Property Flashcards

Question

how to identify shifting executory interest vs springing executory interest

Answer 1

Three parties (Grantor + Grantee + Grantee) = Look for a shifting executory interest where a grantee divests another grantee y Two parties (Grantor + Grantee) = Look for a springing executory interest where the grantee divests the grantor

Answer 2

Specific future interests are valid only if they must vest or fail by the end of a life in being plus 21 years. However, a grantor’s right to a reversion, possibility of reverter, or right of reentry is not subject to RAP. And RAP does not apply if property passes from one charity to another charity.

Answer 3

s include “survival beyond age 21” conditions, fertile octogenarian, unborn spouse, defeasible fee followed by executory interest, and conditional passage of interest.

Answer 4

Does the grantee have a contingent future interest? Yes = RAP applies. No = RAP does not apply. Must the vesting occur within 21 years after creation of the interst. Yes = Interst valid. No... Could the interest possibly vest more than 21 years after the validating life ends: No = interest valid. Yes (common law) = interest is void. Yes (majority rule) = wait and see for 90 years

Answer 5

: If RAP voids a transfer to any class member, then the entire transfer is void as to all class members—even those whose interests have already vested. This is known as the “bad as to one, bad as to all” rule. However, under the rule of convenience, a class will “close” when at least one class member becomes entitled to immediate possession so that no new members can join the class. This rule of interpretation saves many class gifts from violating RAP.

Answer 6

A concurrent estate (i.e., cotenancy) arises when two or more persons own real property simultaneously. The most common concurrent estates are tenancy in common, joint tenancy, and tenancy by the entirety.

Answer 7

Default tenancy for property conveyed to joint owners with: y Equal right to possess the entire property y Separate and possibly unequal shares in the property y No right of survivorship y Alienable during life y Devisable by will y Inheritable via intestate succession

Answer 8

Right of survivorship plus four unities (mnemonic: PITT): y Possession – equal right to possess the entire property y Interest – undivided and equal shares in the property* (some don't require this) y Time – interests created at the same time (unity of time) y Title – interests created in the same instrument Alienable during life (but severs the tenancy)

Answer 9

Joint tenancy between married persons Alienable but only with the spouse's consent.

Answer 10

Each cotenant has the right to possess the entire property and is generally not required to pay rent to the other cotenants, unless they agree otherwise. When a cotenant refuses to allow another cotenant access to the property, an ouster occurs. The ousted cotenant may get an injunction to gain access to, and recover damages for the loss of use of, the property.

Answer 11

y A cotenant can collect contribution from other cotenants for paying more than the cotenant’s share of necessary property-related expenses (e.g., property taxes, mortgage payments). y A cotenant cannot demand contribution from other cotenants for repairs, but expenses for necessary repairs may be recouped in an accounting or partition action. y A cotenant cannot demand contribution from other cotenants for improvements to the property, but the cotenant may be entitled to the additional value if the property is sold or partitioned. y A cotenant must account to other cotenants for rent received from third parties but can deduct expenses, including necessary repairs.

Answer 12

A partition occurs when property is divided voluntarily by agreement of all cotenants or involuntarily by court action. A partition can occur in kind (preferred), where the court divides the property into distinct physical portions. A partition can also occur by sale, where the court may order a sale of the property and distribute the proceeds among the cotenants if physical division is not practicable or fair. Cotenants may agree to not partition so long as the agreement is clear and the time limitation is reasonable.

Answer 13

prohibits discrimination based on race, color, religion, national origin, sex, disability, or familial status in the sale, rental, or financing of homes and in other housingrelated transactions (e.g., advertising, homeowner’s insurance, zoning). Racial discrimination is established by showing a disparate racial impact—the plaintiff need not prove a racial intent or purpose. However, owner-occupied buildings with no more than four units and single-family homes sold or rented without a broker are generally exempt from the FHA (but are still subject to advertising prohibitions).

Answer 14

In cases involving real property, the forum court will apply the law of the situs (i.e., the law where the property is located) except: y When a document that conveys or transfers an interest in land specifies the applicable law y When property is acquired during marriage (in which case the law of the spouses’ domicile when the property was acquired determines whether the property is marital or separate property) or y For collateral issues (e.g., fraudulent transfer of land), where the law of the state with the most significant interest may apply

Answer 15

Created by agreement. Lasts for a fixed period (can be less than a year). Terminates automatically at end of term. Terminates when certain covenants are breached (e.g. rent, habitability)

Answer 16

Creation: Agreement, presumed when the lease has no specified termination date, operation of law (e.g. holdover tenant). Periodicially renews until terminated. Termination: End of period (proper notice required). Breach of certain covenants.

Answer 17

Creation: Agreement. Implied when a person is allowed to possess the premises without paying rent. Duration: Indefinite period. Termiantion: At any time (with reasonable notice).

Answer 18

Creation: Implied when the tenant keeps possession after the lease expires (i.e., holdover tenancy). Duration: Continues until terminated. Termination: Landlord evicts. Tenant vacates. Landlord accepts rent (forms a periodic tenancy).

Answer 19

The Statute of Frauds requires that a lease for a term that is longer than one year be in a writing that: y Identifies the parties and the premises y Specifies the duration of the lease y States the rent to be paid and y Is signed by the party to be charged.

Answer 20

The tenant typically has a duty to pay rent unless the premises are destroyed (this terminates the lease and excuses the tenant from paying rent) or the landlord commits a material breach of the lease (e.g., by completely or partially evicting the tenant).

Answer 21

A tenant—like a life tenant (see above)—has a duty to avoid waste unless this duty is relieved by the lease, a statute, or an ordinance.

Answer 22

Nonresidential lease – If the lease specifies that the tenant must repair and maintain the property, then the tenant is liable for property damage (except damage caused by the landlord). y Residential lease – A lease provision that places the burden of repair on the tenant is generally void, but the tenant may be required to notify the landlord of the need for such repairs.

Answer 23

If a tenant fails to pay rent, then most jurisdictions allow the landlord to terminate the lease and enforce a forfeiture clause (if any) to regain possession of the premises. However, most states preclude recovery of future rent. And in states that apply anticipatory repudiation to leases, damages are limited to the difference between future rent under the lease and (1) the reasonable rental value of the premises or (2) the actual rent collected upon reletting the premises.

Answer 24

If a tenant pays rent late, then the landlord is entitled to damages and may remove the tenant if the delay in payment constitutes a material breach of the lease.

Answer 25

A tenant who unjustifiably abandons a leasehold surrenders her rights under the lease. If the landlord accepts the surrender, then the lease is terminated and the tenant is not liable for future rent. If the landlord rejects the surrender, then the landlord may enforce the lease but must mitigate damages.

Answer 26

may (1) evict the holdover tenant through legal action after the tenant receives written notice to vacate the premises or (2) bind the holdover tenant to a new periodic tenancy.

Answer 27

y English (majority) rule – deliver actual physical possession y American (minority) rule – deliver the legal right of possession y Refuse to pay rent to acquire possession y Terminate the lease y Seek damages for time without possession

Answer 28

Majority rule – implied in residential (not commercial) leases, even when the lease attempts to place the burden on the tenant y Common law – no implied duty Treat as a constructive eviction or a violation of the warranty of habitability

Answer 29

y Refuse to pay rent to acquire possession y Terminate the lease y Seek damages for time without possession Notify the landlord and give a reasonable opportunity to cure before: y Withholding rent y Remedying the defect and deducting the cost from rent or y Defending against eviction

Answer 30

y Implied in all (residential and commercial) leases y Prevent interference (by landlord or someone with superior title) with the tenant’s right to possession y Take action against another tenant’s nuisance-like behavior and control common areas Treat as an actual eviction if landlord removes tenant from the entire premises (terminates lease and duty to pay rent) y Treat as a partial eviction if tenant is removed from a portion of the premises: ○ By landlord – all rent is excused ○ By third party with superior claim – reasonable rent still owed for the remaining premises y Treat a substantial interference as a constructive eviction

Answer 31

A constructive eviction occurs when a landlord breaches a duty to the tenant (e.g., failing to make a repair) that substantially interferes with the tenant’s use and enjoyment of the leasehold (e.g., fails to provide heat or water). This excuses the tenant’s duty to pay rent only if: y The tenant gives notice and adequate time to permit the landlord to fulfill his duty y The landlord fails to do so and y The tenant vacates the property within a reasonable amount of time.

Answer 32

A landlord may not evict a residential tenant in retaliation for the tenant’s complaining, in good faith and with reasonable cause, about a housing code violation or for refusing to pay rent after the landlord breached the duty of habitability.

Answer 33

A landlord may require a security deposit, the amount and terms of which are generally set by state statute. The landlord is generally required to promptly return the security deposit at the end of the lease or notify the tenant of the amount retained and why

Answer 34

A lease can be freely assigned or sublet absent language to the contrary. If the lease requires the landlord’s permission to transfer but is silent as to the applicable standard, then the landlord may: y Deny permission only for a commercially reasonable reason (majority rule) or y Deny permission at her discretion (minority rule). The landlord’s right to object may be waived if the landlord knows of the assignment or sublease and does not object.

Answer 35

A lease can be freely assigned or sublet absent language to the contrary. If the lease requires the landlord’s permission to transfer but is silent as to the applicable standard, then the landlord may: y Deny permission only for a commercially reasonable reason (majority rule) or y Deny permission at her discretion (minority rule). The landlord’s right to object may be waived if the landlord knows of the assignment or sublease and does not object.

Answer 36

A sublease transfers the tenant’s lease for less than the entire remaining duration to a sublesseetenant who then: y Has no privity of estate or contract with the landlord and y Is liable to the sublessor— but not to the landlord unless the sublessee expressly assumes the lease covenants. The original tenant remains liable for all covenants in the lease for the duration of the lease.

Answer 37

A landlord may assign lease rights and obligations to an assignee-landlord without the tenant’s consent. The tenant then owes rent and other burdens imposed by covenant to the assignee-landlord, and the assignee-landlord must perform any burden imposed by a covenant that runs with the land. However, the original landlord remains liable to the tenant for all covenants in the lease.

Answer 38

A landlord may assign lease rights and obligations to an assignee-landlord without the tenant’s consent. The tenant then owes rent and other burdens imposed by covenant to the assignee-landlord, and the assignee-landlord must perform any burden imposed by a covenant that runs with the land. However, the original landlord remains liable to the tenant for all covenants in the lease.

Answer 39

The Statute of Frauds requires that a real estate contract: y Be in writing (physical or electronic) y Be signed by the party to be charged (e.g., handwritten or electronic signature, letterhead) and y Contain all the essential terms. However, there are some exceptions to the Statute of Frauds: y Part performance – Either party may seek specific performance when the acts of performance constitute persuasive evidence that a contract exists. Most jurisdictions require proof of at least two of the following: ○ Payment of all or part of the purchase price ○ Possession by the purchaser ○ Substantial improvement of the property by the purchaser y Full performance – When the seller actually conveys the real property interest, the seller can enforce the other party’s oral promise to pay money for the property. y Detrimental reliance – Specific performance may be permitted when the party seeking enforcement has reasonably relied on the contract and would suffer hardship without its enforcement. y Admission of the contract’s existence – A party may be able to enforce an oral land-sale contract when the other party admits that the contract exists.

Answer 40

Land-sale contracts include an implied covenant of marketable title that guarantees that the title is free of undisclosed defects that create an unreasonable risk of litigation. This covenant requires that the seller deliver marketable title on the day of closing. If the seller fails to do so (and the buyer does not waive the defect), the buyer may (1) rescind the contract and recover out-of-pocket costs, (2) sue for breach and seek damages, or (3) bring an action for specific performance.

Answer 41

“Red flags” for marketable title include covenants, easements, leases, liens, gaps in the chain of title, boundary disputes, existing zoning violations, and adverse possession.

Answer 42

Time is of the essence—and strict adherence to the closing date is required—only when it is expressly stated in the land-sale contract or implied by the circumstances. But even when time is not of the essence, a party that fails to render performance on the date of closing is in breach and may be liable for incidental losses (e.g., taxes, interest).

Answer 43

A warranty of fitness or suitability is implied in the sale of newly constructed homes. It generally covers latent construction defects (i.e., defects that cannot be discovered by reasonable observation or inspection). Breach-of-warranty suits must be brought within a reasonable time after discovering a defect. This warranty may be disclaimed by the builder or waived by the buyer if done so with language that is clear and unambiguous. However, a general disclaimer (e.g., “property is sold as is”) is typically not sufficient.

Answer 44

The seller of a residence must disclose all known material physical defects to the buyer if they are not readily observable. A defect is material if it substantially affects the value or desirability of the home or the health and safety of its occupants.

Answer 45

The merger doctrine refers to the shift in the transaction from performance of a contract to performance of obligations under the deed. At closing, the land-sale contract is completely performed and no longer governs the transaction. This means that ongoing warranties or promises made by the seller must be in the deed to be enforceable after closing, and the buyer must sue under the deed after the closing has occurred. Exceptions: The parties intended that the obligation survive past the closing, or the obligation is collateral to and independent of the conveyance.

Answer 46

In the event of a breach, the nonbreaching party can recover expectation damages (i.e., the difference between the contract price and the market value on the date of performance). In about half of the jurisdictions, if the seller breached because of a good-faith inability to deliver marketable title, then the buyer is limited to out-of-pocket expenses. A buyer typically must deposit some portion of the purchase price (i.e., earnest money), which the seller may retain if the buyer breaches the contract. A liquated-damages clause is generally enforceable if the amount is reasonable. Typically, no more than 10% of the purchase price is reasonable, but other factors may be considered. A court may refuse to enforce a liquidated-damages clause if the seller suffered no actual loss. A liquated-damages clause is generally enforceable if the amount is reasonable. Typically, no more than 10% of the purchase price is reasonable, but other factors may be considered. A court may refuse to enforce a liquidated-damages clause if the seller suffered no actual loss.

Answer 47

During the pendency of the sales contract, the seller continues to hold legal title in the property and has a contractual interest in the proceeds of the sale, while equitable title passes to the buyer. The buyer is responsible for the risk of loss or damage to the property between signing the contract and the closing (except for losses attributable to the seller’s actions).

Answer 48

In an option contract, a party pays consideration for the right to purchase the property during a specific time period. In contrast, a right of first refusal gives the holder the opportunity to acquire property before it would otherwise be transferred to another party. Both interests are subject to the Statute of Frauds.

Answer 49

Under the doctrine of adverse possession, ownership of real property is transferred to a person who exercises exclusive physical possession of the property for a certain amount of time. This requires proof of four elements (mnemonic: ECHO): y Exclusive – Possession cannot be shared with the true owner, but two or more or more people may become cotenants through adverse possession. y Continuous – Possession must be continuous and uninterrupted for the statutory period (e.g., 10 years). ○ Seasonal or infrequent use may be sufficient if that use is consistent with the type of property. ○ An adverse possessor may tack onto the previous possessor’s time if there are in privity (i.e., transfer by nonhostile means). ○ The statutory period will not run against a true owner who has a disability (e.g., infancy, insanity, imprisonment) at the time the adverse possession begins. y Hostile – The adverse possessor must possess the land without the owner’s permission and objectively demonstrate an intent to claim the land as his own. y Open, notorious, actual – Actual possession requires physical presence by the adverse possessor. And in most jurisdictions, possession must be open and notorious such that a reasonable true owner would become aware of the claim. Adverse possession generally traces the legal boundaries of the property, except in cases of constructive adverse possession. An adverse possessor who enters under color of title from an invalid instrument and occupies part of the property described in the instrument is in actual possession of the occupied land and constructive possession of the rest of the land described in the instrument.

Answer 50

At the time of transfer, the grantor must intend to make a present transfer of a property interest to the grantee. Such intent is typically shown by delivery of the deed (i.e., the legal instrument that transfers ownership of real property) to the grantee, because this creates a presumption that the grantor intended to make a present transfer. Conversely, when the grantor keeps the deed, there is a presumption that the grantor did not intend to make a present transfer. But parol evidence is admissible to overcome this presumption and establish the grantor’s intent. When the grantor transfers the deed to a third party, the result depends on the identity of the third party: y Grantor’s agent = treated as a deed retained by the grantor y Grantee’s agent = treated as a deed delivered to the grantee y Independent agent with a condition on delivery = depends on the grantor’s language Acceptance of the deed is required for the transfer to be complete. The grantee is generally presumed to have accepted any beneficial conveyance

Answer 51

1) Written and signed by grantor. 2) Identifies grantor and grantee. 3) Identifies land with reasonable certainty. 4) Includes words of transfer (convey, grant, transfer, sell)

Answer 52

Recording acts establish priority between conflicting claims to real property. If the recording act does not govern the transaction, then the common-law “first in time, first in right” rule establishes priority.

Answer 53

"First to record" or "first duly recorded" Grantee recorded before prior interest was recorded

Answer 54

"In good faith without notice" + "first to record" or "first duly recorded" Grantee took without notice + recorded before prior interst.

Answer 55

"in good faith, without notice." Grantee took without notice of prior interest

Answer 56

Grantee gets same protection as grantor under recording act

Answer 57

at the time of the conveyance to the purchaser.

Answer 58

y Actual – A grantee with actual, personal knowledge of a prior conflicting interest has notice. y Inquiry – A grantee has notice if a reasonable investigation would have disclosed the existence of prior conflicting claims. y Record – A grantee has constructive notice if a prior conflicting interest is properly recorded in the grantor’s chain of title. There are two common situations where a subsequent grantee will be put on inquiry notice: 1. When there is someone else living on or using the land 2. When there is another interest mentioned in the deed or some other document

Answer 59

Only purchasers of real property are entitled to protection under recording acts, so a donee is generally not entitled to priority in her own right because a donee does not pay value. However, under the Shelter Rule, a grantee with priority under a recording act can convey that priority (along with the property) to a donee. In other words, the donee is “sheltered” by the prior grantee’s status as a purchaser for value.

Answer 60

Another special rule for recording acts arises when a grantor conveys land that the grantor does not own. Under the doctrine of estoppel by deed, if that grantor subsequently acquires title to the land, then the grantor is estopped from trying to repossess the land from the grantee on the ground that the grantor did not have title when the original conveyance was made.

Answer 61

y General warranty deed – The grantor guarantees that the grantor holds all six covenants of title (see table below). y Special warranty deed – The grantor guarantees all six covenants of title but only against defects arising during the time the grantor had title. y Quitclaim deed – The grantor promises no covenants of title.

Answer 62

Covenants of Title The three present covenants are breached at the time of the conveyance and do not run with the land (i.e., they may not be enforced by subsequent grantees). In contrast, the three future covenants are breached upon interference with possession by a third party and run with the land (i.e., they may be enforced by subsequent grantees). Present: 1) seisin (grantor owns the interest being conveyed) 2) right to convey (grantor has the legal right to convey the interst) 3) against encumbrances (there are no encumbrances [e.g. easements, mortgages] against the interest conveyed Future: 1) Warranty: Grantor will defend and compensate grantee for lawful claims made against grantee's title. 2) Quiet enjoyment: Grantee's possession and enjoyment will not be disturbed by another's lawful claim of title. 3) Further assurances: Grantor will take any actions reasonably necessary to perfect grantee's title.

Answer 63

Transfer of ownership can occur at death through a will by a specific devise (e.g., “I leave my home to my daughter”) or a residuary clause (e.g., “I leave all other property to my brother”).

Answer 64

A devise of real property may fail by ademption if the testator no longer owns the devised property at death because the property was previously sold, destroyed, or given away.

Answer 65

A devise of real property may also fail by lapse if the intended beneficiary dies before the testator and there is no alternate beneficiary. However, an anti-lapse statute prevents a gift from lapsing if the gift is made to qualifying individuals specified by statute (typically immediate relatives of the testator) with issue who survive the testator.

Answer 66

A trust is a fiduciary relationship created by the settlor (i.e., the one who creates the trust) in which one or more trustees (i.e., the persons who hold legal title to the property) are called upon to manage, protect, and invest certain property and any income generated therefrom for the benefit of one or more named beneficiaries (i.e., the parties who hold equitable title). y An inter vivos trust is created when the settlor conveys property to the trustee while the settlor is alive. y A testamentary trust is created by the settlor via will. y A pourover trust is created by the settlor while alive but not funded until the settlor’s death by a devise in the will.

Answer 67

If a person dies without a valid will or without disposing of all property, the person’s property is distributed according to the state’s law of intestate succession. Preference is typically given to the person’s immediate family (e.g., spouse, children). But if a person dies without a will and without heirs, the person’s property goes to the state.

Answer 68

A restraint on alienation is a restriction on transferring property. Direct restraints on alienation are disfavored and are valid only if reasonable. Any restraint based on race, ethnicity, or religion is not enforceable. However, restraints on the use (as opposed to the transfer) of property are generally permissible. There are various forms of restraint on the transfer of real property: y Disabling restraint – A total prohibition on the transfer of the property interest by its owner. Such restraints are always void. y Forfeiture restraint – A restraint under which property is forfeited if the interest holder attempts to transfer it. Such restraints on a future interest or a life estate may be valid. y Promissory restraint – A promise by the interest holder not to transfer the property interest. This is enforceable by an injunction or a suit seeking damages. y Restraint on equitable interest – A restriction on the transferability of an equitable property interest (e.g., a spendthrift clause). Such restraints are valid.

Answer 69

A mortgage is an interest in real property that serves as security for an obligation—typically a loan. The payment obligation may be owed by either the person who conveyed the mortgage interest (i.e., the mortgagor) or a third party. And the person with the security interest in the property (i.e., the mortgagee) is typically a bank. Note that a mortgage must satisfy the Statute of Frauds.

Answer 70

Lien theory (majority view) – The mortgagor (borrower) is treated as the owner of the real property interest, and the mortgagee (lender) is treated as the holder of a lien on that interest. y Title theory (minority view) – The mortgagee is treated as the owner of the real property interest, and the mortgagor possesses the right to regain ownership of the real property upon satisfaction of the obligation This distinction matters when a mortgage is conveyed by a joint tenant. In a lien state, a mortgage interest is treated as a lien that does not affect a joint tenancy until foreclosure. But in a title state, the joint tenancy is severed upon the granting of a mortgage, and the interest is converted into a tenancy in common.

Answer 71

In some states, a deed of trust (or trust deed) is used in place of a mortgage—but a deed of trust is treated the same as a mortgage for most purposes. A deed of trust is given by the debtor to a third-party trustee as collateral for a debt, and the creditor can instruct the trustee to foreclose upon the property upon default.

Answer 72

The debtor agrees to buy land through installment payments and obtains immediate possession, but the seller retains legal title until the seller is paid in full.

Answer 73

If the grantor proves that a deed was given to the creditor-grantee with the intent to secure a lien, then the transfer is treated as an equitable mortgage.

Answer 74

– The seller leases the property from the buyer immediately after the sale, usually for a long period of time with the option to repurchase the property

Answer 75

Property that is subject to a mortgage may be sold or otherwise transferred to a new owner (the transferee) unless the mortgage states otherwise. However, the debtor remains liable for the mortgage debt after the property is transferred unless the lender agrees to release the debtor. The transferee’s liability for the debt depends on whether the transferee: y Takes subject to the mortgage – in which case, the transferee does not agree to pay and is not personally liable for the debt (but the property may still be sold at a foreclosure sale) or y Assumes the mortgage – in which case, the transferee agrees to pay and becomes primarily liable for the debt, while the debtor becomes secondarily liable as a surety.

Answer 76

Most mortgages contain a due-on-sale clause, which allows the lender to demand immediate payment of the full amount due upon transfer. Mortgages may also contain a due-on-encumbrance clause, which allows the lender to accelerate the mortgage upon a second mortgage on the property.

Answer 77

y Lien theory (majority view) – The mortgagee cannot take possession before foreclosure. y Title theory (minority view) – The mortgagee is theoretically entitled to possession at any time but is typically prohibited by the terms of the mortgage from taking possession before default. If the mortgagee takes possession between default and foreclosure, then the mortgagee has a duty not to commit waste.

Answer 78

Redemption refers to the mortgagor’s ability to regain title to the property after default. Equitable (always exists): After default but before the foreclosure sale. Pay the full amount of the loan obligation currently owed plus interest. Statutory (if statute exists): During the statutory period after the foreclosure sale. Pay the foreclosure sale price to the purchasing party.

Answer 79

A mortgagor can also convey the property to the mortgagee in exchange for releasing the mortgagor from any outstanding debt. This is known as a “deed in lieu of foreclosure.”

Answer 80

A mortgagee may generally foreclose on a mortgage when there is a material default on an obligation that is secured by the mortgage (e.g., failure to make timely payments). However, the mortgagee must give the mortgagor prior notice of foreclosure and is only entitled to collect the amount of the obligation that is currently due and owing. But if the mortgage contains an acceleration clause, then the full amount of the mortgage obligation becomes due upon default.

Answer 81

All states allow a mortgagee to foreclose on a mortgage through a judicially supervised public sale of the mortgaged property. More than half of the states also allow a mortgagee to foreclose through a privately conducted sale when the mortgage contains a power-of-sale clause. Very few states permit strict foreclosure, which allows the mortgagee to foreclose without a sale of the mortgaged property

Answer 82

If there is more than one interest in the property being foreclosed, a valid foreclosure terminates all interests that are junior to the interest being foreclosed. There is no effect on senior interests, so the purchaser of the property takes the property free of junior interests but subject to any senior interests. Priority is determined by the “first in time, first in right” rule, subject to the following exceptions: y Purchase-money mortgages – A purchase-money mortgage typically arises when property purchased with the proceeds of a loan is used as security for the loan. This type of mortgage takes priority over prior interests. y Recording acts – Mortgages are subject to a state’s recording act. Therefore, a properly recorded mortgage might take priority over a prior unrecorded interest. y Subordination agreements – The holder of a prior mortgage can agree to subordinate her interest. Mortgage modification – If a senior mortgagee agrees to modify the senior mortgage, then the modified portion is subordinate to existing junior interests to the extent that it materially prejudices those interests.

Answer 83

Proceeds from a foreclosure sale are applied first to the costs associated with the sale, second to the mortgage obligation being foreclosed, and third to the mortgage obligations owed to junior-interest holders in the order of the priority of their interests. Any remainder is paid to the debtor-mortgagor.

Answer 84

Senior mortgagees are not paid out of the foreclosure sale proceeds because their rights are not extinguished by the foreclosure. They retain their lien on the property, meaning that whoever buys the property at foreclosure takes it subject to the senior lien.

Answer 85

A deficiency arises when the proceeds from a foreclosure sale are insufficient to satisfy a mortgage obligation. y Majority rule – The mortgagee has a deficiency action against the mortgagor or any party who assumed the mortgage y Minority rule – There is no deficiency action when the mortgagee forecloses via a privately supervised foreclosure sale or the mortgage is a purchase-money mortgage. Some states limit the total amount that may be recovered to the fair market value of the property.

Answer 86

A nonpossessory interest in land that: y Gives the easement holder the right to use another’s land for a specific purpose (i.e., affirmative easement) or y Prohibits the owner from doing something on land that the owner would otherwise be allowed to do (i.e., negative easement)

Answer 87

A revocable privilege to enter and use another’s land for a specific purpose y A license is freely revocable unless it is coupled with an interest or detrimentally relied upon y Unlike an easement, a license does not need to be in writing y If the parties attempt to create an express easement that does not satisfy the Statute of Frauds, then a license is created instead

Answer 88

A nonpossessory interest in land that gives the profit holder the right to enter another’s land to remove products of soil (e.g., timber, minerals, oil) y Profits are created and analyzed similarly to easements, except that they cannot be created by necessity

Answer 89

An express easement is affirmatively created by the parties in a writing that satisfies the requirements for a deed, while an implied easement is created by necessity, implication, prescription, or estoppel.

Answer 90

– Arises when the owner of two parcels of land uses one parcel to benefit the other and then transfers ownership of one of the parcels. A court may find that the parties intended for the use to continue as an easement if the prior use (1) was continuous, (2) was apparent or known, and (3) is reasonably necessary to the dominant land’s use and enjoyment.

Answer 91

– Arises when property is virtually useless (e.g., landlocked) without the benefit of an easement across neighboring property. Both the dominant and servient estates must have been under common ownership, and severing the estates must have created the necessity.

Answer 92

– Created using similar requirements to adverse possession but without the exclusivity requirement. adverse possession involves title to land, while an easement involves the right to use land of another. The element of exclusive use distinguishes adverse possession from a prescriptive easement.

Answer 93

Created by good-faith, reasonable, detrimental reliance on permission given by the servient-estate holder to make limited use of the property. This easement is created if it is necessary to prevent injustice.

Answer 94

An easement will terminate according to its express terms or when there is an attempt to convey an easement appurtenant separately from the land it benefits. And because easements are subject torecording acts, if an express easement was granted but not recorded, then the sale of the servient estate to a bona fide purchaser may prevent the easement from being enforceable. An easement can also terminate in the following ways: y Destruction or condemnation of the property may terminate an easement. y Abandonment – An easement can be terminated if the easement owner acts in an affirmative way that shows clear intent to relinquish the easement right. Mere statements of intent or nonuse of the easement are not sufficient to amount to abandonment (but may be evidence of termination by estoppel). y Merger – An easement is terminated if the owner of the dominant or servient estate acquires fee title to the other estate. y Prescription / Necessity – A prescriptive easement may terminate if the owner of the servient estate interferes with the easement in a continuous, actual, open, and hostile way for a specific period. And an easement by necessity terminates when the necessity ceases to exist. Estoppel: If the servient-estate owner changes position to his detriment in reliance on statements or conduct of the easement holder, then the easement holder may be estopped from asserting the easement. Release: An easement can be terminated by a writing that expressly releases the easement and satisfies the requirements for the creation of a deed.

Answer 95

An easement will terminate according to its express terms or when there is an attempt to convey an easement appurtenant separately from the land it benefits. And because easements are subject torecording acts, if an express easement was granted but not recorded, then the sale of the servient estate to a bona fide purchaser may prevent the easement from being enforceable. An easement can also terminate in the following ways: y Destruction or condemnation of the property may terminate an easement. y Abandonment – An easement can be terminated if the easement owner acts in an affirmative way that shows clear intent to relinquish the easement right. Mere statements of intent or nonuse of the easement are not sufficient to amount to abandonment (but may be evidence of termination by estoppel). y Merger – An easement is terminated if the owner of the dominant or servient estate acquires fee title to the other estate. y Prescription / Necessity – A prescriptive easement may terminate if the owner of the servient estate interferes with the easement in a continuous, actual, open, and hostile way for a specific period. And an easement by necessity terminates when the necessity ceases to exist.

Answer 96

Unlike easements, which generally grant affirmative rights to use another’s property, real covenants and equitable servitudes restrict the right to use real property or impose obligations on the owner. Real covenants are enforced by a suit for damages, while equitable servitudes are enforced by injunction.

Answer 97

The enforceability of a covenant by the original parties to the covenant is governed by contract law. In contrast, a covenant linked to real property can be enforced by and against subsequent landowners as a matter of property law if the covenant runs with the land. This occurs when the following elements are met: y Writing – The covenant must comply with the Statute of Frauds. y Intent – The parties must intend for the rights and duties to run with the land. y Touch and concern – The benefit or burden must affect the promisee or promisor as owners of land. ○ Negative covenants run with the land if they restrict the owner’s use or enjoyment of the land. ○ Affirmative covenants run with the land if they require the owner to take affirmative action related to the use and enjoyment of the land. y Notice (burden only) – A purchaser without notice of a burdening covenant is not bound by it if the purchaser is protected by the recording act. y Privity – This refers to the relationships between the parties. ○ Horizontal privity – For the burden to run, the original parties must have privity of estate at the time the covenant is agreed upon. ○ Vertical privity – This refers to the relationship between an original party and the successor to the property interest. For the burden to run, the successor must hold an estate of the same duration as the original party. For the benefit to run, the successor must hold some portion of the original party’s property interest.

Answer 98

Equitable servitudes are agreements about land use that are enforced at equity by injunction when the following requirements are met: y Writing – The servitude must comply with the Statute of Frauds (except for implied reciprocal servitudes). y Intent – The parties must intend for the restriction to be enforceable by and against successors. y Touch and concern – The benefit or burden must affect the promisee or promisor as owners of land. y Notice (burden only) – A purchaser without notice of the equitable servitude is not bound by it. When a party has established a real covenant entitling him to money damages, the promise may also be enforced as an equitable servitude. But because an equitable servitude does not require privity, the reverse is not necessarily true.

Answer 99

Note that implied reciprocal servitudes typically arise in planned subdivisions and are enforceable when the following requirements are met: y There must be intent to create a servitude on all plots (i.e., a common scheme). y The servitude must be negative (i.e., a promise to refrain from doing something). y The party against whom enforcement is sought must have notice (note that the common scheme or plan gives implied notice). Common evidence of a common scheme of development includes (1) a recorded map of the community that shows the scheme, (2) marketing or advertisement of the community, or (3) an oral or written mention (e.g., in a deed) that the lots are burdened by a common restriction.

Answer 100

Defenses to enforcement of covenants and equitable servitudes: y Changed circumstances y Laches y Unclean hands y Acquiescence (implied permission) y Estoppel To spot changed circumstances, look for situations where the restriction no longer makes sense due to drastic changes in the surrounding area. Consider whether the property subject to the restriction still retains some benefit from the restriction. Covenants and equitable servitudes generally terminate in the same ways that easements do. An easement will terminate according to its express terms or when there is an attempt to convey an easement appurtenant separately from the land it benefits. And because easements are subject torecording acts, if an express easement was granted but not recorded, then the sale of the servient estate to a bona fide purchaser may prevent the easement from being enforceable. An easement can also terminate in the following ways: y Destruction or condemnation of the property y Abandonment y Merger y Prescription / Necessity

Answer 101

In a common-interest ownership community, individually owned units are burdened by a covenant to pay dues to an association that provides services and enforces other covenants. These communities: y Are governed by an association, which is overseen by a board of directors y Have rules that are laid out by declaration and other governing documents and y Have powers (as reasonably necessary) to manage the common property, administer the covenants, and carry out other functions set out in the governing documents or statute.

Answer 102

A fixture is tangible personal property (i.e., chattel) that is attached to real property in such a manner that it is treated as part of the real property. y Structures built on real property (e.g., walls) and materials incorporated into a structure (e.g., bricks to make a wall) become part of the real property. y The buyer of real property is generally entitled to the fixture unless the seller reserves the right to remove the fixture in the contract of sale. y Trespassers (e.g., holder tenants) can remove an improvement, or at least recover the value added to the property, so long as they acted in good faith.

Answer 103

Zoning is governmental regulation of land use. States have authority to enact zoning laws pursuant to their police power, but they typically delegate this authority to local governments. A local zoning ordinance must be rationally related to a legitimate governmental purpose. There is no federal authority to enact zoning laws except for limited circumstances, such as federal power over federal lands. Types of Zoning Laws Zoning laws may be based on use (e.g., residential, commercial, industrial), development (e.g., setbacks, density), or special concerns (e.g., environmental protection, historic preservation).

Answer 104

y Fifth Amendment Takings Clause – Zoning regulations do not rise to the level of a taking unless they eliminate all economically viable use. y Fourteenth Amendment Substantive Due Process Clause – Unless they violate a fundamental right, zoning ordinances need only satisfy the rational-basis test. y Fourteenth Amendment Equal Protection Clause – A zoning ordinance that discriminates against a suspect class (e.g., race, national origin) is subject to strict scrutiny. But the challenger must show that the ordinance has a discriminatory purpose or intent—a discriminatory effect is not enough. y Federal Fair Housing Act – This Act prohibits discrimination on the basis of race, color, religion, national origin, sex, disability, or familial status.

Answer 105

A zoning ordinance must generally provide for properties that had an existing use that does not conform to the new zoning law, and most states permit the imposition of a reasonable time limit on the nonconforming use (grandfathered in). The nonconforming use cannot be expanded after being grandfathered in, but frequency of the nonconforming use may be increased if the nature and character of the use does not constitute a substantial change.

Answer 106

An owner may request a special exception permit or a zoning variance by establishing that: y The variance does not deviate from the comprehensive zoning plan and y Compliance with the zoning ordinance would result in unnecessary hardship.

Answer 107

Water belongs to owners of the land bordering the watercourse y The owner may make any reasonable use of the water that does not unreasonably interfere with downstream use (reasonable-use doctrine) y Domestic (natural) use trumps commercial (artificial) use y Water rights cannot be sold or transferred separate from the adjoining land

Answer 108

y Water rights are determined by priority of beneficial use (first in time, first in right) y Any productive or beneficial use of the water, including use for agriculture, is sufficient to create appropriation rights y Water rights are unconnected to adjoining land and can be sold or transferred separately

Answer 109

A landowner has the right to lateral support from adjoining land. y When adjoining land is undeveloped, a landowner who excavates on her land is strictly liable for damage to the adjoining land. y When the adjoining land has been improved, the excavating landowner is strictly liable for damage only if the adjoining land would have collapsed in its natural state. y If the improvement contributed to the collapse, then the landowner is only liable if she was negligent.

Answer 110

A landowner also has the right to subjacent support when the landowner has granted the right to mine on the land to a third party. y The owner of mineral rights is strictly liable for failure to support the land and any buildings on the land that existed at the time the rights were conveyed. y The owner of mineral rights is liable for damage to improvements built after the mineral rights were conveyed only if she was negligent.

Answer 111

A landowner has a limited right to reasonable use and enjoyment of the airspace above her land as long as it does not interfere with another’s reasonable use and enjoyment of land.

Answer 112

1) Identify the property interest 2) characterize the interest 3) Identify the rights and duties of the holder 4) Identify whether the interest has terminated 5) Consider available remedies

Answer 113

 A grantor can place a reasonable restraint on the grantee’s ability to freely transfer  If the restraint is unreasonable, a court will strike it from the conveyance Example 1: Grantor conveys his estate as follows: “to A so long as he does not make any transfer of Greenacre. In the event of such a transfer, Greenacre shall automatically revert back to Grantor.” This is likely an unreasonable restraint on alienation and a court will strike it from the conveyance.

Answer 114

Allowed to prohibit assignment or sublease  If the lease prohibits only assignment, the tenant may still sublease  If the tenant violates the prohibition, the landlord can terminate the lease * Waiver—if the landlord accepts payment from the new tenant, he waives the right to enforce the prohibition clause  Consent—some clauses allow assignment or sublease only with landlord’s consent * The landlord can only withhold consent on a commercially reasonable ground

Answer 115

o Landlord has duty to make reasonable efforts to re-rent the property o The duty applies even if the tenant improperly breached the lease o If a tenant moves out early and the landlord has multiple vacant apartments, the landlord is not obligated to prioritize the tenant’s vacant apartment.

Answer 116

o Generally, only transfers title to the portion that was actually adversely possessed o Color of title (i.e., enters pursuant to a deed or will that is not actually valid)—allows the possessor to obtain title to the whole property under constructive adverse possession o Still subject to existing easements on the land

Answer 117

Must identify the parties, must be signed by the grantor, must include words of transfer, and must contain a reasonably definite property description

Answer 118

o A BFP is a person who pays value for the property and takes it without notice of prior claims. o Notice and Race-Notice Statutes protect BFPs. o A BFP must pay value for the interest, it cannot be a gift

Answer 119

Recording acts do not protect BFPs from adverse possessors Note 2: The recording acts are meant to encourage owners to record their interests. The acts protect later grantees from prior claims that could have been recorded but were not. Because adverse possessors do not have documents describing their interest, they are not subject to the recording acts.

Answer 120

An easement appurtenant will usually continue after land is transferred.

Answer 121

a. Writing—must comply with the Statute of Frauds b. Intent—original parties must intend for the promise to run with the land c. Touch and Concern—must affect how both pieces of land are used d. Notice—only required for burden to run e. Horizontal Privity—only required for burden to run The original parties most have shared some interest other than the promise, such as grantor-grantee. Example 13: A owned both parcels and sold one to B. The covenant was part of the sale to B. f. Vertical Privity  Concerns the relationship between the original party and the successor party  Burden: for the burden to run with the land, the owner must transfer the entire interest Example 14: A owns the land in fee simple absolute. A must convey a fee simple absolute in order for the burden to run.  Benefit: the benefit will run if the successor takes any portion of the original estate (including a lease)

Answer 122

a. Writing—must comply with the Statute of Frauds b. Intent—original parties must intend for the promise to run with the land c. Touch and Concern—must affect how both pieces of land are used d. Notice—only required for burden to run [no privity requirement???]

Answer 123

the borrower uses the loan in order to purchase the mortgaged property A home mortgage is usually a purchase money mortgage. Has priority upon foreclosure

Answer 124

a legally recognized relationship between parties — either through contract or through property interests — that allows one party to enforce or be bound by certain rights or duties.

Answer 125

Buyer obtains legal title upon final payment under the installment payment plan.

Answer 126

Seller is not required to deliver marketable title until closing (as sellers often use the proceeds of the sale to satisfy any prior mortgages or liens). For installment contracts, not until delivery.

Answer 127

The implied covenant of quiet enjoyment, which is implied in every lease. This warranty is breached only when the conduct of the landlord or someone with superior title prevents the tenant from possessing the leased premises.

Answer 128

A life estate measured by the life of a third party is called a “life estate pur autre vie.”

Answer 129

A vested remainder subject to complete divestment is subject to a condition subsequent that can completely divest the remainder interest (trigger words: but if). A contingent remainder is subject to a condition precedent to grantee's taking.

Answer 130

Attornment is the tenant's acknowledgement of a new landlord. This can be accomplished (i) in writing, or (ii) by making rent payments to the new landlord.

Answer 131

Tenancy in common (which requires only the unity of possession).

Answer 132

If the sublessee expressly assumes the rent covenant (or any other covenants), then the sublessee becomes personally liable to the landlord.

Answer 133

An assignee is in privity of estate with the landlord, and thus he is liable to the landlord for the rent and any other covenants in the lease. However, if the assignee reassigns the leasehold to a subsequent tenant, then the privity of estate with the landlord ends and the initial assignee is no longer liable to the landlord based on privity of estate.

Answer 134

A wild deed is a recorded deed that is not within the chain of title (i.e.,recorded and indexed, but not in the correct way to give subsequent purchasers notice).

Answer 135

1. Prior-appropriation 2. Correlative-rights 3. Reasonable-use 4. Common-law doctrine of absolute ownership

Answer 136

An actual eviction, as opposed to a constructive eviction, occurs when the landlord removes the tenant from the premises. This total eviction terminates the lease and ends the tenant’s obligation to pay rent.

Answer 137

1. Shifting executory interest: divests the interest of the grantee by cutting short a prior estate created in the same conveyance. The estate “shifts” from one grantee to another on the happening of the condition. 2. Springing executory interest: divests the interest of the grantor or fills a gap in possession in which the estate reverts to the grantor.

Answer 138

In a title theory state, the joint tenancy is severed upon the granting of the mortgage, and the interest is converted into a tenancy in common.

Answer 139

1. Purchase money mortgage: A person takes out a loan for the purpose of purchasing property 2. Future advance mortgage: A line of credit used for home equity, construction, business, and commercial loans (“second mortgage”)

Answer 140

In general a deed transfers title only when 1. The grantor INTENDS to convey an interest, 2. The grantor DELIVERS a deed to the grantee, AND 3. The grantee ACCEPTS the deed. Tip: When comparing and contrasting questions about delivery, always look to facts indicating the grantor's INTENT.

Answer 141

Present covenants: 1) Covenant of seisin, 2) Covenant of the right to convey 3) Covenant against encumbrances Future covenants: 4) Covenant of quiet enjoyment 5) Covenant of warranty 6) Covenant of further assurances

Answer 142

A forfeiture restraint (property forfeited if interest owner attempts to transfer) and a promissory restraint (promise by interest holder not to transfer) can be valid on a life estate.

Answer 143

1. Common Enemy 2. Natural Flow 3. Reasonable Use

Answer 144

Any insurance proceeds the seller receives must be credited against the buyer's purchase price.

Answer 145

possibility of reverter

Answer 146

1. Partial performance 2. Full performance 3. Detrimental reliance 4. Admission

Answer 147

The remainder is created in an unascertainable grantee, OR if it is subject to a condition precedent to the grantee's taking.

Answer 148

(i) Identities of the grantor and the grantee, (ii) Words of transfer, (iii) Description of the property interest being transferred, and (iv) Grantor’s signature.

Answer 149

If the premises are not habitable, then the tenant may choose to: 1. Refuse to pay rent 2. Remedy the defect and offset the cost against rent 3. Treat the condition as a constructive eviction

Answer 150

A vested remainder subject to open is transferred to a group rather than individual, and at least one member of the group is individually ascertainable and entitled to the remainder interest. A contingent remainder is created in a grantee who is unascertainable.

Answer 151

Grantor's language merely indicates his desire, intent, or purpose for which the property should be used rather than imposing a condition that could limit the duration of the estate.

Answer 152

Ouster occurs when a co-tenant refuses to allow another co-tenant access to the property. In this event, the ousted co-tenant may seek 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 co-tenant was denied access to the property.

Answer 153

A landlord may be liable for: 1. Existing defects prior to the tenant’s occupation of the premises 2. Failure to make repairs required by a housing code 3. At times, the criminal activity of third persons who injure tenants

Answer 154

The implied covenant of quiet enjoyment, which is implied in every lease. This warranty is breached only when the conduct of the landlord or someone with superior title prevents the tenant from possessing the leased premises.

Answer 155

The scope of an express easement is defined in the first instance by its terms. If the terms are ambiguous, courts look to the intent of the parties. The scope of an easement by necessity is determined by the extent of the necessity. The scope of an easement by implication is determined by the existing quasi-easement. The scope of an easement by prescription is limited to the nature and extent of the adverse use.

Answer 156

It must be in writing, signed by the party to be charged, AND contain all essential terms (parties, description of property, price/payment info).

Answer 157

1. Proceeds are used to pay any costs related to the sale. 2. The party who foreclosed on the property is paid, up to the amount outstanding on its mortgage interest. 3. If any money remains, any junior interests are paid in order of their priority. 4. If any money remains, the mortgagor is paid.

Answer 158

Reasonable-use: Favored in the eastern U.S. and allows the owner to make any reasonable use of the water. Water rights cannot be sold or transferred separately. Prior-appropriation: Favored in the western U.S. and states that water rights are determined by priority of beneficial use (first in time, first in right). Water rights can be sold or transferred separately.

Answer 159

NONE. The property passes automatically to the remaining joint tenant(s) due to the right of survivorship.

Answer 160

A license results when there is a failed attempt to create an easement. Example: Grantee receives a license when grantor orally conveys an easement for more than one year.

Answer 161

1. Tenancy in common: Unity of possession 2. Joint tenancy: Unities of possession, interest, time, and title ("PITT") 3. Tenancy by the entirety: Unities of person, possession, interest, time, and title

Answer 162

1. Promise to create an interest in real property 2. Assignment of a right to purchase 3. Option contract 4. Promise to give a mortgage or other lien security

Property Flashcards

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