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Flashcards in Property - General Deck (188):
1

What are the types of freehold estates? (6)

(1) Fee simple absolute
(2) Fee tail
(3) Fee simple determinable
(4) fee simple subject to condition subsequent
(5) fee simple subject to an executor limitation
(6) Life Estate

2

What language creates a fee simple absolute?

"to A" or "to A and his heirs"

3

What are the distinguishing characteristics of a fee simple absolute?

(1) Absolute ownership
(2) of potentially infinite duration
(3) Freely divisible
(4) freely descendible
(5) freely alienable

4

Can a living person have "heirs"?

No, only prospective heirs. Once the person has died, they become heirs.

5

What language creates a fee tail?

"to A and the heirs of his body"

6

What are the defining characteristics of a fee tail?

(1) Virtually abolished in the US
(2) If attempted, instead becomes a fee simple absolute

7

What language creates a fee simple determinable?

"To A for so long as...";
"To A during..."
"To A until..."

8

What happens if the stated condition of a fee simple determinable is violated?

Forfeiture is automatic. Reversion or remainder interest.

9

What language requirement is there for a grantor to create a fee simple determinable?

clear durational language

10

What are the characteristics of a fee simple determinable?

Divisible, descendible, and alienable, subject to the condition.

11

What is the accompanying future interest of a fee simple determinable?

The possibility of reverter (in the grantor)

12

What language creates a fee simple subject to condition subsequent?

"To A, but if X event ever occurs, grantor reserves the right to re-enter and retake."

13

What specifically must be included in language to create a fee simple subject to condition subsequent?

(1) Clear durational language
(2) the right of re-entry

14

What is the accompanying future interest for a fee simple subject to condition subsequent?

Grantor's right of entry

15

What language creates a fee simple subject to executory limitation?

"To A, but if X event occurs, then to B."

16

What is the accompanying future interest of a fee simple subject to executory limitation?

A shifting executory interest

17

What is the effect of mere desire, hope, or intention in creating defeasible fees?

Courts will generally disregard absent clear durational language- general disfavor of restrictions on the free use of land.

18

How are absolute bans on alienation construed?

Void. Restrictions must be linked to a reasonable, time-limited purpose

19

O conveys "To A so long as she never attempts to sell." What does each party have?

A: fee simple abslute
O: nothing

20

"To A for the purpose of conducting a day care center." What type of interest does A have?

Fee simple absolute. Language unclear, so construed as fee simple absolute.

21

"To A with the hope that he becomes a lawyer." What type of interest does A have?

Fee simple absolute.

22

"To A with the expectation that the premises will be used as a Blockbuster video store." What type of interest does A have?

Fee simple absolute.

23

From O, "To A so long as she does not attempt to sell until the year 2015, when clouds on the title will be resolved." What types of interests do O and A have?

A: Fee simple determinable.
O: possibility of reverter

24

From O, "To A for life." What types of interests do O and A have?

A: Life estate; A is known as a life tenant.
O: Reversion

25

What is a life estate pur autre vie?

A life estate measured by the life of someone other than the grantee.

26

From O, "To A for the life of B." What interests do O, A, and B have?

O: reversion
A: Life estate pur autre vie
B: nothing

27

What types of uses is a life tenant entitled to and what prohibitions is the life tenant bound to?

(1) Entitled to all ordinary uses and profits from the land.
(2) May not commit waste (hurt future interest holders)

28

Relating to life estates, what types of waste are there?

(1) Voluntary/Affirmative waste (willful destruction)
(2) Permissive Waste (neglect)
(3) Ameliorative waste (improvements)

29

What is the rule regarding exploiting natural resources during a life estate?

Life tenant must not consume natural resources unless:
(1) Prior to the grant, land was used this way (can't open any new mines)
(2) Needs money to make repairs/maintenance
(3) Life tenant was granted right of exploitation
(4) Exploitation is only reasonable use of land (ex: quarry)

30

What maintenance duties does a life tenant have?

(1) keep premises in reasonably good repair
(2) pay all ordinary taxes on the land, to the extent of income or profits from the lan
(3) If no income from the land, life tenant is required to pay all ordinary taxes to the extent of the premises fair rental value.

31

When can a life tenant engage in acts that will enhance the property's value?

Only when all future interest holders are known and consent.

32

What is the accompanying future interest to a life estate?

(1) Reversion, if held by Grantor.
(2) Remainder, if held by third party.

33

What types of future interests may the Grantor retain?

(1) Possibility of reverter
(2) The right of entry (aka power of termination)
(3) Reversion

34

What are the future interests that may be created in transferees (not the grantor)?

(1) vested remainder (3 kinds)
(2) Contingent remainder
(3) an executory interest (2 kinds)

35

What are the different types of vested remainder interests?

(1) the indefeasibly vested remainder
(2) the vested remainder subject to complete defeasance
(3) vested remainder subject to open

36

What are the different types of executory interests that may be created?

(1) Shifting executory interest
(2) Springing executory interest

37

What is a "remainder"?

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

38

What are the most common estates that precede a remainder?

(1) Term of years
(2) Life estate

39

What type of interest does a remainder never follow?

A defeasible fee.

40

What is a "vested remainder?"

A remainder is vested if it is both created in an ascertained person and is not subject to any condition precedent.

41

What is a "contingent remainder?"

A remainder is contingent if it is created in an unascertained person OR is subject to a condition precedent, or both.

42

What happens when the condition precedent of a contingent remainder actually occurs?

The future interest is automatically transformed from a "contingent remainder" to an "indefeasibly vested remainder."

43

What happens if a contingent remainder is still contingent when the preceding estate ends?

(1) At common law - future interest destroyed

(2) Today: Reversion to Grantor, who holds subject to the the future interest holder's "SPRINGING EXECUTORY INTEREST"

44

O conveys "To A for life, then, on A's death, To A's heirs." A is alive. What type of interest does A have?

(1) At Common Law: Fee simple absolute (future interest destroyed)

(2) Today: life estate; A's yet unknown heirs hold a contingent remainder; O holds a reversion, since A may die w/o heirs.

45

O, who is alive, conveys "To A for life, then to O's heirs." Who has what interests?

(1) A has a life estate.
(2) O has a reversion.
(3) O's yet unknown heirs, have nothing.

Why? Doctrine of Worthier Title; this is a rule of construction and will yield to O's clear intentions.

46

What are the different types of vested remainders?

(1) Indefeasibly vested remainder
(2) Vested remainder subject to complete defeasance
(3) Vested Remainder subject to open

47

What are the characteristics of an indefeasibly vested remainder?

The holder of an indefeasibly vested remainder is certain to acquire an estate in the future, with no strings attached.

48

"To A for life, remainder to B." A is alive. B is Alive. What types of interests exist?

A: life estate
B: an indefeasibly vested remainder

49

What are the characteristics of a vested remainder subject to complete defeasance?

The holder of a vested remainder subject to complete defeasance is not subject to any condition precedent, however his right to possession may be cut short by a condition subsequent.

50

O conveys, "To A for life, remainder to B, provided, however, that if B dies under the age of 25, to C." B is 20 years old. Who has what interests?

O: reversion (B doesn't live to 25, C is gone and has no heirs)
A: life estate
B: vested remainder subject to complete defeasance
C: shifting executory interest

B doesn't have to be 25 to get Blackacre, but if he dies before 25, his heirs get nothing, and Blackacre then goes to C.

51

O conveys: "To A for life, and if B has reached the age of 25, to B." Who has what interests?

What happens if A dies before B is 25?

(1) A: life estate
(2)B: contingent remainder (subject to condition precedent)
(3) O: reversion (If B dies under 25)

If A dies before B is 25, O or O's heirs will hold the interest subject to B's springing executory interest.

52

What is a "vested remainder subject to open?"

A remainder that is vested in a group of takers, at least one of whom is qualified to take, but additional members can still join the group.

53

"To A for life, then to B's children." A is alive. B has two children, C and D. What do D and C have?

Vested remainders subject to open. (more kids could still come)

54

When does an "open class" become closed?

The class closes whenever any member can demand possession.

55

"To A for life, then to B's children." A is alive. B has two children, C and D. When does the class become closed?

(1) Upon B's death (no more kids), or
(2) Upon A's death (Rule of convenience)

56

"To A for life, then to B's children." B has two children, C and D. While B's 3rd child, E, is in the womb, A dies. Who gets part of Blackacre?

C, D, and E. A child in the womb at the time the class of children closes will share.

57

What is an executory interest?

It is a future interest created in a transferee (third party), which is not a remainder and which takes effect by either cutting short some interest of another person (shifting) or in the grantor or his heirs (springing)

58

How do you recognize a shifting executory interest?

(1) It follows a defeasible fee, and
(2) it cut short the interests of someone other than the Grantor

59

"To A and her heirs, but if B returns from Canada sometime next year, to B and his heirs." Who has what interests?

A: fee simple subject to B's shifting executory interest.
B: shifting executory interest

60

"To A, but if A uses the land for nonresidential purposes at any time during the next 20 years, then to B." Who has what interests?

A: fee simple subject to B's shifting executory interest
B: shifting executory interest

61

O conveys: "To A, if and when he marries." Who has what?

O: fee simple subject to A's springing executory interest
A: springing executory interest

62

What are the four steps to assessing potential Rule Against Perpetuities problems?

(1) Are the future interests present subject to the RAP?
(2) What are the conditions precedent for future interest to vest?
(3) Find a relevant measuring life.
(4) Ask: will we know, with certainy, within 21 years of death, if our future interest holder can or cannot take? If no, RAP problems. If yes, okay.

63

Which types of future interests are subject to the Rule Against Perpetuities? (3)

(1) contingent remainders
(2) executory interests
(3) certain vested remainders subject to open

64

What types of future interests are NOT subject to the Rule Against Perpetuities? (3)

(1) indefeasibly vested remainders
(2) any future interest in O, the grantor
(3) vested remainders subject to complete defeasance

65

What happens to a future interest that violates the Rule Against Perpetuities?

The offensive interest is stricken.

66

What are the two brightline rules of the RAP?

(1) A gift to an open class that is conditioned on the members surviving to an age beyond 21 violates the common law RAP.

(2) Many shifting executory interests violate the RAP. An executory interest with no limit on the time within which it must vest violates the RAP.

67

What happens if a RAP-violating future interest is stricken, and the conveyance is no longer grammatically in tact?

The entire clause is stricken.

68

What exception is there to the RAP?

The charity-to-charity exception:

A gift from one charity to another does not violate the RAP

69

What is the "wait and see" or "second look" doctrine?

Under this majority reform effort, the validity of any suspect future interest is examined at the end of the measuring life (rather than stricken by the RAP)

70

What is the USRAP?

Uniform Statutory Rule Against Perpetuities:

Codifies RAP and provides an alternative 90 year vesting period.

71

What doctrines/methods do both the "wait and see" and USRAP embrace? (2)

(1) Cy pres doctrine
(2) reduce any offensive age contingency down to 21 years

72

What are the different forms of concurrent ownership?

(1) Joint tenancy
(2) Tenancy by the entirety
(3) Tenancy in common

73

What is a joint tenancy?

(1) Two or more people own, with a right of survivorship.

(2) Is alienable during owner's lifetime, but not devisible or descendable

74

What is a tenancy by the entirety?

A marital interest between married partners, with the right of survivorship.

75

What is a tenancy in common?

Two or more own, with no right of survivorship.

76

How is a joint tenancy created? (4)

Joint tenants must take their interests:
(1) at the same time
(2) by the same title
(3) with identical shares
(4) rights to possess the whole

AND

Grantor must clearly express the right of survivorship.

77

What does a "straw" refer to in creating a joint tenancy?

Straw man:

A conveys to Straw. Straw conveys back to A and B as a joint tenancy (since A and B's interests must be created at the same time, title)

78

How is a joint tenancy severed?

(1) Sale
(2) Partition (voluntary, in kind,or forced sale)
(3) mortgage (minority of states)

79

How is a tenancy by the entirety created?

In states that recognize it, it arises presumptively in any grant to married partners, unless otherwise stated.

80

What are the characteristics of a tenancy by the entirety?

(1) Creditors of only one spouse can't touch this tenancy
(2) Neither tenancy may unilaterally transfer interest to a third party

81

What are the characteristics of a tenancy in common? (5)

(1) Each co-tenant owns an individual part
(2) each tenant has the right to possess the whole.
(3) Each interest is divisible, descendible, and alienable
(4) There are no survivorship rights.
(5) The presumption favors the tenancy in common.

82

May one co-tenant exclude the other from possession of any part?

No, this is wrongful ouster. Each tenant has the right to possess the whole.

83

How is rental income or maintenance expenses of Blackacre split among co-tenants?

Split by % of ownership.

Ex: Marcia owns 10%, gets 10% of rental income (or pays 10% of expenses)

84

If a co-tenant voluntarily leaves for the statutory period, may the other claim adverse possession?

No, the hostility element of adverse possession is absent.

If there had been ouster + statutory period, then adverse possession would apply.

85

What are the types of leasehold (or nonfreehold) estates?

(1) Tenancy for Years
(2) Periodic Tenancy
(3) Tenancy at Will
(4) Tenancy at Sufferance

86

What is a tenancy for years?

Tenancy for a fixed period of time.

87

What is a periodic tenancy?

A least which continues for successive intervals until L or T gives proper notice to terminate. (month-to-month)

88

How may a periodic tenancy arise?

(1) Expressly, or
(2) By implication, because:
-(a) land leased w/ no mention of duration but payment at set intervals
-(b) Oral term of years in violation of the Statute of Frauds, measured by the way payment is tendered
-(c) L elects to hold over a T who has wrongfully stayed on past the conclusion of the original lease

89

What are the requirements for terminating a periodic tenancy?

(1) Notice, in writing
(2) Notice must be at least equal to the length of the period itself, UNLESS it is a year-to-year periodic tenancy, then only 6 months notice is needed

90

What is a tenancy at will?

A tenancy for no fixed duration.

Although unless parties expressly agree to a tenancy at will, the payment of regular rent will cause a court to treat this as an implied periodic tenancy.

91

What is a tenancy at sufferance?

T has wrongfully held over past the expiration of the lease.

This lasts only until L either evicts T or decides to hold T to a new tenancy

92

What are a tenant's duties to third parties?

(1) Keeping the premises in good repair.
(2) T is liable for injuries sustained by third parties T invited, even where L promised to make all repairs

93

What are T's duties to repair when the lease is silent?

(1) T must maintain premises and make ordinary repairs
(2) T must not commit waste- if T removes a fixture (even if she installed it), she commits voluntary waste

94

What is a "fixture" for purposes of landlord tenant law?

A once movable chattel that, by virtue of its annexation to realty objectively shows the intent to permanently improve the realty.

95

How do you tell when a tenant installation qualifies as a fixture?

(1) Express agreement controls
(2) If no agreement, T may remove a chattel that she installed so long as removal doesn't create a substantial harm to the premises.

96

May T end the lease if the premises are destroyed w/o T's fault?

Historically at common law: no, T was liable for ANY loss to property, including loss due to force of nature

Majority view: T may end lease if it wasn't her fault

97

What are the landlord's duties?

(1) Duty to deliver possession
(2) Implied covenant of quiet enjoyment
(3) Implied warranty of habitability

98

What is an easement?

Th grant of a nonpossessory property interest that entitles its holder to some form of use or enjoyment of another's land, called the servient tenament.

99

What are the two types of easement categories?

(1) appurtenant
(2) held in gross

100

What are the typical categories of negative easements?

LASSS
Light
Air
Support
Streamwater from artificial flow
Scenic Views

101

How will you know if you have an easement appurtenant?

(1) two parcels of land must be involved
(2) dominant tenament gets benefit
(3) servient tenament gets burden

102

Does an easement appurtenant pass with the land?

(1) Dominant tenament, yes, automatically apsses
(2) Servient tenament, yes, unless the new owner is a bona fide buyer w/o notice

103

Is an easement in gross transferable?

No, unless it is for commercial purposes.

104

How is an affirmative easement created?

PING
Prescription
Implication
Necessity
Grant

105

What are the requirements for adverse possession?

COAH
(1) Continuous use for statutory period
(2) Open and notorious
(3) actual use
(4) Hostile (w/o consent)

106

How is an easement terminated?

END CRAMP:
(1) estoppel - dominant told servient that easement won't be enforced, and servient relied
(2) Necessity - need-based easement ends if need no longer exists
(3) Destruction of the servient land
(4) Condemnation of the servient estate
(5) Release - written release by easement holder
(6) Abandonment - easement holder demonstrates by physical action the intent to never use the easement again
(7) Merger doctrine
(8) Prescription via adverse possession

107

What is a license and what are its characteristics?

(1) license = mere privilege to enter another's land for a delineated purpose
(2) Licenses are freely revocable unless estoppel applies

108

What is the difference between an easement and a covenant?

Easement is a property interest, but covenant is a contractual limitation or promise regarding land.

109

How can you tell whether a given promise is a covenant or an equitable servitude?

Look at the type of remedy plaintiff seeks.

Money damages = covenant
Injunction = equitable servitude

110

What is necessary for a covenant burden to run with the land?

WITHN:
(1) Writing
(2) Intent
(3) Touch and concern land
(4) Horizontal and vertical privity
(5) Notice to the new party

111

What is the requirement for horizontal privity in determining whether a covenant burden runs with the land?

The original parties to the covenant must be in "succession of estate," meaning they were in a grantor-grantee or landlord-tenant or mortgagor-mortgagee relationship.

112

What is the requirement for vertical privity in determining whether a covenant burden runs with the land?

A (seller) and A-1 (buyer) must have some non-hostile nexus- just can't be adverse possession.

113

What is necessary for a covenant benefit to run with the land?

WITV
(1) Writing
(2) Intent
(3) Touch and concerns the land
(4) Vertical privity

114

What are the two steps to conveyance of real estate?

(1) The land contract, then
(2) the closing, where the deed becomes the operative document

115

What is the Statute of Frauds requirement for the land contract during a conveyance of real estate?

(1) In writing, signed by party to be bound (∆)
(2) Must describe the land
(3) Must state consideration

116

What is the exception to the Statute of Frauds for conveyance of real estate?

Buyer Needs TWO of the following:
(1) full or close to full payment
(2) Possession
(3) substantial improvements to land

117

In between the land contract and closing, who bears the risk of loss?

B, unless the contract says otherwise.

118

What are the two implied promises in every land contract?

(1) Promise to Provide Marketable Title @ Closing
(1) Promise not to make any false statements of material fact

119

What is the standard for the implied promise to provide marketable title at closing?

Title is "free from reasonable doubt, free from lawsuits, and the threat of litigation"

120

What are the three circumstances that will render a title unmarketable?

(1) Adverse possession makes up part of the title
(2) Encumbrances (mortgage, servitudes)
(3) Zoning violations

121

What counts as a violation of the implied promise not to make any false statements of material fact?

Both material statements and material omissions.

122

May the seller relieve himself of the duty to disclose latent defects when selling real estate?

No, disclaimer does not relieve seller for FRAUD or failure to disclose.

123

When is there an automatic implied warranty of fitness and workmanlike construction?

Sale of a new home by a builder-vendor

124

What does the deed do?

Passes legal title from seller to buyer

125

Must a deed contain terms of consideration for the sale?

No.

126

What is the standard for a proper description of land in a lawful execution of a deed?

Enough to unambiguously describe and identify the land.

127

What are the two requirements for proper deed transfer?

(1) Deed was properly executed
(2) Deed was delivered to buyer

128

For proper deed delivery, is it necessary for the deed to be physically transferred?

No, the standard for delivery is a legal standard.

129

What is the test for lawful delivery of a deed?

Test of present intent.

Did grantor have the intent to be bound, irrespective of whether or not the deed was actually handed over.

130

O conveys a deed to Blackacre that is absolute on its face, but says to grantee, "Blackacre is yours only if you survive me." What is the effect of this?

Delivery is done and the oral condition is void.

If a deed, absolute on its face, is transferred to grantee with an oral condition, the oral condition drops out and delivery is done.

131

May a deed be delivered via escrow, given to grantee once certain conditions are met?

Yes.

Grantor may deliver an executed deed to a third party, known as an escrow agent, with instructions that the deed by delivered to grantee once certain conditions are met. The title does not pass to the grantee until the conditions are met.

132

If grantor has put a deed in escrow to be delivered to grantee upon certain conditions, then the grantor dies before conditions are met, what is the effect?

None. Deed will still pass from escrow agent to grantee once conditions are met.

133

What are the three different types of deeds?

(1) Quitclaim deed
(2) General Warranty Deed
(3) the statutory special warranty deed

134

What is a quitclaim deed?

Quitclaim contains no covenants. Grantor isn't even promising that he has title.

But, there is still the implicit promise to provide marketable title at closing. Problems that occur after closing though- grantor is off the hook.

135

What is a general warranty deed and what does it promise?

Deed that warrants against all defects in title, including those due to grantor's predecessors.

136

What is a present covenant?

One that is breached, if ever, at the moment of delivery.

137

What are the six covenants that are typically contained within a general warranty deed?

Present Covenants:
(1) seisen - "grantor owns this estate"
(2) right to convey - "Grantor has right to transfer"
(3) no encumbrances
Future Covenants:
(1) covenant for quiet enjoyment - grantee won't be disturbed in possession by 3rd Party's lawful claim of title
(2) covenant of warranty - grantor will defend against lawful claims of title by 3rd parties
(3) covenant for further assurances - grantor will do whatever is needed in the future to perfect the title if there are problems

138

What is a future covenant?

One that is breached when the grantee is disturbed in possession.

139

What is a statutory special warranty deed?

Provided via statute in many states:
Deed that contains two promises that grantor makes ONLY on behalf of himself:
(1) Grantor hasn't conveyed Blackacre to anyone other than grantee, and
(2) Blackacre is free from encumbrances made by grantor

140

What are the two brightline rules regarding a double dealing grantor?

(1) if B is a BONA FIDE PURCHASER (BFP), and we are in a NOTICE jurisdiction, then B wins, regardless of whether or not she records before A does.
(2) If B is a BFP and we are in a race-notice jurisdiction, B wins if she records properly before A does.

141

Who is the recording system designed to protect?

(1) Bona Fide Purchasers, and
(2) Mortgage creditors

142

What is a "bona fide purchaser"?

One who:
(1) purchases Blackacre for value, and
(2) did not have notice of prior buyer at the time of the purchase

143

Do recording statutes protect donees, devisees, or heirs?

No, unless there is a shelter statute.

The recording system is designed to protect mortgage creditors and BFP's that bought for VALUE.

144

What are the three forms of notice that a buyer may have (ruining B's BFP status)?

(1) Actual notice
(2) inquiry notice
(3) Record notice

145

When is B on inquiry notice that there is something fishy going on?

If an examination of Blackacre would show that someone else has possession or anything fishy...then B is on inquiry notice, whether or not B actually took the time to inspect.

146

What is the rule in a Notice Statute jurisdiction?

If, at the time B takes, he is a BFP, he wins. The last BFP to enter wins.

It won't matter that A may ultimately record first, before B does. It doesn't matter even if B never records.

147

What is the rule in a Race Notice Statute jurisdiction?

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

148

What if A record before B takes, and we are in a Notice Statute jurisdiction?

A wins, because B can't be a BFP if A recorded. B would be on record notice and thus can't be a BFP.

149

What is the "chain of title?"

The sequence of recorded documents capable of giving notice to other takes.

In most states it is the grantor-grantee index.

150

What is the Shelter Rule?

One who takes from a BFP will prevail against any entity that the transferor-BFP would have prevailed against.

In other words, the transferee "takes shelter" in the status of her transferor, and thereby "steps into the shoes" of the BFP even though she otherwise fails to meet the requirements of BFP status.

151

What is the rule of the wild deed?

IF a deed, entered on the records has a grantor unconnected to the chain of title, the deed is a wild deed and is incapable of giving record notice of its existence.

152

What is the rule of estoppel by deed?

One who conveys realty in which he has no interest is estopped from denying the validity of that conveyance if he later acquires that previously conveyed interest.

153

What is a mortgage?

A mortgage is the conveyance of a security interest in land, intend by the parties to be collateral for the repayment of a debt.

154

What are the two elements of a mortgage?

(1) debt, and
(2) voluntary lien in debtor's land to secure the debt

155

Once a mortgage is created, what are the respective party's rights?

Debtor/Mortgagor: title and right to possess

Creditor/Mortgagee: lien

156

What methods are available for a creditor/mortgagee to transfer his interest?

Creditor may:
(1) endorse the note and deliver to transferee, OR
(2) by executing a separate document of assignment

157

What happens if a creditor endorses and delivers a mortgage note to a transferee?

The transferee is eligible to become a holder in due course.

This means that he 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 the inducement, uncoscionability, waiver, estoppel

158

For a mortgage note transferee to become a holder in due course, what are the requirements?

(1) note must be negotiable, made payable to the named mortgagee
(2) the original note must be endorsed, signed by the named mortgagee
(3) the original note must be delivered to the transferee (photocopy unacceptable)
(4) transferee must take the note in good faith w/o notice of any illegality, and
(5) transferee must pay value for the note- some more than nominal amount

159

What happens if a debtor sells Blackacre, and it has a mortgage on it?

The lien remains on the land, so long as the mortgage was properly recorded.

160

If O sells Blackacre to B, and Blackacre has a mortgage on it, who is liable?

Both. B is primarily liable and O remains secondarily liable.

161

Following a foreclosure, in what order are the debts satisfied?

(1) Attorney fees, foreclosure expenses, and interest for lien of bank w/ first priority
(2) Bank debts, in full, by priority

162

What happens if the foreclosure sale does not cover the full debts? What it covers more and there is a surplus?

Too little: deficiency action against debtor

Surplus: extra goes to debtor

163

What is the first step for a Creditor to have a priority on a property lien?

Recording the mortgage.

Until a creditor records, he has no priority.

164

Once recorded, how is priority determined?

By the norm of "first in, first in right."

165

What is the exception to the "first in time, first in right?"

Purchase Money Mortgage = "superpriority"

Assuming it is recorded properly, mortgage given to secure a loan that enables the debtor to acquire the encumbered land gets first priority.

This will also supersede any after acquired collateral causes.

166

What is an "after acquired collateral clause?"

What that states that the creditor is taking a security interest in all of debtor's real estate holdings, "whether now owned or hereafter acquired." (aka a "floating lien")

167

What is a "subordination agreement?"

Where a senior creditor agrees to subordinate its priority to a junior creditor.

168

What is the cutoff date for a debtor to redeem the land?

Equitable redemption:
At any time prior to the foreclosure sale, debtor can try to redeem the land by paying off the missed payment or payments + interest + costs.

169

What is an acceleration clause?

Acceleration clause permits the mortgagee to declare the full balance plus interest, plus costs, in the event of default.

170

May a debtor/mortgagor waive the right to reeedeem in the mortgage itself?

No.

This is known as "clogging the equity of redemption," and it is prohibited.

171

What is statutory redemption?

Recognized in half the states:
Let's debtor redeem for some set period AFTER the foreclosure sale.

Typically 6 moths to one year.
Amount to be paid is usually the foreclosure sale price, not the original debt amount.

172

In states that recognize statutory redemption rights, who has the right to possess Blackacre during the statutory period?

The mortgagor (debtor).

173

What is the general rule of lateral support?

If land is improved by buildings and an adjacent landowner's excavation causes the improved land to cave in, the excavator will be liable only if NEGLIGENT.

174

What is the riparian doctrine?

The water belongs to those who own the land BORDERING THE WATER COURSE.

Those owners are knwon as riparians, who share the right of REASONABLE USE of the water.

Riparians will only be liable if his use unreasonably interfere's w/ other's use.

175

What is the prior appropriation doctrine?

Individuals may get rights from the government to divert water.

Rights are determined by "priority of beneficial use."

Norm is "first in time, first in right."

176

Is agriculture a productive or beneficial use of water to create an appropriation right?

Yes.

177

What are the rules regarding use of ground water?

The surface owner is entitled to make reasonable use of groundwater. However, use must not be wasteful.

178

What is the common enemy rule?

A landowner may change drainage or make nay other changes/improvements on his land to combat the flow of surface water.

Many courts require that there be no unnecessary harm to others' land.

179

What is "trespass?"

Invasion of land by physical object.

180

How do you remove a trespasser?

Bring an ejectment action.

181

What is private nuisance?

The substantial and unreasonable interference of another's land.

182

What is the difference between private nuisance and trespass?

Private nuisance does not require physical invasion.

Examples: odors, noises ≠ trespass, but can = private nuisance

183

What is the rule regarding private nuisance and the hypersensitive plaintiff?

No nuisance if the problem is the result of plaintiff's super sensitivity or special use.

184

What is eminent domain?

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

185

What is "zoning?"

Pursuant to its police power, government may enact statutes to reasonably control land use.

186

What must a proponent show to be granted a "variance?"

(1) undue hardship, and
(2) the variance won't decrease nearby property values

187

What is an "exaction?"

Exactions are amenities that the government seeks in exchange for granting permission to build.

188

What are the requirements for exactions to be constitutional?

Exactions must be:
(1) reasonably related in nature and scope
(2) to the impact of the proposed development.