Real Property Flashcards
Adverse Possession
is when a trespasser may acquire a title to another’s property without compensation by possessing property for a specified period of time, in manner conflicting with true owner’s rights.
Elements:
H - ostile - w/o owner’s permission, no knowledge or intent requirement
O- pen & Notorious - must be conspicuous that the True Owner would know of trespass but need not actually know
A - ctual & Exclusive - possess reasonable portion of property to exclusion of owner and the public
C-ontinuous for statutory period of time - possession must be similar to ordinary owner’s use; daily possession not required
If someone is Disabled, what is the rule for Adversely Possessing a disabled person’s property?
SOL doesn’t start when the TO is disabled; can’t adversely possessed disabled person
If the property one is trying to adversely possess is a government property, what is the rule?
You cannot adversely possess government property
What is tacking in Adverse Possession?
Tacking in AP is when two successive APs may add the amount of time that they possessed the property to satisfy the statutory limits. However, the two APs must be in privity with each other meaning there must be some sort of relationship.
Explain in a big picture what happens in a Land Sale Contract
When buying real property, first there is a 1) contract which governs the sale of the real property; 2) the escrow period which is the period of time after the K has been signed and before the property has been conveyed, 3) closing, 4) conveyance of the deed. From 1-3 the Contract for conveyance of interest in real estate governs until closing, then 4 the deed becomes the operative document governing land transfer under the merger doctrine. Remember SoF applies in Land-Sale K and remember the part performance exceptions to SoF.
Doctrine of Merger
Merger Doctrine states that upon closing that K and the Deed will merge. Thus, if there is any K issues, you cannot sue on behalf of the K if closing already occurred.
Doctrine of Equitable Conversion
The Doctrine of equitable conversion states that when a buyer buys real property from a seller and the K has signed, the buyer owns the real property. As such if the property is destroyed before the closing of the deal, through no fault of either party such as unforeseeable event like a storm, or fire, the risk of loss passes to the buyer.
MBE Rule – if the seller has insurance in the real property, then seller must give insurance to the buyer
Marketable Title
In every land sale K, there is an (1) implied promise to deliver a marketable title and (2) that the seller must not make false material statements or misleading statements with respect to the real property. Marketable title is title free from risk of litigation. If a property is subject to a mortgage, lien then it is not marketable however the seller has the ability to cure the defect prior to closing. If a property has an easement, or zoning ordinance violation, then it is not marketable.
Deed
A deed is a written instruments that grants property from the grantor to the grantee. The deed must be 1) lawfully executed and 2) must be delivered. Lawfully executed means that the deed must state the identification of the parties, the deed must name the property to be transferred. Delivered means that the grantor must have the intent to transfer the property and the deed must be accepted.
Quitclaim Deed
conveys whatever interest the grantor has in the property but contains no covenants of title
General Warranty Deed
warrants against all defects in title and contains 6 covenants for title. 3 present and 3 future
What are present covenants?
Present covenants are breached at the time of the sale (when the deed is delivered) if breached at all. There are 3 present covenants 1) seisin, 2) right to convey and 3) against encumbrances
Present Covenant: Seisin
the grantor warrants he owns what he says he owns
Present covenant: right to convey
grantor warrants he has right to convey
Present covenant: against encumbrances
grantor warrants no encumbrances
Future Covenants
run with the land, are continuous and breached if ever at the time grantee is disturbed in possession
Future Covenant: Warranty of Title
Grantor promises to defend should there be any lawful claims of title asserted by others
Future Covenant: Quiet Enjoyment
Grantor promises that the grantee will not be disturbed in possession by any third parties lawful claims of title
Future Covenant: Further Assurances
Grantor will do whatever future acts are reasonably necessary to perfect title
Mortgages
A mortgage creates a security interest in a property. When a person takes on a mortgage to buy property, there is usually 1) a note which is the promise to pay off the loan and the 2) mortgage.
Purchase Money Mortgage
PMM is the loan borrowed use to pay off the real property. PMM receives priority over non-PMM mortgages and PMM no deficiency judgment
Future Advantage Mortgage (aka Second Mortgage)
line of credit used for home equity, construction, business etc
Mortgagor
The borrower
Mortgagee
The lender
What happens to the mortgage when the property is owned as a joint tenancy in a majority or Lien State?
The mortgage is treated as a lien and does not sever the JT. The mortgagor has the title and the right to possession absent foreclosure.
What happens to the mortgage when the property is owned as a joint tenancy in a minority or Title State?
The mortgage does not sever the JT and its converted into a Tenancy in Common; the mortgagee has title to property during the loan term.
What are alternative to mortgages?
Deed of Trust where it operates like a mortgage but uses the trustee to hold title for benefit of the lender. Installment Land K where the seller finances purchase, the seller retains title until buyer makes final payment on installment plan
Foreclosure
Foreclosure is the action initiated by creditors when they defaulted on a loan.
What is judicial foreclosure?
When the mortgagee must foreclose by proper judicial proceeding
What is the Priority of Loans during a foreclosure?
After land is sold, proceeds will be used to satisfy the debts secured by the property. Any debts secured are paid in descending order of priority. Each mortgagee is entitled to payment in full before lower ranking creditor receives any payment
What is Order of payment in priority of loans during a foreclosure?
1) Fees from Attys or Trustees, 2) PMM or secured senior interests, 3) secured junior interests, 4) unsecured interest. The foreclosure of junior interests will not affect senior interests but foreclosure of senior interests will destroy junior interests.
In a foreclosure what does an antideficiency statute do?
It will limit a lender to receiving no more than a value of a loan. Excess remaining is returned to the buyer from proceeds of foreclosure sale after paying off all debts.
In a foreclosure, deficiency judgment occurs….
when the property is worth less than the amount owed on an outstanding loan. The lender can sue the debtor personally for difference if: (1) there’s judicial foreclosure and (2) the loan is not a PMM.
What is a redemption?
A redemption is when the mortgage is paid off and the property is “redeemed” from the mortgage before foreclosure stage.
What are the purpose of the recording acts?
Recording acts function to provide a purchaser of land with a mechanism to determine whether there is an earlier transaction re property inconsistent with own transaction. It ensures that the buyer is getting good title.
What if there is no recording act?
If there is no recording act then common law rule applies which says that the “first in time, first in right” applies
What are three types of recording acts?
1) pure race statute
2) pure notice statute
3) race notice statute
Pure Race Statute says
the first to record wins. This statute rewards the winner of the race to the recorder’s office.
Pure Notice Statute Says
A subsequent BFP (one who purchases property for value without notice of prior conveyance) PREVAILS over grantee that didn’t record
Example of Language in a pure notice statute…
“No conveyance or mortgage of Real property shall be good against subsequent purchasers FOR VALUE AND WITHOUT NOTICE unless the same be recorded according to law..”
Race-Notice Statute says
A subsequent BFP that records first prevails over a grantee that didn’t record first
Example of Language in a Race-Notice statute….
“No conveyance or mortgage of real property shall be good against subsequent purchasers for VALUE AND WITHOUT NOTICE, who SHALL FIRST RECORD…”
Recording acts protects who?
Bona Fide Purchasers - one who takes property for value without notice of a prior conveyance and mortgagors. Notice can be actual, inquiry, or constructive notice
Recording acts don’t protect who?
donees, heirs, and devisees because they don’t take “for value”
