Real Property Flashcards
1
Q
Steps for real estate contracts:
A
- The contract of sale is signed.
- The K must satisfy or exclude the warranty of marketable title.
- Once the K is signed, legal, and equitable title split.
- Closing Occurs
- Once delivery occurs, the buyer can only sue on the deed.
2
Q
What’s a mortgage?
A
A mortgage indicates the existence of a debt. The mortgagor is the debtor. The mortgagee
usually is a bank who lends money. Tip: remember “It’s better to be the mortgagee” if
you mix up these terms.
3
Q
If the mortgagor gives away her interest “subject to” the mortgage, who is liable?
A
If the mortgagor gives away her interest “subject to” the mortgage, the original
mortgagor is liable on the mortgage.
4
Q
If the new transferee “assumes” the interest, who’s liable?
A
both the original mortgagor and the new
transferee are liable. Tip: remember the new party “assumes” liability as well.
5
Q
What’s novation?
A
Generally, a novation is a legal instrument used to replace one obligation or party with another in a contract. All parties in the original contract must agree to the changes to execute a novation. Once all parties accept it, the novation nullifies and replaces the previous agreement.
6
Q
In a transfer by the mortgagor, if there’s a novation, who is liable?
A
If there is a novation, then only the new transferee is liable.
7
Q
Due-on-sale clauses:
A
Note: due-on-sale clauses (which state that if the mortgagor transfers the
interest in land without the mortgagee’s consent, the full balance under the
loan is due immediately) are enforceable.
8
Q
A majority of states follow what theory and what is it?
A
A majority of states follow the lien theory where the mortgagee only has a lien on the land.
9
Q
Minority states follow what theory and what is it?
A
Some states follow the title theory where title is transferred to the bank right away upon
loaning the money.
10
Q
When can a bank begin Foreclosure proceedings?
A
a bank can begin foreclosure proceedings upon default.
11
Q
Equity right of redemption:
A
This allows a debtor to redeem the property by paying
everything due under the mortgage agreement prior to foreclosure. This right cannot be
waived in the mortgage or deed of trust but may be waived later for consideration.
12
Q
Acceleration clauses:
A
this states the entire balance is due if a payment is missed, and it is
enforceable.
13
Q
Other ways to discharge a mortgage:
A
full payment or the mortgagor can give a deed to
the mortgagee in lieu of foreclosure.
14
Q
Who gets paid first in a foreclosure proceeding:
A
The party that forecloses and
anyone“junior” to it is paid off in order of priority. All junior parties must be parties to
the proceeding. Note: a purchase money mortgage (PMM) (i.e., when the money
loaned is used to purchase the property) is senior to a non-PMM.
15
Q
What happens when a mortgagee voluntarily Increases the amount due?
A
If a mortgagee voluntarily increases the amount due under a
mortgage, the increase in debt becomes junior to existing mortgages. (This does not
apply if the increase was a mandatory future advance.)
16
Q
Redemption after foreclosure—statutory right of redemption:
A
this allows the debtor to
get property back after the foreclosure sale by paying the full purchase price within a
period of time (e.g., six months).
17
Q
Other types of security devices include an
A
include an absolute deed as security (the parties don’t
call it a “security interest” but one essentially gives a deed as security), a deed of trust
(similar to a mortgage, but a trustee proceeds with foreclosure), and an installment land
contract (one pays off land in a “lease” and gets title to the land once all payments
are made).
18
Q
What happens if a buyer accepts the land with the defect and the seller refuses to perform?
A
If the buyer accepts the land with the defect and the seller refuses to perform, then the buyer can (1) rescind the contract and seek restitution, (2) seek specific performance with an abatement of the purchase price, or (3) sue for damages.
19
Q
What happens if a seller cannot convey marketable title?
A
If a seller cannot convey marketable title, the buyer can rescind the land-sale contract.
20
Q
What does it mean when a new transferee takes the land subject to the mortgage himself?
A
This means that the new transferee is not liable on the mortgage but if the
mortgage does not get paid, the mortgagee can foreclose on its interest. (Note that
sometimes the new transferee will make the mortgage payments to avoid foreclosure if
the initial mortgagor does not make payments. Under the majority law, this does not
mean that the new transferee has impliedly assumed the mortgage. And, just because
they make some payments does not mean they are personally liable for future
payments.)
21
Q
What does it mean when a new transferee assumes the mortgage himself?
A
This means that the new transferee is personally liable for the
mortgage (they “assume” responsibility too). The original mortgagor is liable too.
22
Q
Answer choice A is incorrect because it applies the rule in a contributory negligence jurisdiction, where plaintiff’s own negligence is a complete bar to recovery. Answer choice B is incorrect because it applies the modified comparative fault theory of recovery, where if the plaintiff is more at fault than the defendant, then the plaintiff’s recovery is barred. Answer choice D is incorrect because it does not reduce the plaintiff’s damages by her own proportion of fault as required in pure comparative negligence jurisdictions.
A
Answer choice A is incorrect because it applies the rule in a contributory negligence jurisdiction, where plaintiff’s own negligence is a complete bar to recovery. Answer choice B is incorrect because it applies the modified comparative fault theory of recovery, where if the plaintiff is more at fault than the defendant, then the plaintiff’s recovery is barred. Answer choice D is incorrect because it does not reduce the plaintiff’s damages by her own proportion of fault as required in pure comparative negligence jurisdictions.
23
Q
Why is the following grant a fee simple absolute rather than a fee simple determinable?: Grantor conveys Blackacre “to B to be used for a horse farm.” B does not use Blackacre as a horse farm.
A
Grantor’s language merely indicates his desire, intent, or purpose for which the property should be used rather than imposing a condition that could limit the duration of the estate.
24
Q
What are the three common types of recording acts?
A
1) Notice: A purchaser for value without notice of prior interest prevails.
2) Race: A purchaser for value who records first prevails.
3) Race-notice: A purchaser for value without notice and records first prevails.
25
What is a major difference between a vested remainder subject to open and a contingent remainder?
A vested remainder subject to open is transferred to a group rather than individual, and at least one member of the group is individually ascertainable and entitled to the remainder interest.
A contingent remainder is created in a grantee who is unascertainable.
26
What kind of tenants have the right to unilaterally partition a piece of property?
A tenant in common or a joint tenant may unilaterally partition property.
(NOTE: A tenant by the entirety does not have this right.)
27
After a mortgaged property is sold at a foreclosure sale, in what order are the proceeds distributed to different stakeholders? (Identify at least four.)
1. Proceeds are used to pay any costs related to the sale.
2. The party who foreclosed on the property is paid, up to the amount outstanding on its mortgage interest.
3. If any money remains, any junior interests are paid in order of their priority.
4. If any money remains, the mortgagor is paid.
28
What two possible components denote a contingent remainder?
A contingent remainder has two parts:
1. It goes to someone who is not known or not born yet.
2. It depends on something happening first, like “C will get it if C graduates from college.”
The remainder is created in an unascertainable grantee (unidentifiable like to the children of a but a doesn’t have children)
OR
The remainder is contingent if it is subject to a condition precedent that must be satisfied before the remainder can become possessory. This means that the interest will only vest if a certain event occurs. For example, a remainder to “B if B graduates from college,” where B has not yet graduated at the time the interest is created, is contingent upon B’s graduation.
29
Regarding the effect of a mortgage on a joint tenancy, what is the difference between a title theory jurisdiction and a lien theory jurisdiction, and which is the majority rule?
Lien theory states (the majority): no severance - the mortgage is only a lien on the property
Title theory states (the minority): severance - the joint tenancy is converted into a tenancy in common with respect to the mortgaging tenant
30
What does it mean if a remainder is subject to a condition precedent?
The condition must first be met or satisfied for a remainderman to ever take possession.
Example: Carlos conveys his bakery ""to A for life, then to B if B eats cake every day for one year."" B's remainder is contingent because she must eat cake every day for one year before she can take possession.
31
What are two major exceptions to a tenant's duty to pay rent?
1. Destruction of the premises not due to tenant's fault, or
2. Material breach of the lease by the landlord (e.g., breach of the covenant of quiet enjoyment or the implied warranty of habitability)
32
What are the two types of executory interests? How is each defined?
1. Shifting executory interest: divests the interest of the grantee by cutting short a prior estate created in the same conveyance. The estate “shifts” from one grantee to another on the happening of the condition.
2. Springing executory interest: divests the interest of the grantor or fills a gap in possession in which the estate reverts to the grantor.
33
A sublessee is not liable to the landlord for rent or any other covenants in the lease unless what happens?
If the sublessee expressly assumes the rent covenant (or any other covenants), then the sublessee becomes personally liable to the landlord.
34
A tenant is considered a holdover tenant when he continues to occupy the premises without the landlord's consent and after the expiration of the lease. What two remedies does a landlord have?
The landlord may evict, or the landlord may bind the holdover tenant to a new periodic tenancy.
35
A conveyance by will by a joint tenant of his property interest has what effect?
NONE.
The property passes automatically to the remaining joint tenant(s) due to the right of survivorship.
36
What is a mortgage?
A mortgage is a security device used to secure payment of a debt.
37
What durational language is often used with a fee simple determinable?
So long as
While
During
Until
38
What estate requires clear language that the interest is measured in terms of a life, not a number of years?
A life estate is a present possessory estate that is limited in duration by a life. Upon the end of the measuring life, title reverts to the grantor or specified remainderman.
39
What is the fifth unity unique to a tenancy by the entirety?
The fifth unity, unique to tenancies by the entirety, is the unity of person.
The 5 unities are:
Possession, interest, time, title, and person.
40
What is an ouster?
Ouster occurs when a co-tenant refuses to allow another co-tenant access to the property. In this event, the ousted co-tenant may seek an injunction to gain access to the property and to recover the value of the use of the property for the time during which the co-tenant was denied access to the property.
41
What happens to a fee simple determinable estate upon the happening of the stated condition?
1. The fee simple determinable terminates automatically and
2. Full ownership of the property either
- returns to the grantor (possibility of reverter) or
- transfers to a third party (executory interest).
42
Which covenant is a promise by the landlord not to interfere with the tenant's possession of the leased premises? How is this breached?
The implied covenant of quiet enjoyment, which is implied in every lease.
This warranty is breached only when the conduct of the landlord or someone with superior title prevents the tenant from possessing the leased premises.
43
What are the two types of mortgages?
1. Purchase money mortgage: A person takes out a loan for the purpose of purchasing property
2. Future advance mortgage: A line of credit used for home equity, construction, business, and commercial loans (“second mortgage”)
44
A plaintiff must prove racial intent or purpose in order to establish a violation of the Fourteenth Amendment's Equal Protection Clause. What must a plaintiff show to establish racial discrimination under the Fair Housing Act?
The plaintiff needs to show a disparate racial impact.
45
What are the four types of landlord-tenant estates?
1. Tenancy for years
2. Periodic tenancy
3. Tenancy at will
4. Tenancy at sufferance
46
What remedies does a tenant have when a landlord breaches the warranty of habitability?
If the premises are not habitable, then the tenant may choose to:
1. Refuse to pay rent
2. Remedy the defect and offset the cost against rent
3. Defend against eviction
47
What is a constructive eviction?
A constructive eviction occurs when the landlord breaches a duty to the tenant, such as failing to make a repair, that substantially interferes with the tenant’s use and enjoyment of the leasehold (e.g., fails to provide heat or water).
48
What is a wild deed?
A wild deed is a legal document that conveys a property interest but is not connected to the property's chain of title. It's also known as an interloping deed. Wild deeds can be valid and follow all legal guidelines, but they can cause problems if the chain of title is challenged. This is because wild deeds can be difficult to find, and grantor or grantee index searches may not be obvious. If a previous sale wasn't recorded, it could also make it difficult to transfer a deed later on.
49
What is attornment and how does it happen?
Attornment is the tenant's acknowledgement of a new landlord.
This can be accomplished (i) in writing, or (ii) by making rent payments to the new landlord.
50
Groundwater is natural water that flows or lies under the surface and either percolates to the surface naturally or is tapped by a well. What are the four doctrines that govern groundwater rights?
1. Prior-appropriation
2. Correlative-rights
3. Reasonable-use
4. Common-law doctrine of absolute ownership
51
What are the three requirements in a land sale contract to satisfy the Statute of Frauds?
It must be in writing, signed by the party to be charged, AND contain all essential terms (parties, description of property, price/payment info).
52
What is an option contract?
In an option contract, one party acquires the right to purchase property, usually for a specific period of time, in exchange for consideration. (i.e., The buyer usually pays for the option.)
53
How do the remedies available for breach of a real covenant differ from the remedies available for breach of an equitable servitude?
The remedy for breach of a real covenant is money damages, while the remedy for breach of an equitable servitude is an injunction.
Tip: When deciding whether to analyze facts under a real covenant analysis or an equitable servitude analysis, note what the party is seeking (damages or an injunction).
54
What protections does a buyer have with an option contract?
During the time specified in the contract, the buyer is protected against revocation by the grantor and termination if the grantor of the option dies or becomes incapacitated.
55
What are the requirements for adverse possession?
Possession must be Continuous, Actual, Open and Notorious, Hostile, and Exclusive for the statutory period.
Mnemonic: ANOCHE (""last night"" in Spanish)
(Note: Government-owned land cannot be adversely possessed.)
56
Explain the two doctrines that govern the rights that a land owner has to take or use water from a watercourse that flows through or adjacent to the owner's land?
Reasonable-use: Favored in the eastern U.S. and allows the owner to make any reasonable use of the water. Water rights cannot be sold or transferred separately.
Prior-appropriation: Favored in the western U.S. and states that water rights are determined by priority of beneficial use (first in time, first in right). Water rights can be sold or transferred separately.
57
For a deed to be effective, what must the grantor and grantee do?
In general a deed transfers title only when
1. The grantor INTENDS to convey an interest,
2. The grantor DELIVERS a deed to the grantee, AND
3. The grantee ACCEPTS the deed.
Tip: When comparing and contrasting questions about delivery, always look to facts indicating the grantor's INTENT.
58
What is an actual eviction?
An actual eviction, as opposed to a constructive eviction, occurs when the landlord removes the tenant from the premises. This total eviction terminates the lease and ends the tenant’s obligation to pay rent.
59
A covenant running with the land means that subsequent owners may be burdened by or may have to enforce the covenant. What are the 6 requirements for a burden to run with the land?
1. Writing to satisfy Statute of Frauds (exception implied reciprocal servitude)
2. Intent
3. Notice
4. Horizontal Privity
5. Vertical Privity
6. Touch and Concern
60
Name four real property instruments that must comply with the Statute of Frauds (aside from a land sales contract).
1. Promise to create an interest in real property
2. Assignment of a right to purchase
3. Option contract
4. Promise to give a mortgage or other lien security
61
Restrictions on the transferability of property (restraints on alienation) are generally prohibited. However, what two restraints on alienation can be valid on a life estate?
A forfeiture restraint (property forfeited if interest owner attempts to transfer) and a promissory restraint (promise by interest holder not to transfer) can be valid on a life estate.
62
If a buyer is purchasing property using an installment land contract, when does she obtain legal title?
Buyer obtains legal title upon final payment under the installment payment plan.
63
What terms must a valid deed contain?
(i) Identities of the grantor and the grantee,
(ii) Words of transfer,
(iii) Description of the property interest being transferred, and
(iv) Grantor’s signature.
64
What is a novation?
A novation is an agreement by the landlord to release the original tenant from liability after an assignment or sublease.
Note: Absent a novation, the original tenant remains liable to the landlord for the entire duration of the lease.
65
When analyzing facts concerning a party's liability for changing the flow of surface water, what three theories should you consider?
1. Common Enemy
2. Natural Flow
3. Reasonable Use
66
What are the six covenants of title that a grantor guarantees with a general warranty deed?
SIX Covenants of a General Warranty Deed
Present covenants:
1) Covenant of seisin,
2) Covenant of the right to convey
3) Covenant against encumbrances
Future covenants:
4) Covenant of quiet enjoyment
5) Covenant of warranty
6) Covenant of further assurances
67
If one co-tenant rents out the property, how must profits be split among all co-tenants?
A co-tenant must account to other co-tenants for rent received from third parties, and rent is divided based on ownership interest of each tenant.
68
What is a landowner's liability if he excavates on his land and causes the adjacent, undeveloped land to collapse or subside?
The excavating land owner is strictly liable.
69
In a lien theory state (which is the majority), a mortgage interest is treated as a lien that does not affect a joint tenancy until foreclosure. What does a mortgage do to a joint tenancy in a title theory state?
In a title theory state, the joint tenancy is severed upon the granting of the mortgage, and the interest is converted into a tenancy in common.
70
A landlord's failure to comply with applicable housing code requirements is evidence of a breach of which warranty?
The implied warranty of habitability, which applies to residential leases and is nonwaivable.
71
What is a major difference between a vested remainder subject to complete divestment and a contingent remainder?
A vested remainder subject to complete divestment is subject to a condition subsequent that can completely divest the remainder interest (trigger words: but if).
A contingent remainder is subject to a condition precedent to grantee's taking.
72
What are the three types of waste that both a tenant of a life estate and a tenant in a leasehold must avoid?
(i) Voluntary waste (affirmative, substantial change);
(ii) Permissive waste (deterioration through neglect, failure to preserve, or failure to reasonably protect); and
(iii) Ameliorative waste (voluntary waste that does not diminish the value of the property).
73
What are the four exceptions to the Statute of Frauds writing requirement?
1. Partial performance
2. Full performance
3. Detrimental reliance
4. Admission
74
What was the common law Rule Against Perpetuities (RAP) designed to do?
RAP was designed to prevent interests from vesting in the too distant future.
Tip: RAP is concerned with contingent interests that may remain contingent beyond the lives in being, plus 21 years. So, RAP settles the time within which a contingent remainder must vest in order to be valid. An interest is too remote if it depends upon a contingency, which could possibly happen after the specified period of lives in being, plus 21 years.
75
As between an assignee and a sublessee, who is in privity of estate with the landlord and thus liable to the landlord for rent and other covenants in the lease?
An assignee is in privity of estate with the landlord, and thus he is liable to the landlord for the rent and any other covenants in the lease that run with the lease.
However, if the assignee reassigns the leasehold to a subsequent tenant, then the privity of estate with the landlord ends and the initial assignee is no longer liable to the landlord based on privity of estate.
76
What is a life estate pur autre vie?
A life estate measured by the life of a third party is called a “life estate pur autre vie.”
77
What are the prerequisites for creating an easement by necessity?
The dominant and servient estates must have been under common ownership in the past, and the necessity arose when the property was severed (which rendered the dominant property virtually useless without the benefit of an easement across the servient estate).
78
A tenant is considered a holdover tenant when he continues to occupy the premises without the landlord's consent and after the expiration of the lease. What two remedies does a landlord have?
The landlord may evict, or the landlord may bind the holdover tenant to a new periodic tenancy.
79
What is a right of reentry and who retains this right?
A right of reentry is a future interest retained by the grantor after a fee simple subject to a condition subsequent is granted.
80
In most states, there is a rebuttable presumption that a conveyance to two or more persons creates what kind of tenancy?
Tenancy in common (which requires only the unity of possession).
81
What are the four types of landlord-tenant estates?
1. Tenancy for years
2. Periodic tenancy
3. Tenancy at will
4. Tenancy at sufferance
82
What future interest is held by the grantor who grants a life estate but does not convey the remaining future interest to a third party?
A reversion (or “reverter”)
A reversion is fully transferable inter vivos, devisable by will, and descendible by inheritance. Reversions are not subject to the Rule Against Perpetuities.
83
Who bears the risk of loss if real property is destroyed between execution of a land-sale contract and closing?
In most states, the buyer bears the risk of loss (regardless of whether the buyer takes possession of the property), except when the loss is due to seller's intentional or negligent actions (then seller bears risk).
84
What happens when a casualty occurs during the time between execution of a land-sale contract and closing, and the seller is carrying insurance?
Any insurance proceeds the seller receives must be credited against the buyer's purchase price.
85
To which future interests will the Rule Against Perpetuities (RAP) never apply?
RAP is not an issue when analyzing future interests that revert to the grantor (i.e., reversion, possibility of reverter, right of reentry).
86
For a constructive eviction claim to be effective (i.e., tenant no longer has to pay rent), what TWO things must a tenant do if the residential rental property is uninhabitable?
1. Give notice and adequate time for the landlord to correct the problems, AND
2. Vacate the property within a reasonable amount of time
87
What are the three common types of concurrent estates? What unities are required for each?
1. Tenancy in common: Unity of possession
2. Joint tenancy: Unities of possession, interest, time, and title (""PITT"")
3. Tenancy by the entirety: Unities of person, possession, interest, time, and title
88
How is the scope of an easement determined?
The scope of an express easement is defined in the first instance by its terms. If the terms are ambiguous, courts look to the intent of the parties.
The scope of an easement by necessity is determined by the extent of the necessity.
The scope of an easement by implication is determined by the existing quasi-easement.
The scope of an easement by prescription is limited to the nature and extent of the adverse use.
89
What kind of tenants have the right to unilaterally partition a piece of property?
A tenant in common or a joint tenant may unilaterally partition property.
(NOTE: A tenant by the entirety does not have this right.)
90
Regarding a landlord's tort liability, the modern trend is to hold them to a general duty of reasonable care. This means that a landlord may be liable for what three things?
A landlord may be liable for:
1. Existing defects prior to the tenant’s occupation of the premises
2. Failure to make repairs required by a housing code
3. At times, the criminal activity of third persons who injure tenants
91
What is the difference between a sublease and an assignment?
An assignment is a complete transfer of a tenant's remaining lease term; a transfer of less than that is a sublease.
Tip: If the tenant retains a reversionary interest in the leasehold, then the transfer is a sublease.
92
By what point in time must a seller deliver marketable title?
Seller is not required to deliver marketable title until closing (as sellers often use the proceeds of the sale to satisfy any prior mortgages or liens).
For installment contracts, not until delivery.
93
What future interest is retained by a grantor when a fee simple determinable is conveyed?
A possibility of reverter is a future interest retained by a grantor when a fee simple determinable is conveyed.
94
What happens when an attempt to create an easement fails due to the Statute of Frauds?
A license results when there is a failed attempt to create an easement.
Example: Grantee receives a license when grantor orally conveys an easement for more than one year.
95
What is a retaliatory eviction?
A retaliatory eviction is the unlawful eviction of a residential tenant by a landlord in response to the tenant complaining, in good faith and with reasonable cause, about a housing, building, or safety code violations.
96
What are two major exceptions to a tenant's duty to pay rent?
1. Destruction of the premises not due to tenant's fault, or
2. Material breach of the lease by the landlord (e.g., breach of the covenant of quiet enjoyment or the implied warranty of habitability)
97
What are the two types of mortgages?
1. Purchase money mortgage: A person takes out a loan for the purpose of purchasing property
2. Future advance mortgage: A line of credit used for home equity, construction, business, and commercial loans (“second mortgage”)
98
What is marketable title?
Marketable title is title free from defects (such as undisclosed easements, future interests) regardless of the type of deed.
Essentially, it is title that is free from an unreasonable risk of litigation.
99
What future interest, held by a third party, is not a remainder, and generally cuts short the prior interest upon the occurrence of a specified condition?
An executory interest
100
In a lien theory jurisdiction, does a mortgage destroy co-tenancy?
In lien theory jurisdictions, a mortgage does not destroy the co-tenancy.
101
Are vested and contingent remainders fully transferable during the grantee's lifetime?
Remainders—whether they are vested or contingent—are fully transferable during the grantee's lifetime, devisable by will, and inheritable through intestate succession.
102
The grantor of a general warranty deed guarantees that he holds six covenants of title, three of which are present covenants. The three present covenants are the covenant of seisin, the covenant of the right to convey, and the covenant against encumbrances. The covenant against encumbrances, which applies to this situation, guarantees that the deed contains no undisclosed encumbrances. A breach of the covenant against encumbrances occurs when a property is encumbered by a mortgage, lease, easement, or covenant not specified in the deed.
Here, the developer contracted with a man to build a home on one of the 60 lots. Prior to the sale of the lot, the developer granted easements to utility providers that were promptly and properly recorded. The contract provided that the developer would convey the home and lot to the man by warranty deed excepting all easements and covenants of record. However, the deed contained no exceptions to the six covenants. Under the doctrine of merger, the obligations contained in the contract of sale merge into the deed. Since the deed contained no exceptions, the developer is in breach of the covenant against encumbrances because the utility easements were not disclosed.
The grantor of a general warranty deed guarantees that he holds six covenants of title, three of which are present covenants. The three present covenants are the covenant of seisin, the covenant of the right to convey, and the covenant against encumbrances. The covenant against encumbrances, which applies to this situation, guarantees that the deed contains no undisclosed encumbrances. A breach of the covenant against encumbrances occurs when a property is encumbered by a mortgage, lease, easement, or covenant not specified in the deed.
Here, the developer contracted with a man to build a home on one of the 60 lots. Prior to the sale of the lot, the developer granted easements to utility providers that were promptly and properly recorded. The contract provided that the developer would convey the home and lot to the man by warranty deed excepting all easements and covenants of record. However, the deed contained no exceptions to the six covenants. Under the doctrine of merger, the obligations contained in the contract of sale merge into the deed. Since the deed contained no exceptions, the developer is in breach of the covenant against encumbrances because the utility easements were not disclosed.
103
Warranty of encumbrances
A breach of the covenant against encumbrances occurs when a property is encumbered by a mortgage, lease, easement, or covenant not specified in the deed. In most states, a breach occurs even if the grantee is aware of the encumbrance. However, some states do not recognize a breach if the grantee had knowledge of the encumbrance, if it was visible, or if it benefitted the land. A buyer can recover for breach of the covenant against encumbrances the lesser of the difference in value between title with and without the defect, or the cost of removing the encumbrance.
104
What's an easement in gross?
An easement is in gross if it was granted to benefit a particular person (as opposed to the land). An express easement by grant arises when it is affirmatively created by the parties in a writing that satisfies the requirements for a deed. If a written easement is granted but not recorded against the servient estate, then the easement is not enforceable against a bona fide purchaser. Otherwise, the burden of an easement in gross is transferred automatically with the transfer of the servient estate.
