Real Property

Question 1

Indefeasible life estate

Answer 1

one that will end only when the life tenant dies

Question 2

Contingent Remainder

Answer 2

A remainder is contingent if it is created in favor of unborn or unascertained persons. It is a future interest created in a transferee that is capable of taking in possession on the natural termination of the preceding estate

Question 3

Vested Remainder

Answer 3

Absolute right to receive title when a presently existing interest in real property ends. It is certain to transfer after the existing interest expires, and is not dependent on any conditions (precedent) or other events occurring.

Vested remainders may be subject to total divestment if possession is subject to being defeated by the happening of a condition subsequent

Question 4

Contingent Remainder

Answer 4

The holder has not been identified, or for which a condition precedent must be satisfied.

Question 5

RAP— Exceptions

Answer 5

FS subject to executory interest (void) because could vest too remotely. But “for so long as” —FSD and niece holds possibility of reverter (not subject to RAP)

Charity exception only applies charity-to-charity.

RAP does not apply to right of reentry (right of first refusal is subject to RAP)

Question 6

Life Tenant

Answer 6

A life tenant is entitled to all ordinary uses and profits of the land, but he cannot lawfully do any act that would injure the interests of the remainderman. A grantor intends that the life tenant have the general use of the land in a reasonable manner, but that the land pass to the owner of the remainder, as nearly as practicable, unimpaired in its nature, character, and improvements.

Can substantially alter or even demolish existing buildings if (i) the market value of the future interests is not diminished and either (ii) the remainderman does not object, or (iii) a substantial and permanent change in the neighborhood conditions has deprived the property in its current form of reasonable productivity or usefulness.

Question 7

LL/T Assignment vs. Sublet

Answer 7

Assignment is when a T transfers possession for remaining balance of the lease. When T transfers possession it doesn’t mean T is off the hook, still on the hook because POE—they are always JSL and assignee.
• But when assignee assigns/sublets then they are no longer on the hook.

A sublessee is not personally liable to the landlord for rent or for the performance of any other covenants made by the original lessee in the main lease (unless the covenants are expressly assumed) because the sublessee does not hold the tenant’s full estate in the land (so no privity of estate).

When a tenant makes a complete transfer of the entire remaining term of his leasehold interest, it constitutes an assignment. The assignee and the landlord are then in privity of estate, and each is liable to the other on all covenants in the lease that run with the land.

Question 8

Condemnation

Answer 8

In partial condemnation cases, the landlord-tenant relationship continues, as does the tenant’s obligation to pay the entire rent for the remaining period of the lease. The tenant is, however, entitled to share in the condemnation award to the extent that the condemnation affected the tenant’s rights under the lease.

Question 9

Holdover Doctrine

Answer 9

Proper rent will be new terms if LL notified T of rent increase prior to lease expiring then T on the hook of the new amount. If not, then not.

Commercial lease will follow old terms (years then Year-year) / residential then month-month

Question 10

Covenants

Answer 10

An assignment, making all covenants in the lease that run with the land enforceable by the assignee as long as not meant to be personal.

A covenant runs with the land to a subsequent purchaser with notice of the covenant if it touches and concerns the land and is intended to run. Notice may be actual or constructive (notice statutes don’t protect donee, heir, devisee—only BFP)

For successors of the original promisee and promisor to enforce an equitable servitude, both the benefit and burden of the servitude must run with the land.

[R]eal (damages) Covenants: (run with the land at law); written; notice depends on recording statute (may not protect non-BFPs); notice can come from chain of title deed mentioning covenant
• Burden to run to later grantees: Intent, Notice, Horizontal and Vertical privity, touch & concern [HINTV]
• Benefit to run: Intent, Vertical privity, Touch & concern [ITV]

[E]quitable Servitudes: common scheme for development exists (equitable remedies)
• Burden to run: Touch & concern, Intent, Notice [NIT]
• Benefit to run: Intent, Touch & concern [IT]

Question 11

Fixtures

Answer 11

Residential: nature of the chattel—heirloom or toilet? Intent of annexor (attached the chattel; did they intend for it to be part of real property?) How much damage caused to real property if chattel removed?

Commercial: Trade Fixtures Doctrine—commercial T can remove all trade fixtures PRIOR to lease expiring

Question 12

Implied Covenant of Marketable Title

Answer 12

Absent a provision to the contrary, a contract for the sale of land contains an implied promise by the seller that she will deliver to the buyer a marketable title at the time of closing. This promise imposes on the seller an obligation to deliver a title that is free from reasonable doubt; i.e., free from questions that might present an unreasonable risk of litigation. Title is marketable if a reasonably prudent buyer would accept it in the exercise of ordinary prudence.

If the buyer determines, prior to closing, that the seller’s title is unmarketable, he must notify the seller and allow a reasonable time to cure the defect. If the seller is unable to acquire title before closing, so that title remains unmarketable, the buyer can rescind, sue for damages caused by the breach, or obtain specific performance with an abatement of the purchase price. However, the buyer cannot rescind prior to closing on grounds that the seller’s title is unmarketable

When a seller of land breaches the implied covenant of marketable title, closing date may be extended to allow seller time to cure

Quitclaim deed still contains this covenant

Question 13

Installment Land K

Answer 13

The seller’s obligation is to furnish marketable title when delivery is to occur, e.g., when the buyer has made his final payment. Thus, a buyer cannot withhold payments or seek other remedies on grounds that the seller’s title is unmarketable prior to the date of promised delivery.

Question 14

Valid Conveyance

Answer 14

deed must adequately describe the land being conveyed. If not, fails for lack of definiteness. Deed controls over K.

Mistake or inconsistency in the description of property in the deed, one of the rules of construction is that the physical description takes precedence over the quantity description unless there are grounds for reformation of the deed

Question 15

Reformation of Deed

Answer 15

An equitable action in which the court rewrites the deed to make it conform to the intention of the parties. It is granted when the deed does not express the agreement of the parties due to mutual mistake or a scrivener’s error, and may also be granted when there is a unilateral mistake if misrepresentation is involved

Question 16

Multiple BFP of Land

Answer 16

If the grantor transfers his after-acquired title to an innocent purchaser for value, the bona fide purchaser gets good title. There is a split of authority as to whether the original grantee’s recordation of the deed imparts sufficient notice to prevent a subsequent purchaser from being a bona fide purchaser, but the majority view is that it does not because it is not in his chain of title. Thus, it is not the fact that the creditor recorded that prevents the investor from being a bona fide purchaser. The fact that the creditor built a home and was living on the property gave the investor constructive notice of her interest.

A title search is not complete without an examination of possession

Question 17

AP

Answer 17

(i) An actual entry giving exclusive possession that is (ii) Open and notorious, (iii) Adverse (hostile), and (iv) Continuous throughout the statutory period.

Actual possession of a portion of a unitary tract of land is sufficient adverse possession as to give title to the whole of the tract of land after the statutory period, as long as there is a reasonable proportion between the portion actually possessed and the whole of the unitary tract, and the possessor has color of title to the whole tract

Question 18

Tacking

Answer 18

Periods of adverse possession between two successive claimants may be tacked together to make up the full statutory period if there is privity of possession between the claimants. Privity is satisfied if the first adverse claimant purports to transfer the land to the next; i.e., the subsequent possessor takes by descent, by devise, or by deed purporting to convey title.

Question 19

Color of Title

Answer 19

Document that purports to give title, but for reasons not apparent from its face does not. Usually, the proportion will be held reasonable if possession of the portion was sufficient to put the owner or community on notice of the fact of possession

Question 20

AP and Covenants

Answer 20

If an adverse possessor uses the land in violation of a real covenant (i.e., a written promise to do or refrain from doing something on the land), she takes title free of the covenant EVEN IF she had knowledge of it. However, if she complies with the covenant for the statutory period, she takes title subject to the real covenant. In either case, if an adverse possessor uses land for the limitations period, she DOES take title to the land.

Question 21

AP and Disability

Answer 21

For a disability, such as status as a minor, to stop the clock, the disability must have been in existence on the day the adverse possession began.

Question 22

Anti-Lapse Statute

Answer 22

created to avoid common law result that if beneficiary predeceased will maker then gift would be void

Question 23

General Warranty Deeds: 3 Present Covenant Titles

Answer 23

Present (breached at closing/conveyance; don’t run with land but can bring actions after closing) [SEC]
• Siesen— covenant that the grantor has the estate or interest that she purports to convey. Both title and possession at the time of the grant are necessary to satisfy this covenant.
• Encumbrances— a covenant assuring that there are neither visible encumbrances (easements, profits, etc.) nor invisible encumbrances (mortgages, etc.) against the title or interest conveyed.
• right to Convey—

Question 24

General Warranty Deeds: 3 Future Covenant Titles

Answer 24

Future (run with land) [GQQ]
• Quiet Enjoyment—grantor indemnifies grantee against claims of title brought by 3rd
—does not require a perfect title, but rather one that is free from questions that might present an unreasonable risk of litigation. Title is marketable if a reasonably prudent buyer would accept it in the exercise of ordinary prudence. An inability to establish a record chain of title will generally render the title unmarketable.
—If the seller attempts to rely on adverse possession to show that defects have been cleared, courts traditionally do not favor such an argument, because proof of adverse possession normally rests on oral evidence, which might not be available to the buyer at a later time.

• General Warranty—Grantor agrees to defend, on behalf of the grantee, any lawful or reasonable claims of title by a third party, and to compensate the grantee for any loss sustained by the claim of superior title.
—If the buyer of land determines that the seller’s title is unmarketable, the buyer must notify the seller and give a reasonable time to cure the defects.
—Generally, encumbrances (i.e., mortgages, liens, easements, and covenants) render title unmarketable. However, a seller has the right to satisfy a mortgage or lien at the closing with sale proceeds (and can extend the closing date to allow for cure). Thus, if the purchase price is sufficient and this is accomplished simultaneously with the transfer of title, the buyer cannot claim that the seller’s title is unmarketable.
—Every land sale contract contains an implied covenant that the seller will provide marketable title at closing. Marketable title is title reasonably free from doubt, which a reasonably prudent buyer would accept. While it need not be perfect title, it must not present the buyer with an unreasonable risk of litigation. Generally, this means an unencumbered fee simple with good record title. The mere existence of a zoning ordinance does not constitute an encumbrance. However, title to land that currently violates a zoning ordinance would be considered unmarketable.

• Quiet/Further Assurances—Grantor will take necessary measures to perfect the grantee’s title.

Question 25

Title Insurance Policy

Answer 25

Owned by the mortgagee protects the mortgagee only. Title insurance can be taken out by the owner of the property or the mortgage lender, ensuring good record title as of the policy’s date and defending that title in the event of litigation. An owner’s policy protects only the person who owns the policy (i.e., the property owner or the mortgage lender) and does not run with the land to subsequent purchasers

A title insurance policy ensures that good record title exists as of the policy’s date and defends record title in the event of litigation.

Question 26

Notice Jurisdiction (TX)

Answer 26

Under a notice statute, which the jurisdiction in this question has, a subsequent bona fide purchaser prevails over a prior grantee who fails to record. The important fact under a notice statute is that the subsequent purchaser had no actual or constructive notice at the time of the conveyance, not at the time of recording

Mortgagees for value are treated as “purchasers.”

Question 27

Race-Notice

Answer 27

Under a race-notice statute, a later purchaser will prevail over an earlier grantee only if she takes without actual or constructive (e.g., record) notice of the earlier grant and records before he does.

Question 28

BFP

Answer 28

A BFP is a purchaser who takes land without notice of a prior instrument and pays valuable consideration. Donees, heirs, and devisees are not BFPs because they do not give value for their interests; i.e., they are not purchasers

Question 29

Inquiry Notice

Answer 29

Inquiry notice means that a subsequent grantee is held to have knowledge of any facts that a reasonable inquiry would have revealed, even if he made no inquiry.

A quitclaim deed releases whatever interest a grantor might have in the property and contains no covenants for title. Nonetheless, in the majority of states, grantees are not charged with inquiry notice from the mere fact that a quitclaim deed was used

Question 30

Shelter Doctrine

Answer 30

if purchase from a BFP who had no notice then assume that person’s status (even if you had notice). Buyer from BFP could have notice but is still protected.

Question 31

Water Rights

Answer 31

Majority Rule (Riparian): Domestic use trumps commercial or agricultural use

Prior Appropriations (Minority): First in time, first in right

Question 32

Foreclosures

Answer 32

Normally priority is determined by chronology. But can be modified by a recording act; subordination agreement; or notice statue

Everyone senior with interest remain on the property and new owner takes personally liable to the liens/debt

A foreclosure sale occurs, proceeds from sale first go to senior lender (forecloser) residuary is distributed to junior according to seniority with “proper notice to all the parties”—otherwise, there interest jumps over their’s as their interest will stay on the property
—Junior can pay off senior mortgage to preserve their interest in the land.

Question 33

Equity of Redemption in Foreclosure Sales

Answer 33

In all states, equity of redemption provides the borrower with an equitable right, at any time prior to the foreclosure sale, to redeem the land or free it of the mortgage or lien by paying off the amount due or, if an acceleration clause applies, the full balance due

Only about half the states, however, give the borrower a statutory right to redeem for some fixed period after the foreclosure sale has occurred; the amount to be paid is generally the foreclosure sale price, rather than the amount of the original debt.

Question 34

Purchase Money Mortgage

Answer 34

Given to 3rd a party lendor, like a bank, lending funds to borrower to allow the mortgagor (borrower/buyer) to buy the property.

Usually takes precedent over all other BUT must be recorded. Notice required, especially in notice jurisdiction

Question 35

Equitable Redemption

Answer 35

Right of a mortgagor to recover the land by paying the amount overdue on the mortgage, plus interest, at any time before the foreclosure sale. If the mortgagor has defaulted and the mortgage or note contained an acceleration clause, then the full balance of the mortgage must be paid in order to redeem in equity

Question 36

Modification to a Mortgage

Answer 36

Generally, the priority of a mortgage is determined by the time it was placed on the property, and the proceeds of a foreclosure sale will be used to pay off the mortgages in the order of their priority. However, if the landowner enters into a modification agreement with the senior mortgagee, raising its interest rate or otherwise making the agreement more burdensome, the junior mortgage will be given priority over the modification. Thus, if the first mortgage debt is larger because of the modification, the second mortgage gains priority over the increase in the debt.

Question 37

“For the purpose of”

Answer 37

The language in the deed “for the purpose of constructing a planetarium” merely expresses the grantor’s motive for conveying the property; the city received the estate that the grantor had, a fee simple absolute.