Property Flashcards
Real Estate Contract
In writing to meet SOF (need price, parties, basic description of the property, signed by parties to be charged)
Exception to SOF – part performance (payments, improvements, or taking possession of land)
Equitable Conversion
The day real estate K is signed, grantor transfers equitable title/interest to grantee, but grantor maintains title.
Risk of Loss – shifts to buyer
Legal Title – Grantor does not need legal title until closing
Survive’s grantor’s death
Marketable Title
In every real estate K, there is an implied promise to convey marketable title. Marketable title = free of encumbrances (easements/covenants) or liens (mortgage) and zoning violations.
Reasonably free from doubt and under no threat of litigation
Suspect MT
covenants, easements, leases, liens, gaps in chain of title, boundary disputes, existing zoning violations, adverse possessions
Only buyers have the right of marketable title. can waive
DOESN’T ruin MT - lack of access to public road
Time (during real estate K)
Not of the essence unless made so
Merger
Real estate K merges into deed at closing. Provisions of real estate K transfer to deed. To sue after closing for breach of real estate K provision, must sue using deed.
Duty to Disclose
Grantor has a duty to disclose known material defects that cannot be seen by buyer (except: defects visible to the buyer)
Transferring Title
(1) Real Estate K [transfers equitable title] and (2) Deed [transfers legal title on day of closing aka day you sign deed]
Warranty Deed
No defects in title (no one else owns the land and it is free from encumbrances)
Six warranties (3 present, 3 future)
Present Warranties
Breached at time of conveyance (day of closing).
(1) Warrant of Seizin: grantor actually owns property;
(2) Right to Convey;
(3) Covenant Against Incumbrances
Future Warranties
Breached upon interference with possession
(1) Quiet Enjoyment: grantee’s possession and enjoyment will not disturbed by future lawful claims against grantee’s title;
(2) Covenant of Warranty: grantor will help defend & compensate against any future lawful claims made against grantee’s title;
(3) Further Assurances – grantor will take any actions reasonably necessary to perfect grantee’s title
LAWFUL - 3rd party wins quiet title suit
General Warranty Deed
Promising that all 6 warranties exist/are good since forever (since it was built)
Special Warranty Deed
Promising that all 6 warranties exist/are good since grantor owned property
Quitclaim Deed
Grantor promises nothing (e.g., family & business partners). Can’t hold grantor accountable even if problems later.
Closing
Deed is (1) in writing; (2) Delivery; (3) Acceptance; (4) Merger; (5) Legal description of property in the deed; (6) Identifiable grantees
In Writing – to comply with SOF
Delivery – doesn’t have to be physical. All that matters is grantor’s intent = did the grantor convey unconditional/unequivocable intent to PRESENTLY convey grantee title? If no clear intent, but deed is physically given to grantee no conveyance. Delivery w oral conditions? oral condition thrown out CANNOT RETAIN A RIGHT TO RECOVER THE DEED
deed being recorded = rebuttable presumption of delivery
Acceptance – acceptance is presumed UNLESS the buyer rejects it
Legal Description – Meets & bounds. Description muss be reasonably definitive = someone could reasonably identify the property.
identifiable grantees - if transfers ownership to group of people… must be ascertainable w reasonable certainty (be able to identify specific individuals belonging to that group). extrinsic evidence allowed to clarify ambiguities but if still unclear then deed is void
no consideration needed
Transfer of Title by Operation of Will
Can transfer by will. If no will –> transfer by intestate succession.
If will but grantor sells while alive (ademption)–>no transfer.
If will and beneficiary dies (lapse)–> property transfers into residuary estate.
If will but liens/encumbrances –> estate must pay off liens so that beneficiary can get property free and clear
Adverse Possession
Stealing legal title by squatting.
(1) Continuous
(2) Actual
(3) Open
(4) Notorious
(5) Hostile
(6) Exclusive
Continuous - must be on property for continuous statutory period of time. Exception: Tacking – intentionally transferring right to someone else for temp period. Handing baton. E.g., you’re there for 4 years, then someone else stays for 2 years, then come back for 1 year in 7-year statutory period
Actual, Open, Notorious – the use is obvious so that a reasonable person would know that you are using land
Hostile – use is without owner’s permission and the use is doing something to make the property your own/taking it over
Exclusive – not sharing the property with the owner
Mineral Estate v. Surface Estate - if surface & mineral estates are owned by the same party, then the adverse possessor will acquire title to both estates (even if only one estate is actually possessed). But if mineral estate has been severed from surface estate (i.e., owned by different parties), AP will only acquire title to the estate it is actually possessed
by 2 or more people = TIC via adverse possession
Drafting, Reviewing, & Executing Real Estate Documents
Drafting – can be done by non-attorney (mortgage broker/real estate agent) bc filling in the blanks ≠ practice of law. No legal advice.
Closing – can be done by non-attorney (broker agent)
Executing Documents – An agent for the grantor may sign a deed on behalf of the grantor, but the authority granting the agent the right to do it has to be in writing under SOF. Exception for separate writing:
(1) Officer of corporation w authorization to sign on behalf of corporation;
(2) Agent’s only job is to sign a paper [signing agent];
(3) If no separate writing, grantor is ESTOPPED from using lack of writing as a defense IF grantor did something that made signor believe they had the authority to do the writing
Recording Statutes
When a single grantor conveys/mortgages a single property to multiple people
Race Statute
Race-Notice Statute
Notice Statute
Shelter Rule
Wild Deed
After-Acquired Title/Estoppel by Deed
Race Statute
First person to record wins. Doesn’t have to be a BFP.
Race-Notice Statute
BFP who recorded first. (1) BFP + (2) Recorded first
Notice Statute
No conveyance shall be good against a subsequent BFP for value without notice. Last BFP.
Bonafide Purchaser (BFP) – (1) pays value for property & (2) no notice that any other claims exist. Mortgagees are BFPs = people who give you the mortgage. Not BFPs – creditors, gift donees, will beneficiaries, adverse possession
Notice – recording deed
Shelter Rule
Trying to protect BFP. E.g., O conveys to A, who does not record. Later, O conveys the same parcel to B, a BFP, who records. B then conveys to C, who is a mere donee with no knowledge of the O-to-A transfer. In the contest of A vs. C, who prevails? C prevails in a notice and race-notice jx bc of the shelter rule. C steps into B’s shoes.
HDC - a person who is not an HDC can still be protected if they took lien from HDC
Wild Deed
O sells Blackacre to A, who does not record. Then, A sells to B. B records the A-to-B deed. Is the A-to-B deed connected to the chain of title? NO. A to B deed = a wild deed. O conveys Blackacre to C and C records with no knowledge of O-to-A or A-to-C conveyances. C wins in notice or race-notice jx. If a deed entered on the records (A-B instrument) has a grantor unconnected to the chain of title (O-A missing link), the deed is a wild deed even tho it has been recorded bc not properly recorded. = No record notice.
After-Acquired Title/Estoppel by Deed
O doesn’t have legal title on the property. O conveys property w/o title to A on the day of closing. Once O gets title, the title automatically goes thru O –> A and then to whoever A transfers property to.
however, in most jx a prematurely recorded deed falls outside a later buyer’s chain of title and fails to provide record notice
Fee Simple Absolute
Grantee’s interest. O owns 100% of Blackacre by himself forever.
Life Estate –-> Reversion
Remainder (Contingent/Vested) –> Reversion
fee tail–> really now fee simple absolute
“to A”
“to A and his heirs”
“for the purpose of” –> only limits purpose, not durational or conditional
Life Estate
O conveys Blackacre to A for life. A can do whatever w property that she pleases inc. mortgage property (except: commit any waste). A can convey Blackacre to B, but B can only have it during A’s life. If there’s a mortgage on the property, the life tenant (A) owes interest [not principal] and taxes.
Reversion – Grantor’s interest. When A dies and A had a life estate –> the interest goes back to O.
Duties - pay charges (taxes, mortgage interest), prevent waste, ordinary repairs
Remainder
O conveys Blackacre to A for life (life estate) and then to B (remainder). Divisible during remainder’s life, transfer by will or intestate succession
Reversion – Grantor’s interest. Goes back to O.
Contingent – Conveyance contingent on a condition occurring. O –> to A for life & then to B if he’s married at the time. (if ambiguous survivorship “if she survives” must survive immediately preceding estate aka life estate)
Vested – Conveyance occurs auto when life estate recipient (A) dies. O conveys Blackacre to A for life and then to B –> B.
Vested Remainder Subject to Open (Partial Remainder) – Class of people (“subject to open”). As long as one group member is alive, subject to open = vested remainder. E.g., O to A for life and then to B’s kids.
Vested Remainder Subject to Total Divestment – Condition occurs that wipes out total interest. E.g., O to A for life and then to C; but if C has no children, then to D. C’s interest is totally wiped out if doesn’t have kids.
remainders are transferable inter vivos, devisable by will, and descendible by inheritance
Fee Simple Determinable
Grantee’s interest. O conveys Blackacre to A “so long as/as long as/during/until” A uses property for x purpose.
Possibility of Reverter – Grantor’s interest. If A doesn’t use Blackacre for x purpose or stops using it for x purpose –> O.
OR
Third party executory interest/ fee simple subject to executory limitation
Fee Simple Subject to Condition Subsequent
Grantee’s interest. O conveys Blackacre to A, “but if/provided that/unless x occurs” in the future –> O
Right of Reentry – Grantor’s interest. If that x event occurs, O has to do something to get the property back
OR
Third party executory interest/ fee simple subject to executory limitation
Rule Against Perpetuities (RAP)
applies only to contingent future interests (future interests that are held by unknown/unborn persons or subject to a condition precedent)
“herself, her heirs and assigns”
contingent remainder, vested remainder subject to open, executory interest, power of appointment, rights of first refusal, options
interest must vest within 21 years of the life and being
Two Hypos –
(1) Whether interest will vest in the time period?
(2) Subsequent grantee (3rd party interest/executory interest after Fee Simple Determinable) = E.g., O conveys Blackacre to A (gives either a fee simple determinable or condition subsequent) and instead of property going back to O, it goes to someone else. –> violates RAP. But doesn’t break whole conveyance. So, A & O still have interest. A gets fee simple determinable or condition subsequent and O gets reverter.
Right of first refusal will always violate RAP if it doesn’t have a set termination date
Joint Tenancy
Right of survivorship. Co-tenants have an undivided interest in the whole property. If O dies, A auto gets whole interest.
Severing Joint Tenancy – O can convey interest to B w/o A’s permission or knowledge = severs joint tenancytenancy in common
RoS trumps Wills – If O conveys Blackacre to B via will and then dies, Blackacre still goes to A bc RoS>will
Personal Debt – One co-tenant’s personal debt (e.g., cc debt) dies with them and goes to their estate. It doesn’t go to other co-tenant
for co-tenant to acquire sole ownership via adverse possession = prevent from using or accessing property (e.g., changing the locks, constructing a fence, physical removal)
Joint Tenancy by the Entirety
Spouses. Right of Survivorship. One party cannot convey interest w/o spouse’s permission. Divorce severs.
can only be partitioned by a court if both parties agree
Tenancy in Common
No right of survivorship. Co-tenants have an undivided interest in the whole property. Either can convey to whoever. If O dies, O’s heirs get interest in property bc no RoS.
Ouster
Each tenant has a right to the whole property unless someone gets kicked off the property
Partition
Court generally awards partition of property unless it’s not practical.
Mortgage & Taxes
Co-tenant may seek contribution from other co-tenant for taxes and mortgage. However, if O is in sole possession of the property, O can only recover an amount if it exceeds the FMV of the property
Rent
An out-of-possession co-tenant (doesn’t live on the property) may share in the rent & profits that the property is generating w another co-tenant. However, an out-of-possession co-tenant cannot demand rent from a co-tenant living on the property.
Repair
Co-tenant may not seek contribution from another co-tenant. However, if the repairs were necessary and co-T1 requested it & co-T2 refused, then co-T1 can demand it of co-T2.
Improvements
Co-tenants cannot seek contributions for improvements unless they increase the rents or profits
Types of Tenancies
Periodic Tenancy – specific start date & goes on for a period of time (e.g., month-to-month/year-to-year). Renewal- generally renews at the end of that term unless a termination ate is set. Termination – notice is required. In month-to-month, 1 month notice. In a year-to-year situation, 6-month notice.
Tenancy for Years – typical start date and particular end date. No notice required bc no start & end date.
Tenancy at Will – no specific term. Keeps going until 1 of the parties terminates. Tenant needs to be given notice w/in reasonable time.
Tenancy at Sufferance – Holdover tenant who stays longer than tenancy term allows. Termination occurs by tenant leaving or eviction by landlord. Rules revert to whatever it was before tenant overstayed.
Landlord’s Duties
(1) Give actual/physical possession of the property on 1st day of lease term or lease void;
(2) Basic repairs;
(3) Warranty of Habitability: air conditioning in the summer/heat in the winter, no health/safety code violations. If breach, tenant can refuse to pay rent;
(4) Warranty of Quiet Enjoyment: landlord must stop other tenant’s nuisances from bothering you. Must give landlord notice and it must be a significant nuisance. If breach, tenant can refuse to pay rent.
Tenant’s Duties
(1) Pay Rent (except: habitability or quiet enjoyment; property is destroyed);
(2) Cannot commit waste: must give notice of any damage to landlord & give reasonable time for repair. If something tenant can do by themselves–> must do basic
Assignments/Subleases
Assignments – Giving rest of term lease away. New tenant is primarily liable on lease. However, landlord can still go after old tenant for new tenant not paying unless landlord & old tenant signed a novation. If there is a new landlord, they must give notice to tenant if they want pay/check sent to new landlord.
Sublease – Giving property to a person for a portion of the lease. OG tenant stays liable unless novation.
Covenant against assignments/subleases – strictly construed
Fair Housing Act
Federal law which prohibits discrimination in sale or rental or financing of any property based on race, color, religion, sex, disability, family status (inc. having kids under 18 or being pregnant)
Fixture
A piece of chattel that becomes so affixed to the land that removing it would cause damage (e.g., beam in wall/structure of the house)
an item that is (1) attached to property w the intent that it remain attached and (2) used for a larger component or function of the property
Conflict of Laws pertaining to Property
If property question and states have conflicting law–>law of state where real property is located trumps.
Exceptions –
(1) deed says which law should apply;
(2) if about collateral matter & not property itself (e.g., mortgage) –>local law governs
Mortgage
Loan against a real property given to secure a debt. Can have several mortgages for one property.
Power of sale clause - allows trustees in deed of trust mortgages to do a non-judicial foreclosure on delinquent borrowers
acceleration clause - allows lender to demand full and immediate repayment of the outstanding mortgage balance (+ interest) when a borrower defaults
Collateral
What’s used to pay off the loan (the land) if O cannot pay the loan
Purchase Money Mortgage
The loan used to buy the property (initial loan). This gets priority and is paid back first when multiple mortgages.
Foreclosure Proceedings
If O can’t pay mortgage, mortgagee is going to sell O’s home to pay off debt.
