remains liable on all covenants made before the lease was assigned.
58
Q

Condemnation of Leaseholds

A

If entire leasehold taken by eminent domain, the TT liability for rent is extinguished. However, if the taking is temporary or partial the TT is not discharged from rent obligation, and instead is entitled to compensation for the taking.

59
Q

Tort Liability of Landlord

A

At common law no duty to make premises safe. Today there are six exceptions:

  1. If LL knew, or should have known, of a dangerous condition that TT COULD NOT discover by reasonable inspection, then the LL must DISCLOSE it (not repair). Otherwise LL liable for resulting injury. (Except if TT is apprised and accepts anyway).
  2. Common areas.
  3. Injuries to the public if: (i) knows of dangerous condition; (ii) has reason to believe TT may admit the public before repairing; and (iii) fails to repair.
  4. ANY DEFECT for a furnished short term residence.
  5. Negligent repairs, or deceptive appearance of safety.
  6. If LL covenants to repair he is liable for injuries resulting from failure to repair or negligent repair.
60
Q

LL: General Duty of Reasonable Care (Modern trend)

A

Modern trend is LL is liable for injuries resulting from ordinary negligence if he had notice of defect and opportunity to repair it.

  1. LL generally held to have NOTICE of defects existing before TT took possession, but is not liable for defects arising AFTER TT takes possession unless LL knew or should have known of them.
  2. If LL had legal duty to repair, liable for negligence or failure to repair.
  3. Sometimes liable for injuries to TT by third party criminals where LL failed to comply with applicable housing codes.
61
Q

Fixture

A

A chattel so affixed to land that it has ceased to be personal property and becomes part of the realty. Passes with the ownership of the land.

62
Q

Fixture: Common Ownership

A

This is where the one who brings the chattel to the land and the one who owns the land is the same person. It becomes a fixture if the objective intention of the party who annexed it to the land intended to do so. Determined by:

  1. nature of the article
  2. manner of attachment
  3. amount of damage
  4. if it is uniquely adapted to the real estate that it would make no sense to separate even if not physically annexed.
63
Q

Fixture: Divided Ownership

A
  1. Landlord Tenant: Agreement between LL and TT is controlling. In absence of agreement, TT presumed to lack intent and may remove the chattels IF it does not substantially damage premises or destroy the chattel. Annexed chattels MUST be removed by the end of the lease term and TT is responsible for repairing any damage caused by the removal.
  2. Life Tenant and Remainderman: Same, but may remove within reasonable time of LT death.
  3. Licensees treated like TT.
  4. Trespassers lose their annexations, however a good faith trespasser can sometimes recover the value added to the property.
64
Q

Types of Easements

A
  1. Affirmative: Right to make affirmative use of the servient tenement.
  2. Negative: Compel possessor of servient tenement to refrain from engaging in an activity on the servient estate (historically only light, air, support, and flow) (today this is a restrictive covenant).
  3. Easement Appurtenant: Benefits the holder in physical use or enjoyment of another tract. IMPORTANT: (i) Passes with transfer of benefited land regardless of whether it is mentioned in the conveyance; (ii) BUT DOES NOT pass with the transfer of the burdened estate WHERE the new owner is a bona fide purchaser with no actual or constructive notice.
  4. Easement in Gross: An affirmative easement unconnected to an interest in land, tied to the person it benefits. If for personal pleasure it is not transferable, if it is an economic interest it is transferable.
65
Q

Prescriptive Easement

A

Acquires an easement ‘by prescription’ must be:

  1. Open and notorious (discoverable upon inspection)
  2. Adverse (without permission)
  3. Continuous and uninterrupted for the statutory period.
66
Q

Express Reservation

A

An easement by reservation arises when a grantor conveys title to land but reserves the right to continue to use the land for a special purpose.

TIP: USUALLY CAN ONLY BE RESERVED FOR GRANTOR, NOT A THIRD PARTY. IF ATTEMPTED IT IS VOID.

67
Q

Easement by Implication

A

Created by implication, and EXCEPTION TO SOF:

  1. Quasi-Easement implied from existing use if (i) prior to division of a single tract; (ii) an apparent and continuous use exists on the servient part; (iii) that is reasonably necessary for the enjoyment of the dominant part; and (iv) the court determines the parties intended the use to continue.
  2. Subdivision plat, implied to use streets to access their lots.
  3. Profit a prender, implied to reach the land and extract product.
  4. Necessity: (i) access for utility line; or (ii) access to public road. Owner of SERVIENT parcel has right to locate the easement.
68
Q

Easement: Overuse/Misuse/Repair

A

Does not extinguish. Get injunction to stop the bad behavior.

Easement holder typically responsible for easement repair. But servient holder cannot interfere with access to easement.

69
Q

Termination of Easement

A
  1. Per terms of easement.
  2. Unity of ownership (merger). Must be complete, i.e., the servient tenement must be equal to or LONGER than the duration of the dominant tenement.
  3. Release.
  4. Abandonment. Physical action with INTENT to permanently abandon. Mere expressions does not extinguish neither does nonuse. Oral expression COMBINED with long period of nonuse may be sufficient.
  5. Estoppel.
  6. Prescription (typically 20 years)
  7. Easements by Necessity expire as soon as the necessity expires.
  8. Condemnation or destruction of servient easement. Except for voluntary destruction.
70
Q

Surcharge

A

Misuse that overly burdens the servient estate. For a ‘profit’ this can extinguish the profit.

71
Q

Profit

A

Entitle holder to take a resource from servient estate, implies an easement to access the estate.

72
Q

Covenants Running With the Land

A

Promise to DO or NOT do something with land. Must be in writing to satisfy SOF.

73
Q

Covenant: Requirement for a Burden to Run With the Land

A

The following must be met:

  1. Intent: Can be inferred from circumstance but usually found in the document.
  2. Notice: Must have actual, inquiry, or record notice if you are a SUBSEQUENT PURCHASER FOR VALUE. If you aren’t a taker for value you may be bound anyway.
  3. Horizontal Privity: Covenanting parties must have a shared interest in the land, e.g., grantor grantee, mortgagor mortgagee, landlord-tenant.
  4. Vertical Privity: To be bound the grantee must hold the entire durational interest held by the covenantor at the time the covenant was made.
  5. MUST TOUCH AND CONCERN THE LAND. (i) Negative ones do if they restrict use; and (ii) Positive ones do if they require the holder of the land to do something.
74
Q

Covenant Requirement for Benefit to Run

A

1: Intent
2: Vertical Privity: HORIZONTAL NOT REQUIRED. Any succeeding possessory estate can enforce it, but only enforceable against the original promisor, not promisor’s successors.
3. Touch and concern the land.

75
Q

Covenants: Money and Non-Compete

A

These can run with the land.

76
Q

Covenant: Remedy

A
  1. Money damages, if injunction sought you’re looking to enforce the promise as an equitable servitude.
77
Q

Covenant: Termination

A
  1. Release
  2. Merger; or
  3. Condemnation.
78
Q

Equitable Servitude

A

Is a covenant that REGARDLESS of whether it runs with the land at law, EQUITY will enforce against the assignees of the burdened land who have NOTICE of the covenant. Usual remedy is injunction.

TIP:

  1. If money damages sought use the real covenant analysis.
  2. If injunction sought consider if equitable servitude requirements have been met.
79
Q

Equitable Servitude:

A

Same as covenants EXCEPT for the common scheme exception:

Equitable Servitude can be inferred from common scheme of development for a residential subdivision. So if you have subdivision and some deeds contain negative covenants and others do not we’ll say the negative covenant is binding on everyone.

Scheme evidenced by:

  1. recorded plat;
  2. general pattern of restrictions; OR
  3. oral representations to EARLY buyers.

TIP: if the scheme emerges AFTER some lots are sold, it cannot be used to enforce against the early buyers.

Connected to the foregoing, to be bound by a covenant not in deed as an equitable servitude the grantee must have had notice of the covenants in the deeds by: (i) actual notice; (ii) inquiry (neighborhood appears to conform); or (iii) record, i.e., prior deed in chain of title.

80
Q

Equitable Servitude: Notice

A

To be bound by a covenant not in deed as an equitable servitude the grantee must have had notice of the covenants in the deeds

81
Q

Equitable Servitude: Benefit

A
  1. Intent
  2. Touch and concern.

No privity of estate is required.

82
Q

Equitable Servitude: Burden

A
  1. Intent
  2. Notice.
  3. Touch and concern

No privity of estate required.

83
Q

Defenses to Equitable Servitudes

A
  1. Unclean hands (violating similar restriction)
  2. Benefited party acquiesced in violation by a burdened part
  3. Estoppel
  4. Laches
  5. Neighborhood changed so significantly that enforcement would be inequitable.
84
Q

Equitable Servitude Termination

A
  1. Merger
  2. Written release
  3. Condemnation.
85
Q

Party Walls and Common Driveways

A

Wall/driveway erected on property of each two adjoining landowners treated as belonging to each, a cross-easement of mutual support is imposed. Eahc party can use it but neither can unilaterally destroy it.

Creation:

  1. Express (SOF)
  2. Implication or prescription
  3. Detrimental reliance

If owners agree burden/benefit runs with the land.

86
Q

Adverse Possession

A

Acquires title to real property. Requirements:

Actual entry giving EXCLUSIVE possession that is:

  1. open and notorious
  2. adverse (hostile) NO PERMISSION); and
  3. continuous throughout the statutory period (typically 20 years)

SOL runs when true owner can FIRST bring suit. Does not stop period from running (?)

87
Q

Extent of Adverse Possession

A
  1. Only gain title to land actually occupied; EXCEPT where they only occupy a portion but do so under color of title believing they have right to whole property but do not.
  2. 2 people can take by adverse possession, they take as TICs.
88
Q

Adverse Possession Open and Notorious

A

Must be sufficiently apparent to put the owner on notice.

89
Q

Adverse Possession: Hostility

A
  1. Must be without owner’s permission.
  2. Adverse possessors STATE OF MIND IS NOT RELEVANT.
  3. Co-tenant usually cannot unless they oust and make an affirmative statement to take dominion.
  4. If Grantor stays in possession AFTER conveyance, presumed to be in possession with permission i.e., not adverse.
  5. Mistaken title is still adverse.
90
Q

Adverse Possession Continuous Possession

A

Intermittent periods not sufficient. Must be continuous. But you can tack the periods, but privity is required.

Do not have to pay taxes.

91
Q

Adverse Possession: Disability

A

Disability of owner tolls the SOL.

92
Q

Adverse Possession: Future Interests

A

Does not run against the interest becomes possessory. (i.e. if subject to condition precedent, doesn’t begin to run until the the right is asserted by grantor after the condition)

93
Q

Adverse Possession: Effect on Covenants in Deeds

A

If adverse possessor uses the land in violation of the covenant during the period then they take free of restriction.

94
Q

Equitable Conversion

A
  1. Once K is signed equity regards the buyer as the owner of the REAL PROPERTY, but the Seller’s interest is personal property. Legal title presumed to be held in trust for the buyer.
  2. Risk of loss is with buyer prior to closing, but Buyer is entitled to insurance proceeds.
  3. Upon death the seller’s interest passes as personal property, but the Buyer’s interest passes as real property.
95
Q

Marketable Title

A

Free from questions that present an unreasonable risk of litigation but not PERFECT.

96
Q

Unmarketable Title

A
  1. Title acquired by adverse possession.
  2. Unborn or Unascertained future interest holders.
  3. Significant encumbrances, (Seller has right to satisfy at closing e.g., satisfying a mortgage).
  4. Existing zoning violation.

Buyer investigates Seller’s title and if defect discovered must give Seller a chance to cure.

Marketable at closing, in installment its marketable in final payment.

TIP: REMEMBER once the closing occurs and the deed changes hands, the seller is no longer liable. Do not pick implied covenant of marketability of title. The seller is then liable only for express promises made in the deed.

97
Q

Remedy if Title not Marketable

A
  1. Prior to closing rescission, damages, specific performance with abatement, and/or a quiet title action.
  2. Even Quitclaim deeds have obligation to pass marketable title.
98
Q

Time of Land K Performance

A
  1. Presumption time is not of the essence, a ‘reasonable time’ is imputed.
  2. Time is of the essence if (i) contract so states; (ii) surrounding circumstances; or (iii) notice given that time is of the essence.
  3. Buyer’s obligation to pay and Seller’s obligation to deliver land is concurrent.
  4. No need to perform if other party repudiates or it is impossible (uncurable unmarketable title).
99
Q

Seller Liability for Defective Property

A
  1. Warranty of fitness or quality (new construction only)
  2. Negligence of builder
  3. Sale of existing land and buildings, liability for defects where: (i) misrepresentation; (ii) active concealment; or (iii) failure to disclose.

General disclaimer with all defects, etc., not sufficient to overcome seller’s liability for the aforesaid (in states that recognize them all). Specific disclaimers will be uphold however.

100
Q

Title Insurance

A

Owners policy does not run with the land, only benefits owner.

Lender policy follows any assignment of mortgage loan.

101
Q

Deed Formalities: Creation and Transfer

A

Creation:

  1. Writing
  2. Signed by grantor
  3. reasonable identify parties and land.

Transfer:

  1. Donative intent
  2. Delivery
  3. Acceptance.

TIP: If grantee name left blank when delivered it is presumed the person taking delivery has authority to fill in their name and can take title. If land is left blank it is void unless specifically authorized to fill in.

101
Q

Deed Formalities: Creation and Transfer

A

Creation:

  1. Writing
  2. Signed by grantor
  3. reasonable identify parties and land.

Transfer:

  1. Donative intent
  2. Delivery
  3. Acceptance.

TIP: If grantee name left blank when delivered it is presumed the person taking delivery has authority to fill in their name and can take title. If land is left blank it is void unless specifically authorized to fill in.

102
Q

Defective Deed

A
  1. Void deed set aside EVEN IF PASSED TO BONA FIDE PURCHASER.
  2. Voidable deed only set aside if it has NOT passed to a BONA FIDE PURCHASER.

Void Deed examples: Forged, obtained by fraud, never delivered, issued to non-existing grantee.

Voidable Deed examples: deeds executed by minors or incapacitated persons , those obtained through fraud in the inducement, duress, undue influence, mistake or breach of fiduciary duty.

TIP: Where JT exists and one tenant forges the other tenants signature the conveyance is effective AS TO THAT TENANTS interest, but not the forged interest. It effects a severance.

103
Q

Deed: Fraudulent Conveyance

A

Even where formalities are met it may be set aside by the grantors CREDITORS if it was made with:

  1. actual intent to defraud creditor of grantor; or
  2. without receiving a reasonably equivalent value in exchange for the transfer where the debtor grantor was insolvent or became insolvent.

However will not be set aside where bona fide purchaser value took title in good faith.

104
Q

Description of Land

A

Sufficient if it provides a good lead to the identity of the property. If it is too indefinite the grantor retains title (reformation is a possible remedy).

Parol evidence usually admissible to resolve patent or latent ambiguities in description but not where description is inadequate.

105
Q

Boundary Cases

A

Presumptively, title to land passes to the center of a right of way or water boundary. Can be rebutted by language in the deed. In variable boundary line cases the slow the:

  1. slow and imperceptible change in the course of a river stream operates to change the legal boundary;
  2. accretion belongs to the abutting owner (slow deposit of soil on land abutting water);
  3. Avulsion (sudden change in watercourse) does not change ownership rights.
106
Q

Reformation of Deeds

A

A deed will be reformed if it does not represent the parties agreement because of:

  1. mutual mistake
  2. scriveners error
  3. unilateral mistake caused by misrepresentation or inequitable conduct.
107
Q

Closing Disclosures

A

Residential mortgage lenders must provide closing disclosures to mortgagors at least THREE BUSINESS DAYS prior to closing. This disclosure must provide details about the mortgage including:

  1. principal, interest and payment amounts
  2. closing costs
  3. potential surprises to mortgagors
108
Q

Deed to a Dead Person

A

Void and conveys no title. All circumstances.

109
Q

Deed Delivery: General

A

Title passes upon delivery, it cannot be taken back or canceled. Returning the deed has to effect, it is not a cancellation or a reconveyance. Parol evidence only admissible to show the intent to deliver.

Failure to record a delivered deed does not affect passage of title.

Acceptance is presumed.

110
Q

Retention of Interest by Grantor or Conditional Delivery

A
  1. If grantor executes a deed but does not deliver it (broadly defined) it is presumed that no title passes.
  2. Can have conditional deed, i.e., that title does not pass until grantors death. But if the condition is orally given and the deed on its face is an absolute deed then we ignore the condition.
111
Q

Deliver of Deed: Third Parties

A
  1. Grantor gives deed to third parties with instructions to give to grantee the delivery is effective.
  2. Grantor can give deed to third parties with instructions not to deliver until certain conditions are met, and thus delivery not effective until conditions met. Can recover deed from third party only: (i) if the condition is not yet occurred; and (ii) there is no enforceable written contract to convey.

Wrongfully getting title from escrow does not convey title.

  1. When grantor gives to a third party to give to a DONEE the issue is whether it can be revoked before the condition occurs. Generally hold can revoke for any reason except Grantees own death or where there is a contract.
112
Q

General Warranty Deed: Covenants

A
  1. Seisen: that grantor owns land they purport to convey (legal and possessory)
  2. Right to convey
  3. Covenant against encumbrances
  4. Quiet enjoyment
  5. Warranty (same as enjoyment)
  6. Further assurances.

If a lawful grantee is evicted, he may sue anyone up the chain of title. Recovery is either what he paid or what the covenantor received.

113
Q

Special Warranty Deed

A

Same as grant deed, but promises to defend only against claims arising by through or under the grantor, does not warrant against defects in the title that existed BEFORE GRANTOR WAS DEEDED THE PROPERTY.

114
Q

Type of Deed Where Unclear

A

Where unclear statutory presumption is it creates two covenants:

  1. grantor has not conveyed the same estate or any interest therein to anyone other than grantee; and
  2. estate is free from encumbrances made by grantor.
115
Q

Estoppel By Deed

A
  1. If G conveys an estate that she does not own her subsequent acquisition o the same estate will AUTOMATICALLY inure to the benefit of the purported grantee. Not applicable to quitclaim deeds. Also doesn’t apply to a subsequent BFP grantee.
116
Q

Notice Recording

A

A subsequent BFP prevails over a prior grantee who failed to record. No ACTUAL or constructive notice. No need for the BFP TO RACE TO RECORD.

117
Q

Race Notice Recording

A

Subsequent BFP is protected ONLY if they record first.

117
Q

Race Notice Recording

A

Subsequent BFP is protected ONLY if they record first.

118
Q

Race Recording

A

First to record wins, nothing else matters.

119
Q

Who is a BFP? Who has protection?

A
  1. Must not have ACTUAL, constructive, or inquiry notice.
  2. Donee, heir, or devisee do not count.
  3. Judgment creditor is NOT a BFP.
  4. Someone who takes from a BFP takes their defenses, even if they had NOTICE of a prior unrecorded conveyance.
  5. Under installment K only protected to the amount paid.

Only gets protection after consideration is PAID.

120
Q

What is notice for a BFP?

A
  1. Actual, inquiry, or constructive AT THE TIME OF CONVEUANCE, does not matter if they learn AFTER CONVEYANCE but before recording.
  2. Implied from chain of title.
  3. Wild deed: a deed not connected to chain of title, does NOT provide notice.
  4. Later recorded deed: does NOT provide notice.
  5. Often charged with knowledge of whatever an inquiry would have revealed. Even if you get a quitclaim deed.
121
Q

Effect of Recordation

A
  1. Protection of title.

2. Does and cannot validate an invalid deed or protect against interests arising by operation of law.

122
Q

Ademption

A

Applies to specific bequests only. If no longer owned by the testator the gift fails. Remainder can still be gifted.

  1. Proceeds of sale of land may still pass by gift even if land is gone.
  2. Where destroyed or damaged, the insurance proceeds can go to giftee, ademption doesn’t apply.
123
Q

Lapse and Anti-Lapse Statutes

A

A lapse occurs when the beneficiary of a gift in a will dies before the testator. Common law was that this voids the gift, now it can pass to the donee’s descendants. Does not apply if there is a contrary will provision.

124
Q

Abatement

A

If estate insufficient to pay claims passes as follows:

  1. intestacy
  2. residuary estate
  3. general legacies, and
  4. specific devises and bequests.
125
Q

Absolute Deed

A

Can be treated as an equitable mortgage if given for security purposes.

126
Q

Transfer of Mortgage Without Note

A

Most states say that the transfer automatically transfers the note as well unless explicitly reserved, conversely, a transfer of note without the mortgage is possible.

127
Q

Transfer of Note: Holder in Due Course

A
  1. Note must be in negotiable form (i.e. to the bearer to the order of, etc.)
  2. Indorsed and signed by the named payee
  3. Delivered to the transferee; and
  4. Take the note in good faith with no notice that it is overdue has been dishonored or is subject to any defense by the maker and MUST PAY VALUE FOR IT.
128
Q

Holder in Due Course Benefits

A

Takes free of any personal defenses of the maker, but is still subject to real defenses.

129
Q

Payment to Original Mortgagee After Transfer of Note

A

If the original mortgagee transfers possession of a negotiable instrument any payment by the mortgagor to that mortgagee will not count, EVEN f the mortgagor lacked notice of the transfer. Unless the purported transferred note is actually non-negotiable, then payment is effective until the mortgagor receives notice of the transfer.

130
Q

Assumption

A

If a grantee signs an assumption agreement he becomes PRIMARILY liable to the lender, while the original mortgagor is secondarily liable as surety.

However mortgagee can sue either the assignee or the OG mortgagor.

Important: Once grantee assumes the mortgagee any modification of the obligation by grantee and mortgagee discharges the OG mortgagor of all liability.

131
Q

Mortgage: Lien Theory, Title Theory, Intermediate Theory

A
  1. Lien Theory: Mortgagee is considered holder of a security interest only and the mortgagor is the owner of the land until foreclosure. The mortgagee may NOT have possession before foreclosure.
  2. Title Theory: Mortgagee has legal title until the mortgage has been satisfied or foreclose, and the mortgagee is entitled to possession upon demand at anytime.
  3. Intermediate Theory: Legal title is in the mortgage UNTIL DEFAULT, upon default it passes to the Mortgagee. (basically the same as title theory).
132
Q

Redemption in Equity

A

At any time prior to the foreclosure sale the mortgagor may redeem the property by paying the amount due. If the note or mortgage contains an acceleration clause the FULL BALANCE must be paid to redeem. The right cannot be waived in the mortgage.

133
Q

Statutory Redemption

A

In some jurisdictions a mortgagor may redeem the property for some period of time after the foreclosure sale has occurred.

134
Q

Mortgage: Priorities

A
  1. Usually determined by time it was placed on the property.
  2. Foreclosure does not destroy any interests senior to the interest being foreclosed.
  3. Foreclosure generally destroys all junior interests, but failure to include a junior interest holder in a foreclosure results in the preservation of that party’s interest.
135
Q

Mortgage: Modification of Priority

A

Priority of mortgage may be challenged by:

  1. if prior mortgagee fails to record (depends on recording statute)
  2. there is a subordination agreement between a senior and junior mortgagee
  3. a purchase money mortgage
  4. the modification of a senior mortgage
  5. the granting of an optional future advance by a mortgagee with notice of a junior lien; or
  6. subrogation (senior loan is refinanced with a new mortgage).
136
Q

Purchase Money Mortgage

A
  1. Mortgage given in exchange for funds to purchase the property.
  2. Given either to seller as part of purchase price or to a third party lender.
  3. Priority over all mortgages/liens that arose prior to the PMM.
  4. Subsequent mortgages/liens may defeat PMM by operation of a recording act.
  5. As between two PMMs a seller’s PMM generally has priority, otherwise chronological order.
137
Q

Foreclosure: Proceeds of Sale

A

Order:

  1. Expenses of sale.
  2. principal and accrued interest on the foreclosed loan.
  3. next to any other junior interests.
  4. next to the mortgagor.

May seek deficiency judgments, mortgagor personally liable.

138
Q

Lateral Support

A
  1. Ownership of land includes the right to have the land supported in its natural state by adjoining land.
  2. Landowner strictly liable if his excavation causes adjacent land to subside (i.e. slip or cave in).

3.

139
Q

Cumulative Zoning

A

Land that is zoned for a particular use may be used for the stated purpose or any higher use. Under non-cumulative may ony be used for the purpose for which it is zoned.

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