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Flashcards in Real Property Deck (40)
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1

Present Estates: Defeasible Fees

• A fee simple defeasible is a conveyance of property that has conditions placed on it. It is created when the grantor uses express conditional language to indicate that the conveyance will be terminated upon the occurrence (or non-occurrence) of an event or condition. A fee simple defeasible gives the grantee a present possessory interest in the property, BUT reserves a future interest in the property in favor of either the grantor or a third party.
• Three types of fee simple defeasibles exist: o Fee Simple Determinable: A fee simple determinable is a conditional conveyance that allows the grantor to retain a possibility of reverter. It is created when the grantor uses words of duration (i.e. so long as, during, while, the property shall revert) in the conveyance to indicate that the interest being conveyed will automatically terminate if a specified condition occurs. o Fee Simple on Condition Subsequent: A fee simple subject to a condition subsequent is a conditional conveyance that allows the grantor to retain a right of re-entry. It is created when the conveyance expressly states that the interest being conveyed is subject to the grantor’s right of re-entry if a specified condition occurs. If the condition occurs, the grantee’s present interest in the property will be lost ONLY IF the grantor affirmatively exercises his right of re-entry and re-takes possession of the land. o Fee Simple Subject to Executory Interest: A fee simple subject to an executory interest is a conditional conveyance of real property, in which a third-party (not the grantor or his heirs) will be entitled to the property upon the occurrence of a specified condition. It is created when the grantor uses words such as “To person X, so long as (or “but if”) … to person Y.”

2

Future Estates

• Reverter and the right of re-entry is connected to the occurrence of a condition for a defeasible fee conveyance.
• A possibility of reverter creates a future interest of possession in the grantor if a specified condition occurs. If such condition occurs, the present possessory interest in the grantee will automatically terminate and vest in the grantor.
• A right of re-entry (also known as a power of termination) creates a future interest in the grantor, wherein the grantor has the right to re-enter and take the property if a specified condition occurs. The present interest in the property is lost ONLY IF the grantor exercises that right (the present possessory interest does not automatically terminate upon the occurrence of the specified condition)

3

Restraints on Alienation

• A restraint on alienation occurs when the grantor attempts to restrict the alienability or transferability of the land. Three types of restraints exist: (1) disabling restraints (all transfers are void); (2) forfeiture restraints (land is forfeited if a transfer is attempted); AND (3) promissory restraints (an attempted transfer breaches a covenant).
• Restraints are enforceable based on: (1) the interest conveyed; AND (2) whether the restraint is reasonable (i.e. the restraint lasts for a specific period of time or concerns the appearance or purpose of the land). All absolute restrictions on alienation or transferability on fee simple estates are void and unenforceable

4

Waste

• All those with a present possessory interest (i.e. life tenants, tenants under a lease), must NOT damage or commit waste to the property. Three types of waste exist: (1) affirmative waste (damages that are intentional/negligent or the unapproved exploitation of minerals on the property); (2) permissive waste (failure to make required repairs); AND (3) ameliorative waste (a substantial change in the use of the property that increases its value)

5

Joint Tenancy

• A conveyance of real property to two or more persons creates a joint tenancy when the four unities are present: (1) unity of time (all interests were received at the same time); (2) unity of title (all interests were acquired by the same instrument); (3) unity of interest (all ownership interests are equal); AND (4) unity of possession (all interests have equal rights of possession).
• There MUST be clear express intent to create a joint tenancy, which may be satisfied by including such terms as “joint tenants”, “right of survivorship”, “joint tenants with right of survivorship”, or even “jointly” (if intent is proven). A right of survivorship means that when one joint tenant dies his interest in the land is automatically transferred to the other joint tenant(s)

6

Joint Tenancy Severance

• Generally, when one joint tenant unilaterally transfers his ownership interest in the real property, the joint tenancy is severed and the tenants will then hold the property as tenants in common.
• When a joint tenant conveys his interest in a joint tenancy to a third-party, that party takes the property as a tenant in common. If there are only two joint tenants, the joint tenancy is severed. However, if there are more than two joint tenants, the joint tenancy remains, but only among the other joint tenants.
• When a joint tenant takes out a mortgage on her interest, the mortgage’s effect on the joint tenancy will depend on the jurisdiction. In a lien theory jurisdiction, the mortgage will NOT sever the joint tenancy. However, in a title theory jurisdiction, the mortgage will sever the joint tenancy, and the tenants will then hold the property as tenants in common

7

Co-Tenant’s Entitlement

• Rent from Co-Tenant’s: An out-of-possession co-tenant DOES NOT have the right to receive rent from the inpossession co-tenant, UNLESS the in-possession co-tenant wrongfully ousted the out-of-possession co-tenant from the property. When one co-tenant voluntarily quits (or simply does not use) the property, the other co-tenant is not liable for rent for his use of the entire property. Thus, a co-tenant CANNOT collect rents from another co-tenant who is in exclusive possession of the premises, unless: (a) there is an agreement to the contrary; OR (b) the co-tenant seeking rent was wrongfully ousted.
• Rent from a Third-Party: If an in-possession co-tenant rents the property to a third-party, the out-of-possession co-tenant is entitled to his fair share of the rent paid by the third-party.
• Reimbursement for Repairs: A co-tenant is entitled to reimbursement for the costs of necessary repairs that the cotenant paid for, UNLESS there has been a wrongful ouster. The amount of reimbursement is determined by the percentage share each co-tenant owns in the property (i.e. if a co-tenant owns a 50% share then the co-tenant is obligated to pay 50% of the repair costs).
• Reimbursement for Improvements: A co-tenant who makes improvements to the property is NOT entitled to reimbursement from the other co-tenant(s), UNLESS there is a separate agreement to the contrary. At the end of the cotenancy (i.e. a partition or sale of the property), the improving co-tenant bears all the downside risk of the improvements, but also has all of the upside gain. Thus, if the property appreciated because of the improvements, only the improving co-tenant is entitled to that increase in value

8

Ouster

• All co-tenants have equal rights to possess the entire property. An ouster occurs when a co-tenant excludes another co-tenant from possessing the property. The party wrongfully excluded from the property may bring an action to recover possession and damages

9

Types of Leasehold

• A lease provides the tenant with a present possessory interest in the real property (subject to any terms and conditions agreed to), and gives the landlord a future interest in the property. In most states, the statute of frauds requires a lease of more than one year to be writing.
• Three types of leaseholds exist: (1) tenancy for years; (2) periodic tenancy; AND (3) tenancy at will. o A Tenancy for Years lasts for a fixed period of time (there is a specified beginning and end date), as agreed by the landlord and tenant. The lease automatically terminates after the fixed period. Normally, a tenant CANNOT terminate a lease prior to the end of the term, unless constructive eviction or another exception applies. o A Periodic Tenancy continues for a specific period (i.e. weekly or monthly) until it is terminated by proper notice from either party. A periodic tenancy may be created: (a) expressly by agreement; (b) by implication if rent is paid at specific periods (i.e. every week or month); OR (c) by law when a tenant-foryears remains after termination of the period or when a lease agreement is invalid. ▪ A periodic tenancy can only be terminated (1) at the end of a natural lease period, AND (2) requires written notice at least a full period in advance. For example, a periodic month-tomonth tenancy requires a one-month notice of termination. An exception exists for a periodic year-to-year tenancy, in that only 6-months’ notice is required. o A Tenancy at Will continues until either party terminates it, and is usually created by an express agreement. In most states termination of a tenancy at will requires giving: (1) notice of termination; AND (2) a reasonable time to quit the premises. In a minority of states, termination does not require notice to the tenant.

10

Right to Terminate for Breach of Covenant

• At common law, covenants between a landlord and tenant were considered independent of each other. Thus, a breach of a covenant gave rise to damages, but NOT the right to terminate the lease.
• Under the modern view, many covenants are considered dependent, and a party may seek damages AND terminate the lease upon breach of a covenant

11

Duty to Pay Rent

• A tenant’s duty to pay rent runs with the land. If a tenant remains on the property and does not pay rent, the landlord may: (a) initiate eviction proceedings; OR (b) allow the tenant to remain on the property and sue for damages. If the tenant abandons the property and does not pay rent, the landlord may be required to take reasonable steps to mitigate his losses (depending on the applicable state law)

12

Implied Warranty of Habitability

• A warranty of habitability is implied in every residential lease. The implied warranty of habitability requires that the landlord provide a place to live (apartment, home) that is habitable. A property is deemed habitable if it’s reasonably suitable for human needs (the local housing or public safety code must be considered for specifics – but usually adequate heat, running water, electricity, structurally sound).
• Upon a breach of the warranty of habitability, the tenant may: (a) move out and terminate the lease; (b) withhold or reduce the rent; (c) repair the issue and deduct the cost from the rent; OR (d) remain on the premises and sue for damages.

13

Constructive Eviction

• Every lease includes an implied covenant of quiet enjoyment, which prevents a landlord from interfering with the tenant’s quiet enjoyment and possession of the property. This covenant is breached if the tenant is constructively evicted.
• Constructive eviction occurs when: (1) the landlord breached a duty to the tenant; (2) the landlord’s breach caused a loss of the substantial use and enjoyment of the premises; (3) the tenant gave the landlord notice of the condition; (4) the landlord failed to remedy the condition within a reasonable time after notice was given; AND (5) the tenant vacated the premises.
• Upon being constructively evicted, the tenant may terminate the lease and seek damages.

14

Duty to Repair

• In residential leases, a tenant has a duty to keep the premises in good order and to make ordinary repairs (unless the parties agreed otherwise). BUT, a landlord is required to make repairs and conduct maintenance to keep the rental property in habitable condition (to not violate the Implied Warranty of Habitability). The landlord also has a duty to repair common areas, and has a duty to warn the tenant of any latent defects that create a risk of serious harm that the landlord knows of (or should know of).
• In commercial leases, landlords generally DO NOT have a duty to repair, but public authorities may require the landlord to do so in certain instances.

15

Duty to Mitigate Damages

• At common law, a landlord had NO duty to mitigate his damages. However, most states now impose a duty on a landlord to take reasonable steps to mitigate his losses (i.e. attempting to lease the property to another tenant). However, in those states, the mitigation does not need to be successful in order to recover damages (only reasonable steps are required). If a landlord fails to mitigate, some jurisdictions hold that the tenant is not liable for any rent or damages after the date of abandonment.
• If the landlord leases the property to another tenant, the landlord would be able to sue for the difference between the original rent payments and the rent payments under the new lease (as well as any incidental damages)

16

Assignment of a Lease

• A lease may be freely assigned UNLESS a provision in the lease states otherwise. However, an assignment can never be for a longer period of time than the lessor’s remaining lease term.
• An assignment occurs when a tenant (the assignor) transfers ALL of his remaining interest in a lease to a third-party (the assignee). The assignee is liable to the landlord for rent and all other covenants that run with the land because privity of estate arises between the assignee and the landlord. The assignor also remains liable to the landlord for any rent not paid by the assignee because privity of contract continues to exist with the landlord.
• A landlord may be deemed to waive his right to enforce a provision prohibiting assignments if he accepts rent from the assignee.

17

Subleases

• A lease may be freely sublet UNLESS a provision in the lease states otherwise. A sublease occurs when a tenant (the sublessor) transfers only some of his remaining interest in a lease to a third-party (the sublessee). A sublease can never be for a longer lease term than the sublessor has remaining in his lease.
• The sublessee is NOT liable to the landlord for rent or other covenants that run with the land because there is no privity of estate with the landlord. If a lease prohibits subleases, the landlord waives the right to enforce the provision if he accepts rent from the sublessee.
• The sublessee CANNOT enforce covenants made by the landlord under the lease, but can enforce any covenants made by the sublessor.

18

Real Covenants

• A real covenant is a non-possessory interest in land that obligates the holder to either do something or refrain from doing something to the land. It differs from equitable servitudes in that the remedy is damages (rather than injunctive relief).
• To enforce the benefit of a covenant there must be: (1) a writing that satisfies the statute of frauds; (2) intent that the covenant runs with the land; (3) vertical privity between succeeding parties (exists when the successor holds the entire interest held by the predecessor); AND (4) the covenant must touch and concern the land (make the land more useful or valuable to the benefitted party).
• To enforce the burden of a covenant, ALL OF THE ABOVE REQUIREMENTS MUST BE MET, PLUS: (1) there must be horizontal privity between the original parties (exists when the two parties shared some interest in the land independent of the covenant); AND (2) the new owner must have notice of the covenant. Notice may be: (a) actual; (b) constructive (the covenant is recorded in previous conveyances); OR (c) by inquiry (an inspection of the land would reveal the covenant).

19

Equitable Servitudes

• Equitable servitudes are covenants (burdens on real property) that equity will enforce if the burdened estate had notice of the covenants (regardless of whether the covenants run with the land at law). It differs from real covenants in that the remedy is injunctive relief (rather than damages).
• To enforce the benefit of an equitable servitude there must be: (1) a writing that satisfies the statute of frauds; (2) intent for the servitude to be enforceable; AND (3) the servitude must touch and concern the land (make the land more useful or valuable to the benefitted party).
• To enforce the burden of an equitable servitude, ALL OF THE ABOVE REQUIREMENTS MUST BE MET, PLUS the new owner must have notice of the servitude. Notice may be: (a) actual; (b) constructive (the servitude is recorded in previous conveyances); OR (c) by inquiry (an inspection of the land would reveal the servitude

20

Common Scheme

• Under the Common Scheme or Plan Doctrine, a court will imply reciprocal restrictive covenants on parcels of land in a subdivision sold by a developer only if: (1) the developer had a common scheme or plan that all parcels of land would be subject to the restriction at the time the parcel in the subdivision was sold; AND (2) the defendant land owner had actual, inquiry, or record notice of the restriction. Reciprocal negative servitudes only apply to negative covenants and equitable servitudes.
• In showing the defendant had notice, the proponent of the suit must show either: (a) there was a common scheme or plan and that it was obvious from looking at the subdivision that a general pattern of restrictions existed (inquiry notice); (b) the defendant had actual notice of the restriction; OR (c) the defendant land owner had constructive notice through documents publicly recorded (record notice)

21

Easements by PING

• An easement is a non-possessory interest in the use of someone else’s land. Easements are either in gross or appurtenant. o An easement in gross benefits a specific owner’s enjoyment and use of the land and DOES NOT attach to the land (unless the easement is for commercial activity). It DOES NOT pass to subsequent landowners. o An easement appurtenant benefits any owner’s enjoyment and use of the land and DOES attach to the land. It DOES pass to subsequent landowners so long as the new owner has notice. Notice may be: (a) actual; (b) constructive (the easement is recorded in previous conveyances); OR (c) by inquiry (a reasonable person would have inquired about the existence of any easements or interests in land based on the facts or circumstances of the property).
• Any easement may be created by: (1) an express grant; (2) prescription; (3) implication; OR (4) necessity. o An Easement by Grant is an express agreement by the grantor allowing the easement, and must: (1) be in a writing signed by the grantor that satisfies the statute of frauds (if the duration is more than one year); (2) identify the land and parties involved; AND (3) indicate the grantor’s intent to convey the easement. o An Easement by Prescription is created when the possessor’s use of the land is: (1) open and notorious; (2) continuous; (3) hostile (without permission from the owner of the land); AND (4) for the statutory period. o An Easement by Implication (also known as a implied easement) is established when: (1) a single tract of land is divided by a common owner; (2) a preexisting use by the grantor is established prior to the division of the land; (3) a continuous and obvious indication that the use was intended to be permanent; (4) the use affects the value of the land conveyed; AND (5) such use is reasonably necessary for the owner’s use and enjoyment of the land conveyed (the easement is important or highly convenient). o An Easement by Necessity is created if: (1) the original piece of land owned by one owner is subdivided; AND (2) the access the easement provides is essential to the use of the property because there is no other ingress or egress available (i.e. no viable road to access property).

22

Termination of an Easement

• Typically, an easement is perpetual. However, an easement may be terminated by: (1) estoppel (when the servient estate owner reasonably relies on, or materially changes his position, due to the easement holder’s assurance that the easement will no longer be enforced); (2) termination of the necessity that created the easement; (3) involuntary destruction of the servient estate; (4) condemnation of the servient estate; (5) written release; (6) abandonment (easement holder demonstrates, through physical actions, an intent to never use the easement again); (7) merger (holder of the easement obtains title to the servient estate); OR (8) prescription

23

Licenses

• A license is NOT an interest in land, but merely a privilege to use another’s land in a particular way. The licensee must act within the scope of the license.
• A license DOES NOT need to be in writing.
• A license may be revoked at any time by the licensor. However, a licensor may be estopped from revoking a license if the licensee has invested a substantial amount of money and/or labor in reasonable reliance on the continuation of the license

24

Fixtures

• A fixture is an item that has been affixed to the land/dwelling so that it is no longer personal property, but instead becomes part of the land. Whether an item is a fixture is determined by the objective intent of the party who attached the item.
• To determine whether the item is a fixture, courts consider: (1) the nature of the item; (2) the manner in which it is attached; (3) the damage that would result if the item were removed; and (4) the extent to which the item is adapted to the property (i.e. an installed custom window). The more the item is incorporated into the premises, the more likely the court will find the item to be a fixture.
• Under the trade fixture exception, an item that is attached to the property for use in the tenant’s trade or business is NOT a fixture UNLESS its removal would cause substantial damage to the property. An item that is not a fixture may become one if it’s not removed before the end of the lease term.

25

Adverse Possession

• Adverse Possession Elements: Adverse possession allows someone in possession of land owned by another to acquire title to that land when the possession of the property is: (1) continuous for the statutory period (usually 10 years); (2) open and notorious (to put an owner on notice of the adverse possession upon inspection of the land); (3) exclusive; (4) actual (possess the property as the true owner would); AND (5) hostile and under a claim of right (without the true owner’s consent).
• Aggregation/Tacking: Adverse possessors in privity may aggregate their years spent possessing the property to meet the statutory period. Privity exists when the land is voluntarily transferred to another (i.e. by deed or bequest)

26

Requirements for a Valid Land Sale

• A valid contract for the sale of land must satisfy the statute of frauds. The contract must: (1) be in a writing; (2) describe the property; (3) identify the parties involved; (4) contain the purchase price; AND (5) be signed by the grantor/grantee (depending on whom the contract is being enforced against).
• Once a deed to the property is delivered and accepted, the land sale contract merges with the deed and any rights to sue under the contract are extinguished (although the buyer may sue upon the deed)

27

Warranty of Marketable Title

• A seller has a duty to convey marketable title to a buyer. Marketable title is title that is free from any cloud or subject to any adverse claim. Title is unmarketable when it contains a substantial defect, such as: (1) defects in the record chain of title; and/or (2) encumbrances, such as mortgages, liens, restrictive covenants, easements, a claim of adverse possession, and zoning violations. Although zoning violations make title unmarketable, zoning restrictions do not.
• If the seller CANNOT convey marketable title at the closing, the buyer may withdraw from the contract without penalty. The requirement to deliver marketable title is a condition that benefits the purchaser (not the seller), and the purchaser may choose to waive the requirement. A seller CANNOT cancel a real estate contract for failure to deliver marketable title if the buyer chooses to waive the requirement.
• Merger Doctrine: While a seller must convey marketable title at closing, once a deed to the property is delivered and accepted, the land sale contract merges with the deed and any rights to sue under the contract are extinguished. Thus, after closing the buyer may only sue upon the deed.

28

Revocation of a Land Sale

• In a land sale contract, the seller may NOT revoke once the contract is signed. At that point, the buyer is already considered the owner of the property. When land is conveyed through a deed, the seller may only revoke before the deed is effectively delivered. When delivery is conditional, courts are split on whether the grantor may revoke before the occurrence of the condition

29

Deed Requirements

• A valid deed must: (1) be in a writing signed by the grantor; (2) identify the land and parties involved; AND (3) indicate the grantor’s intent to convey the land.
• Intent to convey is presumed upon the recording of a deed. o Intent will NOT be found if the grantor: (a) expressly reserves the right to revoke the deed; OR (b) gives instructions to only deliver the deed upon the grantor’s death. o A valid conveyance requires the grantee’s acceptance, which is presumed UNLESS the grantee specifically indicates intent not to accept the conveyance.
• When a deed is unconditional on its face and given to a grantee, additional oral conditions are NOT valid. However, if the same deed is instead given to a third-party (i.e. to be held in escrow), any additional conditions would create a conditional delivery.
• Land may be conveyed without a contract when there is (1) intent by the grantor to convey the property to the grantee; (2) delivery of a valid deed; AND (3) acceptance by the grantee.

30

Deeds: Constructive Conveyance

• Constructive conveyance of a deed results when the grantor gives the deed to a third-party who is an agent of the grantee