Property

Question 1

Defeasible Fees

Answer 1

Like a fee simple absolute estate, a defeasible fee is ownership of potentially infinite duration and is freely alienable (i.e., transferable during life or upon death). But, a defeasible fee may be terminated by the occurrence of an event

TYPES:
Fee simple determinable
- Durational: “so long as,” “during,” “until”
- Grantor’s possibility of reverter (automatic)

Fee simple subject to condition subsequent
- Conditional: “but if,” “provided that,” “unless”
- Grantor’s right of reentry (not automatic, grantor must affirmatively demonstrates intent to terminate. owner may waive the right to reenter, but the mere failure to assert it does not constitute a waiver)

Fee simple subject to executory interest
- Durational or conditional
- Third party’s executory interest

Question 2

Life Estates

Answer 2

Life estate is a present possessory estate that is limited in duration by a life. - measured by grantee’s life or life estate pur autre vie
The holder is “life tenant.”
When the future interest is held by a third person, the future interest is a REMAINDER.
When the future interest that follows a life estate is specifically held by the grantor or there is no subsequent interest mentioned in the conveyance–> REVERSION

Question 3

Rights of a life tenant

Answer 3

A life tenant has the right to possess the property, as well as the right to lease, sell, or mortgage his interest in the property (i.e., right of alienation).
1) Rents
2) Profits (a right to take natural resources from the land e.g., oil, gas, minerals, timber).
When the grantor expressly or impliedly gives the life tenant a right to profits, the life tenant may take such resources. If such resources were already being taken when a life estate became possessory, there is a presumption that the grantor intended the life tenant to have the right to profits.
When this right is not expressly or impliedly given to the life tenant, exploitation of natural resources can constitute waste
3) Sale of property
Generally, a life tenant can only sell her life estate when the future interest holders agree to the sale of the property in fee simple. However, in a majority of jurisdictions, a life tenant may seek a court order compelling the sale of the property in fee simple when future interest holders cannot be ascertained or are unwilling to sell the property.

Question 4

How does the doctrine of waste limit the rights of a life tenant?

Answer 4

Under the doctrine of waste, 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.

A grantor may alter or eliminate the doctrine of waste regarding the life tenant. Also, the life tenant’s conduct is not considered waste if the future interest holders consent to the conduct.

1) Permissive waste - life tenant permits the premises to deteriorate through neglect or a failure to preserve or protect the property.

2) Voluntary/Affirmative waste - a life tenant’s affirmative action that results in the diminution in value of the property is prohibited by the doctrine of waste.

b) Ameliorative waste occurs - when the life tenant’s affirmative action substantially changes the condition of the property but does not diminish the value of the property

Although the doctrine of waste typically arises in the context of a life estate, it may arise from abuse, neglect, or improvement of the property by any person who holds a present interest that is not a fee simple (e.g., a defeasible fee). The holder of a future interest in the property (e.g., remainder, executory interest) may enter the land to inspect for waste.
The holder of a vested future interest may bring suit against the present interest holder for damages, and the holder of any future interest may bring suit for an injunction. Some jurisdictions recognize an action for treble damages or forfeiture against a life tenant for voluntary waste.

Question 5

Iife tenant’s duty to prevent permissive waste

Answer 5

a) Repairs
A life tenant has a duty to prevent permissive waste by making reasonable repairs. This duty constitutes a personal obligation of the life tenant only to the extent that the life tenant receives a financial benefit from the property. The life tenant is only obligated to pay up to:
i) The amount of income generated by the property; or
ii) The fair rental value of the property if the life tenant uses the property (e.g., farms the land, occupies the residence).

b) Damage caused by natural forces or third parties
In most jurisdictions, the life tenant is NOT responsible for damage caused by natural forces or third parties that the life tenant could not prevent.

c) Insurance
In most jurisdictions, the life tenant is NOT under an obligation to insure the land for the benefit of the future interest holder.

Question 6

Is ameliorative waste allowed?

Answer 6

At common law, ameliorative waste was prohibited because it changed the condition of the property. In most jurisdictions today, ameliorative waste is permitted when the change results in reasonable use of the property. In determining the reasonableness of a change, the life tenant’s life expectancy and good faith in making the change are factors to be considered.
A life tenant has a duty not to change the premises if the future interest holders have a reasonable ground for objection. However, a reasonable ground for objection does not exist if:
i) A substantial and permanent change in neighborhood surroundings makes the change necessary to continue reasonable use of the property; and
ii) The proposed change is one that an owner of a fee simple estate would typically make.
3) Legal action by future interest holder

Question 7

A vested remainder is an interest that is:

Answer 7

1) Given to an ascertained grantee (i.e., someone who can be identified); and
2) Not subject to a condition precedent

If the remainder fails either 1 or 2, it is a CONTINGENT remainder.
If a contingent remainder does not vest before it becomes possessory (e.g., A does not have any grandchildren before A dies), the grantor has a REVERSION.

Question 8

A vested remainder subject to open/”partial divestment” exists when:

Answer 8

1) A remainder interest is transferred to a GROUP rather than named individuals (e.g., children, grandchildren); and
2) AT LEAST one member of the group is individually ascertainable and entitled to the remainder interest; but
3) That person might be required to SHARE the interest with other members of the group
(vs A vested remainder subject to complete divestment indicates that the occurrence of a condition subsequent will completely divest the remainder interest.)
If no one in the class has vested, then it’s contingent

Question 9

What happens when a holder of a vested remainder dies?

Answer 9

It passes onto the holder’s heirs (it’s inheritable)

Question 10

Rule of Convenience

Answer 10

If the grant does not have an express closing date, the Rule of Convenience closes the class when any member of the class becomes entitled to immediate possession.
It closes the class to avoid application of the rule of perpetuities to a class gift.

Question 11

Doctrine of Worthier Title

Answer 11

Creates a presumption of a reversion to the grantor that prevents against remainders in a grantor’s heirs.
E.g. Oliver conveys “to Anna for life, then to my heirs.” –> Oliver has a reversion

Question 12

Rule in Shelley’s Case

Answer 12

Prevents against remainders in a
grantee’s heirs. Uses the doctrine of merger to create a fee simple
Oliver conveys “to Anna for life, then to Anna’s heirs.” –> Anna has a fee simple

Question 13

Executory Interests

Answer 13

A future interest that divests a prior vested interest.
Springing executory interest: Divests the grantor
Shifting executory interest: Divests a prior grantee

Question 14

Rule Against Perpetuities

Answer 14

If a portion of a transfer violates RAP, that portion is void, the rest is valid
HOW LONG? a life + 21 years
WHEN?
- Inter vivos transfers: Interests created at time of the grant
- Devise (will): Interests created at testator’s death
WHAT? RAP applies to executory interests, contingent remainders, and class gifts
WHO?
- Relevant life: Person who affects vesting
- Validating life: Person who tells us whether or not the interest vests within the perpetuities period (lifetime plus 21 years)
Must have been alive when the interests were created;
Can validate her own interest;
If no validating life, then violates RAP so we strike it from the grant; if there is a validating life, the interest is good (no violation)

Question 15

Special rule for RAP for class gifts

Answer 15

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.” (The “all or nothing” rule.)

BUT Rule of Convenience
* An interpretative rule
* Can save a class gift from being invalidated under RAP
* To avoiding RAP, the class closes as soon as a member of the class is entitled to immediate possession.

EXCEPTIONS (RAP doesn’t apply to:)
* Transfers of a specific dollar amount to each class member, and
* Transfers to a subclass that vests at a specific time, e.g., “to the children of B, and upon the death of each, to that child’s issue”

Question 16

Exceptions to RAP

Answer 16

1) Charities - RAP does not apply to charity-to-charity gifts.
2) Options - RAP does not apply to an option held by a current tenant to
purchase a fee interest in the leasehold property. Nor does it apply to an option (or right of first refusal) in a commercial transaction.

Question 17

Modern “Wait and See” Approach

Answer 17

“wait and see” if an interest subject to RAP vests within the perpetuities period.
Some of these states changed the vesting period to 90 years

Question 18

Cy Pres

Answer 18

An equitable doctrine that allows a court to reform a transfer to avoid RAP.

Question 19

Joint Tenancy

Answer 19

PITT
Possession: Every JT has an equal right to possess the whole of the property.
Interest: JTs must have an equal share of the same type of interest.
* Time: JTs must receive their interests at the same time
* Title: JTs must receive their interests in the same instrument of title
–> right of survivorship

Grantor must make a clear expression of intent + Must be survivorship language (e.g., “as joint tenants with a right of survivorship.”)

Question 20

Mortgages: A joint tenant grants a mortgage interest in the joint tenancy to a creditor.
Does the mortgage sever the joint tenancy?

Answer 20

Most jurisdictions treat the mortgage as a lien, so it does not destroy the joint tenancy.
A minority of jurisdictions follows a title
theory. The mortgage severs title and the tenancy between the joint tenants and the creditor is converted into a tenancy in common

Question 21

Leases: A joint tenant leases her share in the property to a tenant. Does the lease sever the joint tenancy?

Answer 21

Jurisdictions are split.
Some hold that the lease SEVERS the JT
Some treat the lease as a TEMPORARY SUSPENSION of the joint tenancy.

Question 22

Tenancy by the Entirety

Answer 22

= Joint tenancy between married spouses (marriage is the 5th unity)

• Has a right of survivorship.
• Tenants by the entirety CANOT alienate or encumber their shares without the consent of their spouse.

Must say: Property conveyed “as tenants by the entirety, with a right of survivorship”
* If the grant is ambiguous, courts presume property is held as joint tenants or as tenants in
common

Question 23

Possession Rights of JTs/TCs

Answer 23

Unless there is an agreement to the contrary, each cotenant has the right to possess all of the property.

Under the majority rule, a cotenant is NOT required to pay rent to the other cotenants for the value of her own use of the property, even when the other cotenants do not make use of the property, and a cotenant is generally NOT required to share profits earned from the use of the property, such as from a business conducted on the property.

Under minority rule, a cotenant who is in exclusive use of the property MUST provide an accounting to the other cotenants for the reasonable rental value of the property less any necessary expenses.

Because of each tenant’s right to possess the entire property, a cotenant’s exclusive use of the property does not, by itself, give rise to adverse possession of the interest of another cotenant.

Natural resources: A cotenant is entitled to the land’s natural resources (e.g., timber, minerals, oil, gas) in proportion to her ownership share.

Question 24

Ouster
What happens wen a cotenant refuses to allow another cotenant access to the property?

Answer 24

the ousted cotenant may bring a court action (e.g., an injunction) to gain access to the property and to recover the value of the use of the property for the time during which the cotenant was denied access to the property.

Under the majority rule, a cotenant in exclusive possession of the property who merely rejects a demand to pay rent or vacate a portion of the premises has not committed ouster. The cotenant in possession must refuse a demand by another cotenant to use the property.

Question 25

Co-tenants rights to property-related expenditures and income

Answer 25

1) Necessary property-related obligations A cotenant who pays MORE than his share of necessary property-related expenses (e.g., taxes, mortgage payments) generally can compel the other cotenants to CONTRIBUTE based on each cotenant’s ownership interest. A cotenant in sole possession of the property can collect only to the extent that those expenses exceed the rental value of the property. 2) Repairs In most jurisdictions, a cotenant CANNOT compel other cotenants to share in the expenses for repairs made to the property through an action for contribution. In some jurisdictions, a cotenant may maintain a separate action for contribution if the other cotenants were notified of the need for the repair. If there is an action for accounting or partition, NECESSARY repair expenses can be recouped indirectly (e.g., repair expenses can offset rental income received from a third party). 3) Improvements A cotenant does NOT have a right to contribution from other cotenants for improvements. In a partition action, the cotenant may be entitled to the additional value attributable to the improvement if the property is sold or if the property is divided among the cotenants. 4) Third-party rents A cotenant MUST account to other cotenants for rent received from third parties but CAN deduct expenses, including necessary repairs, when calculating net proceeds. Net proceeds from a third party rental of the property are divided among the cotenants based on each cotenant’s ownership interest.

Question 26

Do covenants owe a fiduciary duty to each other?

Answer 26

No, they only owe a duty of fair dealing to each other BUT, a fiduciary obligation can be imposed on cotenants who jointly purchase the property in reliance on each other or acquire their interests at the same time from a common source, such as by gift, will, or inheritance. Typically, these cotenants will be related or in a confidential relationship. The primary situation in which such a cotenant is found to have a fiduciary obligation arises when the property is sold at a tax or mortgage foreclosure sale and a cotenant acquires the property. In such a situation, the other cotenants have the right to reacquire their original interests by paying their due contributions within a reasonable time.

Question 27

Partition

Answer 27

Only for JTs and TCs. Tenants by the entirety do NOT have the unilateral right to partition. Equitable remedy - court will divide the property into distinct portions. * Courts have a preference for a physical division. o Court will order a partition by sale if the physical partition is: Not practical OR not fair to all parties Proceeds from a partition by sale are divided among the co-tenants based on their ownership interests Co-tenants can agree not to partition. Such an agreement is enforceable, provided:  The agreement is clear and  The time limitation is reasonable

Question 28

federal Fair Housing Act

Answer 28

FHA prohibits discrimination in the sale, rental, and financing of homes and in other housing-related transactions (e.g. homeowner’s insurance, and zoning). Exemptions: owner-occupied buildings with no more than 4 living units (including the owner’s living unit), single-family housing sold or rented without the use of a broker, and housing operated by religious organizations and private clubs that limit occupancy to members. Protected traits: race, color, religion, national origin, sex, disability, and familial status. “Sex” has been interpreted to include sexual orientation and gender identity. Familial status includes having or securing custody of children under the age of 18 and being pregnant. Exemption from familial-status protection exists for housing for older individuals (e.g., housing for individuals who are 62 years of age or older Disability provision mandates reasonable accommodations for persons with disabilities (e.g., ramp, elevator, etc.)

Question 29

Rules about discrimination in ads

Answer 29

FHA prohibits stating a discriminatory preference in an advertisement. (e.g. this is the perfect bachelor pad). The unlawful act is the ad itself. (it's a violation even if you don't otherwise engage in discriminatory behavior) Exemptions for single-family without broker and Ms. Murphy boarding house (4 units) do not apply to discriminatory advs unless there are shared living areas and the restriction is sex-based.Religious orgs and private clubs can list their restrictions in their advertisements.

Question 30

What do you have to show to prove discrimination under the federal FHA?

Answer 30

intent or effect * Causation: Prohibited behavior must be linked to the protected basis

Question 31

Conflict of Laws for Property

Answer 31

In cases about property, the controlling law is based upon where the property is located (i.e., law of the situs). BUT not when: If the instrument in question designates an applicable jurisdiction; Marriage - for classifying MP/SP, the domicile of the party may override the law of the situs; Mortgage cases, where the mortgage docs require repayment to be made in another state.

Question 32

Tenancy for Years

Answer 32

A tenancy for years is an estate measured by a FIXED and ascertainable amount of time. (can be any length e.g. 1week, until the end of the war) Created by an agreement between L & T. Termination occurs automatically upon the expiration; no notice is required. Termination may occur before the expiration of the term, such as when the T surrenders the leasehold or if L commits a material breach

Question 33

When does a tenancy for years fall under the statute of frauds?

Answer 33

If it's for longer than one year. (If a lease is to commence in the future, it is the period of the lease itself that must exceed one year). If violate SoF, invalid unless the tenant takes possession of the premises with the acquiescence of the landlord, in which case a tenancy at will is created. If the rent is then paid by the tenant and accepted by the landlord, a periodic tenancy is created. If the tenant further makes substantial improvements and thereby indicates that the parties contemplated a lease for more than a year, the oral lease is given full effect. SoF Requirements - The lease agreement must be in a writing that: i) Identifies the parties ii) Identifies the premises; iii) Specifies the duration of the lease; iv) States the rent to be paid; and v) Is signed by the party to be charged.[ii] b) [iii] When a lease is subject to an option to renew, the option is disregarded when considering whether the lease must comply with the Statute of Frauds.[iv]

Question 34

Periodic Tenancy

Answer 34

A periodic tenancy is a repetitive, ongoing estate measured by a set period (e.g., a month, a year) but without a predetermined termination date. It automatically renews at the end of each period until one party gives a valid termination notice. Can be created by express agreement, implication (e.g., failure of an express agreement to mention a termination date), or operation of law (e.g., a holdover tenant). Statute of Frauds applies to a periodic tenancy only if the initial term of the tenancy exceeds one year. Because it automatically renews, notice is generally required to terminate, 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. Proper notice means the terminating party gives notice before the start of what will be the last term. Notice is effective on the last day of the period. Most jurisdictions require written notice of termination.

Question 35

Tenancy at Will

Answer 35

= a leasehold estate that does not have a specific term and continues so long as the L&T desire. Can be created by the express agreement of the parties or by implication if the owner permits the tenant to occupy the premises. Unless this tenancy is expressly created, the payment of rent by the tenant and acceptance by the landlord convert a tenancy at will into a periodic tenancy. Terminated by either the L or T. It can also be terminated by operation of law upon the death of either party, because of waste or assignment by the T, or upon transfer or lease of the property to a third party by the L. Don't need to give notice, but tenant must get a reasonable time in which to vacate the premises. If the agreement gives only the L the right to terminate at will, the tenant also gets the right to T by implication. If agreement gives only the T the right to terminate at will, the L is NOT given the right to terminate at will.

Question 36

If the landlord or tenant dies, does that terminate the tenancy for years / periodic tenancy / tenancy at will?

Answer 36

Yes, terminates for tenancy at will, but not for the tenancy for years or the periodic tenancy

Question 37

tenancy at sufferance

Answer 37

exists for the period after the expiration of a lease during which the tenant remains on the premises without the landlord’s permission. Created by the actions of the tenant alone. (vs tenancy at will - T&L) Terminated if the tenant vacates the premise, or landlord evicts the tenant, or rerents to tenant Tenant is obligated to pay the reasonable value of use and occupancy of the premises, which typically is a daily rate determined by reference to the previous rent. Tenant is liable for reasonably foreseeable special damages that result from his holding over, such as the cost of evicting the tenant.

Question 38

Duties of the Tenant

Answer 38

1) Duty to pay rent (arises from K btwn L&T) 2) Duty to avoid waste The duty to avoid waste may be modified by contractual or other legal obligations regarding repair of the premises. Prohibited from: affirmative waste (voluntary), permissive (neglectful) Can do ameliorative waste, unless the landlord and tenant agree otherwise. Landlords usually require advance permission. Duty to repair: In a residential lease, L is presumed to be responsible for repairs. The tenant must notify the landlord of any needed repairs

Question 39

When is the tenant's duty to pay rent is suspended:

Answer 39

L Premises are destroyed, so long as the tenant didn’t cause the damage; - L completely (whole property) or partially (part of property) evicts the tenant; - L materially breaches the lease

Question 40

Implied Covenant of Quiet Enjoyment:

Answer 40

T can withhold rent when the L takes actions that make the premises wholly or substantially unsuitable for their intended purposes --> T is constructively evicted (and can withhold rent) for residential + commercial leases

Question 41

T is constructively evicted (and can withhold rent) if:

Answer 41

1) Premises were unusable for their intended purposes (i.e., breach of the covenant of quiet enjoyment); 2) T notifies the landlord of the problem; 3) L does not correct the problem; and 4) T vacates the premises after a reasonable amount of time has passed

Question 42

Implied Warranty of Habitability

Answer 42

L must maintain the property such that it is suitable for residential use. We are concerned with conditions that threaten the tenant’s health & safety. - T can't waive it. - L's failure to comply with applicable building codes constitutes evidence of a breach - Applies to residential properties, NOT commercial leases; If the premises are not habitable, the tenant may: 1) refuse to pay rent; 2) remedy the defect and offset costs against therent; 3) defend against eviction (i.e., if landlord objects to rent abatement) 4) treat the breach as a constructive eviction by vacating the property (not required to vacate like in quiet enjoyment, but you can if u treat as const eviction) If the tenant chooses to withhold rent, the tenant must: notify the L of the problem + give the L a reasonable opportunity to correct the problem

Question 43

Duty to Mitigate Damages (by re-renting)

Answer 43

Majority rule: The L must make reasonable efforts to re-rent. - L must treat leasehold as if it was vacant stock (like any other property she would try to rent) - If L doesn't try to mitigate, the tenant is relieved from the obligation to continue paying rent. - L does not have to accept an unacceptable replacement tenant. Minority rule: L does NOT have to mitigate damages. (more common for commercial leases)

Question 44

If a L continues a relationship w a holdover T, what rent does the T have to pay?

Answer 44

Rent amount under the old lease BUT L can impose a higher rent if the L had informed the T of the increase before expiration of the old lease

Question 45

Landlord's duty to deliver possession

Answer 45

Majority rule: The landlord must deliver actual (physical) possession of the leasehold premises. * Minority rule: legal possession

Question 46

If a tenant pays rent late, landlord is entitled to:

Answer 46

damages. L can also sue to remove the tenant depends on if the delay constitutes a material breach of the lease. But if a landlord accepts late payment of rent, the landlord is treated as waiving his right to regain possession of the premises and terminate the lease at least regarding that breach.

Question 47

Covenant of Quiet Enjoyment

Answer 47

(commercial and residential) L may not interfere with the tenant’s possession of the leased premises. Breached when the conduct of the landlord or someone with superior title prevents the tenant from possessing the leased premises. L is not liable for acts of other tenants, but the landlord has a duty to take action against a tenant’s nuisance-like behavior + to control common areas. L can't control off-premises actions of third parties. Any actions by the landlord that breach this covenant may amount to an actual or constructive eviction of the tenant. In a residential lease, the landlord must provide habitat premises

Question 48

T & L owe a tort liability duty of care to:

Answer 48

invitees, licensees, and foreseeable trespassers

Question 49

L's duty of care

Answer 49

Common law - Responsible in negligence for latent (hidden) defect, which the tenant has not been warned; - repairs completed by the L negligently; - negligence that causes injuries in common areas of the property. Modern trend: Landlords have a general duty of reasonable care.

Question 50

When can a T assign or sublet a lease?

Answer 50

Silent lease --> T may assign/sublet freely. If the lease requires L's permission to transfer, but is silent as to the applicable standard, then: - Majority rule: L may deny permission to a transfer only for a commercially reasonable reason. - Minority rule: L may deny permission at her discretion

Question 51

statute of frauds for land sales contracts (HIGHLY TESTED SUBJECT)

Answer 51

A land-sales contract must: 1) Be in writing; 2) Be signed by the party to be charged; and iii) Contain all of the essential terms: parties, property description, and terms of price and payment. 2 exceptions: PART PERFORMANCE: by either the seller or the buyer is treated as evidence that the contract existed. - e.g. payment, possession, improvement. Many states require at least 2 acts of performance DETRIMENTAL RELIANCE applies where a party has reasonably relied on the contract and would suffer hardship if the contract were not enforced.

Question 52

Marketable title

Answer 52

Every land sale contract includes an implied covenant of marketable title = Title that is free from an unreasonable risk of litigation Std = that of a reasonable buyer Remedy = rescission Unless otherwise agreed, the seller is not required to deliver marketable title until the closing Defects in title rendering title unmarketable include: - Title acquired by adverse possession that has not yet been quieted (i.e., supported by a judicial decree); - Future interests wherein the holders of such interests have not agreed to the transfer; -Private encumbrance (e.g., mortgage, covenant, option, or easement); -Violation of a zoning ordinance; or - Significant physical defect (e.g., an encroachment that is incurable). The buyer may waive a defect in the contract of sale or subsequently

Question 53

What happens when there's a delay (failure to close on the date set for close)

Answer 53

It's a breach of the contract (so liable for dmgs), but is not grounds for rescission (specific performance is still available) Time is NOT of the essence in a real estate contract unless: i) contract specifically states that time is of the essence; ii) Circumstances indicate that this was the parties’ intention; or iii) One party gives the other party notice that time is of the essence. Such notice must be given at a reasonable time before the date designated for closing.

Question 54

Implied Warranty of Fitness or Suitability for defects in new construction

Answer 54

seller generally warrants that a new home was built according to certain standards of workmanship + that it is suitable for living. 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) Damages are generally based on the cost of repairs to bring the residence into compliance with the warranty. But when the defects cannot be corrected without substantial destruction of the residence, damages may be based on the difference between the value of the residence with the warranty and the value of the residence as built implied warranty may be disclaimed by the builder or waived by the homeowner if done so with language that is clear and unambiguous, but a general disclaimer (e.g., “Property is sold as is”) is typically not sufficient

Question 55

duty to disclose defects (for sale of all homes)

Answer 55

Most jurisdictions impose a duty on the seller to disclose to the buyer disclose ALL KNOWN MATERIAL PHYSICAL defects * Material defect must substantially affect the value of the home, health & safety of its occupants, or the desirability of the home; General disclaimers (e.g., “as is”) will not satisfy the seller’s duty to disclose if violate, the buyer may rescind the sale contract or seek damages

Question 56

doctrine of merger for land sales

Answer 56

an obligation contained in the contract of sale is merged into the deed and cannot thereafter be enforced unless the deed contains the obligation. If a buyer wants to enforce an obligation in the contract, the buyer must do so at or before closing. After the closing, the seller has completely performed the contract, so buyer can no longer bring a breach of contract claim related to those obligations. But the buyer may bring a claim under the deed (if the deed includes the obligation). If the deed does not include the obligation, it is no longer actionable. Exceptions - parties’ intent, either expressed or implied, that the obligation survive the deed, such as an obligation that cannot be performed until after ownership of the property has passed to the buyer. Doctrine generally is not applicable to an obligation that is collateral to and independent of the conveyance itself (e.g., an agreement to reconvey, in the future, a portion of the property presently conveyed). Does not prevent a buyer from raising other contract defenses, such as fraud or mutual mistake.

Question 57

remedies for breach of a land-sales contract:

Answer 57

DAMAGES - Expectation damages =difference between contract price and the market value on the date of performance. - In some jurisdictions, if the seller’s breach resulted from an inability to deliver marketable title but the seller acted in good faith, then the buyer’s damages are limited to the buyer’s out-of-pocket expenses. - Incidental damages, such as expenses associated with a title search or survey of the property. SPECIFIC PERFORMANCE RESCISSION

Question 58

doctrine of equitable conversion - ( who owns the property before the transfer of the deed at closing?)

Answer 58

SELLER retains LEGAL title to real property during the pendency of the sales contract, and EQUITABLE title passes to the BUYER upon entering the contract. The seller effectively holds the property in trust for the buyer and has a duty to keep up the property. As the holder of legal title, the seller has the right to possess the property. Equitable conversion does not apply if the contract is not specifically enforceable. Most states place the risk of loss during the time between the execution of the contract and the closing on the BUYER A minority of the states - SELLER

Question 59

adverse possession

Answer 59

Ownership of real property is transferred to a person who exercises exclusive physical possession of that property for a certain amount of time. Government-owned land cannot be adversely possessed. Possession must be: ECHO Exclusive – physical presence on land not shared with the owner Continuous – presence is continuous and uninterrupted for statutory period Hostile – possession is without the owner’s consent Open, notorious, actual – possession is apparent or visible to a reasonable owner

Question 60

how to satisfy adverse possession - Continuous

Answer 60

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 (e.g., vacation residence, farm). An adverse possessor may TACK on his predecessor’s time to satisfy the statutory period if there is PRIVITY between successive possessors. Privity is satisfied if the possessor takes by any nonhostile means (such as descent, devise, contract, or deed). And no gaps. Not allowed when there is an actual, wrongful exclusion of a party entitled to possession from the property (ouster). The statute of limitations will not run against a true owner who is afflicted with a DISABILITY (e.g., insanity, infancy, imprisonment) at the inception of the adverse possession. Once adverse possession has begun, a transfer of the property to another owner (e.g., sale, gift, devise) will not restart the adverse possession period

Question 61

how to satisfy adverse possession - Hostile

Answer 61

Majority rule: Ignores the adverse possessor’s state of mind --> objective Minority rule: - Good faith: The adverse possessor’s claim is hostile if she thinks the land is unowned or that she is the rightful owner. (mistake) - Bad faith: The adverse possessor knows that land is not hers and she tries to acquire title to the property by adverse possession (aggressive trespass)

Question 62

If two people possess the property together, can they both acquire title by adverse possession?

Answer 62

Yes, they acquire title as tenants in common

Question 63

Can easements can be acquired by adverse possession?

Answer 63

yes (it's called prescription)

Question 64

what is a deed?

Answer 64

A deed is a legal instrument that transfers ownership of real property. To be valid, it must be delivered + accepted (generally presumed). The delivery requirement houses the issue of intent note: a deed is valid at delivery, it doesn't matter if it's recorded

Question 65

Delivery requirement for deeds

Answer 65

The grantor must, at the time of transfer, intend to make a present transfer of a property interest to the grantee. Physical transfer of a deed is not required lookout for situations where delivery is incomplete or seemingly revocable.

Question 66

what is a broker allowed to do?

Answer 66

Brokers can be involved in land sale contracts so long as they do not practice law Most states permit real estate agents and brokers to prepare a contract of sale. BUT they cannot usually draft a legal document like a deed or mortgage.

Question 67

Contents of a valid deed

Answer 67

A valid deed must: - identify the parties + be signed by the grantor, per the Statute of Frauds. - include words of transfer = "granting clause" - include a sufficient description of the property. (doesn't have to be a legal description, can be based on monuments/physical attributes, can admit extrinsic evidence for ambiguous desc) if a conflict between descriptions of the property in the deed, descriptions based on monuments (e.g., “from oak tree east to the tool shed”) are given priority over area descriptions (e.g., “100 acres”)

Question 68

execution of a deed

Answer 68

grantor’s signature is required for execution to be effective. (grantee not required to sign) deed doesn't need to be witnessed or notarized? If the signature is forged? The deed is void, even if the purchaser is a BFP. A deed is valid if an agent with authority signs only the principal’s name. Not valid at law if an agent with authority signs only her own name, but the deed may be enforced in equity as between the parties and subsequent purchasers with notice of the existence of the agency.

Question 69

Agents & Equal Dignities Rule:

Answer 69

If the agent is required to sign (e.g., execute a deed), then the agency relationship must be created in writing

Question 70

Who is not covered by recording acts?

Answer 70

Grantees who acquire title by gift, intestacy, or devise

Question 71

3 kinds of notice (for recording acts)

Answer 71

Actual—when the subsequent grantee has real, personal knowledge of a prior interest; Constructive (i.e., record notice)—when a prior interest is recorded Inquiry—when a reasonable investigation would have disclosed the existence of prior claims. (dude on the land, mentioned interest)

Question 72

the 3 recording statutes

Answer 72

RACE statute: A purchaser who records first prevails, regardless of his knowledge of any prior conflicting interests. - “First recorded” or “First to record” NOTICE statute: A purchaser need only purchase without notice of the prior interest to prevail - “in good faith” or “without notice.” against a subsequent purchaser. RACE-NOTICE statute A subsequent purchaser takes the interest without notice of a prior conflicting interest AND be the first to record. Unless the recording act governs, the common-law rule of “first in time, first in right”

Question 73

recording acts - Shelter Rule + Estoppel by Deed

Answer 73

Shelter rule: A person who takes from a bona fide purchaser protected by the recording act has the same rights as her grantor. Estoppel by Deed o Arises when a grantor conveys land the grantor does not own o If a grantor subsequently acquires title to the land, the grantor is estopped from trying to repossess on grounds that he didn’t have title when he made the original conveyance

Question 74

3 types of deeds

Answer 74

GENERAL WARRANTY DEED: Grantor warrants title against all defects, even if the grantor did not cause the defects. 1-3 Present covenants - Covenant of seisin (grantor owns the land as it is described in the deed); - Covenant of the right to convey (the grantor has the right to transfer title) - Covenant against encumbrances (the deed contains no undisclosed encumbrances. 4-6 Future covenants - Covenant of quiet enjoyment (the grantee’s possession will not be interfered with by a third party’s lawful claim for title); - Covenant of warranty (grantor will defend against a 3rd party’s lawful claim for title) - Covenant of further assurances (the grantor will do whatever is necessary to perfect title should it turn out to be defective, though this covenant is not recognized in all states). SPECIAL WARRANTY DEED - the same 6 covenants of title but only warrants against defects arising during the time the grantor had title that the grantor caused QUITCLAIM DEED Promises no covenants of title. 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 75

ademption - A devise of property that deems because it is not in the testator’s estate at death

Answer 75

Basic rule: The gift fails and the intended recipient gets nothing; Satisfaction: If the testator gives the intended beneficiary the promised gift during life, then the beneficiary keeps the gift (“ademption by satisfaction”).

Question 76

lapse & anti-lapse (beneficiary dies before testator dies)

Answer 76

Lapse: intended beneficiary predeceases (i.e., dies before) the testator. -- > Traditionally, the gift fails (i.e., lapses) and would fall to the residuary gift. Every state has an anti-lapse statute. 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 (e.g., the children of the beneficiary) who stands in the shoes of their parent and takes the gift on their behalf.

Question 77

what is a trust? a valid trust?

Answer 77

A trust is a fiduciary relationship wherein one or more trustees are called upon to manage, protect, and invest certain property and any income generated therefrom for the benefit of one or more named beneficiaries. A device for managing property with bifurcated ownership. Trutsee owns property (legal title) for the benefit of the beneficiary (who holds equitable title) A valid private trust must have: i) Intent – the settlor must intend to make a gift in trust; ii) Valid purpose – any purpose not illegal or against public policy; iii) Res – the property that is subject to the trust; and iv) Beneficiaries – those identifiable persons for whose benefit the trust is created and who hold equitable title to the property. vs a charitable trust must have beneficiaries that are reasonably numerous and unidentifiable.

Question 78

restraints on alienation of property (transferring property)

Answer 78

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 (e.g., covenants) 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 in violation of the restraint

Question 79

Installment Land Contract

Answer 79

= a contract whereby the seller retains title until the buyer makes the final payment under an installment payment plan. Traditionally, if the buyer failed to make a single payment, seller could keep all installment payments and retake possession Some states treat an installment land contract as a mortgage, requiring the seller to foreclose on the property to gain clear title. Some offer the buyer the equitable right of redemption. Some allow the seller to retain ownership of the property but require some form of restitution to the buyer.

Question 80

When Can the Mortgagee/Lender Take Possession Pre-Foreclosure?

Answer 80

Lien theory state - mortgagee/lender cannot take possession prior to foreclosure because lender has a lien until foreclosure is complete. The mortgagor is the owner up until foreclosure. Title theory state The lender has the right, as the holder of title, to possess the property at any time. Intermediate title theory state A minority of jurisdictions modify the title theory. The mortgagor retains title until default, at which point the lender can take possession

Question 81

Is the mortgagor responsible if the sale produces less than the mortgagor owes?

Answer 81

Yes, In that situation, the court can issue a deficiency judgment for the remaining balance

Question 82

Exceptions to the Chronological “First in Time” Rule

Answer 82

Purchase-money mortgage exception Recording act exception (A recorded junior mortgage may take seniority over the unrecorded senior mortgage) Subordination agreement between mortgagees Mortgage modifications Future-advances mortgages (line of credit) After-acquired property

Question 83

Purchase-money mortgage exception to the Chronological “First in Time” Rule

Answer 83

Purchase-money mortgage = Mortgage given to a lender in exchange for a loan to buy real property The purchase money mortgage has priority over mortgages and liens created by or against the purchaser/mortgagor prior to the purchaser/mortgagor’s acquisition of the property.

Question 84

what happens after a foreclosure sale?

Answer 84

Absent statutory redemption, the purchaser of property at a foreclosure sale takes the property free and clear of any junior mortgage and subject to any senior mortgage Statutory redemption: Some states allow the mortgagor to redeem the property even after the foreclosure sale, nullify the foreclosure

Question 85

Transfer of mortgage and note

Answer 85

Transfer of mortgage without note Many states treat a transfer of the mortgage alone as void (since the note is the principal evidence of the debt). Some states treat the note as having automatically been transferred along with the mortgage, unless the parties to the transfer agree otherwise. Transfer of note without mortgage Mortgage is treated as having been automatically transferred along with the note, unless the parties to the transfer agree otherwise. No separate written assignment of the mortgage is necessary for the transferee to be entitled to enforce the mortgage

Question 86

Easement Appurtenant

Answer 86

easement is tied to the use of the land. fully transferable; it goes with the land.

Question 87

Easement in Gross

Answer 87

benefits the holder personally there is no dominant estate, only a servient estate. Traditionally, were not transferable, but now courts allow the easement to be transferred if there is intent for it to be transferable.

Question 88

Express easements

Answer 88

subject to the Statute of Frauds. Thus, it must be in writing subject to recording statutes can be created by a grant or by reservation (grantor conveys land but reserves an easement right in the land for the grantor’s use and benefit) A negative easement must be express; it cannot be created by implication

Question 89

Implied Easements (WILL BE TESTED)

Answer 89

informal; they arise out of factual circumstances they are transferrable NOT subject to SoF. NOT subject to recording statutes, unless the subsequent purchaser had notice of the easement. Easement by necessity, implication, prescription, estoppel

Question 90

easement by necessity

Answer 90

created only when property is virtually useless (e.g., landlocked) Conditions that must be met: - Common ownership: Dominant and servient estates were owned in common by one person; and - Necessity at severance: “Necessity” in a strict sense Ends when it is no longer necessary

Question 91

Implied Easement by Implication

Answer 91

Conditions that Must be Met o Common ownership o Before severance: The owner of the large tract uses the land as if there’s an easement on it. We call this a quasi-easement - an owner can’t have an easement over her own land. o Use must be continuous and apparent at the time of severance. o Necessity: Use must be reasonably necessary to the dominant estate’s use and enjoyment

Question 92

changes in use of an express easement

Answer 92

reasonableness standard. Future use of an easement must be reasonably foreseeable. If the use exceeds the scope, the dominant tenant is trespassing on the servient estate. (e.g. big condo) Considerations: * Can the easement be transferred to the new holders of the estate? * Was the new use an ordinary foreseeable development?

Question 93

Requirements for a real covenant to "run with the land"

Answer 93

WRITING (since subject to SoF) INTENT for it to run ("and his heirs and assigns”) TOUCH & CONCERN - Negative covenant: A restriction on use will usually touch and concern because they restrict what you can do with your land. Watch out for promises that are unenforceable such as discriminatory covenants, as these do not touch & concern. - Affirmative covenant: A covenant to pay money (e.g., homeowners’ association fees). Traditionally, did not t&c, but the modern trend is to say that these fees do t&c NOTICE (actual or constructive. inquiry may suffice for an equitable servitude) Privity - og parties in horizontal privity -vertical privity btwn og and successor To run the burden of the covenant to the successor, the successor must take the original party’s entire interest (strict vertical privity) To run the benefit of the covenant to the successor, the successor need only take an interest that is carved out of the og party’s estate. (relaxed vertical privity)

Question 94

equitable servitude

Answer 94

like a real covenant, but easier std to meet. remedy is injunction (vs for real cov dmgs) Must be in writing, intended to run w the land, touch & concern, notice (actual, record or inquiry) - No privity requirement

Question 95

Implied Reciprocal Servitude

Answer 95

doesn't need to be in writing Developer must intend to create a covenant on ALL plots in the subdivision; Promises must be RECIPROCAL (i.e., benefits and burdens each and every parcel equally); Must be NEGATIVE (a restriction on the owner’s use); A successor must be on NOTICE of the restriction (at least inquiry notice); and o Must be a COMMON plan or scheme

Question 96

An equitable servitude can be express. It can also be implied from a common scheme if 3 elements are met:

Answer 96

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. BUT, if the common scheme arose AFTER some of the lots were already sold, then the previously sold lots will not be incorporated into the common scheme or subject to the implied equitable servitude

Question 97

deed of trust

Answer 97

when title is given to a 3rd party (trustee) to hold as security for a loan. If borrower defaults, trustee can sell the property and apply the proceeds to the debt. No judicial supervision of foreclosure sale for a deed of trust (so its cheaper)

Question 98

can you redeem even after a foreclosure sale has happened?

Answer 98

Yes in states that allow for statutory redemption... the mortgagor can pay the foreclosure sales price and it nullifies the foreclosure sale. Must pay the foreclosure sale price (PLUS interest)... NOT the amount of the original debt.