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Flashcards in Real Property Deck (194):
1

Fee Simple Absolue

Largest estate
Can be sold, divided, devised, or inherited
Indefinite or potentially infinite duration
Presumed absent express contrary intent

2

Defeasible Fees

Fee simple estate which is terminable

3

Fee Simple Determinable

Terminates upon occurrence of stated event
Automatic reversion (Possibility of Reverter)
"for so long as"; "while"; "during"; or "until"

4

Possibility of Reverter

Grantor automatically retains possibility of reverter
Transferable, descendible and devisable

5

Fee Simple Subject to Condition Subsequent

Fee simple estate where grantor reserves the right to terminate upon occurrence of a stated event
"upon condition that"; "provided that"; "but if"; and "if it happens that"

6

Right of Entry

Accompanies fee simple subject to condition subsequent
Must be expressly reserved
Does not arise automatically
Most say devisable and all say descendible

7

Fee Simple Subject to an Executory Interest

Fee Simple terminates upon happening of STATED event
Void per public poilicy if penalizes marriage/encourages divorce
Purpose to support till marriage is ok

8

Fee Tail

Estate where inheritability is limited to lineal heirs
Created by words "to A and the heirs of his body"
Most have abolished and will recognize fess simple

9

Life Estate

Measured by the live of person or persons
Dower and curtesy can create-largely abandoned (AR still has)

10

Life Estate Pur Autre Vie

Life measure by life other than grantee's
Life estate when life tenant transfers interest

11

Rights & Duties of Life Tenant

Entitled to ordinary uses
Cannot injury remaindermen's interest

12

Types of Waste

Affirmative/Voluntary
Permissive Waste
Ameliorative Waste

13

Affirmative Waste of Natural Resourses

Generally no
Except when necessary for repair and maintenance; suitable only for such use; or expressly/implied permitted
Open Mines Doctrine: mining may continue if already open

14

Permissive Waste

Tenant obligated to preserve land and structures in a reasonable state of repair; pay interests on mortgages; pay ordinary taxes; and pay special assessment for public improvements of short duration
Limited by extent of income or profits

15

Ameliorative Waste

Change that benefits property economically
Actionable at common law, but now life tenant can alter or demolish buildings if: market value future interests not diminished and either, remaindermen do not object or substantial and permanent change in neighborhood conditions has deprived property reasonable productively or usefulness

16

Types of Future Interest

Reversionary--Possibility of Reverter and Rights of Entry
Remainders
Executory Interests

17

Reversion

Reversion is estate left in grantor who conveys less than they own--i.e. a life estate
Reversions are alienable, devisable, and inheritable
VESTED, i.e. not subject to Perpetuities Rule

18

Remainders

Future interest in third person which becomes possessory on natural expiration of preceding estate
Must be expressly created

19

Indefeasibly Vested Remainder

Vested remainder is one created in an existing ans ascertained person and not subject to condition precedent
Right to immediate possession upon normal termination
Indefeasibly vested remainder is a vested remainder that is not subject to divestment or diminution

20

Vested Remainder Subject to Open

Created in a class
Certain to become possessory but subject to diminution

21

Vested Remainder Subject to Total Divestment

Vested Remainder Subject to Condition Subsequent

22

Contingent Remainder

Contingent Remainders are created in unborn or unascertained persons subject to a condition precedent

23

Subject to Condition Precedent

Condition precedent must be satisfied before remainderman has right to possession

24

Destructibility of Contingent Remainders

At CL destroyed if failed to vest before termination of preceding freehold estate
Most states have abolished--converts to executory interest

25

Doctrine of Merger

one person acquires all present and future interest in land except contingent remainder under CL contingent remainder was destroyed

26

Rule in Shelley's Case

A.k.a--Rule Against Remainders in Grantee's Heirs
CL if same instrument created life estate and gave remainder to heirs remainder was not recognized and A took life estate and remainder
Abolished in Most States

27

Doctrine of Worthier Title

A.k.a. Rule Against Remainders in Grantor's Heirs
Remainder in grantor's heirs is invalid and becomes a reversion in the grantor
Treated as rule of construction--applies only to inter vivos transfers and only if heirs is used

28

Executory Interest

Future interest in third parties either divest transferee's preceding freehold estate or follow a gap in possession or cut short a grantor's estate
Springing if divests grantor's estate
Shifting if divests transferee's preceding estate
Not subject to perpetuities

29

Transferring Remainders

Vested Remainders are fully transferrable
At CL: Contingent Remainders/Executory Interests were not transferable inter vivos
Today descendible and devisable provided survival is not condition

30

Class Gifts

children, nephews, grandkids, kids of the baby momma
May be vested subject to open or contingent

31

Rule of Convenience: Class Gift Rule

Absence of express contrary intent class closes when some member of the class can call for distribution

32

Trusts

Trust is a fiduciary relationship wherein trustee holds legal title to property subject to enforceable equitable rights in a beneficiary

33

Application of Perpetuities to Trusts

Generally applicable to future interest of beneficiares; note charitable trust exception

34

Charitable Trust Requirements

Must have charitable purpose
Differ in three ways: must have indefinite beneficiaries; may be perpetual; and cy pres doctrine allows alternative charity if purpose becomes frustrated

35

Perpetuities

"No interest is valid unless it must vest, if at all, not later than 21 years after some life in being at the creation of the interest."
Interest is void if any possibility might vest beyond 21 years
Look for interest triggered at 25 bday
Only offending interest is striken

36

When Perpetuities Begins to Run

Will--runs from date of the testator's death
Deeds--date of delivery
Irrevocable Trust--date of creation
Revocable Trust--when it becomes irrevocable

37

Interest Exempt from Perpetuities

Except for vested remainders subject to open, does not apply to vested interests
Charity to Charity Exception

38

Common Pitfall Cases in Perpetuities

Executory Interest following a defeasible fee
Age contingency beyond twenty one in an open class
Fertile Octegenarian (baby in the womb shit)
Unascertainable Widow or Widower
Options to purchase unless current lessee

39

Bad as to One, Bad as to All

Too remote of a vesting, the whole class gift fails
Class must be closed and all conditions precedent must be satisfied for every member
Gift to Subclass Exception
Per Capital Gift Exception

40

Rule Against Restraints on Alienation

Any restriciton on transferability of legal interest in void
Three types to look for: disabling restraints, forfeiture restraints, and promissory restraints
All fee simple estate restraints are void unless limited time and reasonable purpose

41

Concurrent Estates

Tenancy in Common
Joint Tenants
Tenancy by the Entirety

42

Joint Tenants

Distinguished by right of survivorship
Created only if four unities--time, title, interest possession
All interests must be equal
Modern law requires clear expression of right of survivorship or presumed to be tenancy in common

43

Severance of Joint Tenancy

Voluntary or involuntary conveyance by joint tenant of undivided interest destroys joint tenancy--transferee takes as tenant in common
Judgment liens doe not sever joint tenancy
Mortgages do not sever a joint tenancy

44

Tenancy by Entirety

marital estate akin to joint tenancy
CL arises presumptively in any conveyance to a husband and wife
Death, divorce, mutual agreement or execution by joint creditor of both husband and wife can sever
Individual spouse cannot convey or encumber

45

Rights and Duties Co-Tenants

Each entitled to right to possess all portions of property but no right to exclusive possession
Cannot bring action until ouster
Most states right to retain profits own use, exclusive until ouster or contrary agreement
Must share net rents

46

Effect of Co-Tenant Encumberance

May not encumber interest of other co-tenant
Mortgage can only foreclose on that tenant's interest

47

Co-Tenant Remedy of Partition

Any co-tenant has right to judicial partion either in-kind or by sale and division of the proceeds

48

Expenses for Preservation

Contribution Right
Co-Tenant paying more than pro rata share of necessary repairs entitled to contribution provided notification to other tenants
No right to cost of improvements unless partiion
Can be demanded for taxes or mortgage payments paid on entire property

49

Duty of Fair Dealing

Confidential relationship exists

50

Leasehold Interests

Estate in land which tenant has a present possessory interest in leased premises and the landlord has a future interest (reversion)

51

Types of Tenancy

Tenancy for Year (Fixed Period)
Periodic Tenancies
Tenancies at Will
Tenancies at Sufferance

52

Tenancy for Year

This is for fixed period
Usually created through written leases
Automatically at its termination date
Breach by tenant provides landlord with right of entry, e.g. terminate lease & obtain possesion

53

Beach of Leasehold Agreement

Failure to pay rent
Surrender--tenant surrenders and landlord accepts

54

Periodic Tenancies

Continues for successive periods
e.g. month to month
Upon proper notice either party may terminate

55

Creation: Periodic Tenancies

Express Agreement
Implication; or
Operation of Law

56

Tenancies at Will

Tenancy at will is terminable at will of either landlord or tenant
May be terminated at willy by giving notice and a reasonable time to terminate
Similar right will not be in favor of landlord

57

Tenancies at Sufferance

Tenancy at sufferance arises when tenant wrongfully remains in possession after the expiration of a lawful tenancy
Termination last only until landlord takes steps to evict the tenant

58

Hold-Over Doctrine

Applies when tenant continues possession after right to possession
Landlord may: evict; bind new periodic tenancy
Terms and conditions expired apply
Commercial tenants likely new year to year, or period term based on frequency of rent payment if less than year
Residential month to month

59

Hold-Over Exceptions

Remain only a few hours or leaves articles of personal property; delay is not the tenant's fault or seasonal lease

60

Leases

Contract governing landlord tenant relationship
CL: one breached, other could recover damages but still had to perform and could not terminate
Excpetions: Actual and Constructive Eviction Actions; Implied Warranty of Habitability

61

Types of Tenant Waste

Voluntary/Affirmative Waste--intent or negligence for damages & minerals
Permissive Waste-fails to take reasonable steps to protect premises from damages; liable for ordinary wear and tear
Ameliorative Waste-tenatn alters leased property and increased value; tenant liable for cost of restoration; exception if long term tenant and change reflects neighborhood

62

Destruction of Premises: Without Fault Landlord Tenant

CL: Neither party has duty to restore premises in absence of language but tenant must continue to pay
Most states now give tenant option to terminate lease

63

Tenant's Liability for Covenants to Repair

Landlord remains liable for repairs if in lease
Implied Warranty of Habitability
Nonresidential obligated to perform covenants; not liable to rebuild structural damage or casualty destruction unless expressly includes

64

Illegal Purposes Uses

Landlord may terminate lease or obtain damages and injunctive relief

65

Duty to Pay Rent

CL: Due at end of leasehold term
Statutes provide payable at some other time
Landlord not permitted to retain security deposit beyond damages suffered

66

Landlord Remedies

Tenant Fails to Pay Rent; Evict or Sue for Rent
CL: provided cause for damages but not eviction
Modern: provides right to evict ("unlawful detainer")

67

Tenant Abandons

Do Nothing or Reposses
Tenant Unjustifiably Abond the property--landlord duty to mitigate damages through releasing
Tenant liability depends on whether landlord accepted the surrender

68

Landlord Duties & Tenant Remedies

CL: Landlord had no duty to repair or maintain
Duty to Deliver Possession of Premises--actual
Quiet Enjoyment--implied covenant neither landlord nor paramount title holder will interfere with quiet enjoyment and possession of the premises

69

Actual Eviction

Occurs when landlord or hold over tenant excludes tenant from entire premises; terminates obligation to pay rent

70

Partial Eviction

Tenant is physically excluded from part of leased premies
By the Landlord: relieves tenant of obligation to pay rent entire premises
By a Third Party: apportionment of rent

71

Constructive Eviction

Premises Unsuitable for Occupancy
Tenant must prove: landlord breached duty; substantially and materially deprived tenant of her use and enjoyment of the premises; gave notice and reasonable time to repair; and tenant vacated lease

72

Implied Warranty of Habitability

Most jurisdictions imply covenant of habitability into residential leases
Nonwaivable
If breached, tenant may: terminate lease; make repairs and offset the cost w/future rent; abate rent; or remain pay in full and sue for damages

73

Retalitatory Eviction

Many states landlord may not termiante lease or otherwise penalize tenant in retaliation for exercise of legal rights
Presumed retaliatory motive if within 90 to 180 days
Must show valid, nonretalitary reasons for actions

74

Assignment

Complete transfer of tenants rights

75

Sublease

Tenant retains an interest

76

Consequences of Assignment

Assignee stands in the shoes of original tenant, i.e. direct relationship with landlord--"privity of estate"
Each liable on all covenants in lease that "run w/land"

77

Covenants Running with the Land

"Touches and concerns"
Benefits landlord and burdens the tenant or vice versa with respect to interest

78

Consequences of Sublease

Sublessee Not in Privity with Landlord
Sublessee is tenant of original lessee and usually pays rent to original lessee
Sublesse not personally liable to landlord for rent or for performance of any covenants in main lease unless sublessee expressly assumes the covenants

79

Landlord Remedies

Landlord may terminate main lease for nonpayment of rent or breach of covenant stats or power given by statute

80

Rights of Sublessee

Sublessee cannot enforce covenants made by landlord in main lease, except residential sublessee may be able to enforce implied warranty of habitability

81

Covenants Against Assignment or Sublease

Lease covenants restriction assignment and sublease strictly construed against the landlord
Waiver: aware of assignment and did not object

82

Assignments by Landlord

May assign rents and reversions
Usually done by deed
Tenants consent is not required

83

Liabilities of Assignee to Tenants

Burden of covenants which touch and concern runs with landlord's estate to assignee; assignee liable for performance of covenants

84

Concealed Dangerous Condition

Latent Defect
Landlor knows or should know of dangerous condition tenant could not discover by reasonable inspection, the landlord must disclose
Otherwise liable for any injuries resulting from condition
Tenant accepts after disclosure they assume risk for herself and others

85

Public Use: Landlord Liability

Landlord liable for injuries to members of public if at time of lease he knows or should know of a dangerous condition; has reason to believe tenant may admit public before repairing condition; and fails to repair condition

86

Furnished Short Term Residence

Landlord rents fully furnished premise for short period apply a heightened duty
Landlord liable for injuries resulting any defect whether know or not

87

Negligent Repairs by Landlord

Landlord has no duty to make repairs, landlord who attempts to repair is liable if injury results due to negligent repairs or provide deceptive appearance of safety

88

Modern Trend--General Duty of Reasonable Care

Many courts now hold that landlord owes general duty of reasonable care toward residential tenants and will be held liable for injuries resulting from ordinary negligence if notice and opportunity to repair

89

Defects After Tenant Possessess

Landlord not liable for defect arising after tenant takes possession unless knew or should have known

90

Legal Duty to Repari

Landlord has statutory duty to repair

91

Tenant's Liability

Tenant owes duty to third persons in accordance with Duties of Landowners from Torts

92

Fixture

Fixture is chattel affixed to land and become realty
Passes with ownership of the land
Note: Chattels Incorporated into Structure, e.g. keys

93

Common Ownership Cases

Person brings chattel to land owns both the chattel and land
Item is fixture if objective intention of party that made the annexation to make part of realty
Determined by : nature of the article; manner of attachment; amount of damage caused by removal; and adaptation of item to realty

94

Divided Ownership Cases

Accession describes annexor's intent to make chattels permanent part of real estate
Landlord Tenant: agreement controls; absent agreement presumed to lack intent to permanently improve; must be removed by end of lease term and tenant liable for repairs

95

Third Party Cases

Third Party Lien on Chattel Affixed to Land
Seller retains security interest in chattel and landowner mortgages land
Landowner defaults both chattel and mortgage payments, general rule, "first in time, first in right."; but note UCC Fixture Filing

96

Easement

Nonpossessory interest in land creating right to use land possessed by someone else
Presumed perpetual duration unless specific limitation

97

Types of Easements

Most easements are affirmative, holder entitled to make affirmative use of servient tenement
Negative easements entitle holder to compel possessor of servient tenement to refrain engaging activity on servient estate

98

Easement Appurtenant

Benefits holder in physical use or enjoyment of another tract of land
Must be two tracts: dominant tenement and servient tenement
Easement Appurtenant passes with transfer of benefited land regardless of whether mentioned in conveyance

99

Easement in Gross

Holder of easement in gross acquires right to use servient tenement independent of possession of another tract, e.g. benefits holder not tract
Not transferable, unless serves economic or commercial interests (billboards)

100

Creation of Easement

Express grant or reservation, implication and prescription
Express Grant--must be memorialized in writing and signed by holder of servient easement unless duration is brief enough; must comply with all formal requisites of deed
Express Reservation--arises when grantor conveys tilte but reserves right to continue use of tract for special purposes

101

Implication Easement

Three Types: Existing Use; Implied without Existing Use; and Necessity
Existing Use--may be if prior to division, apparent and continuous use exists of servient, reasonably necessary for dominant, and intent
Without--Subdivision or Profit a Prendre (easement for mineral extractions
Prescription--Adversely possessed by open and continuous adverse use which was continuous and uninterrupted for a statutory period.

102

Termination of Easements

Stated Conditions
Unity of Ownership/Merger
Release
Abandonment--physical action with intent to permanently abandon
Estoppel
Prescription
Necessity
Condemnation and Destruction

103

Termination of Licenses

License is not an interest but a privilege, revocable at will
Inalienable by Licensee

104

Irrevocable Licenses

Estoppel or Licenses Coupled with an interest

105

Real Covenant

Burdens Land
Written promise to do something on the land

106

Requirements for Burden to Run

Intent--inferred from circumstances
Notice--actual, inquiry or record
Horizontal Privity
Vertical Privity
Touch and Concern--restrict holder of servient estate in using land

107

Requirements or Benefits to Run

Three requirements: Intent, Vertical Privity, & Touch and Concern

108

Specific Situations Involving Real Covenants

Pay money and not to compete run with the land

109

Termination

Written Release; Merger; or Condemnation of Burdened Property

110

Equitable Servitudes

Regardless of whether runs with the land, equity will enforce against assignees of burdened land with notice of covenant
Injunction usually appropriate

111

Creation of Equitable Servitudes

Created by covenants contained in writing that satisfies Statute of Fraud
One Exception: Implied Common Scheme for Development

112

Common Scheme

Reciprocal negative servitudes will be implied if at time of sales developer had a plan that all parcels would be subject to restriction.
Evidenced by recorded plat, general pattern of restrictions or oral representations to early buyers

113

Requirements for Burden to Run

Successor bound if covenanting parties intended that servitude be enforceable by and against assignees; promisor has actual, inquiry, or record notice, and touches and conerns

114

Requirements for Benefit to Run

Benefit of Equitable Servitude runs with the Land and enforceable by promissee successors if intended and touches and concerns

115

Equitable Defenses to Enforcement: Equitable Servitude

Will not enforce if unclean hands; acquiesced; estoppel; laches; or neighborhood has changed

116

Termination of Equitable Servitudes

May be extinguished by written release from benefit holders; mergers; or condemnation of burdened property

117

Party Walls and Common Driveways

Each owner owns to extent rests on land; will imply mutual cross easements of support
Each has right to use and cannot destroy

118

Creation of Wall and Common Driveway

Statute of Frauds for Creation of Party Wall or Common Driveway
Can also arise from implication or prescription

119

Adverse Possession

Title may be acquired by adverse possession; must show actual entry giving exclusive possession, which is open and notorious, adverse/hostile; and continuous throughout statutory period
Co-Tenants must oust other co-tenants

120

Continuous Possession

Intermittent periods are not sufficient

121

Disability Effect on Adverse Possesion

Does not begin to run if true owner was under some disability to sue when cause of action first accrued

122

Conveyancing

Land Sale Contract
Deeds
Delivery and Acceptance
Covenants for Title and Estoppel by Deed
Recording
Conveyance by Will

123

Land Sale Contract

Precede Transfers
Statute of Frauds Applies

124

Doctrine of Equitable Conversion

Once sgined, equity regards buyer as owner of real property
Seller's Interest: considered personal property
Risk of Loss: buyer if without fault
Passage of Title on Death: Seller's interest passes as personal property and buyer's interest passes as real property

125

Marketable Title

Implied covenant that seller will provided marketable title at closing
Defects in Chain of Title render unmarketable
Title acquired by adverse possession is unmarketable

126

Encumberances

Mortgages, liens, restrictive covenants, easements, and significant encroachments render title unmarketable
Easement that is beneficial, visible or known to buyer does not impair marketability

127

Zoning Restrictions

Do not affect marketability

128

Time of Marketability

Seller agreed to furnish title date of closing, buyer cannot rescind prior to date on grounds title is not marketable

129

Remedies of Unmarketability

Buyer must notify seller
Seller has reasonable time to cure
Failure to cure: rescission, damages, specific performance with abatement, and quiet title suit

130

Time of Performance

Time of Essences--must be fulfilled by that date

131

Tender of Performance

Obligated to pay and convey are concurrent conditions
Excused if repudiated contract or impossible for party to perform

132

Remedies for Breach of Sales Contract

Nonbreaching party entitled to damages for land--specific performance
All land is unique
Buyer will likely get abatement for breach

133

Earnest Money

A form of liquidated damages
Court will uphold

134

Seller's Liabilities for Defective property

Warrant of Fitness/Quality--New Construction Only
Negligence Builder

135

Sale of Existing Land and Buildings--Liability for Defects

Theories:
Misrepresentation (Fraud)--knowingly or negligently made a false statement of fact to buyer if buyer relied on statement and materially affect the value of the property
Active Concealment--seller liable for defects even without making any statements if took steps to conceal the defects
Failure to Disclose--Most states hold seller liable for failure to disclose defects, they know or have reaso to know, defect is not apparent, and seller knows unlikely to discover upon ordinary inspection; and defect is serious and would probably cause buyer to reconsider purchase if known

136

Disclaimers of Liability

General disclaimer in sales contract not sufficient to overcome seller's liability for fraud, concealment, or failure to disclose
If identifies specific type of defects will likely be upheld

137

Title Insurance

Owner's Policy--protects person who owns policy
Lender's Policy--follows assignment of mortgage loan

138

Deeds Formalities

Must be in writing, signed by the grantor, and reasonably identify the parties and land
May be validly conveyed by inter vivos gift so long as donative intent, delivery, and acceptance

139

Defective Deeds

Void deed will be set aside even if passed to BFP
Voidable deed will be set aside only if property not passed to BFP

140

Fraudulent Conveyances

Even if deed complies with required formalities, may be set aside if made with actual intent to hinder, delay or defraud any creditor of the grantor, or without receiving a reasonably equivalent value in exchange for transfer and debtor was insolvent or insolvent as result of transfer

141

Description of Land Conveyed

Description is sufficient if provides good lead to identified property
Parol Evidence generally admissible to resolve patent or latent ambiguities
Rules of Construction: hierarchy from natural monuments, artificial monuments, courses, distances, name, and quantity

142

Deed Reformation

Deed will be reformed if does not represent agreement because of mutual mistake, scrivener's error, unilateral mistake caused by misrepresentation or other inequitable conduct

143

Delivery and Acceptance

Deed not effective unless it has been delivered and accepted
Generally: refers to grantor's intent to make deed presently effective even if possession postponed; parol evidence may be used
Retention of Interest: indicates lack of intent to pass title; dies but does not delivery no title passes; failure to record does not affect passage of title

144

Delivery with Instruction to Third Party

Grantor gives deed to third party with instructions there is a valid delivery
Grantor gives deed to third party without instructions validity depends on whether third party could be grantor's agent, if so no delivery

145

Transfer to Third Party with Conditions

Valid conditional delivery occurs when grantor gives deed to third party with instructions to give grantee
Parol Evidence is Admissible to show delivery is conditional
Grantor may revoke if condition not yet occurred and no enforceable written contract to coney
Breach of Escrow Conditions
Relation Back Doctrine

146

Acceptance

Required in order to complete conveyance
Mostly presumed
Relates back to date deed delivered into escrow

147

Dedication

Transfer to public land

148

Covenants for Title and Estoppel by Deed

Three Types
General Warranty Deed
Special Warranty Deed
Quitclaim Deed

149

Covenants in General Warranty Deed

Covenants of Seisin--title and possession
Covenant of Right to Convey--authority to make grant
Covenant Against Encumbrances
Covenant of Warranty
Covenant for Further Assurances

150

Breach of Covenants

Three are breached at time of conveyance--Seisin Right to Convey, Against Encumbrances)
Three breached at time of disturbance of grantee's possesion--Quiet enjoyment, warranty, and further assurances

151

Damages and Remote Grantees

May sue anyone up the line

152

Quitclaim Deed

whatever interest grantor has

153

Statutory Special Warranty Deed

Grant creates by implication two limited assurances against acts of grantor:
grantor has not conveyed same estate or interest therein to anyone other than grantee and estate free from encumbrances made by grantor

154

Estoppel by Deed

Grantor conveys estate shown they do not own subsequent acquisition of estate will automatically inure benefit of grantee
Applies if warranty deed or deed purported to convey a particular estate

155

Recording

CL: grantor conveyed property twice grantee first in time generally prevailed
Recording Act--generally protects all BFPs from secret interests
Proper recording gives constructive notice of first conveyance to everyone so there can be no subsequent BFPs

156

Types of Recording Acts

Three Major Types
Notice Statutes--Subsequent BFP prevails over a prior grantee who failed to record; cannot have actual or constructive notice at time of conveyance
Race Notice Statutes--subsequent BFP protected only if takes without notice and records before prior grantee
Race Statutes--Whoever records first wins

157

Who is protected by Recording Acts

Only BFPs are protected from claims of prior transferee under notice and race notice statutes
BFP--purchaser for value without notice and pay valuable consideration

158

Shelter Rule

Transfer from BFP
Person who takes from BFP will prevail against any claim a BFP would prevail against

159

Purchaser Under Installment Land Contract

Most states, purchaser under installment land contract protected only to extent of payment made
May recover share of property as tenant in common equal to proportion of payments made; lien extent amount paid; or entire property subject to lien on property to extent balance still owed

160

Without Notice

Means purchaser had not actual constructive or inquiry notice

161

Actual notice

Knowledge

162

Record Notice

Chain of title needs to be recorded in manner such that searcher could reasonably find it
Wild Deed--recorded but not connected to chain of title
Deeds Recorded Late--recorded after grantor shown to have parted title through another; not constructive notice

163

Inquiry Notice

Charged with knowledge of whatever inquiry would have revealed

164

Title Search

Tract Index--page indexed by block and/or lot describing the property and any instruments effecting
Grantor and Grantee Index--search by grantee grantor index

165

Effect of Recordation

Raises presumption of valid delivery and authenticity

166

Conveyance by Will & Related Concepts

Ademption--testator no longer owns gift fails; Specific Bequests Only
Exoneration--CL entitled to have land exonerated by payment of liens and mortgages from testator's residuary estate
Lapse and Anti Lapse--beneficiary dies before testator, gift void; anti-lapse prevents this result
Abatement--residuary back up to specific devises

167

Crops

conveyance generally includes

168

Security Interest in Real Estate

Five Types
Mortgage
Deed of Trust
Installment Land Contract
Absolute Deed
Sale Leaseback

169

Mortgage

Debtor/notemaker is morgagor; lender is morgagee
Default lender can realize on mortgaged real estate by having judicial foreclosure sale

170

Deed of Trust

Debtor/notemaker is the trustor
Provides deed of trust to third party trustee
Default trustee forecloses on deed of trust by sale

171

Installment Land Contract

Obtains legal title only when full contract price been paid
Forfeiture Clauses are common

172

Absolute Deed

Given for security purposes, can be treated as equitable mortgage

173

Sale leaseback

Landowner sells property for cash and lease it back from purchaser for long period of time

174

Transfers by Mortgagee and Mortgagor

Note and mortgage must pass to same person

175

Transfers by Mortgage Without Note

Mortgage automatically transfers note as well, unless mortgagee-transferor expressly reserves rights to note
Transferee can file equitable action and compel transfer of note as well

176

Transfer of note Without Mortgage

Note can be transferred without mortgage but mortgage will automatically follow properly transferred note
No separate written assignment is necessary

177

Methods of Transferring the Note

Negotiable in Form;
Indorsed and Signed by named payee;
Delivered;
Transferee takes note in good faith and pays value for it

178

Transfer by Mortgagor--Grantee Takes Subject to Mortgage

Assumption--transferee becomes primarily liable, while original mortgagor is seconarily liable as surety
Mortgagee may sue either grantee or original morgagor on debt
Unsigned agreement original liable and grantee not personally liable

179

Due on Sale Clauses

Appear in most modern mortgages
Demand full payment if mortgagor transfers any interest in property without consent

180

Possession Before Foreclosure

Theories of Title--right to take possession before foreclosure depending on theory; three types:
Lien
Title
Intermediate
Most states use n

181

Lien Theory of Title

Mortgagee is considered holder of security interest only and mortgagor deemed owner of land until foreclosure
Mortgagee may not have possession before foreclosure

182

Title Theory

Legal title is in the mortgagee until mortgage has been satisfied or foreclosed and morgagee is entitled to possession upon demand at any time

183

Intermediate Theory

Legal title in mortgagor until default and upon default legal title is in the mortgagee
Little practical difference between theory and title

184

Foreclosure

Almost all states allow
Sale to satisfy debt in whole or part
States allow judicial sale, some allow nonjudicial sale under power of sale

185

Redemption

Redemption in Equity--any time prior to foreclosure sale mortgagor may redeem property by paying amount due; if acceleration clause full balance note must be paid to redeem
Statutory Redemption--Half of states allow mortgagor to redeem property for some fixed period after foreclosure sale

186

Priorities

"First in time, first in right"--general rule
Modification--operation of recording statute if prior mortgagee fails to record; subordination agreement between senior and junior; purchase money mortgage; modification of senior mortgage; or granting optional future advances
Purchase Money Mortgages--Mortgage given in exchange for funds used to purchase property; given either as part of purchase price or third party lender and have priority over mortgages, liens, and other claims that arise prior to mortgagor's acquisition of title

187

Installment Land Contracts

Provided for forfeiture rather than foreclosure
Courts will use following theories to avoid harsh result:
Equity of Redemption
Restitution
Treat as Mortgage
Waiver
Election of Remedies

188

Rights Incident to Ownership of Land

Natural Rights and Minerals
Generally owner has exclusive right to use and possess surface, airspace, and soil
Rights to Lateral and Subjacent Support of Land--right to have land supported in natural state; landowner strict liable if excavation causes or negligent

189

Water Rights: Riparian Doctrines

Natural Flow Theory--action which results in substantial or material diminution is enjoinable
Reasonable Use Theory--Most common and everyone entitled to reasonable use
Natural prevails over artificial

190

Rights to Exclude

Trespass
Private Nuisance
Continuing Trespass
Ejectment or Unlawful Detainer

191

Cooperative and Condos

Cooperative--corporation leases individual apartments to its shareholders
Condos--owns interior of unit plus undivided interest in exterior and common areas

192

Zoning

may enact for health, safety, morals, and welfares
Nonconforming use--amortization effect
Special Use--must be obtained even though zoning proper for intended uses
Variance--departure from literal restrictions granted by administrative action

193

Unconstitutional Takings and Exactions

Zoning ordinance may reduce value of real property that constitutes taking under Fifth and Fourteenth Amendment
Denial of All Economic Use--taking
Denial of Nearly All Economic Use--Balancing test; look at social goals, diminution in value, and whether substantially interferes with distinct, investment backed expectations

194

Unconstitutional Exactions

Must be rationally connected to project and reasonably relate to nature and extent of impact (rough proportionality)