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Flashcards in Property Deck (80):
1

 

Fee Simple Absolute

 

Ex. "To A and his heirs." 

Absolute ownership of potentially infinite duration, fully devisable, descendible, and alienable. 

No future interest. 

2

 

Fee Tail 

 

Ex. "To A and the heirs of his body." 

Duration: Only as long as there are lineal blood descendants of grantee. 

Transferability: Passess automatically to grantee's lineal descendants. 

Future Interest: Reversion (if held by grantor); remainder (if held by third party). 

Note: Fee tails are abolished in New York and most of the United States

3

 

Defeasible Fees

 

  1. Fee Simple Determinable (NY: fee on limitation)
  2. Fee Simple Subject to Condition Subsequent 
  3. Fee Simple Subject to Executory Limitation

 

4

 

Fee Simple Determinable

Ex. "To A for so long as, until, while ______."


Duration: potentially infinite if event does not occur. 

Transferability: fully, subject to condition. 

Future Interest: possibility of reversion in grantor (automatic). 
 



 

5

 

Fee Simple Subject to Condition Subsequent 

 

Ex. "To A, but if X . . . ." 

Duration: potentially infinte, but if breached, grantor may terminate (contrast with fee simple determinable). 

Transferability: fully, subject to condition. 

Future Interest: right of entry (NY: "right of reacquisition") / power of termination. 

 

6

 

Fee Simple Subject to Executory Limitation

 

Ex. "To A, but if X happens, then to B." 

Duration: Potentially infinite, so long as condition does not occur. 

Transferability: Fully, subject to condition. 

Future Interest: Shifting executory interest held by third party (automatic). 

7

 

Defeasible Fees: Rules of Construction

 

  1. Words of desire, hope, and intention are insufficient to create a defeasible fee. Courts disfavor such restrictions on free land use. E.g., To A, "For the purpose of," "with the hope that," "with the expectation that," X --> create fees simple, not defeasible fees." Looking for clear durational language. 
  2. Absolute restraints on alienation are void (become fees simple). Restraints for a reasonable period of time are okay, but you can't say "To X, but if he ever tries to sell it, to Y." That will be an unreasonable restraint on alienation then the restraint will be void and the property go to X in fee simple. A court of equity will cut off the invalid part of the conveyance, but maintain the "flavor" of the conveyance. (Lesser restraints like no sublease, no assignment are okay). 

8

 

Life Estate 

 

Ex. "To A for Life" 

"To A for the life of B" (pur autre vie)

Duration: Measured by life of transferee or some other person. 

Transferability: fully, only to the extent of the life estate, while measuring life is alive. 

Future Interest: Reversion (if held by grantor); remainder (f held by third party). 

NOTES

  • Any encumbrance created by a life tenant may not extend beyond the life estate 
  • Present possessory interest-holder must pay property taxes 

 

9

 

Life Tenancy: 

Waste 

 

A Life Tenant may not commit waste. 

  1. Voluntary/Affirmative Waste. Overt conduct causing a drop in value / willful destruction. Cannot exploit natural resources except for "PURGE" usages: Prior UseRepairs/maintenance, Grant of right, or where Exploitation is the only valuable use of the land. Open Mines Doctrine: can mine existing mines under "prior use" but cannot open new mines. Prior use = continue doing the activity already done, even if you increase or decrease that amount of activity. 
  2. Permissive Waste. Land in disrepair. Life tenant must maintain land in reasonably good repair.
    • Must pay all ordinary taxes to the extent of income/profit from the land; if none, to the extent of fair rental value. 
    • May tear down an uninhabitable structure. Changed conditions making the destruction reasonably necessary can give life tenant the right to tear an improvement down. 
  3. Ameliorative Waste. Life tenant must not engage in acts that enhance property value unless all interest-holders know & consent, to honor sentimental value. But in NY: life tenant may make "reasonable improvements" unless remaindermen object. 

10

 

Future Interests in the Grantor 

 

  1. Possibility of Reverter (accompanies fee simple determinable) 
  2. Right of Entry (accompanies fee simple subject to condition subsequent) (NY: "right of reacquisition"). 
  3. Reversion (accompanies transfer of an interest less than a fee simple, such as for life tenant). 

11

 

Future Interests in Transferees

 

  1. Vested Remainder (indefeasibly vested, vested subject to complete defeasance, and vested subject to open); 
  2. Contingent Remainder
  3. Executory Interest (shifting, springing). 

12

 

Remainders

 

future interest created in the grantee that is capable of becoming possessory upon the expiration of a prior possessory estate created in the same conveyance in which remainder is created. 

  • Always accompanies a preceding estate of known, fixed duration (usually a life estate/term of years). 
  • Never follows a defeasible fee ("so long as, but if") 
  • Cannot cut short or divest a prior transferee.

Vested Remainders are created in an ascertained person not subject to a condition precedent. 

Contingent Remainders are either created in an as-yet unascertained person or subject to a condition precedent. 

13

 

Contingent Remainders 

 

  1. Unascertained Persons.  To A for life, then to B's heirs (B is alive and as yet has no heirs). 
  2. Remainder Subject to Condition Precedent. To A for life, then, if X, to B (reversion in grantor if X doesn't happen). 

Rule of Destructibility of Contingent Remainders:  (abolished in U.S. including NY): at common law, if a remainder was still contingent at the time the preceding estate ended, it was destroyed and grantor takes. 

Rule in Shelley's Case (abolished in U.S. including NY): at common law, where O conveys a life estate to A, and on A's death, to A's heirs, the interests would merge, giving A a fee simple absolute, even in face of contrary intent. 

Doctrine of Worthier Title (viable in most states but abolished in NY after 9/67): Applies when O (grantor), who is alive, tries to create a future interest in his own heirs (e.g., To A for life, then to O's heirs). Without the doctrine, O's heirs have a contingent remainder because a living person has no heirs. Under the doctrine, the contingent remainder is void and O has a reversion (endeavors to promote free transfer). 

  • This is a rule of construction, not substantive law, so grantor's specific intent will control over doctrine (unlike Rule in Shelley's Case). 

 

 

14

 

Indefeasibly Vested Remainder 

 

The holder of this remainder is certain to acquire the estate in the future with no strings attached. 

"To A for life, then to B" (B is alive). 

If B predeceases A, B's remainder passes by will or intestacy. 

15

 

Vested Remainder Subject to Complete Defeasance

 

(Note: NY = "Remainder Vested Subject to Complete Defeasance") 

B's taking is not subject to a condition precedent, but his right to possession can be cut short by a condition subsequent

Ex. "To A for life, then to B, provided, however, that if B dies under the age of 25, to C." A is alive; B is 20. 

  • B takes if under 25 when A dies, but must live to 25 to retain his interest. 
  • Becomes indefeasibly vested remainder if B becomes 25 before A dies. 

16

 

Vested Remainder Subject to Open

 

A remainder vested in a group of persons, at least one of whom is presently qualified to take, but each member's share is subject to partial dimunition b/c additional members can still join in. 

Ex. "To A for life, then to B's children." B has two children, C & D, and can have more. 

  • The class closes when any member can demand possession (rule of convenience - when A dies), or when B dies. 
  • Once A dies, a child of B from after A's death will not share in the class, except that a child of B in the womb when A dies can share in the class ("the womb rule"). 
  • If a member of the class pre-deceases the testator, then they (and their heirs) get nothing; but if the member of the class dies after the testator but before the interest has become possessory, that interest is devisableto heirs even if the class can't yet demand possession. 
    • E.g., conveyance by O to Sarah, for life, remainder to the children of N. When the will was executed, N had children D and S. One year later, O died. Shortly after, D died, leaving her estate to H. Thereafter, N had another daughter, D. Then, Sarah died. Then, N had another son, Sid. Because O pre-deceased D, D's heirs can take in the class gift. If D had pre-deceased O, D's heirs could not take. Sid cannot take because Sarah died before Sid was born, giving the other members of the class a present possessory interest and closing the class. 

       

17

 

Executory Interests

 

A future interest in a transferee (third party) which is not a remainder and whcih takes effect but either cutting short some interest in another person ("shifting") or in the grantor's heirs ("springing"). 

shifting executory interest always follows a defeasible fee, and cuts short someone other than the grantor. B's interest: "To A and her heirs, but if B returns from Canada sometime next year, to B and his heirs." 

springing executory interest cuts short grantor and descendants' interests. A's interest: "To A, if and when he marries." 

18

 

New York Distinction Between Executory Interests and Contingent Remainders 

 

NY has abolished the distinction between executory interests and contingent remainders. Both are instead called "remainders subject to a condition precedent." 

19

 

Rule Against Perpetuities 

 

Certain future interests are void if there is any possibility, however remote, that the interest will vest more than 21 years after the death of a measuring life. 

Fertile Octogenarian Rule: a person can have children at any time before death. 

  1. What is the future interest? RAP not applicable to future interests in grantor, indefeasibly vested remainders, or vested remainders subject to complete defeasance. Looking for contingent remainder. [Ex. "to A for life, then to A's children"; A is alive, has no children]. 
  2. What are the conditions precedent for the future interest-holders to take? [A must die leaving a children]. 
  3. What is the measuring life? Must be alive at conveyance and relevant. [A]. 
  4. Will we know with certainty that within 21 years of the measuring life's death that the future interest-holder can or cannot take? [Yes - at A's death, we will know who her children are]. 

20

 

Bright-Line Common Law RAP Rules 

 

  1. A gift to an open class that is conditioned on members surviving to an age beyond 21 violates common law RAP. "Bad as to one, bad as to all." [Ex. "to A for life, then to such of A's children to live to 30." A has 2 children, B (35) and C (40). This violates the RAP and is void, because B + C have vested remainders subject to open (A having more children; B + C dying). Entire class gift is void (life estate in A, reversion in O). 
  2. Many shifting executory interests violate RAP; an interest with no time limit in which it must vest violates the RAP. [Ex. "to A and his heirs, so long as the land is used for farm purposes, and if the land ceases to be so used, to B and heirs."] --> A has fee simple absolute. 
  • Charity-to-Charity Exception (from one charity to another does not violate the rule). 

  • Options to purchase that could v est more than 21 years after measuring life usually void, unless held by current tenant (not former tenant or party to whom former tenant might transfer the right). 



     

21

 

RAP Reform 

 

  1. Wait and See / Second Look Doctrine. The validity of suspect future interest determined on the basis of facts as they now exist, at the end of the measuring life (eliminates what if / anything is possible). 
  2. USRAP: Common law rap - or - alternative 90-year vesting period. 
  3. Both (1) and (2) embrace the "cy pres" ("as near as possible") doctrine (if a given disposition violates the rule, a court may reform it in a way that most closely matches the grantor's intent while still complying with RAP). e.g., reducing any offensive age contingency to 21 years. 

22

 

NY RAP Reform 

 

NY applies the common law rule (rejected wiat and see and cy pre, except for charitable trusts and powers of appointment (taken up in trust). 

BUT -- 

  • Where an interest would be invalid because it depends on attaining an age in excess of 21 years, contingency is reduced to 21 years. 
  • Fertile Octogenarian Rule is modified, so that a woman over 55 is presumed not to be ble to have a child (adoption disregarded). 
  • Suspension rule: applies common law RAP to restrictions on power to sell and transfer. 

23

 

Joint Tenancy

 

Two or more parties own property with right of survivorship. JT must be created and maintained with four unities intact ("T-TIP"): 

  1. Time (interest created at same time)
  2. Title (interest created in same instrument) 
  3. Identical shares (of the property)
  4. Possession (right to possess the whole) 

Characteristics: 

  • When 1 JT dies, shares go to other JTs. 
  • Grantor must clearly express right of survivorship b/c JTs are disfavored. 
  • If a person who owns property wishes to share it in JT with another, must use a straw (no need in NY). 
  • Severance happens by "SPAM": Sale, Partition, and Mortgage. 
    • Equitable conversion - sale severs JT at time of contract, not closing. 
    • Mortgage will sever only in TITLE THEORY states (mortgagee has title to property), not LIEN THEORY STATES (mortgagee only has lien on property). NY follows lien theory. 
    • SALE: the joint tenancy is only severed if a JT unilaterally conveys his property or a share of the property to another, not when the JTs agree together to convey part of the interest to others. In that case, there is a joint tenancy as between the original JTs sharing a tenancy in common with the other tenant. 

24

 

Tenancy by Entirety 

 

Recognized in NY 

  • Can only be created b/w married partners with right of survivorship. It arises presumptively in any conveyance to married partners unless otherwise indicated. 
    • NY/maybe all of MBE: grantor intent controls. If Grantor declares conveyance to be a tenancy in common or joint tenancy, then that intent controls. 
  • Creditors typically cannot come after this property, except that in NY, a spouse may mortgage his share and creditors may enforce such interest, but only as to the debtor-spouse's share; non-debtor spouses's rights must not be compromised. 
  • Neither tenant may unilaterally convey to a third party. 

25

 

Tenancy in Common

 

Each co-tenant owns a share and a right to possess the whole. Each interest is freely devisable, descendible, and alienable; there are no survivorship rights. This is a favored estate. 

Rights and Duties: 

  • Entitled to possess/enjoy the whole (but not ouster)
  • Absent ouster, co-tenant in exclusive possession is not liable for rent. 
  • Co-tenants must account for rent obtained from third parties. 
  • No adverse possession by co-tenant, except NY a recent Court of Appeals decision recognized adverse possession by co-tenant on theory of implied ouster.
  • Each tenant must pay share of carrying costs and reasonable repairs, but not improvements (but can get credit/liability for rise/fall in value at partition). 
  • Co-tenant must not commit waste. 
  • Co-tenant has right to bring action for partition. serious disputes as to use of property will give rise to partition.  

26

 

Tenancy for Years

 

AKA "Estate for Years," "Term of Years" 

A lease for a fixed period of time (be it one day, two months, five years) with a known termination date. 

No notice needed for terminaton. 

Writing: Must be in writing if for more than 1 year. 

 

27

 

Periodic Tenancy 

 

A lease giving T the leasehold for successive intervals, such as week to week; month to month; year to year; with no set duration. 

By implication: 

  • No set duration but provision made for payment of rent at set intervals --> implied month-to-month, year-to-year, etc. periodic tenant. 
  • Oral term of years violating the statute of frauds creates implied periodic tenancy measured by how rent is paid. 
  • In a residential lease, if L elects to holdover a T who has wrongfully stayed on past conclusion, an implied periodic tenancy arises, measured by how rent is paid. 

Termination = by notice, usually the length of the period of rent payment, unless otherwise agreed; except for leases greater than 1 year, requirement of 6 months' notice. Termination must happen at the conclusion of a natural lease period (e.g., if payment is month-to-month made on June 1, the termination cannot happen until July 1).

NY: A landlord who holds over a tenant creates an implied month-to-month lease unless otherwise agreed.  

NY: IF YOU HAVE A LEASE OF INDEFINITE DURATION, NOTIFY THE LANDLORD OF THE INTENTION TO QUIT, AND THEN FAIL TO QUIT, YOU MUST PAY THE LANDLORD DOUBEL RENT OTHERWISE OWED FOR AS LONG AS YOU CONTINUE IN POSSESSION.

28

 

Tenancy at Will

 

Tenancy for no fixed duration (but unless parties expressly agree to tenancy at will, treated as an implied period tenancy if there is payment of regular rent). 

Termination: by either party, at any time, but a reasonable demand to vacate is usually needed. *NY: minimum of thirty days' written notice. 

Ex. "To T, for as long as T or L desires." 

29

 

Tenancy at Suffrance

 

Created when T has wrongfully held over past the expiration of the lease. Wrongdoer gets leasehold estate to permit landlord to recover rent. 

Duration: Until L evicts T or elects to hold T to a new tenancy.

  • For a holdover, L can hold T to a periodic month to month resiential tenancy or a commercial tenancy based on the period of the previous lease, but not exceeding one year b/c of statute of frauds. 
  • How much? If tenant was notified of rent increase prior to expiration of lease, they pay the new amount; if not, they pay what they had paid under the old lease. 
  • *NY: A lanrdlord's acceptance of rent subsequent to the expiration of the term will create an implied month-to-month periodic tenancy, unless otherwise agreed. 

 

30

 

Tenants' Liability to Third Parties 

 

As a matter of tort law, tenants have the responsibility to keep the premises in reasonably good repair and are liable to third parties for injuries sustained, even where the landlord promised to repair. 

31

 

Tenants' Duty to Repair 

(When Lease is Silent) 

When the lease is SILENT: 

  1. T must maintain the premises and make routine repairs other than those due to ordinary wear and tear. E.g., no duty to renovate, but must make ordinary repairs. 
  2. T must not commit waste (voluntary, permissive, ameliorative). 
  3. Law of FIXTURES tested with waste doctrine. 

32

 

FIXTURES

 

When a tenant removes a fixture, she commits voluntary waste. Fixtures pass with ownership of the land; T must not remove a fixture, no matter that she installed it. 

Definition: a fixture is once-moveable chattel that, by virtue of its annexaton to realty, objectively shows the intent to permanently improve the realty (e.g., furnace, storm windows, heating system, some lighting). 

Whether something qualifies as a fixture depends on: 

  • Express agrement controls (contract)
  • RESIDENTIAL: In the absence of agreement, chattel is a removal non-fixture if no substantial damage to the premises is caused by removal; if removal causes substantial damage, then the fiture must stay put. 
  • COMMERCIAL: Trade fixtures doctrine. Prior to expiration of commercial lease, a commercial tenant can remove all trade fixtures. Exception -- an accession (a STRUCTURAL addition to real property) cannot be removed by any tenant. 

33

 

Tenants' Duty to Repair 

(Contracted For)

 

When T expressly covenants in the lease to maintain the property in good condition for the duration of the lease . . . 

  • At common law, T was liable for any loss to the property, including total loss due to force of nature. 
  • Majority modern view: T may end the lease if the premises are destroyed without T's fault. 

*NY: Absent tenant's express undertaking to restore premises in the event of their destruction w/o T's fault, T may quit the premises and surrender the lease with no duty to pay rent. 

34

 

T's Duty to Pay Rent 

 

  1. T breaches duty while in possession of premises: L may (a) evict through the court; or (b) continue and sue for rent, until tenant at suffrance vacates. No self help – results in civil/criminal liability; in NY, treble damages. 
  2. T breaches duty while out of possession: "SIR"  --> Surrender: Implicit offer of surrender, which L accepts. 

Ignore: Ignore and hold T responsible for rent as    though T in possession (option only available in minority of states) 

Re-Let: re-let premises on wrongdoer's behalf and hold T liable for any deficiencies. 

  • Majority rule: L must at least try to re-let (mitigation); 
  • *NY: No requirement to mitigate 

 

35

 

Landlord's Duty 

  1. Duty to deliver possession 
  2. Implied covenant of quiet enjoyment 
  3. Implied warranty of habitability 
    • No retaliatory eviction 

36

 

Duty to Deliver Possession

 

  • Majority Rule ("English Rule"): L must put T in physical possession of the premises. Prior holdovers in T's leasehold --> L's breach, damages to T. 
  • Minority Rule ("American Rule"): L need only deliver legal possession. 

37

 

Implied Covenant of Quiet Enjoyment 

 

Residential and Commercial Right 

  • T has right to quiet use and enjoyment of premises without interference from L. 
  • Breach by actual wrongful eviction: L wrongfully evicts T or excludes from premises. 
  • Breach by constructive eviction ("SING"): 
    • Substantial Interference (due to L's actions/failures or permanent/chronic problems). 
    • Notice (T must notify L of problem and L fails to act meaningfully). 
    • Goodbye (Tenant must vacate within a reasonable time after L fails to fix the problem). 
  • L is not liable for the acts of other T's, except that (1) he must control common spaces and (2) he may not allow nuisances. 

38

 

Implied Warranty of Habitability

 

Only applicable to Residential Leases: 

  • non-waivable right
  • That premises be fit for basic human dwelling (standard supplied by housing code, case law --> e.g., no heat in winter, no running water/plumbing)

T has three options in case of breach: "MR3" 

  • Move out and end the lease (doesn't HAVE to; compare with constructive eviction); 
  • Repair and deduct (allowable by statute in growing number of jurisdictions); 
  • Reduce rent (or withhold until court determines fair value); 
  • Retaliatory eviction prohibited. If T lawfully reports L for housing code violation, L is barred from penalizing T by eviction, ending lease, raising rent, harrassing T, or other repraisals. 

39

 

Assignment and Sublease 

 

  • Absent prohibition by lease, T may freely transfer his interest in whole (assignment) or in part (sublease).
  • L can prohibit T from subletting or assigning lease without  prior written approval if provided for in lease. However, she waives the right to prohibit future transfers once she approves one, unless she reserves that right. 
    • *NY: T may not assign lease without consent and L can unreasonably withhold. However, T may sublease with consent, if the building has four or more units, but L may not unreasonably withhold. 
  • Liability: only parties in privity of estate or privity of contract are liable to each other. Privity of estate arises when assignee is in possession of the leasehold. Privity of contract arises when assignee assumes the contract with L. Sub-tenants do not have privity of contract or estate with L. First tenant remains secondarily liable. 

40

 

Landlord's Tort Liability

 

Common Law Rule of Caveat Emptor. "Let buyer beware." In tort, L was under no duty to make the premises safe, unless "CLAPS" exceptions apply. 

C ommon areas (hallways and stairways, duty to maintain)

atent defects rule (duty to WARN -- only against those he knew or had reason to know of)

ssumption of repairs (liability for negligent voluntary     undertaking of repairs) 

ublic use rule (L who leases a public space, such as a    convention hall or museum, and who should know b/c of  nature of defect and length of lease that T will not repair,    is liable for any defects on the premises). 

hort term lease of furnished dwelling (liability for defects)

 

41

 

Affirmative / Negative Easements 

An easement is a grant of a non-possessory property interest that entitles its holder to some form of use or enjoyment of another's land, called the servient tenament. The easement is a grant of USE not POSSESSION so avoid answer choices that use the language of POSSESSION. 

Affirmative = right to do something on servient land; 

Negative = right to prevent servient landholder from doing something. Generally only recognized in 4 categories (Light, air, stream water from artificial flow, and support); a small minority of states recognizes scenic view. 


Negative easements can only be created expressly by a signed writing from grantor. No natural/automatic right.


 

42

 

Creating an Affirmative Easement 

 

"PING" 

rescription

  • Continuous use for the statutory period; open/notorious; actual use; hostile without consent. Permission defeat. *NY: statutory period = 10 yrs. The only difference between this and adverse possession is that there is no exclusive requirement for easement by prescription. 

mplication 

  • Easement implied from existing use. May be implied if previous use was apparent and the parties expected the use would survive division because necessary to dominant land's use. 

ecessity 

  • Landlocked setting, if grantor conveys a portion of land with no way out except over remaining land. 
  • As between routes on land, the SERVIENT LANDHOLDER gets to choose which route gets easement by necessity. E.g., if the parcel is landlocked, the servient landholder can tell the dominant parcel which of two access roads has an easement by necessity. 

rant 

  • If to endure more than 1 year, must be in writing (statute of frauds) --> Deed of Easement. This is the only type of easement that is in writing. 
  • Improper recording of express easements does not affect the rights of the original parties to the transaction. Unacknowledged notice can affect the availability of constructive notice to third parties, but it is enforceable as between the original parties. 

43

 

Termination of Easement 

 

"END CRAMP" 

 stoppel

  • Servient holder's material reliance on representation that easement is cancelled. 

ecessity 

  • Easements created by necessity expire when the need ends; unless created by express grant. 

estruction 

  • Destruction of servient land other than through willful conduct of servient owner

ondemnation 

  • By eminent domain 

elease 

  • Written release by holder to servient owner 

bandonment 

  • Some physical action by the easement holder demonstrating intention never to use it again.  Mere non-use does not terminate the easement. 

erger 

  • Extinguished when title to easement and to servient land become vested in same person (not revived by later separation) 
  • The merger must result in the parcels being owned in the same manner (e.g., no merger if you have a life estate in Parcel A and fee simple in Parcel B). 

rescription 

  • Same elements of acquiring prescriptive easement 

44

 

License 

 

A license is a privilege to enter another's and for some designated purpose. They are not subject to the statute of frauds (no need for a writing). 

Licenses are freely revocable (including tickets); estoppel (not to revoke) can apply when licensee has invested substantial mony or labor in reasonable reliance on the license's continuation. 

45

 

Profit 

 

  • Entitles holder to enter the servient land and take from it the soil or some substance of the soil (minerals, timber, oil). 
  • Profits share all the rules of easement, except that the profit is destroyed when surcharged (scope exceeded) whereas easement is not. 

46

 

Covenant 

 

A contracted-for promise to do or not do something related to land; can be restrictive/negative or affirmative (to do, not do). 

The promise is a covenant if P seeks money damages. The promise is an equitable servitude if P seeks an injunction. 

One tract is burdened by the promise; the other benefitted. 

Covenants run with the land when capable of binding successors. 

 

47

 

Covenants Running with the Land 

BURDEN RUNS: "WITHN" 

  • RITING between original parties; 
  • NTENT that the covenant run; 
  • OUCH AND CONCERN the land; 
  • H ORIZONTAL AND VERTICAL PRIVITY; and 
  • OTICE to transferee of promise at taking. 

Horizontal = original parties had a nexus between them as grantor/grantee; mortgagor/mortgagee; landlord/tenant. 

Vertical: non-hostile nexus between holder + transferee. 

BENEFIT RUNS: "WITV" 

  • RITING 
  • NTENT 
  • OUCH AND CONCERN 
  • ERTICAL PRIVITY (no horizontal privity / notice needed) 

 

48

 

Equitable Servitude 

 

A promise that equity will enforce against successors bny injunctive relief. "WITNES" where "ES" = equitable servitude. 

RITING BY ORIGINAL PARTIES; 

NTENT OF ORIGINAL PARTIES TO BIND; 

OUCHING AND CONCERNING THE LAND; 

OTICE TO ASSIGNEES 

  • Privity is not required 
  • Equitable defenses to enforcement: changed conditions (must be so pervasive that the entire area has changed, as to ALL parcels; mere pockets not enough). 

49

 

Implied Equitable Servitude 

(General / Common Scheme Doctrine)

 

When a subdivision has a general scheme of residential development which includes D's lot, the court may imply a reciprocal negative servitude to hold a lot holder to a restrictive covenant not in his deed, when: 

  • Subdivider had a general scheme when sales began, and 
  • Defendant lot-holder had notice of the promises contained in the prior deeds. 

Notice may be imputed by: 

ctual notice (defendant literally knew) 

nquiry notice (constructive - neighborhood confirms) 

ecord notice (notice imputed b/c publicly recorded deeds. Some courts impute notice of contents of other deeds, the "better" / NY view, no record notice of other deeds. 

AVOIDING RESTRICTION:

  • ONLY if changed circumstances have made the property unusable for ALL parcels within that common developmnent scheme. This is all or nothing –– either every lot is affected or the covenant stays in place as to all lots. 

50

 

Adverse Possession

 

Possession of property may ripen into title where certain elements are met. 

COAH: 

Continuous (*10 years in NY

Open/notorious 

Actual 

Hostile (no consent -- this doesn't mean knowing the property isn't yours; just means it's against the rights of the owner / not permissive). 

  • Intent: subjective state of mind as to right is irrelevant for MBE; *NY must occupy in good faith. 
  • Tacking: one adverse possessor may tack on his time to another's, so long as those possessors shared privity (non-hostile nexus such as blood, contract, deed, will); not allowed with Ouster. 
  • Disabilities: Insanity/infancy/incarceration tolls statutory period if present at entry (not later). 
  • adverse possessor has no right of conveyance until filing (and succeeding on) lawsuit to quiet title. 
  • Usually you only get title to the land you actually occupy. However, if you claim under color of title (by instrument/deed that is invalid but you believe it's valid) then you can get title to the whole tract, not just the portion occupied. 

 

51

 

Conveyance of Real Estate: Two Step Process 

 

  1. The land contract, which endures until step 2; 
  2. The closing, where the deed becomes operative document. 

52

 

The Land Contract 

Statute of Frauds and Discrepancies in Contract 

  • Statute of Frauds: Must be in writing, signed by party to be bound, stating the particular property and consideration (price). 
    • Exception to Statute of Frauds: Doctrine of Part Performance. If you have 2 of the following 3: 
      • B takes possession; 
      • B pays all/part of the price; and/or 
      • B makes substantial improvements. 
    • Doctrine of Part Performance Not Applicable As Exception to Statute of Frauds WHEN the parties' behavior under the oral contract is consistent with the payment of rental payments. 
  • Discrepancies in Land versus Contract: When the amount of land recited in land contract is > size of parcel, buyer's remedy = specific performance with pro rata reduction in price.

53

 

The Land Contract 

Risk Allocation and Implied Promises 

  • Doctrine of Equitable Conversion. For the multistate, equtiy regards as done what ought to be done. In equity, once the contract is signed, B owns the land, subject to the condition that he pays the purchase price at closing. Accordingly, if the property is destroyed through no fault of either party between contract and closing, B bears the risk of loss unless the contract says otherwise. 
    • *NY: As long as B is without fault, the risk of loss remains with seller until B has title or takes possession under the Uniform Vendor and Purchaser Risk Act.

 

  • Implied Promises in Land Contracts: 
    • Seller promises to provide marketable title at closing. The title must be free from reasonable doubt; free from lawsuits and threat of litigation. 
      • Three circumstances will render title unmarketable: adverse possession (even if only part of title); encumbrances (liens, servitudes, mortgages, unless waived by them); zoning violations, even if slight (not mere presence of zoning). Building code violations are NOT treated as encumbrances. 
      •  Note that seller has the right to satisfy an outstanding mortgage or lien at closing with proceeds of the sale. 
    • Seller promises not to make any false statements of material fact. Most states now also hold sellers liable for failure to disclose latent material defects (liability for lies and ommissions). 
      • "As is" - type disclaimers do not excuse seller from liablity for fraud / failure to disclose. 
    • Land contract DOES NOT contain any implied warranties of fitness or habitability (caveat emptor) unless the builder of the house is selling the house, in which case must warrant that it is sound.

54

 

The Closing Documents:

Lawful Execution and Delivery 

 

Controlling document is now the deed (legal title from seller to buyer). The deed must be "LEAD": 

Lawfully Executed And Delivered. 

  • Lawful execution: in writing, signed by grantor. The deed itself need not recite consideration, nor must consideration pass to make deed valid. The land must have a description of land (need not be perfect; only an unambiguous description & good lead (e.g., all of O's land in Essex County OKAY, but "some of O's land not okay).
  • Delivery: Satisfied when grantor physically transfers deed to grantee (mail, agent, messenger permissible). Delivery does not necessarily require physical transfer of the instrument itself; legal/not actual standard. Test of present intent to be bound, irrespective of whether the deed itself was handed over. 
    • Express rejection defeats delivery. 
    • Oral conditions drop out if deeds are absolute on their face. 
    • Delivery by escrow agent okay (e.g., escrow agent may deliver once/if certain conditions are met). 
  •  

55

 

Covenants for Title: Types of Deed 

 

Deeds must contain adequate descriptions of the land being conveyed otherwise may not be valid. However, equity does not prefer forfeitures based on technicalities. For the description to be adequate, it must accurately identify the property; as long as it is clear what property is the subject of the contract, the description is acceptable even if it contains errors. 

QUITCLAIM 

GENERAL WARRANTY DEED 

STATUTORY SPECIAL WARRANTY DEED 

56

 

Quitclaim Deed 

 

Contains no covenants; not even promise that title to convey is valid (worst deed). Grantor did implicitly promise in the contract to provide marketable title at closing; but grantor is off the hook for any post-closing problems. 

57

 

General Warranty Deed 

 

The best deed a buyer could hope for, warrants against all defects intitle, including those due to grantor's predecessors. Typically contains six covenants, present or future:

Present (breached at closing; SOL runs from closing) 


  • Covenant of seisin: grantor owns this estate.  



  • Covenant of right to convey: grantor has power to transfer; no temporary restraints or disabilities.  





  • Covenant against encumbrances: no servitudes/mortgages on property. 
     

Future (not breached until future date; SOL runs from future breach) 


  • Covenant for quiet enjoyment: grantee won't be disturbed in possession by thid party's lawful claim of title;  



  • Covenant of warranty: grantor will defend against lawful title claims brought by others;  





  • Covenant of further assurances: grantor will do whatever is needed to perfect title. 
     

58

 

Statutory Special Warranty Deed 

 

Provided for by statute in many states, this deed contains two promises that grantor makes only on behalf of himself (not predecessors): 

  1. He hasn't conveyed this estate to anyone else other than grantee; 
  2. The estate is free from encumbrances made by grantor. 

*NY: Special warranty deed is called a bargain and sale deed. 

59

 

Recording Systems 

(General; Purposes)

 

  • Recording acts exist to protect only bonafide purchasers for value and mortgagees (creditors). 
  • A bonafide purchase (BFP) is one who: 
    • Purchases Blackacre for value; 
    • W/o notice that someone else got there first. 
  • Getting a bargain doesn't change the fact that B is a BFP. 
  • Donees lose, unless the shelter rule applies (see other card). 
  • BFP's may be charged with actual, inquiry, or record notice. 
    • Actual notice: B learned of A prior to closing. 
    • Inquiry notice: B would have learned based on duty to inspect, whether or not B inspected (e.g., sees someone else in possession).
    • Record notice: If a recorded instrument makes reference to an unrecorded transaction, grantee is on inquiry notice of whatever a reasonable follow-up would show. B is also on recor notice if, at the time B takes, A's deed was recorded properly within the chain of title. 
    • Mortgagee can't record mortgage after different BFP recorded his title, not contemplating the mortgage, unless the recording would satisfy under either the race-notice statute or the notice statute. 

60

 

The Recording System: 

RACE-NOTICE JURISDICTIONS

 

If B is a bona-fide purchaser for value and we are in a race-notice jurisdiction, B wins if she records properly before A does. 

*NY is a race-notice jurisdiction. 

"Any conveyance of an interest in land shall not be valid against any subsequent purchaser for value, without notice thereof, whose notice is first recorded." 

  • To prevail, B must (1) be a BFP and (2) win the race to record. 

61

 

Recording System: 

Notice Jurisdictions 

If B is a BFP and we are in a notice jur, B wins, regardless of whether or not she records before A does. 

The Notice Statute: "A conveyance of an interest in land shall not be valid against any subsequent purchaser for value, without notice thereof, unless the conveyance is recorded." 

IT won't matter that  may ultimately record first, before B does, and it won't matter that B never records. The last BFP to enter (take deed as conveyance) wins as long as there was no notice of the prior conveyance (by record deed or possession).  

 

62

 

The Shelter Rule

 

One who takes from a BFP will prevail against any entity that the transferor or BFP would have prevailed against ("takes shelter" in status of her transferor and steps into those shoes). Aims to protect B by making it easier to transfer successfully. Therefore, even if C is a donee, if B was a BFP, see can bring action against A under B's claims. 

63

 

The Wild Deed

 

O sells Blackacre to A, who does not record. Then, A sells to B. B records the A-to-B deed. 

The A-to-B deed contains a missing grantor, and therefore is a wild deed. 

The Rule of the Wild Deed: if a deed, entered on the records (A to B) has a grantor unconnected to the chan of title (O to A), the deed is a wild deed and incapable of giving record notice of its existence. 

Ex. O sells Blackacre to A, who does not record. Then, A sells to B. B records the A-to-B deed. Thereafter, O sells Blackacre to C. C has no actual or inquiry knowledge of the O-to-A or A-to-B conveyance. C records. In the contest of B v. C, C prevails, in both a notice and a race-notice statute, because at the time C takes she is a BFP and B's recording is a nullity because of the rule of the wild deed. 

64

 

Estoppel by Deed 

 

A person who transfers property he does not in fact own in estopped by deed from denying the validity of that first conveyance, if he later acquires the interest he purported to transfer. 

Ex. O does not sell Blackacre to X, but X sells Blackacre to A. A records. Later, O does sell Blackacre to X, who records; X then sells to B. B records. 

  • As between X and A, A owned Blackacre once X purchased it from O. 
  • As between A and B, B has valid title because A's early recording was a nullity and B is the last BFP to record in a notice statute and the first BFP to validly record. 

65

 

Legal Mortgages 

(Creation)

 

A mortgage is the conveyance of a security interest in land, intended by the parties to be collateral for repayment of a debt. Judgment liens on land follow property just like mortgages.

Two elements

  1. A debt; 
  2. A voluntary transfer of a security interest in debtor's land to secure the debt. 

Must be in writing to satisfy the Statute of Frauds. This is the legal mortgage (also known as the mortgage deeds, note, security interest in land; deed of trust; sale/lease-back). 

Debtor is the mortgagor; creditor is the mortgagee. 

 

 

66

 

Equitable Mortgage 

 

When parties reach an understanding that Blackacre is the collateral for the debt, but instead of executing a note or mortgage deed, the buyer hands Creditor a deed to Blackacre that is absolute on its face. This is an equitable mortgage. 

  • Parol evidence is freely admissible to show parties' intent; 
  • But if creditor sells Blackacre to a BFP, the BFP owns the land and O's only recourse is to proceed against creditor for fraud & sale proceeds. 

67

 

Parties' Rights Under the Mortgage 

 

  • Unless and until foreclosure, the debtor-mortgagor has title and right of possession. Creditor-mortgagee has a lien/right to look to Blackacre in the event of default. 

 

68

 

Transferring Creditor-Mortgagee's Interest 

  • All parties to the mortgage can freely transfer their interests. The mortgage automatically follows a properly transferred note. 
     
  • Creditor-mortgagee can transfer his interest by indorsing the note and delivering it to the transferee; or executing a separate document of assignment. 
     
  • A holder in due course takes the note free of any personal defenses that could have been raised against the original creditor (personal defenses include lack of consideration; fraud in inducement, unconscionability, waiver, estoppel; ordinary breach of contrat defenses). The holder in due course is still subject to "real" defenses ("MADFIFI4). 
    • Material Alteration 
    • Duress
    • Fraud in the factum (lies about instrument)
    • Incapacity
    • Illegality
    • Infancy
    • Insolvency
  • To be a holder in due course of the note: 
    • Note must be negotiable (made payable to the named mortgagee); 
    • The original note must be indorsed, signed, by named mortgagee; 
    • The original note must be delivered to the transferee (no photocopy); 
    • The transferee must take the note in good faith without notice of any illegality, and 
    • The transferee must pay value for the note (some amount more than nominal). 















 

 

 

 

69

 

Effect of Mortgage Lien on Land 

 

  • If a debtor-mortgagor sells the mortgaged property, the lien remains on the land so long as mortgage instrument is properly recorded (you must record the note as well as the deed). The buyer holds the property subject to the Bank's mortgage. 
    • All recording statutes apply to mortgages as well as deeds. A later buyer takes subject to a properly recorded lien. 
      • In a notice statute, buyer takes subject to the lien because buyer has record notice when buyer enters.
      • In a race-notice statute, buyer takes subject to the lien because buyer has record notice and bank wins race to record. 
      • But if Bank records after a BFP takes, then the BFP can take not subject to the mortgage in a notice state (and if the Bank records after BFP takes and records, then BFP wins w/o lien in a race-notice statute). 
  • Personal Liability: O sells Blackacre to B; Blackacre has lien on it. 
    • If B has assumed the mortgage: Both O and B are personally liable. B is primarily liable; O is secondarily liable. 
    • If B takes "subject to the mortgage" but doesn't assume, B assumes no personal liability. But, if recorded, mortgage remains on land; thus if O does not pay, mortgage may be foreclosed. 
    • If property subject to a mortgage passes to a devisee or distributee, the property continues to be subject to the mortgage but neither the personal representative of the estate nor the devisee/distributee is personally liable (unless the testator, by will, imposes the express burden of satisfying mortgage on devisee). (NY testing book - not sure if MBE rule or not). 

 

70

 

Foreclosure

(Distribution of Proceeds)

 

Mortgagee may foreclose by proper judicial action. At foreclosure, the land is sold, and the proceeds go towards satisfying the debt. A foreclosing party must give notice to all parties that became mortgagees after the foreclosing party did, or else the later mortgages stay on the land. 

  • If the proceeds are insufficient, mortgagee brings deficiency judgment against debtor. 
  • If there is a surplus, the junior liens are paid off in order of priority and the remaining surplus goes to the debtor. 
  • Attorneys fees and court expenses are paid first (and any approved interest on first priority lien). Distributions are then made in full in order of priority. 

71

 

Effect of Foreclosure on Various Interests

  • In states following the TITLE THEORY of mortgages, the bank can take possession of property prior to foreclosure, because such possession has no effect on the doctrine of equitable redemption. This is not the case in LIEN THEORY states where mortgagor has title to property until lien is foreclosed. 
  • Foreclosure will terminate any interests junior to the mortgage being foreclosed, but will not affect senior interests. Junior lienholders should be able to proceeding with deficiency judgments, but can no longer look to Blackacre for satisfaction. 
    • Those with interests subordinate to those of the foreclosing party are necessary parties to foreclosure action. 
  • Debtor-mortgagor is also necessary party and must be joined. 
  • Failure to include a necessary party results in the preservation of that party's claim, despite the foreclosure and sale. Thus, if a necessary party is not joined, his mortgage remains in the land. 
  • Foreclosure does not affect senior interests. Senior creditor can foreclose on land bought at foreclosure sale (so buyer will usually pay an amount less the amount needed for buyer to pay off the senior mortgage. E.g., if property is worth $50,000 and is subject to a $30,000 senior lien, but the junior lien-holder is foreclosing, the lien stays, and buyer can pay up to $20,000 cash for property (the $30,000 extra value to pay off senior lien). 

72

 

Mortgages: Order of Priorities 

 

  • As a creditor, you must record (until recording, no priority). 
  • Once recorded, priority is determined by the norm of "first in time, first in right." 
  • Purchase money mortgag has super-priority over all liens, notwithstanding floating liens (liens on after-acquired collateral). 
  • Subordination agreements are permissible by private agreement. A senior creditor may agree to subordinate its priority to a junior creditor. 

73

 

Equitable Redemption

 

  • Redemption in Equity: Universally recognized up to date of sale, giving debtor right to redeem the mortgage and free the land at any point until the time of foreclosure. Exercised by paying off missed payments and costs. If the mortgage note contained an acceleration clause, the party must pay the full balance and accrued interest to equitably redeem. 
  • The debtor-mortgagor may not waive the right to redeem in the mortgage itself; this is known as "clogging the equity of redemption" and is prohibited. 
  • Statutory redemption: recognized in half of the states *NOT NEW YORK giving debtor-mortgagor a statutory right to redeem for some fixed period after the foreclosure sale has occurred (typically six months to one year). Where recognized, the statutory redemption applies after foreclosure occurred, and the amount to be paid is usually the foreclosure sale price rather than the full debt. 
    • In most states applying this statute, mortgagor will have the right to possession during the statutory period. 
    • When a mortgagor redeems the effect is to restore the redeeming owner to title. 

74

 

Lateral Support 

 

If there are buildings on the property, and it caves in due to adjascent landowner's use of its property, then the plaintiff must show either negligence or, in strictly liability, that the land as unimproved would also have caved in. 

  • If land is improved by buildings and an adjacent landowner's excavation causes that improved land to cave in, the excavator will be liable only if negligent
  • Strict liability does not attach unless Plaintiff shows that because of D's actions, P's improved land would have collapsed in its natural state (no buildings). In other words, P must show that the improvements (shrubs, foundation, structures, etc.) did not contribute to the collapse. 

75

 

Water Rights 

 

ALLOCATION 

  1. Riparian Doctrine: water belongs to those who own the land bordering the water course. These people are known as riparians, who share the right of reasonable use of the water. One riparian will be liable if his or her use unreasonable interferes with others' use. 
  2. Prior Appropriation Doctrine: The water belongs initially to the state, but the right to divert it and use it can be acquired by an individual, regardless of whether or not he happens to be a riparian owner. Rights are determined by priority of beneficial use (first in time, first in right allocation as long as productive/beneficial use of water). 

GROUND WATER / PERCOLATING WATER 

  • The surface owner is entitled to make reasonable use of ground water; however, the use must not be wrongful. 

SURFACE WATERS (RAIN/SPRINGS/MELTING SNOW WHICH HAVE NOT YET REACHED NATURAL WATERCOURSE OR BASIN) 

  • Common enemy theory: surface water is nemesis. Landowner may change drainage or make any other changes/improvements on his land that combat flow of surface water. Many courts have modified the common enemy rule to prohibit unnecessary harm to others' land. VERSUS 
  • natural flow theory: landowner cannot alter natural flow of surface waters (contrast with common enemy theory). 

 

 

76

 

Possessor's Rights

 

Possessor of land has the right to be free from trespass and nuisance: 

  • Trespass: Invasion of land by physical object. To remove a trespassor, bring ejectment action. 
  • Private nuisance: substantial, unreasonable interference with anther's use and enjoyment of land. Unlike trespass, nuisance does not require tangible physical invasion. Thus, odors and noise could give rise to a nuisance but not a trespass. 
    • No cause of action for hypersensitive plaintiff. 

77

 

Eminent Domain

 

Government's 5th Am. Power to take private property for public use in exchange for just compensation. 

Explicit takings or acts of governmental condemnation; implicit and regulatory takings (same effect of economic wipeout of investment) --> just compensation; or termination of regulation + damages incurred while reg in effect. 

78

 

Zoning 

 

Pursuant to police powers, state/local govt's can enact statutes to reasonably restrict land use. 

Variance: principle to achieve flexibility in zoning. Granted if can show undue hardship + that variance won't work detriment to surrounding property values. 

  • Variance granted or denied by admin action. 

Non-conforming use that was once lawful cannot be eliminated all at once unless just compensation is paid (otherwise could be deemed unconstitutional taking). 

Unconstitutional Exactions: 

  • Exactions are those amenities gov't seeks in exchange for granting permission to build. Must be reasonable related in nature and scope to impact of proposed development, otherwise, unconstitutional. 

79

80

 

Transferability of Easements

 

  • Easements appurtenant: the benefit runs with the land regardless of whether it is mentioned in the conveyance (no notice requirement); the burden runs with the land unless the new owner is a bona fide purchaser with no actual or constructive notice of the easement. 
  • Easements in gross: right to use servient land. IF acquired for personal pleasure, such easements are non-transferrable; if acquired for economic/commercial use, the easement is transferable.