Property Flashcards
(88 cards)
1
Q
What is a defeasible fee?
A
A fee simple estate of potentially infinite duration that can be terminated upon the occurrence of some specified event. (i.e. estate with a remainder vested in some person, who may lose the vested interest upon the occurrence of some event)
Requires clear words of intent for the remainder to vest (words of desire, hope, or aspiration are insufficient).
2
Q
What are the three types of defeasible fees?
A
- Fee simple determinable
- Fee simple subject to condition subsequent
- Fee simple subject to an executory interest
3
Q
What is a fee simple determinable?
A
Property automatically reverts back to grantor upon the happening of a given event or condition
Characteristics:
- Automatic forfeiture - upon occurrence of the given event or condition, the grantee automatically forfeits the estate
- Potentially infinite - duration can be infinite so long as the event or condition does not occur
- Transferability - alienable, devisable, and escendible, subject ot the occurrence of the given event (BUT absolute restraints on alienation are void RAP)
Creation - requires clear durational language (e.g., “for so long as,” “while,” “during,” “until,” e.tc.)
Accompanying future interest: A fee simple determinable has the possibility of a reverter that is retained by the grantor.
4
Q
What is a fee simple subject to condition subsequent?
A
Grantor retains power to terminate grantee’s estate (grantor must take action to terminate, does not occur automatically).
Characteristics:
- Forfeiture NOT automatic
- Potentially infinite
- Transferable
Creation: clear durational language must carve out a right of reentry for grantor. “To A, but if he wins the lottery, grantor reserves the right to reenter and retake”
The accompanying future interest is the right of reentry that is retained by the grantor.
5
Q
What is a fee simple subject to an executory interest?
A
Property automatically transfers to a third party (i.e., someone other than grantor) upon the happening of a given event.
Characteristics:
- Automatic forfeiture (similar to fee simple determinable, but interest automatically transfers to a third person)
- Potentially infinite
- Transferable
Creation - clear durational language required. “To A, but if A is ever arrested, then to B”
The accompanying future interest is a shifting executory interest that is retained by a third party.
6
Q
What is a life estate?
A
An interest that lasts only for the life of the interest holder and therefore does not terminate at a fixed or computable time period. Typically measured by life of grantee, but see also life estate pur autre vie (life estate measured by the life of another person
7
Q
What is the doctrine of waste?
A
The doctrine of waste concerns the rights/duties of a life tenant. A life tenant cannot injure interests of remainder/reversion-holder.
Types of waste:
- Affirmative (voluntary) waste
- Permissive waste
- Ameliorative waste
8
Q
What are the exceptions to the prohibition on affirmative waste?
A
Life tenant cannot consume or exploit natural resources, except:
(a) where necessary for repairs or maintenance of land
(b) when grant expressly gives the right to exploit
(c) if land was used for exploitation prior to grant - open mines doctrine - if extraction of materials was done on land before life estate began, life tenant may only extract from mines already open.
9
Q
What is permissive waste?
A
The life tenant has the duty to repair/maintain property up to extent of income/profits derived from land or rental value of land; failure to do so is permissive waste.
10
Q
What is ameliorative waste?
A
These are acts that economically benefit land’s value; usually permitted under modern authorities.
11
Q
What is a future interest?
A
A future interest is a legal right to the property that will begin at some time in the future. There are two main types of categories of future interests:
(1) Future interests in the grantor:
(a) Possibility of reverter
(b) right of reentry/power of termination
(c) reversion
(2) Future interests in grantees or third persons
(a) vested remainder
(b) contingency remainder
(c) executory interests
12
Q
What are remainders?
A
A future interest in a third person that arises immediately upon the termination of the preceding estate.
Characteristics:
- Expressly created in the same conveyance in which the preceding estate is created
- Cannot cut off or divest an interest held by a prior transferee
- Alienable, devisable, and descendible
Vested and Contingent are the two categories of remainders.
13
Q
What is a vested remainder?
A
A remainder that automatically becomes possessory upon the natural expiration of the preceding estate.
Limitations - vested remainders cannot:
- be subject to any condition precedent; or
- vest in an unknown or unascertained person
Three types of vested remainders:
- Indefeasibly vested remainder: becomes possessory immediately upon termination of the prior estate
- Vested remainder subject to total divestment - subject to some condition subsequent, such that the remainderman could be divested after taking possession. “A for life, remainder to B; but if B weds, to C”
- Vested remainder subject to open (class gift) - remainder vested in a described class of takers, at least one of whom is capable of taking possession (i.e. by virtue of being alive)
14
Q
What is an indefeasibly vested remainder?
A
Property becomes possessory immediately upon termination of the prior estate.
15
Q
What is a vested remainder subject to total divestment?
A
Remainder subject to some condition subsequent, such that the remainderman could be divested after taking possession. E.g. “A for life, remainder to B; but if B weds, to C”
16
Q
What is a vested remainder subject to open?
A
Also known as a class gift. Remainder vested in a described class of takers, at least one of whom is capable of taking possession.
- Not subject to any condition precedent
- Open v. closed class - class remains open to allow for future class members (anyone who satisfies class description, e.g., “children of A”) and closes when additional class members are impossible.
- Rule of convenience: class closes whenever any class member can call for distribution of her share; does not apply if it conflicts with grantor’s expressed intent.
17
Q
What is a contingent remainder?
A
A remainder will be contingent if it is either a) subject to a condition precedent, or b) created in favor of an unascertained or unborn person.
18
Q
What is a remainder subject to condition precedent?
A
Remainder’s taking is subject to a condition precedent, i.e. contingent as to an event.
- Once grantee satisfies the contingency, the interest automatically becomes an indefeasibly vested remainder
19
Q
What is a remainder subject to unborn or unascertained persons?
A
Remainder is contingent if created in favor of unborn or unascertained persons.
- The remainder is contingent on the grantee becoming born or ascertained.
- E.g. to A for life, then to B’s heirs.” Contingent because heirs of B cannot be ascertained until B dies.
20
Q
What is the rule of destructability?
A
At common law, a contingent remainder is destroyed if it remains contingent (i.e. the condition is not satisfied) when the preceding estate ends.
Modern rule: gives a reversion to grantor or grantor’s heirs until grantee satisfies the condition
21
Q
What is the rule of merger (Shelley’s Rule)?
A
O grants “ to A for life, then to A’s heirs” and A is alive.
At common law, the remainder (to A’s heirs) merges and A has a fee simple absolute.
Modern rule - A has a life estate and A’s heirs have a contingent remainder. O has a reversion because A could die without heirs.
22
Q
What is the doctrine of worthier title?
A
O conveys “to A for life, then to O’s heirs”
- The contingent remainder in O’s heirs is void; A instead has a life estate and O has a reversion.
23
Q
What is an executory interest?
A
A future interest in a third party that takes effect by cutting short some interest - two types: shifting and springing.
- Includes any future interest that is not a remainder
Look for phrases like “but if”, “then to”, “for so long as”, etc.
- Executory interest holders lack standing to sue for waste.
24
Q
What is a shifting executory interest?
A
It always follows a defeasible fee and cuts short someone other than the grantor (third party).
- E.g., “to A and his heirs, so long as the property is used for storage. But if used for any other purpose, to B and his heirs”
- A has a fee simple subject to an executory interest
- B has a shifting executory interest - if A stops using the property for storage, A’s interest is cut short (not the grantor’s)
25
What is a springing executory interest?
A springing executory interest cuts short the interest of the grantor or his heirs.
E.g., "to A if and when he gets married"
- A has an executory interest
- Grantor has a fee simple subject to an executory interest; if A gets married, possession springs from grantor to A.
26
What is the Rule Against Perpetuities?
No property interest is valid unless it must vest, if at all, no later than 21 years after the death of a life in being at the time the interest was created.
Applies to:
- contingent remainders
- executory interests
- vested remainders subject to open
- options and rights of first refusal
- powers of appointment
Analyzing a conveyance subject to the RAP:
1. Determine the interest being granted
2. Apply RAP to any interest for which RAP applies
3. If conveyance violates RAP, strike only the violating portion and what remains is the new conveyance.
Note: many states have reformed the common law RAP, providing for an alternative vesting period greater than 21 years. But unless instructed otherwise, apply the common law RAP.
27
Rights of first refusal and RAP
Contingent interest in property (i.e. options and rights of first refusal) violate RAP if they could posibly be exercised outside
28
Class gifts and RAP
```
For class gifts to satisfy RAP, class must be closed with all conditions precedent satisfied for every member.
- Rule of Convenience for class gifts may save a class conveyance that would otherwise violate RAP
```
29
What is the charity to charity exception to RAP?
RAP does not apply to conveyances from one charity to another.
30
What is a tenancy in common?
An estate with multiple tenants in which each co-tenant owns a distinct, undivided interest and each has a right to possession of the whole estate.
Characteristics:
- Freely transferable - each interest is freely descendible, devisable, and alienable
- Co-tenants only share the right to possession
- No survivorship rights - a co-tenant's interest can be transferred to heirs upon her death
- Partition - a co-tenant can force partition at any time and take sole ownership of her share in the estate while the remaining parties hold their interests as tenants in common
- Modern law favors tenancy in common; it is the default concurrent estate
31
What is a joint tenancy?
Creation - Four conditions must concurrently exist when the tenants take their interests:
1. Time - JTs must take their interests at the same time
2. Title - JTs must receive their conveyance through the same instrument
3. Interest - JTs must take equal and identical interests
4. Possession - JTs must have equal possessory rights
- Express intent is required - grantor must expressly intend to create a JT; otherwise tenancy in common is presumed
- Right of survivorship - if one JT dies, surviving JTs automatically take equal possession of deceased JT's share
- Transferability - alienable, but not devisable or descendible
32
What is the effect of a severance or a transfer of interests under a joint tenancy?
- Severance: severance by any JT creates a tenancy in common with respect to severed interest
- Transfer of interest: a JT interest becomes a tenancy in common upn transfer; this does not destroy teh entire JT if two or more JTs remain.
- Mortgage: lien theory (majority) v. title theory (minority)
- - Lien theory: JT can take a mortgage on her interest without severing JT (b/c no title passes to mortgagee)
- - Title theory: JT is severed if any JT takes a mortgage on her interest because title passess to the mortgagee
33
What is tenancy by the entirety?
Marital estate, similar to JT, but between married couple
- created by conveyance to married couple (requires same four conditions of JT (time, title, interest, possession)
- Spouses are co-tenants; tenancy by the entirety is presumed in any conveyance made jointly to married couple.
- Only recognized in some common law jurisdictions
Characteristics:
- Right of survivorship
- No right of partition
- Protection from creditors - creditors of one spouse cannot reach that spouse's interest; only creditors of the couple can reach a tenancy by the entirety
34
How can a tenancy by the entirety be severed?
(1) Death by one co-tenant
(2) Mutual agreement of the parties in writing
(3) Issuance of a divorce decree
(4) Execution by a joint creditor (e.g., foreclosure)
35
What rights generally apply to concurrent estate tenants?
(1) Possession - each co-tenant has rights to possess the whole
(2) Rent from a co-tenant in exclusive possession - a co-tenant in exclusive possession is not liable to co-tenants for rent
(3) Rent from third parties - a co-tenant leasing premises out must account to co-tenants for their share of rental income
(4) Adverse possession - tenants may not acquire title to the exclusion of co-tenants through adverse possession
(5) carrying costs - each tenant is responsible for his fair share of taxes, interest, etc.
(6) repairs - co tenants my seek contribution fo reasonable repairs, but must inform co-tenants before making repairs
(7) improvements - no righ tto contribution for improvements, but co-tenants are entitled to credit for an increase in value attributable to the improvement (and also liable for any resulting loss)
(8) Waste - a co-tenant can bring an action for waste against another co-tenant during the life of the tenancy
(9) Partition/forced sale - JT's and tenants in common may bring an action for partition, or seek a forced sale and apportion the proceeds.
36
What is leasehold estate?
An estate in which the tenant has a present possessory property interest and the landlord has a future interest (reversion).
Four types:
(1) Tenancy for years: lasts for a fixed period of time, requires definitive beginning and end, automatically terminates at end of fixed period.
(2) Periodic tenancy - tenancy estate that repeats until terminated
(3) Tenancy at will - either party can terminate at any time without notice
(4) Tenancy at sufferance - tenant has possession by virtue of wrongfully remaining after termination of a lease (holdover tenant)
37
Periodic tenancy
A leasehold that is continuous for successive intervals until either party gives notice of termination.
Creation: can be express, implied or by operation of law
- Express: conveyed to tenant for agreed interval
- Implication - a lease does not specify duration, but provides for rent to be paid at set intervals
- Operation of law - two situations:
(1) Invalid lease - if tenant takes possession despite an invalid lease, periodic tenancy arises upon the landlord's acceptance of payment
(2) Holdover tenant - if landlord accepts rent from a holdover tenant, a periodic tenancy arises for the period the payment overs
Termination: when tenant gives property notice which requires:
- Sufficient time - tenant must give notice one full period in advance; year to year tenancies require six-month notice
- Effective date - effective date of termination must be at the end of the period of tenancy
Note: parties can agree to modify these requirements.
38
Tenancy at will
A tenancy with no fixed duration, terminable by either party at any time withotu notice.
Creation: express agreement
-Without an express agreement, courts will treat the lease as an implied periodic tenancy
Termination - by will or operation of law
- By will: either party can terminate the lease at any time without notice, but a reasonable demand to vacate the premises is usually required.
- By operation of law - occurs when:
1. Death of either party
2. Waste by the tenant
3. Assignment by the tenant
4. Transfer of title by the landlord
5. Lease by the landlord to a third party
Note: If agreement only gives landlord right to terminate, reciprocal right is given to tenant.
39
Tenancy at sufferance
A default tenancy that arises when a tenant continues to possess property after the lease expires (i.e., a holdover tenant).
Creation: tenant holds possession beyond lease expiration.
Landlord options:
1. Sue to evict
2. Impose a new periodic tenancy
Exception: imposing new periodic tenancy must be reasonable.
- New periodic tenancy is unreasonable if:
- - Tenant only remains in possession for a few hours
- - Tenant is not at fault for delay in vacating
- - Seasonal leases
40
Tenant's duties at common law
- Duty to repair
- Duty to pay rent
- Duty to not use property for illegal purposes
- Liability to third parties in tort
41
Fixtures
Once-movable chattel that is annexed (i.e., attached) to real property, indicating an intent to permanently improve property
Characteristics:
- Fixtures pass with ownership of the land
- Tenant installation qualifies as a fixture if there was an express agreement between the landlord and tenant. If no agreement, tenant may remove the chattel that tenant installed as long as removal does not cause substantial harm to the property
Fixtures and voluntary waste:
-If tenant removes fixtures, he commits voluntary waste
42
Landlord's remedies for tenant breach
If tenant breaches his leashold duties, landlord's options depend on whether tenant retains possession.
If T retains possession - landlord may:
1. File for notice of eviction
2. Continue the lease and sue for rent due
If T abandons premises - landlord may:
1. Treat the abandonment as tenant's surrender and accept it, releasing the tenant from the lease.
2. (minority rule) ignore it and hold the tenant liable for unpaid rent.
3. (majority rule) lease the premises to new tenants and hold the breaching tenant liable for any losses.
No self help! Landlord may not engage in self-help upon tenant's breach
Security deposit - required at beginning of most leases to secure landlord against damages and/or abandonment
-Landlord must return deposit to tenant once lease terminates and may subtract damages she has suffered
43
Landlord's duties and warranties
Landlords have hte following implied duties to tenant:
1. Duty to deliver possession
- Majority: actual possession; landlord must deliver physical possession to tenant
- Minority: legal possession (i.e., right to possess); new tenant is responsible for any holdovers on property. Tenant's remedy for breach is money damages
2. Implied covenant of quiet enjoyment
3. Implied warranty of habitability
4. Tort liability
44
Implied covenant of quiet enjoyment
A tenant has an implied right to quiet use and enjoyment of the premises, without interference from the landlord
-breach may occur by actual eviction or constructive eviction
Actual eviction: landlord wrongfully evicts or excludes tenant from property
Constructive eviction: landlord's actions or inactions render the property uninhabitable. Elements:
1. Substantial interference: major and/or chronic problems
2. Notice: tenant must inform teh landlord and give him a reasonable opportunity to repair; landlord must fail to act meaningfully
3. Vacate: tenant must vacate within a reasonable period after the landlord fails to repair
Retaliatory eviction: landlord is prohibited from retaliatory eviction if a tenant lawfully reports housing code violations
45
Implied warranty of habitability
Residential property must be fit for basic human dwelling.
Characteristics:
- Not applicable to commercial leases
- Absolute duty - cannot be modified by lease terms
- Local code or case law specifies the standard for breach
Tenant's remedies for landlord breach:
1. Move - vacate premises and terminate lease
2. Repair - make reasonable repairs and deduct the costs from future rent
3. Reduce or withhold rent - tenant can reduce rent or stop payment until a court determines the fair rental value given the breach - tenant must place withhold rent in escrow
4. Remain - tenant can remain in possession and seek money damages
46
Landlord's tort liability to tenants
Landlord is liable for injuries involving:
1. Common areas (landlord has duty of reasonable care in maintaining and repairing common areas)
2. Latent defects (landlord has duty to disclose hidden defects he should reasonably know of)
3. Assumption of repairs (landlord is liable for harm caused by negligent repairs made by him or an agent that he chooses to undertake)
4. Public use (landlord is liable for known defects if he knows the property is for public use and tenant is unlikely to repair
5. Seasonal or short term lease of a furnished dwelling (landlord is liable for defects that cause harm to tenant)
47
Lease assignments
Entire leasehold transfers from tenant to assignee
- Assignee is in privity of estate with landlord - teh two are bound by all covenants that run with the land
- Assignor remains in privity of contract with landlord
- Assignee owes rent directly to landlord, bua ssignor may be held liable for unpaid rent
Assignment provisions - construed against landlord
- Lease provisions restricting assignment are generally construed against landords
- Once landlord has given tenant permission to assign, such provision is thereafter waived.
Unless restricted by lease terms, a tenant may transfer her leasehold interest in whole (assignment).
48
Subleases
Partial leasehold transfer from sublessor to sublessee
- SUblessor is in privity of estate and contract with landlord. Sublessee pays rent to sublessor as her tenant
- Sublessee is not liable to landlord for rent and is not bound by any covenants unless expressly assumed
Sublease provisions - construed against landlord
- Lease provisions restricting sublet are generally construed against landlords
- Once landlord has given tenant permission to sublet, such provision is thereafter waived.
Unless restricted by lease terms, a tenant may transfer her leasehold interest in part (sublet)
49
Easements
A non-possessory interest that confers a right to use another's land.
Terms:
Servient estate: burdened land
Dominant estate: benefited land
Types of easements:
- Easement appurtenant - entitles a dominant estate owner to use a servient estate's land. Attaches to the dominant estate and passes automatically (even if not mentioned in a conveyance).
- Easement in gross - entitles an individual or entity (not a dominant landowner) to use the servient estate. Does not attach to land. E.g., right to place a billboard, right to run utility line, right to fish in another's pond
- Affirmative easement - entitles its holder to make affirmative use of the servient estate
- Negative easement - entitles its holder to restrict the servient estate from otherwise permissible activities
Creation: easements may be created by prescription, implication, necessity, or expressly by grant or reservation.
50
Easement by prescription
A process of acquiring an easement; similar to acquiring title by adverse possession.
Requirements: acquirer's use of another's land must be:
1. continuous - for the applicable statutory period
2. open and notorious - owner knows or should know of use
3. actual
4. hostile - without the owner's permission
Note - an easement can also be terminated by prescription if the servient landowner interferes with the easement sufficiently to satisfy the above requirements.
51
Easement by implication
An easement legally implied based on prior use by a common grantor on land subsequently divided into multiple plots.
Requirements:
1. Easement exists prior to division of a single tract of land
2. Common grantor's use is continuous and apparent
3. Use is reasonably necessary for enjoyment of the dominant tenement
4. Parties intended the use to continue after division of the land
Exceptions - easement may be implied without prior use if:
1. Subdivision plat - lots in a subdivision are sold with reference to a map plan
2. Profit a prendre - holder of a profit a prendre has an implied easement to pass over the land's surface as reasonably necessary to extract materials
52
Easement by necessity
An easement can arise if access to or from a property is impossible without the easement
Creation: usually arises when a landowner sells a portion of her property and the resulting division deprives one lot owner of access to a public road or utility. The owner of the servient estate can choose a reasonable location for the easement.
Termination - expires automatically when the necessity ends.
53
Express easement (easement by grant or reservation)
Easements may be expressly created by grant or reservation.
Grant - an express grant of the easement
Reservation - grantor conveys title to land but reserves the right to continue using the land for a designated purpose.
-Grantor may only reserve an easement for himself, void if reserved for the benefit of another
Requirements:
1. in writing
2. signed by the servient estate holder
3. satisfy deed formalities
54
Scope of easements
An easement's scope is determined by teh terms or conditions that created it.
- in interpreting an easement's scope, courts will consider reasonable intent of the original parties
Expansion
- Easement holders cannot unilaterally expand the scope of their easement. But overuse/misuse of easement does not terminate the easement
- Remedy for violation = injunction
Duty to repair
- Easement holder has a duty to make repairs if he is the sole user
- If both the servient landowner and the easement holder use an easement, the repair costs are apportioned
55
Termination of easements
Easements may be terminated in any of the following ways:
1. Estoppel - where servient owner reasonably relies on an easement holder's conduct or representations indicating an intent to abandon the easement; non-use is insufficient
2. Necessity ends
3. Destruction of servient tenement
4. Release - deed of release
5. Abandonment - holder physically demonstrates an intent to permanently abandon it
6. Merger - easement terminates automatically if one person acquires title of both the easement and the servient land
7. Prescription - servient owner may extinguish an easement by interfering with it using elements of adverse possession
8. Expiration
56
Negative easements
Entitles the holder to prevent the servient landowner from engaging in otherwise permissible actions on his own land.
4 categories of acts may be prevented:
1. Light
2. Air
3. Support
4. Stream of water from an artificial flow
Creation: can only be created by express grant
Note: restrictive covenants are utilized more frequently than negative easements to prevent a landowner from engaging in certain activities on their land.
57
Licenses (servitude)
A right to use licensor's land that is revocable at the licensor's will
- E.g., oral permission for neighbor to use licensor's pool
- Licensor may revoke the privilege at any time, unless estoppel applies
No SoF requirement - a license may be oral or written; they can result from easements that are invalid under the SoF
58
Profit (servitude)
A nonpossessory property interest entitling its holder to enter a servient estate to remove resources
- All rules governing easements apply to profits
- Extinguishment - a profit may be extinguished through misuse or overuse of resources on the servient estate
59
Covenants
A promise to do or refrain from doing something related to land
- A contractual limitation or promise regarding land
- Note: covenants are not property interests
Real covenant: a covenant concerning real property
- Runs with the land at law - subsequent owners may be burdened by teh vovenant or may enforce it. Different requirements apply for burdens and benefits running with the land
- Affirmative covenant - a promise to do something related to land
- Restrictive covenant - a promise to refrain from doing something related to land
Termination: can occur by
a. written release
b. merger of benefited and burdened estates
c. condemnation of burdened property
Covenants v. equitable servitudes - difference is the remedy
- Covenant - money damages
- Equitable servitude - injunction
60
Requirements for BURDENS of covenant to run with land
A successor in interest to the burdened estate will be bound by a covenant if the following conditions are satisfied:
1. Writing - original covenant was in writing
2. Intent - parties intened to bind successors to interest
3. Touches and concerns land - covenant must affect parties' legal relations as landowners
4. Horizontal and vertical privity - must exist between interested parties. Horizontal privity=relationship between the covenanting parties. Vertical privity=relationship between covenanting parties and their successors in interest
5. Notice - successor in interest had notice of the covenant when she took her interest
61
Requirements for BENEFITS of covenant to run with the land
A successor in interest to the benefiting estate may enforce the covenant if the following conditions are met:
1. Writing
2. Intent
3. Touches and concerns land
4. Vertical privity
62
Equitable servitudes
A promise enforced in equity against successors through injunctive relief.
- Virtually the same as a covenant, except for the remedy.
- Privity is not required to bind successors
Creation:
1. Writing
2. Intent
3. Touches and concerns
4. Notice - successors of the burdened land had notice (inquiry notice is sufficient)
Defenses to enforcement - a court will not enforce an equitable servitude if any of the following conditions exist:
1. Pervasive changes in the neighborhood
2. Estoppel
3. Acquiescence
4. Unclean hands
5. Laches
Reciprocal negative servitudes - may be implied from a common scheme for development of a residential subdivision
63
Reciprocal negative servitudes
Lot owners in residential subdivisions may enforce restrictions on teh use of property against other subdivision lot owners
- may be implied from a common development scheme of a residential subdivision
Created through implication if:
(1) general/common scheme - when sales began, the developer had a general scheme for all parcels of the subdivision, including the subject lot.
(2) Notice: owner of the subject lot had notice of the covenants in the deeds of other subdivision lots. Notice may be one of three types: actual (literal knowledge of covenants), inquiry (character of the neighborhood indicates a common restriction), record (chain of title for the owner's lot includes a prior deed containing a covenant)
64
Adverse possession
A trespasser may acquire title to another's property without compensation by possessing teh property for a specified period, in a manner conflicting with the true owner's rights
Requirements:
1. Continuous for the statutory period
2. Open and notorious
3. Actual and exclusive
4. Hostile
65
Miscellaneous adverse possession rules
Statute of Limitations
- SoL doesn't run if true owner was under some disability
- SoL does nto run against future interest holders until teh interest becomes possessory
- SoL doesn't run while true owner is incarcerated
Restrictive covenants - will not run with the land if the adverse possessor's use of land violated the covenant; but covenant will run if the AP's use complied with teh covenant
Color of title: a claim of title to property not actually owned. AP part of the property under color of title is sufficient to acquire title to the entire property
Govt. land - cannot be acquired through adverse possession
Leasing - AP can lease a portion of the land to a thrid party and still possess the property
Non-marketable title - title taken by adverse possession is not marketable, unless there has been an action to quiet title.
66
Adverse possession: tacking and concurrent owners
Tacking:
- APs can tack together successive periods of adverse possession to satisfy the statutory period, even if successive possession was by different adverse possessors. MUST BE SUCCESSIVE
- Requires privity between successive adverse holders
Concurrent owners
- Co-tenants may not adversely possess each others' interests unless ouster has occurred. I.e., to adversely possess a co-tenant, the co-tenant must be excluded from the land for the statutory period
67
Land sale contracts and conveyancing
Land sale contracts are subject to the SoF and must be:
1. in writing
2. signed by the parties to be bound
3. articulate essential terms
```
Exception: partial performance
Land sale contract is outside SoF if the buyer:
a. pays all or part of purchase price
b. makes substantial improvements
c. takes possession
normally need 2+
```
Land sale process:
1. Contract
2. Escrow period
3. Closing
4. Conveyance
68
Equitable conversion and risk of loss in land sale contracts
Equitable Conversion: during escrow (after land sale contract but before deed delivery), buyer owns the real property, but seller owns personal property (the right to proceeds of the sale. Seller holds legal title in trust for buyer
Death of a party: if buyer or seller dies before closing, rights to the contract pass according to interests held. Seller's interest passes as personal property. Buyer's interest passes as real property
Risk of loss: if property is destroyed before closing through no fault of the parties, buyer bears the risk of loss. Parties can contract differently. Seller must credit any insurance proceeds from loss against the purchase price.
69
Implied promises in land sale contracts
Every land sale contract contains two implied promises:
(1) Promise to provide marketable title - title is free from risk of litigation. Defects rendering title unmarketable: (a) acquired by adverse possession, (b) encumbered by interests, (c) zoning ordinance violations existing at sale.
(2) Promise to disclose and make no material false statements. Seller must not materially misrepresent facts or make false statements concerning the property. SEller must disclose ltaent material defects. Seller cannot limit liability through disclaimers. FOr a new property, seller/builder is subject to an implied warranty of fitness/quality in construction
Remedy for breach: Buyer must notify seller before closing and give reasonable time for seller to cure defects. If seller fails to cure, buyer can rescind, file for damages, demand, specific performance, or file suit to quiet title. If buyer fails to notify seller before closing, contract merges with deed and seller is not liable.
70
Deeds
A deed passes legal title from seller to buyer.
Requirements:
1. Lawfully executed - deed must be signed by grantor and must reasonably identify the parties and the land.
2. Delivered. Requires intent to be bound by teh conveyance. Title passes upon effective delivery and cannot be rescinded. Present intent controls, physical transfer not required. Grantee must accept the deed and acceptance is presumed upon valid delivery. A rejection by the grantee is ineffective delivery.
Types of deeds:
- general warranty - six covenants for title
- special warranty: grantor assures that (he has not conveyed land to another, the land is free from encumbrances made by the grantor
- quitclaim: transfers whatever interest grantor purports to have in property - no covenants included; grantor is not even promising he has title to convey.
71
General warranty deeds and covenants for title
General warranty deeds include six covenants for title
Present covenants (only breached at time of delivery)
1. Seisin - grantor covenants that he is the rightful owner and that deed covers described land
2. Right to convey - grantor covenants that he has the right to convey
3. Against encumbrances - grantor covenants that the land is free from encumbrances (e.g., servitudes, morgages)
Future covenants (only breached after delivery)
4. Quiet enjoyment - grantor covenants that grantee will not be disturbed by a third party's claim of lawful title
5. Warranty - grantor agrees to defend against lawful claims of title by others
6. Further assurances - grantor promises to perform future acts reasonably necessary to perfect the title conveyed.
72
Bona fide purchasers for value
BFP purchases property for value without notice of a prior conveyance.
Purchasers:
- Includes mortgagees for value
- Does not include donees, heirs, or devisees. Not protected by the recording statutes, unless the Shelter Rule applies
Notice - a buyer has notice of a prior conveyance by:
- Actual notice - actual knowledge from any source
- Inquiry notice - what a reasonable inspection of the land would reveal, regardless of whether buyer actually inspects)
- Record notice - knowledge from a routine title search. e.g. a previous conveyance properly recorded in the chain of title (not a wild deed)
73
Recording statutes
If a prior conveyance or interest is not recorded, a subsequent purchaser/mortgagee may be protected under a recording statute.
-Level of protection depends on the type of recording statute
Notice statutes - subsequent BFP always prevails
- Whether or not she recorded first, a subsequent BFP always prevails over a prior grantee who fails to record.
- Sample language: "No conveyance or mortgage of an interest in land shall be valid against any subsequent purchaser for value without notice thereof unless it is recorded."
Race-Notice statute - first subsequent BFP to record prevails
- Sample language: "No conveyance or mortgage of an interest in land shall be valid against any subsequent purchaser for value without notice thereof whose conveyance is first recorded"
Race statutes - first grantee to record prevails, regardless of whether buyer is a BFP.
- E.g. non-BFP purchaser who records first prevails over BFP
- Sample language: "No conveyance or mortgage of an interest in land shall be valid against a subsequent purchaser whose conveyance is first recorded.
74
Shelter rule
One who takes from a BFP will prevail against any interst teh transferor-BFP would have prevailed against, even if the transferee had actual notice of a prior conveyance.
- Protects donees, heirs, or devisees of BFPs who cannot qualify as BFPs and would not otherwise receive protection under notice or race-notice statutes
75
Wild deeds
A recorded deed unconnected to the chain of title (e.g., due to a clerk's filing error)
-Record notice cannot be derived from a wild deed
76
Estoppel by deed
One who conveys land in which she has no interest is estopped from denying the validity of the conveyance if she subsequently acquires the same interest.
- Prevents one from fraudulently conveying land and later validly acquiring it (i.e., laundering title)
77
Real estate brokers and agents
Most real property sales are negotiated by real estate brokers.
Seller's agent (listing broker) - broker who obtains listing from seller
- Has fiduciary duty to seller
- Earns commission from sale of property. Seller's agent may still earn commission if the sale fails to close due to seller's fault
Buyer's agent (selling broker) - primary relationship is with buyer
- Typically compensated by receiving a portion of the listing broker's commission
- Owes a fiduciary duty to seller because buyer's agent is technically a subagent of the seller's agent
Duty to disclose - agents have a duty to disclose material information about which they have actual knowledge
78
Mortgages
A security interest in land that serves as collateral for the repayment of a loan
- Must be in wriitng to satisfy SoF
- Morgagor = debtor/borrower/landowner
- Mortgagee = creditor
Parties' rights
- Lien theory (majority) - mortgagor has title and right to possession absent foreclosure. Mortgagee has a lien, conferring a right to take action for ownership of the land if the mortgagor defaults on the loan.
- Title theory (minority) - mortgagee has title to the property during loan term, not mortgagor-borrower
- Note - unless instructed otherwise, assume lien theory applies
Equitable mortgage - debtor gives creditor a deed to his land as collateral for the debt (instead of executing a mortgage)
Acceleration clauses - terms in loan agreements that require mortgagor to pay off full loan immediately if certain conditions are met
79
Transferability of mortgage interest and holder in due course status
A mortgagee (creditor) can transfer her interest by:
- Endorsing the mortgage note and delivering it to transferee
- Executing a separate assignment of the mortgage interest
Holder in due course
- A holder in due course takes a mortgage note free of any personal defenses the mortgagor could have raised against the original mortgagee (e.g., lack of consideration, fraud)
- He still remains subject to real defenses (e.g., material alteration, duress, fraud, incapacity, infancy, illegality, insolvency)
Requirements for holder in due course status:
1. Negotiable note - note must be negotiable, made payable to teh named mortgagee
2. Endorsed and signed - note must be endorsed or signed by the named mortgagee
3. Delivered - note must be delivered to the transferee
4. Good faith and value paid - transferee must take the note in good faith (i.e., without notice of illegality) and pay value
80
Foreclosure and mortgagee rights to property
Foreclosure - upon default, mortgagee can satisfy debt through foreclosure by judicial action
- property is sold to satisfy teh debt in whole or in part
- Deficiency judgement - if the debt exceeds sale proceeds, mortgagee can file suit against mortgagor for debt balance
- if proceeds exceed the debt balance, junior liens are paid in order of priorty
Redemption in equity - at any time prior to teh foreclosure sale, mortgagor can redeem the property by paying the amount due
- some jurisdictions allow mortgagor, for a certain period, to buy back the property after foreclosure sale - statutory right to redemption
Mortgagee possession - mortgagee's right to possession prior to foreclosure depends on the jurisdiciton:
- Lien theory - no right to possess prior to foreclosure
- Title theory - right to possess at any time upon demand
- Mortgagee can always take possession with mortgagor's consent or abandonment
- Mortgagee in possession assumes the risk of accounting for rents, managing property, and tort liability to third parties
81
Foreclosure and multiple creditors/ interests
Priority of creditors - creditors must record their interests
- Recorded interests take priority in the order recorded
- Purchase money mortgages (PMM) - superior to all interests. PMM = mortgage given in exchange for funds used to buy the property; PMM is given either to the seller as part of the purchase price or t o a third=party lender (if both, seller's PMM is senior to the third-party lender)
- Creditors can agree to subordinate priority to a junior creditor
Junior interests - terminated by foreclosure of a superior claim
- Foreclosure terminates all junior interests; junior interest holders cannot look to the land to satisfy debts. Junior interset holders can seek a deficiency judgment against debtor, ensuring the debtor remains liable for teh balance on the junior mortgage.
- Junior interests are necessary parties and must be included in a senior foreclosure action. Otherwise, the junior mortgage will remain on the land
Senior interests - unaffected by junior interest foreclosures.
- Buyer of foreclosed property takes it subject to senior interests. Buyer is not liable for senior debt, but the senior mortgage remains on the land.
82
Lateral and subjacent support
Lateral support:
- Ownership of land includes the right to have land supported in its natural state by adjoining land; landowners can be liable for excavations that cause damage to adjacent land.
- P can bring claims under two types of liability: (1) negligence if adjacent landowner's excavation causes damage to developed land, excavating owner is only liable if he acted negligently; (2) strict liability where P must show his land would have collapsed, even in its natural state, due to D's excavations.
Subjacent support:
- Underground (subjacent) structures must support surface structures existing when the subjacent estate was created. Subjacent owners are strictly liable for failure to support pre-existing surface structures
- Negligence standard applies for subjacent structures erected prior to surface structures
- Subjacent structures include parking garages, tunnels, mines, etc. HOWEVER, the owner of mineral rights is not liable for damage done to structures built on the surface of the land after the mineral rights were transferred unless the owner fails to exercise reasonable care.
83
Water rights in watercourses
Land bordering watercourses (natural or artificial bodies of water, e.g., lakes and rivers) is governed by either the riparian doctrine or the prior appropriation doctrine.
Riparian doctrine - water belongs to those who own land bordering the watercourses. Two theories:
(1) reasonable use theory (majority) - riparian owners share rights to reasonable use and are liable to other owners if their use unreasonably interferes with other owners' use. Balance utility of use vs. gravity of harm.
Prior appropriation doctrine - water rights are originally acquired by actual use.
- priority of beneficial use determines rights to water.
84
Water rights in groundwater and surface water
Groundwater - water beneath the surface is not confined to a known channel (e.g., water in wells). Surface owner is entitled to make reasonable use of groundwater, but must not be wasteful (majority)
Surface water - water from rain, springs, or other runoff that has not yet reached a natural watercourse.
-Landowners can generally use surface water as they please, but may be liable for interrupting its flow.
Liability depends on which theory applies:
- Natural flow theory - owners cannot unreasonably alter natural drainage
- Common enemy theory - owners can do anything to change drainage or combat flow unless it causes unnecessary damage to others' land
- Reasonable use theory - utility of use is balanced against the gravity of harm from that use.
85
Zoning power
Pursuant to its police powers, government may enact statutes to reasonably control land use (cities and counties must be authorized to do so under an enabling act)
- zoning ordinances must be reasonably related to teh public welfare, not too restrictive, and not racially discriminatory
86
Variances to zoning
Landowners can get governmental permission to be exempt or vary from literal restrictions of a zoning ordinance.
To qualify, a landowner must show:
1. undue hardship
2. variance will not negatively impact surrounding property values
Nonconforming use - a once lawful existing use for property, now deemed nonconforming under new zoning laws
- government cannot eliminate a use all at once unless just compensation is paid. May provide landowner with amortization whereby gov will make payments to the landowner over a set period of time until the landowner recoups the value of the nonconforming use.
87
Special use permit and exactions
Certain property uses require a special use permit even where zoning generally allows the type of use
Exactions - condition for gov approval of new development
- Condition is usually a payment or gift of property to gov to offset the developments demands on public services.
Requirements: exactions are unconstitutional unless they satisfy the following:
(1) nexus - there must be a rational relationship between the exaction sought by the gov and the burden on public facilities
(2) proportionality - exaction must reasonably relate in nature and scope to the impact of the development
88
Conflicts of law in real property
Real property is subject to the law of the jurisdiction where it is situated. Applies to the disposition of real property, whether by descent, deed, or other method.
Ks related to real property - generally governed by the law of the place where the property is situated - but can be subject to contract provisions (i.e. forum clause)
