Real Property Flashcards
(477 cards)
1
Q
T/F. A joint creditor of both spouses can execute a judgment against the property, terminating the tenancy by the entirety.
A
T
a creditor of only one spouse cannot
2
Q
T/F. The mutual agreement of the spouses (e.g., deed executed by both spouses) will sever a tenancy by the entirety.
A
T
2
Q
The Rule Against Perpetuities provides that certain interests in property are void if there is _____, however _____, that they may _____ more than _____ years after _____ at the _____.
A
any possibilityremotevest21some life in beingcreation of the interest
3
Q
T/F. A deed or mortgage executed by one spouse is effective to cause a severance of a tenancy by the entirety.
A
F
3
Q
The Rule Against Perpetuities applies to the following interests in property:
A
(i) contingent remainders;(ii) executory interests;(iii) class gifts (even if vested remainders);(iv) options and rights of first refusal; and(v) powers of appointment.
4
Q
Under a __________ statute, a subsequent purchaser who pays valuable consideration and takes without notice of the prior conveyance prevails over a prior grantee who failed to record.
A
notice
4
Q
The Rule Against Perpetuities provides that . . .
A
certain interests in property are void if there is any possibility, however remote, that they may vest more than 21 years after some life in being at the creation of the interest. The Rule applies to the following interests in property:(i) contingent remainders;(ii) executory interests;(iii) class gifts (even if vested remainders);(iv) options and rights of first refusal; and(v) powers of appointment.
5
Q
Mechanics of Recording
1) Filing Copy
The grantee or her agent normally presents the deed to the county recorder, who photographs it and files the copy in the official records. These records are kept _____.
2) Indexing
The recorder also indexes the deed to permit title searches. The usual indexes are the _____ and _____ indexes, which are arranged by reference to _____. Tract indexes, which index the property by_____, exist in some urban localities.
A
chronologically
grantor-grantee
grantee-grantor
the parties to the conveyance
location
5
Q
_____ are not subject to the Rule Against Perpetuities.
A
Future interests in the grantor (i.e., reversions, possibilities of reverter, and rights of entry)
6
Q
Types of recording acts . . .
A
CL - first in time (first grantee)
Notice - subsequent grantee if BFP
Race Notice - subsequent grantee if BFP + recorded first
R - whoever records first
6
Q
Which interest violates the Rule Against Perpetuities and is stricken if it follows a defeasible fee and has no limit on the time within which it must vest?
A
An executory interest
7
Q
When is someone a BFP for purposes of recording acts:
A
The person must:
(i) Be a purchaser (or mortgagee or creditor if the statute so allows);
(ii) Take without notice (actual, constructive, or inquiry) of the prior instrument; and
(iii) Pay valuable consideration.
7
Q
A possibility of reverter is the _____ retained by _____ who conveys a _____. Future interests in the grantor are not subject to _____.
A
future interesta grantorfee simple determinable (a defeasible fee)the Rule Against Perpetuities
8
Q
“Without notice” means that the purchaser had no _____ (3) notice of the prior conveyance at the time _____. While no one has a legal duty to perform a title search, a subsequent purchaser will be charged with the notice that such a search would provide, whether or not she actually searches. However, the fact that the purchaser obtains knowledge of the adverse claim after the conveyance but _____ it is immaterial; she only has to be “without notice” at _____.
A
actual, record, or inquiry
she paid the consideration and received her interest in the land
before she records
the time of the conveyance.
8
Q
At common law, the unities of _____ are required to create a _____.
A
time, title, interest, and possessionjoint tenancy
9
Q
T/F. Actual notice, for purposes of recording statutes, includes knowledge obtained from any source (e.g., newspaper, word-of-mouth, etc.).
A
T
9
Q
The unity of time requires that the interest of _____ joint tenant vest _____.
A
eachat the same time
10
Q
T/F. The fact that a deed has been recorded does not always mean that a purchaser will be charged with notice of it.
A
T
The fact that a deed has been recorded does not always mean that a purchaser will be charged with notice of it. A subsequent purchaser will be held to have record notice only if the deed in question is recorded “in the chain of title,” which means that it is recorded in a fashion that a searcher could reasonably find it. There are several situations in which a deed might be recorded, but very difficult or impossible for a search to locate.
10
Q
The unity of title requires that _____ joint tenants acquire _____ by _____.
A
alltitlethe same instrument
11
Q
A subsequent purchaser will be held to have record notice only if the deed in question is recorded “_____,” which means that it is recorded _____.
A
in the chain of title
in a fashion that a searcher could reasonably find it
11
Q
The unity of interest requires that the _____ of each joint tenant be _____.
A
interestof the same type and duration
12
Q
O owns Blackacre, which she contracts to sell to A. The contract is not recorded, and O remains in possession. A thereupon conveys Blackacre by deed to B, and B records. O then conveys Blackacre by deed to C. Did B’s recordation charge C with constructive notice of B’s claim to equitable title to Blackacre derived through A?
A
No. C is not charged with notice because there was no way for him to find the AB deed. Nothing related it to O. It was not in O’s chain of title; it was a “wild deed.”
Compare: If the jurisdiction maintained a tract index, it would not be hard to find that A-B deed. It would be indexed under Blackacre’s block and lot number. But it is impossible to find in a grantor-grantee index without looking at the descriptions of all the recorded properties.
12
Q
The unity of possession requires that each joint tenant have the right to possession of _____.
A
the whole
13
Q
O conveys to A on May 1. O conveys to B, a donee, on May 15. B records on June 1. A records on June 15. B conveys to C on July 1. C has no actual notice of the O-A deed.
B v. A:
C v. A: In notice statute jurisdictions
If B in the example above were a BFP _____.
A
B v. A: As between A and B, A would win because B (a donee) was not a bona fide purchaser.
C v. A: In notice statute jurisdictions, most courts hold that C will prevail over A because the O-A deed was recorded “late” and is not in C’s chain of title; i.e., the search burden is too great if C is required to search “down” the grantor index to the present time for each grantor in the chain.
In several race-notice jurisdictions, however, A’s recordation is treated as giving constructive notice to any purchaser subsequent to such recordation. In these states, the title searcher must search to the present date under the name of each person who ever owned the property in order to pick up deeds recorded late.
Exception—Shelter Rule
If B in the example above were a BFP, C would win in any event, for she would “shelter” under B. This result would be the same even if C had actual knowledge of the O-A deed; otherwise B’s power to transfer would be restricted.
13
If these four unities are not present, a joint tenancy _____. Instead, a _____ results.
cannot be created at common lawtenancy in common: is a concurrent estate with no right of survivorship.
14
Inquiry notice means that _____.
if the subsequent grantee is bound to make reasonable inquiry, she will be held to have knowledge of any facts that such inquiry would have revealed (even though she made none).
14
A tenancy in common is a _____ estate with no _____.
concurrentright of survivorship
15
A court will never reform a deed that has been _____. Reformation is an equitable action in which the court rewrites a deed to make it conform to _____. Reformation will be granted if the deed does not express what the parties agreed to for any of the following reasons:
relied on by a bona fide purchaser
It reflects the parties’ mutual mistake;
It contains a drafting error; or
It reflects one party’s unilateral mistake—but only if that mistake was induced by the other party’s misrepresentation or inequitable conduct.
15
A tenancy by the entirety is a marital estate akin to _____ in that _____ are required for its creation, and _____. _____, however, is not required to create a joint tenancy.
a joint tenancyfour unities (plus a fifth—marriage)the surviving spouse has the right of survivorshipMarriage
16
In order to prevail over a prior grantee under a race statute, when must a subsequent transferee record
Before the prior grantee records.
16
All of the interests are valid under the common law Rule Against Perpetuities in a conveyance from O “to A for life, then to A’s widow for life, then to A’s __________.”
Children
17
T/F. In order to prevail over a prior grantee under a race statute, a subsequent transferee must record before she learns of the prior grant.
F
Before the prior grantee records.
17
A contingent remainder is a remainder that . . .
is (i) subject to a condition precedent, or (ii) created in favor of unborn or unascertained persons.
18
_____, _____, and _____ are not BFPs because they do not give value for their interests; i.e., they are not purchasers.
Donees
heirs
devisees
18
If O conveys property “to A for life, then to B’s heirs” and A predeceases B, at common law the heirs’ interest is void under the __________.
Rule of Destructibility of Contingent Remainders
19
A mortgagee of the land can be protected as a BFP of land. Mortgagees for value (but not those _____) are treated as purchasers, either expressly by recording acts or by judicial classification. Thus, mortgagees for value who take without notice can be protected as BFPs.
who receive a mortgage only as security for a preexisting debt
19
At common law, a contingent remainder had to vest _____ termination of the preceding estate or it was destroyed.
prior to or upon
20
A donee from a bona fide purchaser of the land can be protected as a BFP of land. Under the _____ rule, anyone who takes from a _____ will be treated _______. This rule exists to protect the BFP by preserving his ability to convey property. It applies even ______. However, a non-BFP who previously had title cannot acquire BFP status by selling the land to a BFP and then _____.
shelter
BFP
like a BFP (i.e., will prevail against any interest her transferor would have prevailed against)
when his transferee had actual knowledge of a prior unrecorded interest or did not take for substantial pecuniary value (i.e., was a donee)
repurchasing it
20
Under the Doctrine of Merger, whenever the same person acquires _____, a merger occurs resulting in _____ in _____. At common law, if the person acquired all of the interests except a contingent remainder, the merger would _____, and the contingent remainder would _____.
all of the existing interests in land, present and futurefee simple absolutethat personwould occur anywaybe destroyed
21
If a deed never was delivered, but the listed grantee discovers the deed and records it, the deed is:
void
If a deed never was delivered, but the listed grantee discovers the deed and records it, the deed is void. A deed is not effective unless it has been delivered and accepted. While proper acknowledgment and recording raises the presumption that a deed is authentic and was validly delivered, this presumption is rebuttable in most states. Recording a deed, by itself, does not validate any aspect of an otherwise invalid conveyance (e.g., a forged or undelivered deed). Here, the grantor never delivered the deed; thus, it is not valid (i.e., void). A void deed will be set aside by a court even if title purportedly has passed to a bona fide purchaser.
21
Under the common law Rule in Shelley’s Case, a conveyance that purports to give a grantee a _____ with a _____ to the grantee’s heirs instead gives the grantee both _____ and .
freehold estate (e.g., a life estate) remainderthe freehold estatethe remainder
22
T/F. Physical transfer of a deed is necessary for a valid delivery.
F
22
Under the common law Doctrine of Worthier Title, a remainder limited to the grantor’s heirs is _____, and the grantor retains _____.
invalida reversion in the property
23
T/F. Physical transfer of a deed alone establish delivery.
F
23
In general, a life tenant commits voluntary waste when he _____, unless _____.
Consumes or exploits natural resources on the property(e.g., timber, minerals, oil).However, there are exceptions to this rule which allow the life tenant to consume or exploit such resources:(i) in reasonable amounts when necessary for repair and maintenance of the land;(ii) when the life tenant is expressly given the right to exploit such resources in the grant (e.g., a mineral lease);(iii) when prior to the grant, the land was used in exploitation of such natural resources, so that the grantor most likely intended the life tenant to have the right to exploit; and(iv) in many states, when the land is suitable only for such exploitation (e.g., a mine).
24
“Delivery” (deeds) refers to the _____; it is satisfied by _____ evidencing the grantor’s intention that the deed have some _____; i.e., that _____.
grantor’s intent
words or conduct (note the presumptions related to deed delivery)
present operative effect
title pass immediately and irrevocably, even though the right of possession may be postponed until some future time.
24
When a life tenant fails to make required repairs to the land or pay required carrying charges (e.g., interest on encumbrances, ordinary taxes), he commits _____.
permissive waste
25
Presumptions Relating to Delivery
As a matter of theory, a deed may be delivered by words without an act of physical transfer. Delivery is presumed if the deed is: _____. Unless there is _____, the continued possession of the deed by the grantor raises a presumption of _____ and therefore _____. Conversely, possession by a grantee of a properly executed deed raises a presumption that _____. Note, however, that the presumptions involved are _____.
(i) handed to the grantee, or (ii) acknowledged by the grantor before a notary and recorded.
some clear expression of intent that the grantor envisioned the passage of title to the grantee without physical delivery
nondelivery
no passage of title
the delivery requirement has been satisfied
rebuttable
25
A life tenant commits permissive waste when he . . .
fails to make required repairs to the land or pay required carrying charges (e.g., interest on encumbrances, ordinary taxes), he commits _____.
26
There must be an acceptance by the grantee in order to complete a conveyance. In most states, acceptance is presumed if _____. In other states, acceptance is presumed only where _____. Acceptance is presumed in all states if the grantee is _____.
the conveyance is beneficial to the grantee (whether or not the grantee knows of it)
the grantee is shown to have knowledge of the grant and fails to indicate rejection of it
an infant or an incompetent
26
When a life tenant substantially changes the use of the property in a way that increases its value (e.g., he demolishes a run-down building), he commits _____. Courts will permit this when performed by a _____ when _____.
ameliorative wastelong-term tenantneighborhood changes make the previous use infeasible
27
A deed requires ____ and _____.
delivery and acceptance
27
A __________ restraint provides that any attempted transfer of the property is ineffective.
Disabling
28
When a watercourse or body of water forms the boundary of a parcel of real property, accretion causes the legal boundary to change due to the _____. The slow erosion of the bank of a river or stream serving as a boundary results in the owner _____. Similarly, the slow deposit of soil belongs to _____. Where accretion builds up in an irregular pattern over the lands of several adjacent property owners, courts determine title to it by _____.
In contrast,_____ is the sudden, perceptible change of a watercourse serving as a boundary. Avulsion does not change the legal boundaries, which remain where they were even if _____. Similarly, the legal boundary line _____ changed by the encroachment of the body of water. When property is encroached upon by a body of water (e.g., a lake enlarges), previously fixed boundary lines _____. The boundary lines can be proven even if the land is completely under water.
slow and imperceptible deposit of soil
losing title to that area
the owner of the abutting land
(i) extending each owner’s property line out into the water, or (ii) dividing up the newly formed land in proportion to the owners’ interests in the adjoining lands.
avulsion
this results in a landowner who had river access finding himself landlocked
is not
do not change and ownership rights are not affected
28
A disabling restraint provides that _____. Disabling restraints on any legal interest are_____.
any attempted transfer of the property is ineffective. A conveyance from “O to A, and neither A nor her heirs shall have the right to transfer the land or any interest therein” contains a disabling restraint. void
29
There are three types of deeds characteristically used to convey property interests other than leaseholds: _____. The major difference between these deeds is the _____ of assurances (covenants for title) they give to the grantee and the grantee’s successors regarding the title being conveyed.
the general warranty deed, the special warranty deed (usually statutory), and the quitclaim deed
scope
29
A _____ provides that if the grantee attempts to transfer the property, it is surrendered to another person.
forfeiture restraintA conveyance from “O to A, but if A attempts to transfer the land or any interest therein during her lifetime, to B” contains a forfeiture restraint. Partial (i.e., limited in time and purpose) forfeiture restraints on legal interests generally are valid.
30
In this day of recording acts and title insurance, covenants for title are not much relied upon for title assurance. A general warranty deed is one in which the grantor covenants against title defects created by _____. In a special warranty deed, however, the grantor covenants _____. General warranty deeds are a rarity in a number of states where many conveyances are made with statutory form special warranty deeds.
both himself and by all prior titleholders
only that he himself did not create title defects; he represents nothing about what prior owners might have done
30
A forfeiture restraint provides that _____. _____ on legal interests generally are valid.
if the grantee attempts to transfer the property, it is surrendered to another personPartial (i.e., limited in time and purpose) forfeiture restraints
31
A grantor may give any or all of the following covenants, which are classified as the “usual covenants for title.” A deed containing such covenants is called a “general warranty deed.”
1) Covenant of Seisin
The covenant of seisin is a 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 the covenant.
2) Covenant of Right to Convey
The covenant of the right to convey is a covenant that the grantor has the power and authority to make the grant. Title alone will ordinarily satisfy this covenant, as will proof that the grantor was acting as the authorized agent of the titleholder.
3) Covenant Against Encumbrances
The covenant against encumbrances is a covenant assuring that there are neither visible encumbrances (easements, profits, etc.) nor invisible encumbrances (mortgages, etc.) against the title or interest conveyed.
4) Covenant for Quiet Enjoyment
The covenant for quiet enjoyment is a covenant that the grantee will not be disturbed in her possession or enjoyment of the property by a third party’s lawful claim of title.
5) Covenant of Warranty
The covenant of warranty is a covenant wherein the 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. This covenant is generally considered to be similar to the covenant for quiet enjoyment.
6) Covenant for Further Assurances
The covenant for further assurances is a covenant to perform whatever acts are reasonably necessary to perfect the title conveyed if it turns out to be imperfect.
7) No Implied Warranties or Covenants
In the absence of a statute, no covenants of title are implied in deeds. Moreover, the implied (or express) covenant of marketable title found in contracts of sale of real estate is no longer assertable once a deed has been delivered, unless fraud or mistake is shown.
31
A conveyance from “O to A, but if A attempts to transfer the land or any interest therein during her lifetime, to B” contains a _____.
forfeiture restraint
32
1) Covenant of Seisin
The covenant of seisin is a covenant that the grantor has the estate or interest that she purports to convey. Both _____ are necessary to satisfy the covenant.
2) Covenant of Right to Convey
The covenant of the right to convey is a covenant that the grantor has _____. ____ alone will ordinarily satisfy this covenant, as will proof that the grantor was _____.
3) Covenant Against Encumbrances
The covenant against encumbrances is a covenant assuring that there are _____.
4) Covenant for Quiet Enjoyment
The covenant for quiet enjoyment is a covenant that the grantee will not be disturbed in her possession or enjoyment of the property by _____.
5) Covenant of Warranty
The covenant of warranty is a covenant wherein the grantor agrees to _____. This covenant is generally considered to be similar to the covenant for quiet enjoyment.
6) Covenant for Further Assurances
The covenant for further assurances is a covenant to perform whatever acts are reasonably necessary to _____.
7) No Implied Warranties or Covenants
In the absence of a statute, no covenants of title are implied in deeds. Moreover, the implied (or express) covenant of marketable title found in contracts of sale of real estate is no longer assertable once a deed has been _____, unless fraud or mistake is shown.
title and possession at the time of the grant
the power and authority to make the grant
Title
acting as the authorized agent of the titleholder
neither visible encumbrances (easements, profits, etc.) nor invisible encumbrances (mortgages, etc.) against the title or interest conveyed.
a third party’s lawful claim of title
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
perfect the title conveyed if it turns out to be imperfect
delivered
32
A conveyance from “O to A, and neither A nor her heirs shall have the right to transfer the land or any interest therein” contains a _____.
disabling restraint
33
Three of the covenants (_____) are present covenants and are breached, if at all, ______. _____ are future covenants and are breached only upon _____. This distinction is important in that it determines _____ begins running and whether a remote grantee of the covenantor can sue.
seisin, right to convey, against encumbrances
at the time of conveyance
Quiet enjoyment, warranty, and further assurances
interference with the possession of the grantee or her successors
when the statute of limitations
33
A promissory restraint provides that _____. Partial promissory restraints on legal interests generally are _____.
that the grantee covenants not to transfer the property. A conveyance from “O to A, and A hereby covenants not to transfer the land or any interest therein without O’s consent” contains a promissory restraint. valid
34
Parol evidence is admissible to show oral conditions on the delivery of a deed if the deed _____. A grantor may deliver a deed by giving it to a _____ who is instructed to give it to the grantee. Parol evidence generally is admissible to show the _____, even though the deed itself is unconditional.
was placed in escrow
third party (i.e., an escrow)
conditions and terms on which the deed was placed in escrow
34
A conveyance from “O to A, and A hereby covenants not to transfer the land or any interest therein without O’s consent” contains a _____.
promissory restraint
35
Statutory Special Warranty Deed
Statutes in many states provide that (unless expressly negated) the use of the word “_____” in a conveyance creates by implication the following two limited assurances against acts of _____:
grant
the grantor (not her predecessors)
(i) that prior to the time of the execution of such conveyance, the grantor has not conveyed the same estate or any interest therein to any person other than the grantee; and (ii) that the estate conveyed is free from encumbrances made by the grantor.
35
In most states, when tenants by the entirety divorce, they hold the property as _____. On the other hand, in a minority of states, when tenants by the entirety divorce, they hold the property as _____.
Tenants in commonjoint tenants with right of survivorship
36
Quitclaim Deeds
| A quitclaim deed is basically _____.
a release of whatever interest, if any, the grantor has in the property. Hence, the use of covenants warranting the grantor’s title is basically inconsistent with this type of deed; i.e., if the deed contains warranties, it is not a quitclaim deed.
36
A tenancy at will is a _____ that is terminable at the will of _____.
leasehold estate in land either the landlord or the tenant
37
On Day 1, A, who does not own Blackacre, purports to convey Blackacre to B by general warranty deed. On Day 1, B has no interest in Blackacre. On Day 3, A acquires Blackacre from O. That interest automatically passes to B, so that on Day 3 B owns Blackacre. A’s warranties will prevent her from denying ownership when she executed the deed on Day 1. This is called _____.
Estoppel by Deed
If a grantor purports to convey an estate in property that she does not then own, her subsequent acquisition of title to the property will automatically inure to the benefit of the grantee.
37
In most states, the reservation of an annual rent, payable monthly, in a lease with no set termination date creates a __________.
Year-to-year periodic tenancy
38
Estoppel by deed applies to _____, but does not usually apply to _____.
general warranty deeds
quitclaim
38
A periodic tenancy is a tenancy that _____. It may be created by implication if _____.
continues from period to period until terminated by proper notice by either the landlord or the tenanta lease with no set termination date provides for the payment of periodic rent
39
A deed delivered to a grantee who is dead at the time of delivery is:
void
39
A tenancy at will is a tenancy that _____. Although a tenancy at will can arise when a lease _____, a provision requiring annual rent payments will convert it to a _____.
continues only until the landlord or the tenant gives notice and time to quithas no set termination dateperiodic tenancy
40
A deed delivered to a grantee who is dead at the time of delivery is void. A deed is not effective to transfer an interest in real property unless it has been delivered. The grantee must actually exist at the time of delivery; otherwise, the deed is not valid (i.e., void). A void deed will be set aside by a court even if _____.
title purportedly has passed to a bona fide purchaser
40
A tenancy for years is a tenancy that _____. A _____ with no stated duration is not a tenancy for years.
continues for a fixed period of time and then ends automatically on its termination datelease
41
The fact that _____ would charge a purchaser of realty with inquiry notice. 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. When a grantor’s deed is unrecorded, the grantee is expected—at her peril—to demand a viewing of her grantor’s title documents at the time of the purchase and insist that they be recorded.
her grantor’s deed is unrecorded
41
Personal property that is not affixed to land may be classified as a fixture if _____.
the item is uniquely adapted to the realty
42
T/F. The grantor’s use of a quitclaim deed would not charge a purchaser of realty with inquiry notice.
T
42
A fixture is _____. Under the doctrine of constructive annexation, an article of personal property also may be considered a fixture if _____.
a chattel that has been so affixed to the realty that it has ceased being personal property and has become part of the realty. it is so uniquely adapted to the land that it makes no sense to separate it (e.g., keys to doors, carpet cut to fit an unusually shaped room)
43
A quitclaim deed releases whatever interest a grantor might have in the property and contains no _____.
covenants for title
43
A fixture is a _____ that has been so affixed to the realty that it has ceased being _____ and has become _____. Under the doctrine of _____, an article of personal property also may be considered a fixture if it is so uniquely adapted to the land that it makes no sense to separate it (e.g., keys to doors, carpet cut to fit an unusually shaped room).
chattelpersonal propertypart of the realtyconstructive annexation
44
(Inquiry notice) If a _____ instrument makes reference to _____, the grantee is bound to make inquiry to discover the nature and character of _____. However, this duty to inquire does not extend to situations in which an _____ (unless the purchaser has _____.
```
recorded
an unrecorded transaction
the unrecorded transaction
unrecorded instrument refers to the prior transaction
actual knowledge of it)
```
44
Whether an item is classified as a fixture is NOT determined by whether the annexor _____ intends that the item pass with the realty. When a landowner owns a chattel that is annexed to the realty, whether the item is a fixture generally depends on the annexor’s _____ intention, which is determined by considering:
subjectivelyobjective1. The nature of the chattel (i.e., how essential it is to the normal use of the realty);2. The manner in which the chattel is attached to the realty (the more substantially attached, the more likely it was intended to be permanent);3. The amount of damage that would be caused by the chattel’s removal; and4. The adaptation of the chattel to the use of the realty (e.g., custom window treatments, wall-to-wall carpet).
45
A forged deed is most likely to be set aside as against a bona fide purchaser because _____.
In contrast, deeds _____ are _____.
a forged deed is void, and deeds that are void will be set aside by a court even if the property has passed to a bona fide purchaser.
executed by a minor grantor or executed under duress
voidable
Voidable deeds will be set aside only if the property has not passed to a bona fide purchaser.
46
A deed executed by a debtor with intent to defraud a creditor may be set aside by the grantor’s creditors as a fraudulent conveyance. Under the Uniform Fraudulent Transfer Act, which nearly all states have adopted, a conveyance is fraudulent if _____. However, such a conveyance will not be set aside as against _____.
the grantor/debtor actually intended to hinder, delay, or defraud a creditor; or if the grantor (i) did not receive a reasonably equivalent value in exchange for the transfer and (ii) was insolvent or became insolvent as a result of the transfer
a grantee who took in good faith and paid reasonably equivalent value (i.e., a bona fide purchaser)
46
T/F. It is necessary that the annexor expressly provide that the item is to pass with the realty for an item to be classified as a fixture.
false. Thus, it is not necessary that the annexor expressly provide that the item is to pass with the realty for an item to be classified as a fixture.
47
Under a race statute, a subsequent transferee with notice of a prior conveyance can prevail over the prior grantee.
race
47
If L leases a residence to T for five years, ending on December 31, at $400 per month, and T remains in possession of the premises on January 1 of the sixth year, L may hold T to a __________.
month-to-month tenancy at $400 per monthExplanationIf L leases a residence to T for five years, ending on December 31, at $400 per month, and T remains in possession of the premises on January 1 of the sixth year, L may hold T to a month-to-month tenancy at $400 per month. If a tenant continues in possession after the termination of a lawful tenancy, the landlord may evict the tenant or bind the tenant to a new periodic tenancy. The terms and conditions of the expired tenancy (e.g., rent, covenants, etc.) apply to the new tenancy. Although a commercial tenant holding over after termination of a lease for one year or more generally may be held to a year-to-year tenancy, most courts would rule a residential hold-over tenant a month-to-month tenant, irrespective of the term of the original lease. If the landlord notifies the tenant before termination of the tenancy that occupancy after termination will be at an increased rent, the tenant will be held to the new rent if he does not surrender. Here, T’s five-year tenancy for years automatically expired on December 31. Thus, on January 1 he was a hold-over tenant and L could bind him to a new periodic tenancy. As a residential tenant, the period would be month to month rather than year to year. Because there is no evidence that L informed T of the rent increase prior to December 31, T will be liable only for $400 per month. L may not hold T to a month-to-month tenancy and now demand $500 per month because L did not notify T of the rent increase prior to the expiration of his five-year tenancy. L may not hold T to a year-to-year tenancy at $400 per month because T is a residential rather than a commercial tenant. L may not hold T to a year-to-year tenancy and now demand $500 per month because T is a residential rather than a commercial tenant, and because L did not notify T of the rent increase prior to the expiration of his five-year tenancy.
48
T/F. Under a race statute, notice is irrelevant.
T
48
A tenant leases premises that are destroyed without the fault of either the landlord or the tenant.Under the majority view, which is true in the absence of a contrary lease provision?The common law rule differs from the majority view in that _____. Note that the ____ common law rule has been modified by_____ in most states. T/F. Absent a contrary lease provision, if under applicable law the lease remains effective after destruction of the leased premises without the fault of either the landlord or the tenant, the tenant may cease paying rent.
The lease may be terminated at the tenant’s option, and the tenant may cease paying rentif the leased premises are destroyed without the fault of either the landlord or the tenant, the lease remains effective and the tenant must continue paying rentharshstatuteFalse. May NOT cease paying rent.
49
T/F/ Under any recording statute other than a race statute, a subsequent transferee with notice of a prior conveyance cannot prevail over the prior grantee.
T
49
__________ waste results when a tenant intentionally or negligently damages the leased premises.
Voluntary
50
When a grantee’s successor is lawfully ejected by a third party, the original grantor who conveyed the general warranty deed may be held liable for breaching _____.
The covenant of warranty
50
_____ waste results when a tenant fails to make ordinary repairs to keep the leased premises in the same condition as at the commencement of the lease term, excluding _____ (unless _____).
Permissiveordinary wear and tearthe tenant covenanted to repair ordinary wear and tear
51
The usual covenants for title include present covenants, which can be breached only _____; and future covenants, which can be breached only _____.
Which runs with the land and which does not? What does that mean?
at the time of conveyance
upon eviction (i.e., interference with the possession of the grantee or his successors by someone with better title)
Future covenants run with the land, and thus a grantor may be liable for its breach if the grantee’s successor is disturbed in possession.
Present covenants, in contrast, do not run with the land. Thus, the original grantor cannot be liable to the grantee’s successors for breaching the present covenants of seisin, right to convey, or against encumbrances. Through the covenant of seisin, the grantor warrants that she has the estate or interest she purports to convey (i.e., both title and possession) at the time of the grant. Through the covenant of right to convey, the grantor warrants that she has the power and authority to make the grant (i.e., she has title or is the titleholder’s authorized agent). Through the covenant against encumbrances, the grantor warrants that there are no encumbrances (e.g., easements, profits, or mortgages) against the title or interest conveyed. These present covenants can be breached only at the time of the initial conveyance and thus do not run to the grantee’s successors.
51
Ameliorative waste results when _____. Modern courts will permit _____ that have _____ if:
a tenant makes substantial alterations to the leased premises that increase the value of the propertya change in the character of premisessignificantly decreased in value over time1. The change increases the value of the premises;2. The change is performed by a long-term tenant (e.g., 25 years) or a life tenant; and3. The change reflects a change in the nature and character of the neighborhood.
52
When O does not acquire title to property until after he purported to convey the property to A, A can ______ because of the doctrine of _____.
accept title to the land or possibly sue O for breach of covenants for title
estoppel by deed
52
T/F. A covenant against assignment prevents the tenant from subleasing her interest.
False.
53
T/F. When O does not acquire title to property until after he purported to convey the property to A, A will acquire title regardless of the terms of her deed.
Why?
F
Estoppel by deed applies to grantees who take by warranty deed (i.e., deeds that contain covenants for title). In most states, the doctrine will not be applied when the conveyance is by a quitclaim deed—i.e., a deed releasing whatever interest, if any, the grantor has in the property.
53
If a landlord consents to one transfer that violates a covenant against assignment or sublease, he waives his right to avoid future transfers.
False.
54
T/F. When O does not acquire title to property until after he purported to convey the property to A, A will acquire title only if she was a bona fide purchaser (“BFP”).
F
BFP is irrelevant for estoppel by deed
54
If a landlord consents to one transfer that violates a covenant against assignment or sublease, he waives his right to avoid future transfers.
True.
55
Requirements of a valid deed:
1. SOF - writing and signed by grantor
2. description of the land - doesn't have to be formal, but must be unambiguous.
3. description of the parties - can be by description (to my eldest daughter)
4. words of intent (grant alone is enough - nothing special but express intent to transfer realty
seal and attestation by W not required.
The grantor may designate an agent to sign on the grantor’s behalf, but if the signing is not done in the grantor’s presence, the Statute of Frauds generally requires that the agent’s authority be written. In the case of deeds by corporations, statutes usually provide for execution by two officers of the corporation and the affixing of the corporation’s seal. If the deed represents a conveyance of all or a substantial part of the corporation’s assets, a resolution of the board of directors approving the transfer may be necessary. The grantee’s signature is not necessary even if the deed contains covenants on her part. Her acceptance of the deed (called a “deed poll” when signed only by the grantor) is sufficient to make the covenants enforceable.
55
Under the _____ if a landlord consents to one transfer that violates a covenant against assignment or sublease, he waives his right to avoid future transfers. The landlord may reserve the right to avoid future transfers, but such reservation must _____.
Rule in Dumpor’s Casetake place at the time of granting consent
56
Is this a sufficient description of land for a valid deed?
A conveyance of “all my land,” or “all my land in Alameda County."
Yes.
A description is sufficient if it provides a good lead as to the identity of the property sought to be conveyed. The intention of the grantor is clear and the meaning of this intention can be proved without difficulty (by checking the land records of Alameda County).
56
Under the implied warranty of habitability, the landlord assures that _____. The standard usually applied is _____.
assures that the premises are suitable for human residence the local housing code
57
Is this a sufficient description of land for a valid deed?
A conveyance of “one acre off the western end of my 30-acre tract” (the 30-acre tract being adequately described).
No.
Would probably fail for uncertainty. “Off the western end” is too vague to ascertain which acre, and the admission of parol evidence here would be considered a violation of the Statute of Frauds.
57
Under the covenant of quiet enjoyment, the landlord assures that she nor _____ will _____. The covenant of quiet enjoyment may be breached by _____, _____ , or _____.
someone with paramount title interfere with the tenant’s quiet enjoyment and possession of the premisestotal actual evictionpartial actual evictionconstructive eviction
58
A deed must identify the land to be conveyed. When a mistake or inconsistency in the description leaves in doubt the exact location of the property, and the court otherwise lacks clear evidence of the parties’ intent, the following rules of construction apply:
1. Natural monuments (e.g., “from Moss Lake to the oak tree”) prevail over all other methods of description, including artificial monuments, courses and distances, and quantity measurements;
2. Artificial monuments (e.g., stakes, buildings) prevail over all but natural monuments;
3. Course measurements (e.g., “North 25 degrees to Main Street”) prevail over distance measurements (e.g., “East 45 feet to Grace Street”); and
4. All of the foregoing prevail over general descriptions such as name or quantity (e.g., “10 acres of land known as Blackacre”).
58
The covenant against encumbrances is a covenant contained in _____, assuring that _____.
a general warranty deedthere are neither visible encumbrances (e.g., easements) nor invisible encumbrances (e.g., mortgages) against the title or interest conveyed.
59
The doctrine of estoppel by deed will apply if the grantor __________.
Expressly purports to convey land he does not then own
60
“No conveyance or mortgage of an interest in land is valid against any subsequent purchaser whose conveyance is first recorded" is an example of a _____ statute.
race statute.
60
A leasehold is a _____ in land.
nonfreehold estate
61
The majority rule is that any type of parol evidence, including conduct or statements made by the ____, _____ the alleged delivery, is _____.
grantor
before or after
admissible to prove her intent
61
A leasehold is not a freehold estate in land. Freehold estates in land (e.g., fee estates and life estates), like leaseholds, give _____, but their _____.
possessionduration is regarded as longer than that of the nonfreehold (or leasehold) estates
62
If a deed is ____ on its _____ and is given _____ , in most jurisdictions parol evidence is not admissible to show _____.
unconditional
face
directly to the grantee
that the delivery was subject to a condition.
62
A leasehold IS an estate in land. Possessory interests in land are estates in land. Both the tenant and the landlord have _____ in leased premises. In contrast, nonpossessory interests in land (e.g., _____) are not estates in land.
possessory interests easements, profits, and covenants
63
While parol evidence is not admitted to prove that a delivery was subject to an oral condition, parol evidence is admissible to prove that the grantor _____.
did not intend the deed to have any present effect at all
64
T/F. Parol evidence is always admissible to show that a deed absolute on its face was intended by the parties to be a mortgage; i.e., there was no intent to convey title outright.
T
65
O delivers an absolute deed of Blackacre to A, but tells A that the deed is effective only if A pays off the encumbrance on the property, or only if O does not return from the hospital. Under the above rule, even if A never pays off the encumbrance or if O returns from the hospital, _____ is the owner of Blackacre and _____ cannot claim that there was no valid delivery.
note: "tells" - SOF
A
O
If a deed is unconditional on its face and is given directly to the grantee, in most jurisdictions parol evidence is not admissible to show that the delivery was subject to a condition.
Rationale: The rule is designed to avoid unsettling of land titles which appear to be in the grantee’s name, and to protect both innocent third parties and grantees from testimony fabricated by grantors.
66
O tells A, “I want you to have Blackacre when I die, and I’m giving you this deed to Blackacre so that you can have it at that time.” Most courts would hold that O’s statements are _____ admissible/inadmissible, and that despite the unconditional nature of the deed itself, they show that O did not intend the deed to have any _____.
admissible
present effect
while parol evidence is not admitted to prove that a delivery was subject to an oral condition, parol evidence is admissible to prove that the grantor did not intend the deed to have any present effect at all.
67
Even though the grantor is allowed to show, via parol evidence, that no delivery at all was intended as against the grantee, he often is estopped to assert lack of delivery against _____.
an innocent purchaser
O gives A a deed but does not intend the deed to be presently effective. A shows the deed to an innocent purchaser, B, who buys the land in reliance thereon. B will prevail in litigation with O, the original grantor, if it appears that O negligently permitted A to have possession of the deed. Rationale: As between two innocent parties, the one who contributed most directly to the loss must bear the burden of it, and in many cases O must be deemed responsible for entrusting A with a deed absolute on its face. The same result occurs where the grantee records the deed and an innocent purchaser relies on the recordation.
68
O gives A a deed but does not intend the deed to be presently effective. A shows the deed to an innocent purchaser, B, who buys the land in reliance thereon. B will prevail in litigation with O, the original grantor, if it appears that O _____.
negligently permitted A to have possession of the deed
Rationale: As between two innocent parties, the one who contributed most directly to the loss must bear the burden of it, and in many cases O must be deemed responsible for entrusting A with a deed absolute on its face. The same result occurs where the grantee records the deed and an innocent purchaser relies on the recordation.
Parol evidence is always admissible to show that a deed absolute on its face was intended by the parties to be a mortgage; i.e., there was no intent to convey title outright. (See VII.A.4., infra.)
69
Suppose O gives A a deed for examination by A’s attorney (deed not intended to be effective at this point). A wrongfully records it and sells to B, a bona fide purchaser (“BFP”). On these facts, O would prevail against B unless estopped to assert lack of delivery (see below). In other words, absent estoppel, a subsequent BFP is not protected; if there was no_____, the BFP’s grantor had no power to convey.
delivery
Even though the grantor is allowed to show that no delivery at all was intended as against the grantee, he often is estopped to assert lack of delivery against an innocent purchaser.
Example: O gives A a deed but does not intend the deed to be presently effective. A shows the deed to an innocent purchaser, B, who buys the land in reliance thereon. B will prevail in litigation with O, the original grantor, if it appears that O negligently permitted A to have possession of the deed. Rationale: As between two innocent parties, the one who contributed most directly to the loss must bear the burden of it, and in many cases O must be deemed responsible for entrusting A with a deed absolute on its face. The same result occurs where the grantee records the deed and an innocent purchaser relies on the recordation.
70
T/F. Absent estoppel, a subsequent BFP is not protected; if there was no delivery, the BFP’s grantor had no power to convey.
T.
Suppose O gives A a deed for examination by A’s attorney (deed not intended to be effective at this point). A wrongfully records it and sells to B, a bona fide purchaser (“BFP”). On these facts, O would prevail against B unless estopped to assert lack of delivery (see below). In other words, absent estoppel, a subsequent BFP is not protected; if there was no delivery, the BFP’s grantor had no power to convey.
(1) Estoppel in Favor of Innocent Purchaser
Even though the grantor is allowed to show that no delivery at all was intended as against the grantee, he often is estopped to assert lack of delivery against an innocent purchaser.
Example: O gives A a deed but does not intend the deed to be presently effective. A shows the deed to an innocent purchaser, B, who buys the land in reliance thereon. B will prevail in litigation with O, the original grantor, if it appears that O negligently permitted A to have possession of the deed. Rationale: As between two innocent parties, the one who contributed most directly to the loss must bear the burden of it, and in many cases O must be deemed responsible for entrusting A with a deed absolute on its face. The same result occurs where the grantee records the deed and an innocent purchaser relies on the recordation.
4) Comment
Obviously, the above rules give the courts flexibility to find either delivery or nondelivery in many situations. It is also evident that there exists a theoretical inconsistency in admitting parol evidence to show that no delivery was intended, but not to show that delivery was “conditional.” This inconsistency has been criticized by numerous commentators.
71
Proper recordation gives all prospective subsequent grantees constructive notice of the existence and contents of the recorded instruments; i.e., there can be no subsequent ____. Recordation also raises presumptions that the instrument has been validly _____ and that it is _____. These presumptions are _____, not conclusive.
BFPs
delivered
authentic
rebuttable
72
T/F. Recordation is not necessary for a valid conveyance. Nor does recordation validate an invalid conveyance, such as a forged or undelivered deed.
T
73
Recordation does not protect a subsequent purchaser against interests that arise by _____, rather than from a recordable document (e.g., _____ (3)). Because there ______, the recording acts do not apply, and subsequent purchasers take subject to the interests. (Remember: If the recording act is inapplicable, the _____ priority rules apply.)
Exception
A court may protect a subsequent BFP from _____.
operation of law
dower rights; prescriptive and implied easements; title by adverse possession
is no instrument to record in order to perfect such interests
common law
an unrecorded implied easement that is not visible upon inspection of the premises (e.g., an underground sewer).
74
O is the record owner of Blackacre. X adversely possesses Blackacre for the period of the statute of limitations. O then conveys Blackacre to A, a BFP. Who prevails between X and A?
Even though X’s interest has never been recorded, X prevails against A.
Does Not Protect Against Interests Arising by Operation of Law
Furthermore, recordation does not protect a subsequent purchaser against interests that arise by operation of law, rather than from a recordable document (e.g., dower rights; prescriptive and implied easements; title by adverse possession). Because there is no instrument to record in order to perfect such interests, the recording acts do not apply, and subsequent purchasers take subject to the interests. (Remember: If the recording act is inapplicable, the common law priority rules apply.)
75
Recorder’s Mistakes
An instrument is considered recorded from and after the time it is filed at the recorder’s office, irrespective of whether it is actually listed on the indexes. If the recorder’s office has made an error in recording, the subsequent purchaser _____.
has an action against the recorder’s office. There is a strong minority view that protects the searcher
76
The recording acts require that before an instrument can be recorded, it must be acknowledged by the grantor before a notary. What happens if the recorder, by oversight, records a deed that has not been acknowledged or has been defectively acknowledged?
No Acknowledgment—No Constructive Notice
Because an unacknowledged deed does not qualify for recordation, it does not give constructive notice to subsequent purchasers. Hence, unless the subsequent purchaser has other notice of the earlier deed, the subsequent purchaser will prevail.
Compare—Defective Acknowledgment
When a recorded instrument has been acknowledged, but the acknowledgment is defective for some reason not apparent on the face of the instrument, the better view is that the recordation does impart constructive notice. Rationale: A hidden defect in the acknowledgment should not be allowed to destroy the constructive notice that the document otherwise clearly imparts. Purchasers should be entitled to rely on what appears to be a perfectly recorded document.
77
O conveys Blackacre to A by a deed that is not acknowledged, but the recorder nevertheless records it. Later, O conveys to B by an acknowledged deed, which B records. As between A and B, _____ prevails over _____ unless _____.
B
A
B had actual notice of the deed from O to A (which she might have if she searched the title records) or inquiry notice (as she would have if A was in possession of Blackacre).
Effect of Recording Unacknowledged Instrument
As discussed above, the recording acts require that before an instrument can be recorded, it must be acknowledged by the grantor before a notary. What happens if the recorder, by oversight, records a deed that has not been acknowledged or has been defectively acknowledged?
1) No Acknowledgment—No Constructive Notice
Because an unacknowledged deed does not qualify for recordation, it does not give constructive notice to subsequent purchasers. Hence, unless the subsequent purchaser has other notice of the earlier deed, the subsequent purchaser will prevail.
78
A deed bears what appears to be a valid acknowledgment but is in fact invalid because the notary was disqualified to act or because the grantor did not appear personally in front of the notary to acknowledge her signature, as required by law. Does the deed impart constructive notice?
No. When a recorded instrument has been acknowledged, but the acknowledgment is defective for some reason not apparent on the face of the instrument, the better view is that the recordation does impart constructive notice. Rationale: A hidden defect in the acknowledgment should not be allowed to destroy the constructive notice that the document otherwise clearly imparts. Purchasers should be entitled to rely on what appears to be a perfectly recorded document.
Example: A deed bears what appears to be a valid acknowledgment but is in fact invalid because the notary was disqualified to act or because the grantor did not appear personally in front of the notary to acknowledge her signature, as required by law.
79
T/F. A judgment creditor would not be entitled to prevail against a prior transferee under “notice” and “race-notice” statutes.
T/F. A mortgagee for value would be entitled to prevail against a prior transferee under “notice” and “race-notice” statutes.
T
In other words, they do not meet the reqs. of a BFP
In nearly all states, a plaintiff who obtains a money judgment can obtain, by statute, a judgment lien on the defendant’s real estate. The majority of cases hold that the judgment lienor is not protected either because (i) he is not a BFP because he did not pay value for the judgment, or (ii) the judgment attaches only to property “owned” by the defendant, and not to property the defendant has previously conveyed away, even if that conveyance was not recorded.
T
Notice and race-notice recording acts protect bona fide purchasers (“BFPs”) from prior unrecorded conveyances of the same property.
80
T/F. When a grantee’s successor is ejected by a third party, the original grantor who conveyed the general warranty deed is breaching the covenant of seisin.
F
A general warranty deed contains covenants for title through which the grantor warrants against title defects created by himself and prior titleholders. Through the covenant of seisin, the grantor warrants that he has the estate or interest he purports to convey (i.e., both title and possession) at the time of the grant. The covenant of seisin can be breached only at the time of the initial conveyance; thus, it does not run to the grantee’s successors.
On the other hand, the original grantor who conveyed the general warranty deed is breaching some of the usual covenants for title in a general warranty deed. Among the usual covenants in a general warranty deed are future covenants, which run with the land. Thus, a grantor could be liable for breaching one of these covenants for title, as explained below, if the grantee’s successors are disturbed in possession.
When a grantee’s successor is ejected by a third party, the original grantor who conveyed the general warranty deed is breaching the covenant for quiet enjoyment. Through this covenant, a grantor warrants that the grantee will not be disturbed by a third party’s lawful claim of title to the property. This covenant runs with the land to the grantee’s successors and can be breached multiple times. The lawful ejectment of the grantee or her successor would constitute a breach.
The original grantor also is breaching the covenant of warranty. Through this covenant, the grantor agrees to defend the grantee’s title from any third party’s lawful or reasonable claims of title, and to compensate the grantee for any related loss. This is generally considered similar to the covenant for quiet enjoyment, and its benefit also runs with the grantee’s estate.
81
T/F. If a grantor executes and delivers a deed to a grantee but asks the grantee not to record the deed for a week, title pass to the grantee when the grantee records the deed a week later
F
When the grantor delivers the deed to the grantee
82
In a __________ deed, the grantor covenants against only the title defects he himself created.
Special warranty
83
What is not an effect of properly recording a deed?a. Raising a presumption that the deed is authentic
b. Raising a presumption that the deed was validly delivered
c. Protecting a purchaser against interests arising by adverse possession
d. Placing subsequent grantees on constructive notice of the deed’s contents
c.
84
T/F. A properly recorded deed raises the presumption that the deed was validly delivered.
T
85
T/F. A properly recorded deed raises the presumption that the deed is authentic.
T
86
Against whom may a grantee invoke the doctrine of estoppel by deed?
a. The original grantor only
b. The original grantor and subsequent bona fide purchasers only
c. The original grantor and any successor to the grantor’s after-acquired title
a.The original grantor only
87
T/F. When a grantor transfers land to hinder a creditor, the creditor may seek to have the transfer set aside.
A creditor may set aside a fraudulent conveyance under the Uniform Fraudulent Transfer Act (“UFTA”), which nearly all states have adopted. A conveyance is fraudulent if the grantor/debtor actually intended to hinder, delay, or defraud a creditor; or if the grantor (i) did not receive a reasonably equivalent value in exchange for the transfer and (ii) was insolvent or became insolvent as a result of the transfer.
A deed will not be set aside under the UFTA as against any grantee who took in good faith and paid reasonably equivalent value. However, the transfer may be set aside by a court if the land was given as a gift (i.e., without receiving reasonably equivalent value).
88
A deed will not be set aside under the UFTA as against any grantee who _____.
took in good faith and paid reasonably equivalent value
89
If a deed is delivered with the identity of the grantee left blank, courts will presume that _____.
the person taking delivery has authority to fill in the blank.
90
“No conveyance or mortgage of an interest in land is valid against any subsequent purchaser for value without notice thereof, unless it is recorded" is an example of a typical ____ statute.
notice
91
A grantor hands a deed to a grantee and says, “I want you to hold on to this deed so you can have my land when I die.”
Will a court likely rule that delivery occurred? (parol evidence)
No, because the grantor’s statement is admissible to show that the deed was not delivered
92
T/F. A donee from a bona fide purchaser of the land can be protected as a BFP of land.
T
Under the shelter rule, anyone who takes from a BFP will be treated like a BFP (i.e., will prevail against any interest her transferor would have prevailed against). This rule exists to protect the BFP by preserving his ability to convey property. It applies even when his transferee had actual knowledge of a prior unrecorded interest or did not take for substantial pecuniary value (i.e., was a donee). However, a non-BFP who previously had title cannot acquire BFP status by selling the land to a BFP and then repurchasing it.
93
T/F. Courts generally will presume that a grantee’s possession of a deed means it has been delivered.
T
Unless the grantor clearly expressed his intent that title pass to the grantee without physical delivery, the grantor’s continued possession of the deed raises a presumption of nondelivery. Conversely, the grantee’s possession of a properly executed deed raises a presumption of delivery.
94
T/F. The grantor’s continued possession of the deed raises a presumption of nondelivery.
T
Unless the grantor clearly expressed his intent that title pass to the grantee without physical delivery, the grantor’s continued possession of the deed raises a presumption of nondelivery. Conversely, the grantee’s possession of a properly executed deed raises a presumption of delivery.
95
To what extent (in most states), does a buyer who has paid only part of the purchase price under an installment land contract protected by recording acts?
only to the extent of payments made
In a dispute between a subsequent purchaser under an installment land contract and a prior claimant of the same land, the court may:
1. Award the contract purchaser a share of the property equal to the proportion of payments made as a tenant in common with the prior claimant;
2. Award the land to the prior claimant, but give the contract purchaser a lien on the property to the extent of the amount paid; or
3. Award the land to the contract purchaser, but give the prior claimant a lien on the property to the extent of the balance still owed.
96
_____is a security interest in land by which the debtor (i.e., the trustor) transfers title to the land to a third party (i.e., the trustee), such as the lender’s lawyer or a title insurance company, acting on behalf of the lender (i.e., the beneficiary). In the event of default, the lender instructs the trustee to foreclose the _____ by selling the property.
deed of trust
97
5 types of security interest in land
mortgage = usually foreclosure sale conducted by sheriff required
deed of trust = third party; many states allow judicial and nonjudicial (sale not conducted by sheriff)
installment land = get deed transferring title at the end of series of payment; In case of default, the contract usually contains a forfeiture clause providing that the vendor may cancel the contract, retain all money paid to date, and retake possession of the land.
absolute deed= give you the deed in place of mortgage in exchange for cash - but may be interpreted as equitable mortgage by court if land give as security
sale-Leaseback=
A landowner needing to raise money may sell her land to another for cash and may then lease the land back for a long period of time. As in the case of the absolute deed, the grantor/lessee may attack such a transaction later as a disguised mortgage.
98
An equitable mortgage exists if a court concludes that a grantor transferred _____ to serve as security for an obligation. If the court so determines, the grantee must foreclose by _____, as with any other mortgage. The court will consider:
an absolute deed
judicial action
(i) The existence of a debt or promise of payment by the grantor;
(ii) The grantee’s promise to return the land if the debt is paid;
(iii) Whether the amount advanced to the grantor was much lower than the value of the property;
(iv) The degree of the grantor’s financial distress; and
(v) The parties’ prior negotiations.
99
__________ is the right of a mortgagor to free the land of the mortgage by paying the amount due, plus interest, at any time before the foreclosure sale.
Equitable redemption
100
Equitable redemption is the right of a mortgagor to _____ at any time before the foreclosure sale. (If the mortgage so requires, the mortgagor may have to pay a prepayment charge as well.) If the mortgagor defaulted and the mortgage or note contained an acceleration clause, then the _____ must be paid in order to redeem in equity. This right cannot be waived in the mortgage itself; doing so is known as “_____.” However, the right can be waived later for _____.
free the land of the mortgage by paying the amount due, plus interest,
full balance
clogging the equity of redemption
consideration
101
Statutory redemption, in contrast to equitable redemption, is the right of a mortgagor to free the land of the mortgage by _____. About half the states provide a statutory right to redeem for some fixed period after the foreclosure sale has occurred, usually six months or one year. The amount to be paid usually is the foreclosure sale price, rather than the amount of the original debt. This right extends to mortgagors and, in some states, to junior lienors.
paying the foreclosure sale price after the sale has occurred
102
A “_____” clause authorizes the trustee in a deed of trust to advertise, give appropriate notices, and conduct a nonjudicial foreclosure sale personally. All states allow mortgages to be foreclosed by judicial sale, while about one-half also allow nonjudicial sale under a _____.
power of sale
power of sale for deeds of trust
103
Must a junior mortgagee be named as a party to a senior mortgagee’s foreclosure action? Why?
Yes, because it has the right to pay off the senior mortgage to avoid being wiped out by foreclosure
104
A _____ must be named as a party to a senior mortgagee’s foreclosure action because it has the right to pay off the senior mortgage to avoid being wiped out by foreclosure. Foreclosure destroys _____ junior to the mortgage being foreclosed. Thus, if a senior mortgage is in default, a junior mortgagee has the right to pay it off (i.e., _____) to avoid being wiped out by its foreclosure. Failure to join the junior mortgagee results in _____. In contrast, those with interests senior to that of the foreclosing party are _____ parties because their interests are not affected by foreclosure. The buyer at the sale takes subject to senior interests, which remain on the land.
junior mortgagee
interests (e.g., liens, mortgages, leases, easements)
redeem it
the preservation of its interest despite foreclosure and sale
not necessary
105
T/F. Those with interests senior to that of the foreclosing party are not necessary parties because their interests are not affected by foreclosure.
T
106
How is the priority of a mortgage generally determined?
However, priority may be modified in several ways, such as by _____ if a mortgagee fails to record its mortgage, or through _____ between mortgagees.
By the order in which it was placed on the property.
operation of the recording acts
subordination agreements
107
If an installment land contract provides that the debtor forfeits her interest in the property on default, and the vendor sends notice that he is electing the forfeiture remedy, the vendor can pursue _____.
no other remedies
The contract may contain a forfeiture clause providing that the vendor may cancel the contract upon default, retain all money paid, and retake possession of the land. Because forfeiture is such a harsh remedy, courts have tended to resist enforcing forfeiture clauses, e.g. by treating installment contracts as mortgages. A number of decisions allow for forfeiture of the debtor’s interest in the property but require the vendor to refund to the purchaser any amount by which his payments exceed the vendor’s damages.
108
T/F. A vendor who pursues a forfeiture under an installment land contract cannot also pursue damages or specific performance.
T
If an installment land contract provides that the debtor forfeits her interest in the property on default, and the vendor sends notice that he is electing the forfeiture remedy, the vendor can pursue no other remedies. In an installment contract, the debtor (i.e., the buyer) contracts with the vendor to pay for the land in regular installments until the full contract price has been paid, plus interest. Only then will the vendor transfer legal title to the buyer. The contract may contain a forfeiture clause providing that the vendor may cancel the contract upon default, retain all money paid, and retake possession of the land. Because forfeiture is such a harsh remedy, courts have tended to resist enforcing forfeiture clauses, e.g. by treating installment contracts as mortgages. A number of decisions allow for forfeiture of the debtor’s interest in the property but require the vendor to refund to the purchaser any amount by which his payments exceed the vendor’s damages.
Hence, a vendor who pursues a forfeiture cannot also pursue damages or specific performance. It is commonly held that the vendor who elects to pursue a forfeiture cannot also bring an action for damages or for specific performance. If the vendor chooses the forfeiture remedy, he must forgo all others.
109
If a debtor deeds land to her creditor in exchange for cash, a court may treat the conveyance as a security interest if _____. A court will likely treat such a transaction as _____ and not as a conveyance of the land outright. In determining whether the parties intended the transfer only to serve as security for an obligation, the court will consider:
(i) The existence of a _____ or promise of payment by the grantor;
(ii) The grantee’s _____ to return the land if the debt is paid;
(iii) Whether the amount _____ was much lower than the value of the property;
(iv) The degree of the grantor’s _____; and
(v) The parties’ prior _____.
Considering the above, a court is not likely to treat the conveyance as a security interest if the creditor agreed to accept the land as _____.
If the court thus concludes that the deed was given as security, the grantee-creditor must foreclose it like any other mortgage. It will be treated as an equitable mortgage even if the parties _____.
the creditor promised to return the land when the cash is repaid in full
```
an equitable mortgage
debt
promise
advanced to the grantor
financial distress
negotiations
```
payment in full for the loan
did NOT execute a mortgage contract.
110
T/F. If the court thus concludes that the deed was given as security, the grantee-creditor must foreclose it like any other mortgage. It will be treated as an equitable mortgage even if the parties did not execute a mortgage contract.
T.
111
T/F. The mortgagor’s exercise of her statutory right of redemption will preclude the mortgagee’s right to foreclose upon the mortgagor’s default.
F
Rather, statutory redemption is the right of a mortgagor to recover the land by paying the foreclosure sale price after the sale has occurred. Note that this differs from equitable redemption, which is the 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. The mortgagor’s exercise of her equitable right of redemption prior to the foreclosure sale would indeed preclude the mortgagee from foreclosing.
112
Equitable redemption is the right of a mortgagor to recover the land by paying the amount overdue on the mortgage, plus ____, at any time _____ the foreclosure sale.
interest
| before
113
May a vendor who has accepted late payments for six months on an installment land contract declare a forfeiture if payment is late the seventh month?
No, because the vendor has waived strict performance of the contract
Forfeiture clauses are NOT void in all jurisdictions, but because forfeiture is such a harsh remedy, courts have tended to resist enforcing them. One way courts have done so is by finding a waiver of strict performance when a vendor has established a pattern of accepting late payments from the purchaser. To reinstate strict performance, the vendor must notify the purchaser of her intent to do so and must allow the purchaser a reasonable time to make up any late payments.
114
T/F. All parties to a mortgage or deed of trust can transfer their interests.
T
Ordinarily, the mortgagor transfers by deeding the property, while the mortgagee usually transfers by indorsing the note and executing a separate assignment of the mortgage. The note and mortgage must pass to the same person for the transfer to be complete.
115
All parties to a mortgage or deed of trust can transfer their interests. Ordinarily, the mortgagor transfers by _____, while the mortgagee usually transfers by _____. The _____ must pass to the same person for the transfer to be complete.
deeding the property
indorsing the note and executing a separate assignment of the mortgage
note and mortgage
NOTE: courts split on whether it is presumed that the transfer of the mortgage automatically transfers the note as well, unless the mortgagee-transferor expressly reserves the rights to the note. Other states hold that, because the note is the principal evidence of the debt, a transfer of the mortgage without the note is a nullity and is void.
116
Transfer of mortgage without note =
| Transfer of note without mortgage =
courts split - some presume that mortgage auto transfer some the transfer is null and void
The note can be transferred without the mortgage, but the mortgage will automatically follow the properly transferred note, unless the mortgageetransferor expressly reserves the rights to the mortgage (which there would rarely be any reason for the mortgagee to do)
117
The note may be transferred either by _____ and _____, or by _____. Only if the _____ is used can the transferee become a holder in due course under U.C.C. Article 3.
indorsing it
delivering it to the transferee
a separate document of assignment
former method (indorsing it and delivering)
118
Holder in Due Course Status
To be a holder in due course of the note, the following requirements must be met:
(1) The note must be _____ in form, which means that it must be payable _____. It must contain a promise to pay _____ amount of money (although _____ is permitted), and no _____, except that it may contain _____.
(2) The original note must be indorsed (i.e., signed) by _____. Indorsement on _____ is not acceptable.
(3) The original note must be delivered to the _____. Delivery of a _____ is not acceptable.
(4) The transferee must take the note _____ and must _____. The transferee must not have any notice that the note _____.
negotiable
“to bearer” or “to the order of” the named payee
a fixed
an adjustable interest rate
other promises
an acceleration clause and an attorneys’ fee clause
the named payee
a photocopy or some other document
transferee
photocopy
in good faith
pay value for it (“Value” implies an amount that is more than nominal, although it need not be as great as the note’s fair market value.)
is overdue or has been dishonored, or that the maker has any defense to the duty to pay it
119
Benefits of Holder in Due Course Status
A holder in due course will take the note free of any _____ defenses that the _____ might raise. These defenses include _____. The holder in due course is, however, still subject to “_____” defenses that the _____ might raise. These include _____.
personal
maker
failure of consideration, fraud in the inducement, waiver, estoppel, and payment
real
maker
infancy, other incapacity, duress, illegality, fraud in the execution, forgery, discharge in insolvency, and any other insolvency
120
Effect of Payment to Original Mortgagee After Transfer of Note
Under the version of the U.C.C. enacted in a large majority of states, if the original payee transfers possession of a negotiable instrument, a payment to the original payee will not count, and the holder of the instrument can still demand payment. [See U.C.C. §3-602 (1995)] However, many notes secured by mortgages on real property are not negotiable in form (e.g., because their promise to pay is conditional or they are not payable to “bearer” or “order”). If the original mortgagee transfers possession of a nonnegotiable note, the mortgagor’s payment to the original mortgagee is effective against the transferee until the mortgagor receives notice of the transfer. [Restatement (Third) of Property: Mortgages §5.5]
121
A borrows $50,000 from B and gives B a nonnegotiable note for that amount, secured by a mortgage on Blackacre. One year later, B assigns the note and mortgage to C, transferring actual possession of the note to C. Two years thereafter, A, who does not realize that B no longer holds the note, pays $50,000 plus interest to B. This payment is effective against _____. C’s recourse is against _____.
C
B
122
A purchase money mortgage (“PMM”) is a mortgage given to _____ or _____. Who has priority among the two.
A vendor’s purchase money mortgage usually has priority over a third-party lender’s purchase money mortgage. A purchase money mortgage (“PMM”) is a mortgage given to (i) the vendor of the property as a part of the purchase price, or (ii) a third party who lends funds to allow the buyer to purchase the property. As between a vendor PMM and a third-party PMM imposed as part of the same transaction, the vendor’s is presumed to have priority, irrespective of the order of recording.
123
As between two third-party lender PMMs, priority is determined by _____, subject to any subordination agreement.
the chronological order in which the mortgages were placed on the property
124
Junior lienors are entitled to proceeds of a mortgage foreclosure sale, but only after certain expenses and the foreclosing party’s loan have been paid. The priority of the proceeds from a foreclosure sale is:
1. Expenses of the sale, attorneys’ fees, and court costs;
2. The principal and accrued interest on the foreclosing party’s loan;
3. Any junior lienors or other junior interests in the order of their priority; and then
4. The mortgagor.
125
T/F. Junior interests do not remain on the property after the sale.
T
they are extinguished by foreclosure if they are properly made parties to the foreclosure proceeding. In contrast, foreclosure does not affect any interest senior to the mortgage being foreclosed, which remains on the property.
126
May the vendor of an installment land contract containing a forfeiture clause reinstate strict performance once she has waived it?
Yes, by giving the purchaser notice and a reasonable time to catch up on payments
127
A due-on-sale clause permits the mortgagee to _____.
Permits the mortgagee to demand full payment of a mortgage debt if the mortgagor transfers her interest without the lender’s consent
128
When may a mortgagor redeem her land in equity?
Before the foreclosure sale.
129
T/F. The right to redeem your land in equity exist only in a foreclosure sale context.
F
A mortgagor may redeem her land in equity before the foreclosure sale. At any time prior to the foreclosure sale—i.e., this right does not exist only during the foreclosure sale—the mortgagor has the right to redeem the land or free it of the mortgage by paying off the amount due, plus interest. If the mortgage or note contained an acceleration clause, which permits the mortgagee to declare the full balance due in the event of default, the full balance must be paid in order to redeem.
130
What does it mean for a grantee to assume a mortgage?
The grantee becomes primarily liable to the lender.
131
Assumption of a mortgage does not mean the grantee becomes a surety for the original mortgagor. The assuming grantee becomes primarily liable to the lender, and the original mortgagor becomes _____ as a _____.
secondarily liable
| surety
132
T/F. The mortgagee’s acceptance of a deed in lieu of foreclosure will preclude the mortgagee’s right to foreclose upon the mortgagor’s default.
T
133
As between two mortgages, what is the effect on the junior mortgage when the mortgagor agrees to an increased interest rate on the senior mortgage?
The junior mortgage is given priority over any increase in the senior mortgage debt
If a mortgagor enters into a modification agreement with the senior mortgagee making its mortgage more burdensome, the junior mortgage will be given priority over the additional debt balance resulting from the modification.
When a mortgagor and mortgagee agree to modify the mortgage, the mortgagee loses its priority as to the modification but maintains its priority as to the original debt. Thus, the junior mortgage is NOT given priority over the entire senior mortgage.
134
May the lender who is foreclosing a mortgage bid on the land during the foreclosure sale?
Yes, regardless of whether the parties contracted for this before default.
135
What generally occurs when a mortgagee transfers a promissory note without a written assignment of the mortgage?
The mortgage follows the note.
136
As between two mortgages, what is the effect on the junior mortgage when the mortgagor accepts an advance of funds from the senior mortgagee?
The junior mortgage is given priority over the advance if the advance was optional
137
T/F. If the proceeds from a foreclosure sale are insufficient to satisfy the debt of a mortgage junior to the one being foreclosed, the junior mortgagee may sue the mortgagor for the deficiency
T
called a deficiency judgment
138
For which type of security interest in land does the debtor transfer title to land to a lender in exchange for a lease with an option to repurchase?
Sale-leaseback
139
T/F. A PMM has priority over prior non-PMMs, even if those other mortgages or liens are recorded first.
T
140
T/F. A purchase money mortgage (“PMM”), whether recorded or not, generally will not have priority over a prior non-PMM against the same mortgagor, regardless of whether the prior interest is recorded.
F
A purchase money mortgage (“PMM”), whether recorded or not, generally will have priority over a prior non-PMM against the same mortgagor, regardless of whether the prior interest is recorded. A PMM is a mortgage given to (i) the vendor of the property as a part of the purchase price, or (ii) a third party who lends funds to allow the buyer to purchase the property. Thus, a PMM has priority over prior non-PMMs, even if those other mortgages or liens are recorded first.
A PMM that was not recorded generally will not have priority over a subsequent recorded mortgage or lien, such as a non-PMM, against the same mortgagor. PMM priority may be defeated by subsequent mortgages or liens by normal operation of the recording acts. In general, if a first mortgagee fails to record and the second mortgagee records, gives value, and takes without notice of the first, any recording act will give the second mortgagee priority over the first. Thus, a PMM does not have priority over all other mortgages and liens. Furthermore, as between a vendor PMM and a third-party PMM, the vendor’s is presumed to have priority, irrespective of the order of recording.
141
T/F. A PMM that was not recorded generally will not have priority over a subsequent recorded mortgage or lien, such as a non-PMM, against the same mortgagor.
T
b/c of the recording acts (BFP)
A PMM that was not recorded generally will not have priority over a subsequent recorded mortgage or lien, such as a non-PMM, against the same mortgagor. PMM priority may be defeated by subsequent mortgages or liens by normal operation of the recording acts. In general, if a first mortgagee fails to record and the second mortgagee records, gives value, and takes without notice of the first, any recording act will give the second mortgagee priority over the first. Thus, a PMM does not have priority over all other mortgages and liens. Furthermore, as between a vendor PMM and a third-party PMM, the vendor’s is presumed to have priority, irrespective of the order of recording.
142
T/F. Mortgages senior to the loan that was foreclosed receive none of the proceeds of a mortgage foreclosure sale.
T
Mortgages senior to the loan that was foreclosed receive none of the proceeds of a mortgage foreclosure sale. Because a senior mortgage remains on the land (i.e., may itself be foreclosed in the future), a senior mortgagee is not entitled to any of the money from the sale, even if there is a surplus.
143
When a mortgagor defaults on his debt, the mortgagee can _____ or foreclose on the mortgage.
sue on the debt
144
A mortgagee may wish to take possession of the property, or begin receiving the rents from the property, before foreclosure. This is especially important in states where foreclosure is a lengthy process. What are the theories related to this in which is the majority?
1. Theories of Title
The mortgagee may have a right to take possession before foreclosure, depending on the theory the state follows.
a. The Lien Theory
According to the lien theory, the mortgagee is considered the holder of a security interest only and the mortgagor is deemed the owner of the land until foreclosure. A majority of the states follow this theory, which provides that the mortgagee may not have possession before foreclosure.
b. The Title Theory
Under the title theory, legal title is in the mortgagee until the mortgage has been satisfied or foreclosed. A minority of states follow this theory, which provides that the mortgagee is entitled to possession upon demand at any time. In practice, this means that as soon as a default occurs, the mortgagee can take possession.
c. The Intermediate Theory
The intermediate theory is a compromise position in which legal title is in the mortgagor until default, and upon default, legal title is in the mortgagee. Only a handful of states follow this theory, which provides that the mortgagee may demand possession when a default occurs. There is little practical difference between this theory and the title theory.
145
According to the lien theory, the mortgagee is considered _____ and the mortgagor is deemed _____ until _____. A majority of the states follow this theory, which provides that the mortgagee may not have possession before foreclosure.
the holder of a security interest only
the owner of the land
foreclosure
146
Under the title theory, legal title is in the _____ until _____. A minority of states follow this theory, which provides that the mortgagee is entitled to possession upon demand at any time. In practice, this means that as soon as a default occurs, the mortgagee can take possession.
mortgagee
the mortgage has been satisfied or foreclosed
147
The intermediate theory is a compromise position in which legal title is in the _____ until default, and upon default, legal title is in the _____. Only a handful of states follow this theory, which provides that the mortgagee may demand possession when a default occurs. There is little practical difference between this theory and the _____ theory.
mortgagor
mortgagee
title
148
T/F. All states agree that the mortgagee may take possession if the mortgagor gives consent to do so, or if the mortgagor abandons the property.
T
149
The mortgagee who takes possession prior to foreclosure can intercept the rents, prevent waste, make repairs, and lease out vacant space. However, despite these advantages, most mortgagees do not wish to take possession because _____.
of the liability risks it presents. These risks include a very strict duty to account for all rents received, a duty to manage the property in a careful and prudent manner, and potential liability in tort to anyone injured on the property.
150
Instead of becoming a “mortgagee in possession,” most mortgagees attempt to intercept the rents before foreclosure by _____. Courts will generally appoint receivers for rental property upon a showing of some combination of three factors: (i) that _____ is occurring, (ii) that the value of the property is _____, and (iii) that the mortgagor is _____.
getting a receiver appointed by the court to manage the property
waste
inadequate to secure the debt
insolvent
151
When is a lender entitled to a deficiency judgment?
When the proceeds of a foreclosure sale do not satisfy the mortgage debt.
152
T/F. If a debtor deeds land to her creditor in exchange for cash, a court treat the conveyance as a security interest if the creditor promised to return the land when the cash is repaid in full.
T
153
T/F. If a mortgagee purports to transfer the mortgage without the note payment of the mortgage debt would become due in full.
F
That would never happen
154
For an institutional lender, what is the effect of a due-on-sale clause when a mortgagor transfers her interest without the lender’s consent?
The lender may demand that the debtor pay the remaining debt in full
155
If a mortgagor conveys mortgaged property, when does the grantee become primarily liable to the lender?
If the grantee assumes the mortgage
156
Land subject to a security interest cannot be foreclosed through the mortgagor’s tender of the deed to the mortgagee. The mortgagor may grant the mortgagee a deed to the property in _____. The mortgagor effectively gives the mortgagee her _____ (i.e., her right to free the land of the mortgage by paying it off). What is the effect of a deed in lieu of foreclosure?
lieu of foreclosure
equity of redemption
Acceptance of a deed in lieu of foreclosure discharges the mortgage and allows the mortgagee to take possession without a foreclosure sale. If the mortgagee accepts the tendered deed, it is not a foreclosure, since it does not cut off subordinate liens as a foreclosure does. However, a mortgagee has the right to refuse the deed and proceed to foreclosure.
157
T/F. The mortgagee’s acquiring the mortgagor’s legal interest in a lien theory state will not preclude the mortgagee’s right to foreclose upon the mortgagor’s default. Why/Why not?
F
In a lien theory state, a mortgage lien vests the mortgagee with an equitable interest in the land, while the mortgagor retains the legal interest (the opposite is true in a title theory state). If the mortgagee subsequently acquires the mortgagor’s interest, the mortgage merges with the title, and the mortgagor’s personal liability on the underlying debt is discharged up to the value of the land.
158
T/F. The mortgagor’s full payment of the note if the agreement permits prepayment will preclude the mortgagee’s right to foreclose upon the mortgagor’s default.
T
Generally, full payment of the note discharges the mortgage lien. The agreement in the note normally governs whether the mortgagor may prepay the obligation. If the note or mortgage does not provide for prepayment, the mortgagor does not have this right.
159
T/F. If the note or mortgage does not provide for prepayment, the mortgagor does not have this right.
T
redemption in equity applies at any time before the foreclosure sale. not before foreclosure.
160
T/F. Redemption in equity only applies if the mortgagor has defaulted on a mortgage.
F
If the mortgagor has defaulted on a mortgage or note that contains an “acceleration clause” permitting the mortgagee to declare the full balance due in the event of default, the full balance must be paid in order to redeem. A mortgagor’s right to redeem her own mortgage cannot be waived in the mortgage itself; this is known as “clogging the equity of redemption” and is prohibited. However, the right can be waived later for consideration.
161
A mortgagor’s right to redeem her own mortgage cannot be waived _____; this is known as “clogging the equity of redemption” and is prohibited. However, the right can be waived _____.
in the mortgage itself
| later for consideration
162
Which of the following is not a way in which land subject to a security interest can be foreclosed?
a. Through a clause in a deed of trust giving the trustee the power of sale.
b. Through the mortgagor’s tender of the deed to the mortgagee.
c. Through an auction.
d. Through a court order.
b. Through the mortgagor’s tender of the deed to the mortgagee.
163
T/F. O conveys property “to A for life, then to A’s widow for life, then to A’s children” is valid under the Rule Against Perpetuities.
T
164
T/F. O conveys “to A and her heirs an option to purchase a subdivision lot for $50,000” is valid under the Rule Against Perpetuities.
F
165
A grantor who conveys a fee simple absolute retains:
no interest
166
In most states, when tenants by the entirety divorce, they hold the property as __________.
TIC
167
What interest arises when the remainderman is in existence and ascertained, but her right to possession and enjoyment is subject to being defeated by the happening of a condition subsequent?
Vested remainder subject to total divestment
168
At common law, a conveyance of property from O “to O and A as joint tenants with right of survivorship” creates a __________.
TIC
169
If A, B, and C own property as joint tenants, and A conveys his interest to D, what interests do the parties own on B’s death?
C owns a 2/3 interest, and D owns a 1/3 interest
If A, B, and C own property as joint tenants, and A conveys his interest to D, on B’s death C owns a 2/3 interest, and D owns a 1/3 interest. The distinguishing feature of a joint tenancy is the right of survivorship. When property is held by three or more joint tenants, one joint tenant’s conveyance destroys the joint tenancy only as to that interest. The remaining joint tenants continue to hold in joint tenancy as between themselves, and the grantee holds his interest as a tenant in common with them. When A sold his interest to D, that 1/3 interest was severed and thus converted into a tenancy in common, which D continues to hold. However, the remaining 2/3 interest continues to be held in joint tenancy with right of survivorship between B and C. When one joint tenant dies, the property is freed from her interest, and the survivors retain an undivided right in the property. Since B’s interest was extinguished on her death, B’s estate does not take B’s interest; the surviving joint tenant (C) holds free of it. Thus, C owns a 2/3 interest in the property.
170
The distinguishing feature of a joint tenancy is the _____.
right of survivorship
171
When property is held by three or more joint tenants, one joint tenant’s conveyance destroys the joint tenancy _____.
only as to that interest
172
In general, a life tenant commits permissive waste when he:
Fails to make required repairs to the land or pay required carrying charges
173
When a life tenant consumes or exploits natural resources on the property (e.g., timber, minerals, oil), he commits _____ waste. However, exceptions to this rule allow the life tenant to consume or exploit such resources:
voluntary
(i) in reasonable amounts when necessary for repair and maintenance of the land;
(ii) when the life tenant is expressly given the right to exploit such resources in the grant (e.g., a mineral lease);
(iii) when prior to the grant, the land was used in exploitation of such natural resources, so that the grantor most likely intended the life tenant to have the right to exploit; and
(iv) in many states, when the land is suitable only for such exploitation (e.g., a mine).
174
When a life tenant commits ameliorative waste he _____.
When a life tenant substantially changes the use of the property in a way that increases its value (e.g., he demolishes a run-down building), he commits ameliorative waste.
175
A tenant for life is entitled to all the _____; but he cannot lawfully do any act that would injure the interests of the person who owns the _____. If he does, the future interest holder may _____.
ordinary uses and profits of the land
remainder or the reversion
sue for damages and/or to enjoin such acts
176
Obligations of a life tenant under permissive waste doctrine:
- preserve the land and structures in a reasonable state of repair (But the tenant is under no obligation to make permanent improvements on the land, no matter how wise it might seem to do so.)
- A life tenant is obligated to pay interest on any encumbrances on the land (to the limited extent stated above). However, he does not have to pay anything on the principal of the debt; reversioners or remaindermen must pay the principal in order to protect their interests.
- The life tenant is obligated to pay all ordinary taxes on the land
- If the life of a public improvement on the land is shorter than the expected duration of the life estate, the life tenant is obligated to pay all of the assessment (to the limited extent stated above). However, if the improvement is likely to outlast the life estate (e.g., curbing, sewers, water mains, a change in grade of a street), taxes and assessments are apportioned equitably between the life tenant and the holders of all future interests.
NOTE: e) No Obligation to Insure Premises
The life tenant is under no obligation to insure the premises for the benefit of a remainderman. However, both the life tenant and the remainderman have an insurable interest.
f) No Liability for Third Party’s Torts
Under the modern view, life tenants are not responsible to remaindermen (as they were at common law) for damages caused by third-party tortfeasors. The life tenant’s action against such third parties is limited to the damages to the life estate.
177
T/F. The life tenant is under no obligation to insure the premises for the benefit of a remainderman.
T
178
T/F. Under the modern view, life tenants are not responsible to remaindermen for damages caused by third-party tortfeasors. The life tenant’s action against such third parties is limited to _____.
T
Under the modern view, life tenants are not responsible to remaindermen (as they were at common law) for damages caused by third-party tortfeasors. The life tenant’s action against such third parties is limited to the damages to the life estate.
the damages to the life estate.
179
If T devises property “to A for life, then to B’s children,” and B has at least one child living at all relevant times, when does the class of “B’s children” close?
At A’s death
180
A __________ restraint provides that the grantee covenants not to transfer the property.
Promissory
181
If O conveys property “to A, but if the premises cease to be used for recreational purposes, then to B,” what interests do the parties have in a jurisdiction that follows the common law Rule Against Perpetuities?
A has a fee simple absolute, and B and O have no interest
182
A grantor who conveys a fee simple determinable retains __________.
A possibility of reverter
183
A fee simple determinable, also called a determinable fee, is an estate that _____ on the happening of a stated event and goes back to the grantor. It must be distinguished from the _____, where the grantor must take affirmative steps to terminate the estate of the grantee if the stated event occurs.
automatically terminates
fee simple subject to a condition subsequent
184
A _____ is created by the use of durational, adverbial language, such as “for so long as,” “while,” “during,” or “until.”
fee simple determinable
185
A fee simple subject to a condition subsequent is created when the grantor retains the power to terminate the estate of the grantee upon the happening of a specified event. Upon the happening of the event stated in the conveyance, the estate of the grantee _____.
continues until the grantor exercises her power of termination (right of entry) by bringing suit or making reentry
186
The following words are usually held to create _____: “upon condition that,” “provided that,” “but if,” and “if it happens that.”
conditions subsequent
187
A right of entry (also known as “right of reentry” or “power of termination”) is the future interest retained by the transferor who conveys an estate _____. It is necessary to _____.
on condition subsequent
expressly reserve the right of entry in the grantor; this retained interest does not automatically arise as in the case of a fee simple determinable and possibility of reverter
188
O conveys land “to A and his heirs, provided that liquor is not sold on the premises.” What interest is created?
O has not used words indicating the estate will terminate if liquor is sold on the premises. Nor has O retained a right to reenter. Because a statement of the grantor’s wishes as to how the property should be used does not ordinarily imply a right retained by the grantor to enforce the purpose, a court may construe the deed as giving A a fee simple absolute. [Wood v. Board of County Commissioners, 759 P.2d 1250 (Wyo. 1988)]
189
O, owning Blackacre in fee simple, conveys it “to A and his heirs, on the express condition that the premises are never to be used by A for the sale of liquor, and in the event that they are so used, then O or her heirs may enter and terminate the estate hereby conveyed.” What interest is conveyed?
A has a fee simple subject to a condition subsequent. O has a right of entry. If the condition is broken, O has a power to terminate the estate of A by asserting her right of entry.
190
T/F. At common law and in nearly all states today, the grantor does not have to expressly retain a possibility of reverter.
T
unlike condition subsequent
191
Can the possibility of reverter could not be transferred?
At early common law, the possibility of reverter could not be transferred inter vivos or devised by will. An attempted transfer of the interest was invalid; but the possibility of reverter was not extinguished by the attempted transfer and would still descend to the heirs of the owner. Today, in most jurisdictions, the possibility of reverter can be transferred inter vivos or devised by will, and descends to the owner’s heirs if she dies intestate.
192
Although a joint tenant or tenant in common may have a right to compel contribution from other co-tenants for the cost of _____, she does not have a right to compel contribution for the cost of_____.
Under the unity of possession, each co-tenant has a right to possess the _____. A co-tenant out of possession cannot bring a possessory action unless _____.
Although a co-tenant generally is not entitled to share in the rental value of the land, she does have a right to share in _____.
A joint tenant or tenant in common may mortgage her interest. However, she may not encumber another co-tenant’s interest. Note that an _____ may not mortgage her interest in tenancy by the entirety property.
necessary repairs, taxes, and payments due on mortgages
improvements
entire estate subject to the equal right of her co-tenant.
there has been an “ouster” (i.e., wrongful exclusion) by the co-tenant in possession
rents paid by third parties
individual spouse
193
T/F. A co-tenant generally is not entitled to share in the rental value of the land.
F
she does have a right to share in rents paid by third parties though.
194
At common law, a contingent remainder must _____ or it is extinguished under the Rule of Destructibility of Contingent Remainders. Thus, if O conveys property “to A for life, then to B’s heirs” and A predeceases B, at common law _____. (Note: This rule has been abolished in all but a few states. In most states today, on A’s death, _____)
vest prior to or upon termination of the preceding estate
the heirs’ contingent remainder is extinguished, leaving a life estate in A and a reversion in O
O’s reversion would take over, and would then give way to a springing executory interest in B’s heirs.
195
The common law Rule in Shelley’s Case provides that a conveyance that purports to give a grantee a freehold estate (e.g., a life estate) with a remainder to her heirs instead gives the grantee _____. Thus, if O conveys property “to A for life, then to A’s heirs,” at common law A has a life estate and a _____ in fee simple. These interests merge to give A a _____. (Note: This rule also has been abolished in most states. In most states today, A would have _____, A’s heirs would have _____, and O would have a _____.)
both the freehold estate and the remainder
vested remainder
fee simple absolute in the property
a life estate
a contingent remainder
reversion
196
The common law Doctrine of Worthier Title provides that a remainder limited to _____ is _____, and the grantor retains a reversion in the property. Thus, if O conveys property “to A for life, then to my heirs,” at common law A has _____ and O has a _____. (Note: This doctrine is applied as a _____ in most states today, and so O’s heirs would have a _____ if O so clearly intended.)
to the grantor’s heirs is invalid
a life estate
reversion
rule of construction
contingent remainder
197
1) O conveyed “to A for life, then to the heirs of B.”
2) O conveyed “to A for life, to B if she reaches age 21.”
Why are the interests in the above examples remainders and not executory interests?
In each instance it is possible that the future interest will take effect at the natural expiration of A’s life estate (as remainders do), or that it will take effect following a gap after A’s estate (as executory interests do). The rule is that if an interest may operate as either a remainder or an executory interest (depending on the circumstances at A’s death), it is a remainder. Thus, at common law, if such a remainder was then called upon to act as an executory interest, it could not do so and was destroyed.
198
Difference b/w remainder and executory interest?
In each instance it is possible that the future interest will take effect at the natural expiration of A’s life estate (as remainders do), or that it will take effect following a gap after A’s estate (as executory interests do). The rule is that if an interest may operate as either a remainder or an executory interest (depending on the circumstances at A’s death), it is a remainder. Thus, at common law, if such a remainder was then called upon to act as an executory interest, it could not do so and was destroyed.
199
The validity of interests under the Rule Against Perpetuities is determined at the time _____.
The interests in an irrevocable trust arise when _____.
The interests in a will are created when _____.
For revocable trusts, the perpetuities period _____.
For deeds, the perpetuities period begins to run _____.
the interests are created
the trust is created
the will becomes effective—i.e., on the date of the testator’s death.
does not begin to run until the settlor’s power of revocation ceases (i.e., the trust becomes irrevocable), which is usually at the settlor’s death.
until it has been delivered with the intent to pass title (Because a deed is not effective to transfer an interest in property until it has been delivered with intent to pass title.)
200
The Rule Against Perpetuities provides that certain interests in property are void if there is any possibility, however remote, that they may vest more than 21 years after some life in being at the creation of the interest. The Rule applies to the following interests in property:
(i) contingent remainders;
(ii) executory interests;
(iii) class gifts (even if vested remainders);
(iv) options and rights of first refusal; and
(v) powers of appointment.
Future interests in the grantor (i.e., reversions, possibilities of reverter, and rights of entry) are not subject to the Rule Against Perpetuities.
201
Future interests in the grantor (i.e., reversions, possibilities of reverter, and rights of entry) are not subject to the Rule Against Perpetuities.
T.
202
If O conveys property “to A for her support until she remarries,” what interest does A have?
Fee simple determinable
203
A co-tenant has the right to possess:
The entire estate
204
If A, B, and C own property as joint tenants, and P obtains a money judgment against A, what interests do the parties own on B’s death?
A owns a 1/2 interest subject to P’s lien, and C owns a 1/2 interest
205
The Rule Against Perpetuities provides that _____.
certain interests in property are void if there is any possibility, however remote, that they may vest more than 21 years after some life in being at the creation of the interest
206
If O conveys property “to A for life, then to B; but if B predeceases A, to C,”
C has a _____.
A has a _____.
B has a _____.
shifting executory interest. A shifting executory interest is a future interest that divests the interest of another transferee. Because C’s interest may divest B’s interest, it is a shifting executory interest.
life estate
vested remainder subject to total divestment because B is an ascertained person in being whose interest is not subject to a condition precedent but is subject to being divested if she does not survive A
207
A remainder is a future interest created in a transferee that is capable of becoming a present interest upon _____. Generally, a remainder follows a ____. If the interest is not capable of taking on the natural termination of the preceding estate, it is an _____.
the natural termination of the preceding estate
life estate
executory interest
208
T/F. A remainder cannot “cut short” or divest a preceding estate prior to its normal expiration.
T
209
“To A for life, and on A’s death to B and his heirs.” B has _____, because _____.
A has a present possessory life estate.
a remainder in fee simple
It is a remainder because upon the expiration of A’s life estate (natural termination of the preceding estate), B will be entitled to present possession and enjoyment of the property. The term “remainder” derives from the consequence that when A’s life estate comes to an end, title “remains away” from the transferor instead of reverting back to him.
210
T/F. The term “remainder” derives from the consequence that when A’s life estate comes to an end, title “remains away” from the transferor instead of reverting back to him.
T
211
On Monday, O conveys Blackacre “to A for life.” On Wednesday, O conveys “all of my right, title, and interest in Blackacre” to B. B holds a _____.
reversion , not a remainder. B’s future interest was not created in the same disposition that gave A a life estate. The Monday conveyance gave A a life estate and raised a reversion in O. The Wednesday conveyance transferred O’s reversion to B. “Once a reversion, always a reversion.”
212
A vested remainder subject to total divestment arises when _____, but his right to _____ is subject to being defeated by the happening of some _____.
the remainderman is in existence and ascertained and his interest is not subject to any condition precedent
possession and enjoyment
condition subsequent
“To A for life, remainder to B and his heirs, but if at B’s death he is not survived by issue, to C and his heirs.” Here, B has a vested remainder in fee simple, but his fee simple interest is subject to being divested if at his death he is not survived by issue. (C has a shifting executory interest.)
213
“To A for life, remainder to B and his heirs, but if at B’s death he is not survived by issue, to C and his heirs.”
B has _____.
C has _____.
Here, B has a vested remainder in fee simple, but his fee simple interest is subject to being divested if at his death he is not survived by issue. (C has a shifting executory interest.)
214
“To A for life, then to B for life.”
A has a _____. B has a _____.
life estate
vested remainder in a life estate subject to total divestment
The transferor has a reversion in fee. B’s remainder is vested even though (as a practical matter) he must survive A in order to take. But this practical requirement does not make B’s remainder contingent. The only condition to B’s taking is the natural termination of A’s life estate, and this “condition” is inherent in any remainder life estate. There is no other condition precedent. However, B’s remainder life estate is not indefeasibly vested, for it will be defeated if he dies in A’s lifetime. Therefore, it is a vested remainder subject to total divestment.
215
“To A for life, and on A’s death to B; but if B predeceases A, on A’s death to C.”
A has a _____.
B has a _____.
C has a _____.
life estate
vested remainder subject to total divestment
Although B’s taking is contingent on his surviving A, that contingency is expressed as a condition subsequent—meaning that B’s remainder is vested subject to total divestment.
shifting executory interest.
216
“To A for life, and on A’s death to B if B survives A.”
A has a _____.
B has a _____.
life estate
contingent remainder in fee simple
The transferor has a reversion, which will become a possessory estate on the termination of A’s life estate if B predeceases A. Here, B’s taking is subject to a contingency, stated as a condition precedent, that he must survive A in order to take.
217
Under the growing trend of modern case law, may a landlord be held liable for injuries inflicted on a tenant by a third-party criminal?
Yes, if the landlord failed to maintain ordinary security measures
218
A grantor who conveys a fee simple subject to a condition subsequent retains __________.
A right of entry
219
A _____ is the future interest retained by a grantor who conveys a fee simple determinable.
possibility of reverter
220
A _____ is the future interest retained by a grantor who conveys a lesser estate than the grantor owns. Where O has a fee simple, a conveyance from “O to A for life” creates a life estate in A and a _____ in O.
reversion
reversion
221
In a conveyance from O “to charity A, but if the premises are no longer used as a museum, to charity B,” charity A has a _____.
fee simple subject to an executory interest
A fee simple subject to an executory interest is an estate that automatically divests in favor of a third party, rather than the grantor, on the happening of a stated event.
222
What will terminate a profit but not an easement?
Misuse of the interest
223
A person whose interest in land gives him the right to use someone else’s land independent of his ownership or possession of his own tract holds:
An easement in gross
224
T/F. By granting an affirmative easement across her land, a landowner grants a right to possess and enjoy that portion of her land
F
A right to use that portion of her land
225
T/F. A license is a nonpossessory interest in land.
F
A license is merely a privilege to go upon another’s land; it is not an interest in land.
226
T/F. An easement is a nonpossessory interest in land.
T
The holder of an easement has the right to use another’s land, but has no right to possess and enjoy the land.
227
T/F. If a profit holder uses the profit beyond its legal scope, the servient landowner may terminate the profit.
F
It automatically terminates
Thus, the servient landowner need NOT enjoin the use or seek to terminate the profit. Moreover, the scope of the profit is NOT increased to meet the holder’s needs.
228
T/F. Both profits and easements may arise by prescription.
T
Profits and easements may be created in the same way. Acquiring an interest by prescription is analogous to acquiring title to property by adverse possession.
229
Is a long period of nonuse sufficient to terminate an easement?
Yes, if it is accompanied by other evidence of intent to abandon the easement
230
Someone whose interest in land benefits her in her possession of another tract of land holds __________.
easement appurtenant
231
To acquire a prescriptive easement on property, the claimant's use does not need to be __________.
exclusive
232
To acquire a prescriptive easement on property, the claimant’s use must be:
Open and notorious, adverse, and continuous for the statutory period
Acquiring an easement by prescription is analogous to acquiring title to property by adverse possession, except that the use need NOT be exclusive (i.e., the user may share the use with the owner or other easement claimants). There is no requirement that the use be in good faith, and adverse use means the user does NOT have the owner’s permission.
233
If an easement has been surcharged, this means that _____.
The legal scope has been exceeded
234
T/F. Condemnation of the servient estate will terminate an easement.
T
235
When the grant of a perpetual easement fails to satisfy the Statute of Frauds, the result is that _____.
the grant creates a license
236
An oral attempt to create a perpetual easement results in the creation of a __________.
license
237
T/F. Real covenants run with the land at law.
T
238
What does it mean that real covenants run with the land at law?
that subsequent owners of the land may enforce or be burdened by the covenant.
239
If a plaintiff wants an injunction or specific performance, he must show that the covenant qualifies as an _____.
equitable servitude
240
For the burden of a real covenant to run to a successor in interest, the successor must be in privity of contract with the covenantor.
F
vertical privity
241
Horizontal privity exists between:
Parties to a real covenant who shared an independent interest in the land at the time they entered the covenant
242
DEFENSES TO EQUITABLE SERVITUDES
If someone burdened by an equitable servitude can raise the defense of estoppel to prevent its enforcement, it is probably because _____.
If the benefited party is violating a similar restriction on her own land, the burdened party would raise the defense of _____.
If the benefited party failed to bring suit against the burdened party within a reasonable time, the burdened party would assert that the suit is barred by _____.
If the benefited party is attempting to enforce a servitude in a neighborhood that has changed significantly since the time the servitude was created, the burdened party would raise the defense of _____.
If the benefited party seeking to enforce an equitable servitude previously consented to another party’s violation of the servitude, the burdened party should assert the defense of _____.
the benefited party acted so that a reasonable person would believe she abandoned the covenant, and the burdened party relied on this
unclean hands
laches
changed conditions
acquiescence
243
If adjoining landowners agree to be mutually responsible for maintaining a common driveway, the burdens and benefits of these covenants will _____. Why? What is this called?
run to successive owners of each parcel
The cross-easements for support, which give each party the right to use the driveway, satisfy the requirement of horizontal privity because they are mutual interests in the same property. Additionally, each promise touches and concerns the adjoining parcels, and the grantee will be held to have notice of the covenant due to the visibility of the common driveway.
244
If a plaintiff seeks an injunction for breach of a promise relating to the use of land, she must show that the promise qualifies as _____.
In contrast, if the plaintiff seeks damages, the promise must be enforced as _____.
an equitable servitude
a real covenant
245
May a grantee be bound by a covenant that does not appear in his deed or chain of title?
Yes, if there is a common scheme for development and the grantee had notice of the covenant.
246
A breach of a real covenant is remedied by __________.
an award of money damages
247
T/F. If a party to a real covenant transfers his entire durational interest to a third person, the party and his successor in interest are In both vertical and horizontal privity
Just vertical.
248
If a driveway is located partly on the property of each of two adjoining landowners, what interest does each landowner have in the driveway absent express agreement?
Cross-easement for support
249
A cross-easement for support is:
An easement implied for adjoining landowners who share a common wall or driveway
250
T/F. For purposes of determining title by adverse possession, the statute of limitations begin to run against someone who holds a future interest that was created before the adverse possession commenced when the interest vests.
F
When the interest becomes possessory.
251
If an occupier initially has the true owner’s permission to enter the land, may she acquire title to the land by adverse possession?
Yes, if the occupier communicates hostility
252
T/F. If an adverse possessor uses land in compliance with a recorded real covenant for the limitations period, he takes title subject to the real covenant.
T
253
If an adverse possessor violates a real covenant for the statutory period, he takes title _____.
free of the real covenant, regardless of whether he had notice of it.
254
If an adverse possessor violates a real covenant for the statutory period, he takes title free of the real covenant, but only if he had notice of it.
F
even if he had notice
255
O conveys a life estate to A, with a remainder to B.
If during A’s lifetime, X enters into actual, exclusive possession that is open and notorious and hostile for the statutory period, will X obtain title to the land?
No, but X will acquire A’s life estate
256
For purposes of determining title by adverse possession, whose periods of disability may be tacked together to prevent the statute of limitations from running?
No one’s
257
How can a landowner prevent an occupier of land from taking title by adverse possession?
By obtaining a judgment in an action for ejectment
258
T/F. A landowner can prevent an occupier of land from taking title by adverse possession by filing a suit for private nuisance, by filing a suit for trespass, by obtaining a judgment in an action for ejectment, or by evicting the occupier under an unlawful detainer statute
F
judgement in action for ejectment only
259
T/F. A landowner can prevent an occupier of land from taking title by adverse possession by evicting the occupier under an unlawful detainer statute
F
judgement in action for ejectment only
260
The hostility element of adverse possession requires that the possessor:
Lack the true owner’s permission to be on the land
261
T/F. The hostility element of adverse possession requires that the possessor know he is trespassing on someone else’s land.
F
Lack the true owner’s permission to be on the land
262
T/F. If a landowner brings an ejectment action against a would-be adverse possessor within the statutory period, the possessor will not acquire title if the judgment is rendered even after the statute has run.
T
263
O conveys to A a fee simple subject to a condition subsequent and retains a right of entry.
When must X go into adverse possession in order to acquire O’s interest?
When O asserts his right of entry
If O conveys to A a fee simple subject to a condition subsequent and retains a right of entry, X must go into adverse possession when O asserts his right of entry in order to acquire O’s interest. If a landowner does not commence an action to eject a would-be adverse possessor before the statute of limitations expires, he is barred from suing for ejectment, and title vests in the possessor. However, the statute of limitations does not run against the holder of a future interest (e.g., remainder, reversion) until his interest becomes possessory. The future interest holder has no right to possession until the prior present estate terminates, and thus no cause of action accrues until that time. A right of entry gives the grantor the power to terminate the grantee’s estate upon the happening of a specified event (i.e., a condition subsequent) by suing or entering the land; the grantee’s estate is not automatically terminated when the condition subsequent occurs. Thus, O will have no cause of action against X until O asserts his right of entry. If X goes into adverse possession when A goes into possession, the statute will not run as against O. However, it will run against A, and X could thus acquire A’s interest, subject to O’s right of entry.
264
To establish title by adverse possession, the occupier must show:
(i) An actual entry giving exclusive possession that is
(ii) Open and notorious,
(iii) Adverse (hostile), and
(iv) Continuous throughout the statutory period.
265
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
Thus, for purposes of determining title by adverse possession, tacking is not available when one adverse claimant ousts the other or the first claimant abandons and the next claimant goes into possession.
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.
266
T/F. Thus, for purposes of determining title by adverse possession, tacking is available when the first claimant abandons and the next claimant goes into possession.
F
For purposes of determining title by adverse possession, tacking is not available when one adverse claimant ousts the other or the first claimant abandons and the next claimant goes into possession. 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.
267
May a claimant gain title to a tract of land by adverse possession if she has color of title to the entire tract but occupies only a portion of it?
Yes, if there is a reasonable proportion between the portion occupied and the whole tract
268
If a landowner comes under a disability to sue after an occupier enters into adverse possession, the statute of limitations:
Continues to run
269
When is a disability relevant for purposes of adverse possession?
If the disability exists when the adverse possessor begins occupation
270
_____ at or before the time an occupier entered into possession all will prevent the statute of limitations from beginning to run for adverse possession.
The landowner’s insanity adjudication, the landowner’s minority, and the landowner’s incarceration
271
The Statute of Frauds requires that a land sale contract be memorialized in a writing that contains
a description of the property, identification of the parties to the contract, and the price and manner of payment, if agreed upon
272
If the seller is in breach of a land sale contract at closing, is the buyer entitled to specific performance?
Yes, if he tenders the purchase price
273
T/F. If a mortgage exists on property when a real estate contract is signed title may be marketable.
T
274
When a seller of land dies before the contract closes _____.
The successors to the seller’s real property must give up legal title at closing.
275
Under the doctrine of _____, once a contract is signed and each party is entitled to specific performance, equity regards the purchaser as the owner of the real property. The seller’s interest, which consists of the right to the proceeds of sale, is considered to be _____. The _____ that remains in the seller is considered to be held in trust for the purchaser as security for the debt owed the seller. But note that possession follows the _____; so even though the buyer is regarded as owning the property, the seller is entitled to possession until the _____.
a. Risk of Loss
If the property is destroyed (without fault of either party) before the date set for closing, the majority rule is that, because the buyer is deemed the owner of the property, the risk of loss is on the _____. Thus, the buyer must pay _____ despite a loss due to fire or other casualty, unless the contract provides otherwise. Some states, however, have adopted the _____, which places the risk on the seller unless the buyer has either _____ of the property at the time of the loss.
1) Casualty Insurance
Suppose the buyer has the risk of loss, as is true under the majority view, but the seller has fire or casualty insurance that covers the loss. In the event of loss, _____
equitable conversion
personal property
bare legal title
legal title
closing
buyer
the contract price
Uniform Vendor and Purchaser Risk Act
legal title or possession
allowing the seller to recover the full purchase price on the contract and to collect the insurance proceeds would be unjust enrichment. Hence, the courts require the seller to give the buyer credit, against the purchase price, in the amount of the insurance proceeds.
276
A land sale contract must be in writing and signed by the party _____ to be enforceable under the Statute of Frauds. However, courts in most states will award specific performance of a contract absent a writing under the doctrine of _____. The doctrine applies if the buyer has performed at least_____ of the following acts:
to be charged
part performance
two
1. Taken possession of the land;
2. Made substantial improvements to the land; and/or
3. Paid all or part of the purchase price.
277
There is an implied covenant in every land sale contract that at closing the seller will provide the buyer with a title that is “_____.”
marketable
278
Marketable title is title _____, i.e., title that a _____ would be willing to accept. It need not be a “_____” title, but the title must be free from questions that _____. Generally, this means an unencumbered fee simple with _____ title.
reasonably free from doubt
reasonably prudent buyer
perfect
might present an unreasonable risk of litigation
good record
279
Real covenant and equitable servitude chart:
RC
intent and T&C
A_______________________B
| |
HP | |
N |
ES
same as above, but no HP required for A, just N.
280
Generally speaking, apply the common law rule UNLESS there has been a _______in the common law rule.
majority change
281
FSA must be _____.
a. Potentially infinite DURATION-potentially lasts forever.
| b. FSA must be fully ALIENABLE: No direct restraints on transfer of ownership of FSA.
282
John wills the farm in upstate New York to Yoko, but provides that if Yoko tries to sell the farm, it goes to Shaun.
Yoko has _____
Shaun has _____
FSA
nothing
General RULE: Any attempt to put a direct restraint on alienationisVOID- which means you ignore it.
Distinguish language of "condition" from restrictions on "transferability": Conditions may be imposed on the exercise of a fee simple but any attempt to limit the right to transfer is void.
283
John wills the farm to Yoko, but provides that if Yoko tries to sell the farm during her lifetime, then Shaun has a right of first refusal; that is,
Shaun has the option to buy the land before Yoko can sell the land to anyone else. Is this restriction on alienation ok?
Yes.
Modern EXCEPTION upholds validity of RIGHTS of FIRST REFUSAL:
284
Difference b/w language required at CL to create FSA and language required now.
CREATION: Language required at COMMON LAW to create FSA: "To A and her heirs." If the language was to "A," then at common law A took a life estate.
e. TODAY, there has been a MAJORITY CHANGE in common law rule: Courts will presume a fee simple was granted-UNLESS language
shows to do otherwise.
285
Fee tail:
hardly exists any more;
At common law, the Fee Tail was a device to lock the property into the Grantee's family.
At common law, a Fee Tail was created by using the following very precise language:
I) "To A and the heirs ofhis (or her) body"; OR 2) "To A and his (or her) bodily heirs."
286
A Life Estate is never measured by _____ only measured by ______.
time
life
measured by time, then not LE
287
Some years ago, a large house in Nashville, Tennessee, was conveyed from Garth to Elvis. The language was "to Elvis for 200 years if he lives that long."
(a) Does Elvis have a life estate?
No
only measured by life, not time.
288
In his will, Lyndon leaves the ranch "to Luci and Lynda after the death of my beloved wife Lady Bird."
What is Lady Bird's estate?
a) Lady Bird has an implied life estate.
| (b) Her life estate is created by necessary implication from the terms of the testator's will.
289
Life Estate Pur Autre Vie is _____
a life estate measured by the life of another
290
In a Life Estate Pur Autre Vie, if the life tenant dies before the measuring life dies, the life estate passes to _____.
the estate of the deceased life tenant and continues in place until the measuring life dies
Modern majority view
291
Assume the language ofconveyance read: "To Tarzan, and on Tarzan's death, to Jane." What interest does Tarzan have?
life estate b/c on estate (measured by his life, even though don't use the word "life")
292
Some years ago, Garth conveyed his large mansion in Nashville, Tennessee "to Reba for life." Later Reba sold her life estate to her agent, AL What happens to the mansion if Al should die before Reba dies?
(a) Reba holds a _____ and _____ life is the measuring life.
(b) So Al holds a______________ measured by _____ life.
(c) If Al dies before Reba, the modem rule says that the life estate passes to _____.
```
life estate
Reba's
life estate
Reba's life
life estate
Reba's life
Al's estate and continues until Reba dies.
```
(d) General RULE: Ifthe life tenant dies before the measuring life dies, the life estate just passes to the estate of the life tenant and continues until the measuring life dies.
293
Bill conveys Whiteacre to Paula for life, then to Monica, but provides that if Paula tries to sell her life estate, then her life estate terminates and the property goes to Monica in fee simple. Is this forfeiture restriction valid?
Yes. The MODERN rule allows a provision that terminates the life estate IF the life tenant attempts to convey away the life estate.
294
Key word with LE for purposes of their duty to avoid waste is ____, because it expresses both _____.
GeneralRULE: Life tenant maintain the estate.
Key word is MAINTAIN which expresses BOTH the max AND min.
the that the life tenant can do on the land.
295
MAINTAIN means life tenant may continue the ____ use of the land.
normal
296
Voluntary waste is any___________ action beyond the right of___________ that causes __________ to the premises.
affirmative
maintenance
harm
297
Depletion of natural resources constitutes waste UNLESS _____, as in the case of a life estate in a _____.
(a) This is called the _____ doctrine.
consumption of such resources constitutes the normal use ofthe land
coal mine or a granite quarry
open mines
298
T/F. The sale ofharvestable crops does not involve waste.
T
299
Permissive waste =
failure to maintain
300
3 things that must be done to avoid liability for permissive waste:
repairs up to rents and profits received on the land; no duty to replace, no matter how much it makes sense. (fix leaky roof, but don't repair it)
all taxes
interest on mortgage
301
If Life Tenant is receiving _____, then Life Tenant has no repair obligation.
NO income from the property and is not otherwise using the property
302
The Life Tenant's REPAIR obligation is limited to the _____.
However, ifthere are NO rents and profits, then the repair obligation is limited to _____.
_____, then Life Tenant has no repair obligation.
amount of rents and profits received from the land
to reasonable rental value of the land IF the life tenant is
using the land.
If Life Tenant is receiving NO income from the property and is not otherwise using the property
303
What happens if the life tenant FAILS to pay TAXES on the property?
he holder of the future interest must be sure that the taxes are paid because a tax sale will eliminate the future interest. The buyer at the tax sale takes the property free and clear ofthe future interest.
304
_____ generally must pay the principal on the mortgage. (life estate)
The holder of the future interest
305
Ameliorative Waste occurs when _____
the life tenant alters the property substantially but life tenant's activity increase the value of the land.
306
An old residential mansion is now surrounded by heavy industry. The life tenant wants to tear down the mansion, thus making the underlying land much more valuable for other uses. The holder of the future interest objects. Can the life tenant tear down the mansion? (ameliorative waste)
General RULE: If changed conditions have made the property relatively worthless, then the life tenant can alter the property without incurring liability to the holder ofthe future interest.
remember: relatively worthless and changed conditions = if they are there, then yes, tear down the mansion
307
What is SEISIN?
Today, this means that the holder of seisin is the taxpayer.
308
What is a FUTURE INTEREST?
a. GeneralRULE: The INTEREST exists _____ BUT___________ will NOT take place-IF it takes place at all-UNTIL some time in the FUTURE.
now
| possession
309
Future interests retained by GRANTOR:
Future interests given to GRANTEE:
GRANTOR
reversion
possibility of reverter
right of entry
GRANTEE
remainder
executory interest
310
0 conveys Blackacre to A for life.
A:
0:
Life estate
| Reversion in fee simple
311
A Reversion in the Grantor arises whenever the Grantor conveys away _____
less than the
| durational estate that the Grantor had.
312
0 conveys Blackacre to A and his heirs for so long as no liquor is consumed on the premises.
What estate does A receive?
Fee Simple Determinable
313
0 conveys Blackacre to A and her heirs; provided, however, that if liquor is ever consumed on the premises then 0 or O's heirs shall have the right to re-enter and retake the premises.
A:
fee simple on condition subsequent
314
Whenever Grantor conveys a Fee Simple on Condition Subsequent, Grantor keeps a _____.
right of entry
315
To create an FSCS, the MAGIC words must be followed by language where the Grantor _____.
expressly reserves
| the right to re-enter and retake the property.
316
0 conveys Blackacre to Loyola Marymount University for the purpose of building a gymnasium. IfLoyola Marymount University
later builds a school theater on Blackacre, will Loyola Marymount lose title to Blackacre?
No. Not FSD or CS. Expressing a preference. Can maybe sue for breach of contract, but that's different than property law.
317
T/F. All future interests in Grantor are vested.
T
318
```
a. Reversions
I) Subject to Rule Against Perpetuities?
2) Freely transferable on death?
3) Freely transferable inter vivos?
b. Possibility of Reverter
I) Subject to Rule Against Perpetuities?
2) Freely transferable on death?
3) Freely transferable inter vivos?
c. Right of Entry
1) Subject to Rule Against Perpetuities?
2) Freely transferable on death?
3) Freely transferable inter vivos?
```
Reversions
1. No, it's vested
2. yes, decendable and devisable
3. yes
Possibility of Reverter
1. no
2. yes
3. yes.
Right of Entry
1. no
2. yes
3. no
BUT FL . . .
FLORIDA LAW: The Right ofEntry can be transferred inter vivos.
319
T/F. The Right of Re-Entry can be transferred inter vivos.
T and F
Yes in FL
No on MBE.
320
What is the future interest to the grantor that goes with each of the following:
To A for life.
fee simple determinable
condition subsequent
reversion (less than full estate)
possibility of reversion
right of re-entry
321
Remainders are a future interest in the _____.
How do you spot a remainder?
Remainders are either _____ or _____. The difference is _____.
grantee
comes NATURALLY and IMMEDIATELY on the termination of the previous estate
vested or contingent.
A Remainder is vested if nothing stands in the way of its becoming possessory on the
natural expiration ofthe preceding estate (i.e., taker is ascertainable and no conditions to taking).
CONTINGENT REMAINDER
Because there is a condition
(i.e., a survivorship clause) that B must satisfy BEFORE his interest in Blackacre will become possessory.
ex. 0 conveys Blackacre to A for life, then to B and his heirs ifB survives A.
322
O conveys Blackacre to A for life, then to B and his heirs if B survives A.
O conveys Blackacre to A for life; and then on A's death to B and heirs.
B: contingent remainder
B: vested remainder
323
Difference in O's interest between vested and contingent remainder?
vested - doesn't go back to O b/c going to next person (or their estate)
contingent - may go back as a reversion until condition comes about (ex. until B turns 18)
324
What is a class gift?
vested remainder subject to open
325
0 conveys Blackacre to A for life, then to A's children. At the time 0 makes this grant, A has three children, B, C and D.
A:
B, C and D:
Life Estate
| Vested Remainder subject to open
326
"To Band C, the children of A." Is this a class gift?
No. Must be group of unnamed persons.
327
Under the Rule of Convenience the class closes when _____.
testator dies
328
0 conveys Blackacre to A for life, then to A's children. At the time this conveyance is made, A has no children.
A's children have:
a contingent remainder
I f the Grantee is not in existence (i.e., is not ascertainable) at the time the conveyance takes effect, then the remainder is contingent on the Grantee being born and therefore ascertainable.
329
0 conveys Blackacre to Harry for life, then to Harry's widow. At the time this conveyance is made, Harry is married to Sally.
Harry's widow
contingent remainder
may be another widow in the future.
The widow's interest is CONTINGENT because the exact identity of the taker is not ascertainable until Harry dies, at which time we can identify the person who is Harry's widow.
330
An Executory Interest operates to --------------- the estate that comes before it.
cut short
0 conveys Blackacre to A so long as the property is used for residential purposes; and if the property is ever used for other than residential purposes, then to B and heirs.
cannot be remainder b/c remainder never follows fee simple
331
Remainders never follow a _____.
FS
If a future interest in a Grantee is NOT a Remainder,then it must be an Executory Interest.
332
If a future interest in a Grantee is NOT a Remainder,then it must be _____.
an Executory Interest
ex. of EI: 0 eonveys Blackacre to A so long as the property is used for residential purposes; and ifthe property is ever used for other than residential purposes, then to B and heirs.
333
The DEFEASIBLE FEES are:
a. Fee Simple Determinable.
b. Fee Simple Subject to Condition Subsequent.
c. Fee Simple Subject to Executory Interest.
334
T/F. Contingent interests in property, such as options and rights of first refusal, violate the Rule Against Perpetuities if they could possibly be exercised outside the time period of the Rule.
T
335
0 conveys Blackacre to Saint Anne's Catholic Church for so long as the premises are used for church purposes; and if they shall ever cease to be so used, to the American Red Cross.
What interests are created here?
Church: _____
Red Cross: _____
0: _____
Impact of Rule Against Perpetuities?
Fee Simple Subject to Executory Interest
Executory Interest
Nothing
none. charity to charity exception
Without this Charity-to-Charity Exception, the gift over to the Red Cross would violate the Rule because it is entirely possible that Blackacre may be used for non-church purposes way outside the time frame of the Rule.
336
The Fertile Octogenarian Rule and the Rule Against Perpetuities:
YES, because of the Fertile Octogenarian Rule-which conclusively presumes that Mary might have another child, regardless of her age or medical condition.
coma, life support - doesn't matter
337
The 4 unities apply to _____ and are _____ (4)
joint tenancy
time - all must have vested at the same time
title - by the same instrument
interest - same kind and same amount
possession - same or identical rights of possession
338
Language of a conveyance for a joint tenancy must _____.
General RULE: To create a joint tenancy, the LANGUAGE of conveyance must clearly reflect the Grantor's INTENT to create a joint tenancy.
I) Any time the intent of the grantor is unclear, the modem rule will presume that a Tenancy in Common is created.
The necessary language of grant to look for on the Bar Exam is: "as joint tenants, with right of survivorship" - or - "in joint tenancy with right of survivorship."
339
The necessary language to look for to see if a JT has been established is ______.
The necessary language of grant to look for on the Bar Exam is: "as joint tenants, with right of survivorship" - or - "in joint tenancy with right of survivorship."
340
"To John, Paul, Ringo and George jointly," the courts would construe this to be a _____.
TIC
General RULE: To create a joint tenancy, the LANGUAGE of conveyance must clearly reflect the Grantor's INTENT to create a joint tenancy.
I) Any time the intent of the grantor is unclear, the modem rule will presume that a Tenancy in Common is created.
The necessary language of grant to look for on the Bar Exam is: "as joint tenants, with right of survivorship" - or - "in joint tenancy with right of survivorship."
341
If any JT wants to be relieved of common ownership then they can ______.
exert the right of partition
if
If the parties cannot reach an agreement, then a judicial action seeking a partition may be brought.
342
_____ of a JT occurs whenever any one of the four unities is disturbed. This is a form of _____ termination of a JT.
Severance
involuntary
343
In 1971 Ringo mortgages his 1/3. interest in the joint tenancy. What result to the JT?
FL is a lien theory state!!!!!
MAJORITY rule: In a LIEN theory state there is NO severance
of the joint tenancy. Why?
When mortgage is executed, a lien attaches to the title, but title is not transferred.
(i.e. unities not destroyed when mortgage created)
MINORITY rule: In a TITLE theory state there is a severance
of the joint tenancy. Why?
When mortgage is executed, title passes from mortgagor to mortgagee, even though title goes back to the mortgagor when the mortgage is satisfied.
Unities ARE disturbed when mortgage is executed.
344
Effect of mortgage on JT.
FL is a lien theory state!!!!!
MAJORITY rule: In a LIEN theory state there is NO severance
of the joint tenancy. Why?
When mortgage is executed, a lien attaches to the title, but title is not transferred.
(i.e. unities not destroyed when mortgage created)
MINORITY rule: In a TITLE theory state there is a severance
of the joint tenancy. Why?
When mortgage is executed, title passes from mortgagor to mortgagee, even though title goes back to the mortgagor when the mortgage is satisfied.
Unities ARE disturbed when mortgage is executed.
345
T/F. FL is a title theory state.
F. Lien.
346
On January I, Ringo enters into a contract of sale of his interest in the joint tenancy, with closing to be on April I.
The severance occurs on _____- because of the Doctrine of _____.
January I when the contract of sale was
signed
equitable conversion.
347
Suppose Ringo had business reversals and a creditor sought to reach
his interest in the joint tenancy. Does a severance occur? When?
If Ringo dies BEFORE the creditor's sale, there would be _____.
Yes
When judicial sale takes place
no severance (right of survivorship)
348
TIC requires _____.
one unity; possession
which means each co-tenant is entitled to possess the whole of the property
349
T/F. In a TIC, there is a right of survivorship.
F
350
Tenancy by the entirety requires _____.
4 unities plus marriage.
351
At COMMON LAW, any grant _____ would give rise to a Tenancy by the Entirety provided _____. The rule in FL _____.
of a concurrent estate to a Husband and Wife
the four unities were present
Florida follows the common law rule and presumes that a conveyance to a husband and wife creates a Tenancy by the Entirety -- UNLESS the express language ofconveyance reflects a clear intent to the contrary.
352
T/F. Tenancy by the entirety has no right of survivorship.
F.
353
T/F. Tenancy by the entirety has no right of partition.
T
| 4 unities plus marriage
354
How can a tenancy in common by severed?
death
mutual agreement in writing
divorce
execution by a joint creditor
355
T/F. A tenancy in common by severed by a mutual agreement.
T. Must be in writing.
356
Jimmy and Billy are co-tenants on a farm in South Georgia. In the fall of 1976 Jimmy convinces a large number of people to give him a good paying job. He leaves the farm and moves to Washington. For the next four years Billy works the farm and takes all of the profits and puts them in his own personal bank account. Then in 1980 the people who hired Jimmy let him go, and he returns to the farm and immediately asks Billy for his share ofthe profits in the farm for the years he was gone. Does Billy have to account to Jimmy for Jimmy's share?
No.
General RULE: One co-tenant does not have to account to another co-tenant for his share of the profits, subject to four exceptions.
357
General RULE: One co-tenant does not have to account to another co-tenant for his share of the profits, subject to four exceptions which are:
Ouster: Accounting is required IF one co-tenant is EITHER keeping a co-tenant off the property - OR -- claiming a right of exclusive possession
agreement to share
Lease of the property by a co-tenant to third party.
depletion of natural resources
358
_____ concerns the right of one co-tenant to force the other co-tenants to pay their fair share ofsome expenditure made on the property.
Contribution
359
(Co-tenants/contribution) What if, during the four years Jimmy was in Washington, Billy did four things on the farm: built a house, fixed the roof of the barn, made the monthly mortgage payment and paid the taxes. Does Jimmy have to contribute to any of these expenditures? To what extent?
(a) Building the house (improvements)? YES or NO
(b) Fixing the barn (repairs)? YES or NO
(c) Paying the mortgage? YES or NO
(d) Paying the taxes? YES or NO
(e) All governmentally imposed obligations such as property taxes or assessments for curbs, streets, sewers, etc.
a. no BUT: REMEMBER: Although there is no current right of contribution, any monies expended for improvements (or any non-necessary repairs) may be recouped later-at time of sale of the property or on a partitioning o f the property.
b. YES-but only for necessary repairs.
c. Contribution is required for any mortgage on the property that has been signed by ALL the co-tenants.
d. YES
e. YES
360
The non-freehold estates:
4 land-lord tenant estates. How do you identify each? Statute of Frauds apply? Creation? Notice required?
estate for years - fixed beginning and end date; ANY fixed period. no matter how short; SF applies for OVER year; no notice required for termination
periodic tenancy - key phrase is "repeating"
rolls on and on until on party terminates WITH PROPER NOTICE
creation by implication or express
tenancy at will
Either party can terminate this tenancy at any time.
NOTICE Requirement: A Tenancy at Will may be terminated by either party giving
the other notice o f termination and a reasonable time to vacate the premises.
termination by operation of law: death of either party, waste by tenant, assignment by tenant, transfer of title by landlord, lease by landlord to 3rd party
tenancy at sufferance - holdover tenant.
361
Cher leases Blackacre to Madonna for $100 per month commencing on January 1, 2007, but the lease is silent as to duration. Madonna pays the first month's rent. What tenancy has been created?
A periodic tenancy for month-to-month is created by implication from the fact that theparties specified that rent was to be paid monthly.
362
If the lease does NOT specify how long the tenancy is to last, then it is presumed to be a _____ measured by the
_____.
periodic tenancy
payment of rent
rent payment (forexample,amonth-to- month periodic tenancy arises ifthe rent is to be paid monthly).
363
How can a periodic tenancy be created by operation of law?
oral lease that violates SOF (ex. was supposed to be a longer tenancy but was oral and T sends a check for one month and landlord accepts
holdover tenant
364
Tenant holds over after the expiration of her one year apartment lease, but sends another month's rent check to the landlord, who cashes it.
(a) What kind of tenancy has been created?
A periodic tenancy ofmonth-to-month.
General RULE: When the landlord accepts a rent check from a holdover tenant, a periodic tenancy is created by operation of law for the period specified in the rent check.
365
How does the periodic tenancy terminate?
by giving proper notice Enough TIME: An amount of time equal to the length of the period of the tenancy EXCEPT in the case of year-to-year tenancy, which generally requires only notice. Effective DATE: To be valid, the effective date specified in the notice must be at the end of the period ofthe tenancy.
366
Warren leased his Beverly Hills estate to his sister Shirley on July 15, 1998 for a periodic tenancy ofmonth-to-month. All goes well for several years; the periodic tenancy just kept rolling on month-to-
month. Then sometime in July of2004, Shirley sent Warren a letter saying that she was terminating the tenancy as of September 1, 2004.
Is that valid notice?
(a) Enough TIME? YES or NO
(b) Correct effective DATE? YES or NO
a. yes
| b. no; notice specifies wrong date
367
Tenancy at will can be terminated by _____.
any party at any time by proper notice
368
How can a tenancy at will be terminated?
termination by operation of law: death of either party, waste by tenant, assignment by tenant, transfer of title by landlord, lease by landlord to 3rd party
369
Landlords options with a tenancy at sufferance (holdover tenant).
sue to evict in trespass and recover damages for holdover OR
The Landlord may elect to treat the Tenant as a new periodic tenant.
2) Ifthe old, expired tenancy was for less than ayear, the new tenancy will be measured by the period covered by the rent payment. In the case ofresidential property, the new period will usually be month-to-month.
370
If the old, expired tenancy was for less than ayear, the new tenancy will be measured by _____. In the case of residential property, the new period will usually be _____. In the case of leases for commercial property, if the old, expired tenancy was for a year or more, the new periodic tenancy that the landlord may elect to impose will be for _____.
the period covered by the rent payment
month-to-month
year-to-year
371
You are at the end of your second year in law school; you arc also at the end of your two-year lease on your house. One day a few weeks before your lease is to expire your landlord shows up at your house and asks if you want another year's lease. Landlord also says the rent will be doubled. You are undecided and so you stay through the expiration ofyour lease.
(a) Can the landlord get the doubled rent, ifthe landlord imposes a new periodic tenancy on this holdover tenant?
Yes
if landlord give notice of increased rent before expiration of lease, the LL may properly demand payment of higher rent amount
372
FL distinctions with respect to holdover tenants:
In the case of a Holdover Tenant, Florida law does not allow the landlord to impose a new periodic tenancy.
b. By statute in Florida, the landlord can collect DOUBLE RENT for the period ofthe HOLDOVER.
373
Under the modem majority view, if the leased premises are destroyed without the tenant's fault, the tenant generally will be given the option to _____.
terminate the lease
374
The modem majority view is that once the tenant covenants to repair, the tenant is liable _____ unless the parties' agreement expressly excludes this responsibility from the tenant's repair covenant.
for everything including ordinary wear and tear
375
T/F. Under the modem majority view, if the leased premises are destroyed without the tenant's fault, the tenant generally will be required to rebuild the structure - even if the lease includes the tenant's covenant to repair - unless the lease expressly includes this type of repair.
F.
will not be required
376
Landlord remedies: CL vs. Today
CL = could sue for damages but could only collect arrears and could NOT terminate lease
Today = in all states = sue for damages AND evict
377
FL rules regarding landlord options if tenant unjustifiably abandons:
(a) In the case of a residential lease - ifthe Tenant abandons and the Landlord does not retake the leased premises, then the Landlord may standby and do nothing and continue to hold the Tenant liable for the rent as it comes due.
(b) I f the Landlord elects to retake the leased premises, then Florida follows the modern majority rule and the Landlord will be subject to a duty to mitigate the Tenant's damages.
378
Landlord leases a house to tenant; the house has wooden steps that lead up to the elevated front porch. The steps have a hidden defect; they are rotten. There is no evidence that the landlord knew of the defect, but the landlord had painted the steps the week before renting the house to the tenant. One day tenant is using the steps and they collapse, seriously injuring tenant.
(a) Is Landlord liable? YES or NO
(b) Why?
(c) What is the type of defect involved and define it?
(d) What is the scope of the LL's duty?
Yes
General RULE: Landlord is under a duty to disclose latent defects which the landlord either knows or has reason to know of.
What is a latent defect? A defect that the Tenant does not know of and a reasonable person in the Tenant's position would not discover.
What is the scope of the Landlord's duty? The Landlord must disclose the defect but is under no duty to repair.
379
You rent a furnished cottage in Maine for a short term. The wooden steps are rotten; you are seriously injured. Landlord neither knew nor should have known the steps were rotten. Is the LL liable?
Yes.
GeneralRULE: Therentalofafurnisheddwellingforashort term makes the Landlord liable for defects, even if the landlord neither knows nor has reason to know ofsuch defects.
(c) What is a short term? For bar exam purposes, 3 mths or less.
380
Tenant is injured in a common area that remains under landlord's control, such as hallways, elevators, etc.
What is a common area?
Will the landlord by liable?
Areas that the landlord still exercises dominion and control over.
General RULE: Landlord will be liable if the landlord/ailed to exercise reasonable care.
381
Landlord leases commercial property to tenant-a store front. One day tenant is out in front of the store and notices a loose tile on a step leading into the store. Tenant is concerned that a customer may trip on the tile, so tenant calls the landlord and says, "You promised to repair, so come fix it." The landlord promises to do so, but does nothing. Tenant calls landlord several more times, but landlord does nothing. Finally, a customer slips on the loose tile, is injured and sues tenant.
Is the Tenant liable?
YES.
Tenant is ALWAYS liable to a third party invitee for negligent failure to correct dangerous conditions on the leased premises, regardless of whether the landlord may be held liable as well.
382
T/F. Tenant is always liable to a third party invitee for negligent failure to correct dangerous conditions on the leased premises, regardless of whether the landlord may be held liable as well.
T
383
Woody has the easement to go to the beach over Mia's lot. He calls her up and "releases" the easement, saying he will never use the easement again. Mia decides to put a swimming pool on her lot and puts it where Woody had walked to get to the beach.
Is the easement terminated?
Yes.
2 requirements.
(i) A representation ofrelinquishment ofthe easement by the holder ofthe dominant estate; AND
(ii) The holder ofthe servient estate must make a
change in his position in reliance.
384
Bill had an implied easement by necessity across land that had been sold to George, because there was no other way off of Bill's property. Some years later the Arkansas Highway Department put in a new four-lane highway along the rear of Bill's land.
(a) Is the easement extinguished?
Yes.
General RULE: Once the necessity that gave rise to an implied easement ceases to exist, then the implied easement will automatically terminate.
385
T/F. Covenants not to compete do touch and concern the land.
T
386
Barney Fife owned two adjacent lots, lots A and B, in Mayberry, USA. Barney operated a gas station on lot A. Later Barney sold lot B to Andy and included a covenant in the deed that provided that neither Andy nor his heirs, successors or assigns would compete by operating a gas station on lot B. Still later, Andy sold lot B to his son, Opie, but Andy did not include any restrictive covenant in the deed of conveyance to his son. Opie, however, knew that the covenant not to compete was in the deed from Barney to Andy, but was delighted that it was not put in his deed. Does the covenant not to compete run with the land so as to be enforceable against Opie?
Yes
387
Recall that Sam and Diane agreed on a covenant as neighboring landowners. Sam said he would pay to build the fence if Diane would pledge that she and her heirs, successors and assigns would maintain the fence. Their agreement was written up, signed and recorded.
Later Diane sold her lot to Frazier. Assume that Sam sues to recover DAMAGES for Frazier's failure to maintain the fence in accordance with terms ofthe agreement made between Sam and Diane. Who wins-Sam or Frazier?
Sam will NOT be able to enforce this RESTRICTION (promise) against Frazier in a suit at LAW because there is NO HORIZONTAL privity between Sam and Diane, the original parties to the agreement, since as neighboring land owners they do NOT share any interest in the land apart from the promise contained in their covenant agreement.
388
Termination of Covenants and Servitudes
Pleasant Valley, a residential subdivision, is now surrounded by industrial development. Each lot in the subdivision, however, is restricted to residential use only. The houses along the border are so affected by the pollution that they are unfit for residential use.
Can you void the residential use only restrictions by virtue ofthe changed conditions?
Yes. If all the lots in the subdivision are affected.
General RULE: I f all the lots in the entire subdivision are affected, then the use restriction will be eliminated.
(c) REMEMBER: This is an ALL or NOTHING proposition!
389
0 orally contracts to sell the farm to Barbie Buyer. After this oral contract o f sale, Barbie takes possession and immediately starts building a barn. Then, before closing, 0 dies. 0 ' s estate refuses to go to closing, citing the Statute of Frauds.
(a) Who wins when Barbie Buyer sues for specific performance of the oral contract?
Barbie wins, relying on the Doctrine of Part Performance.
TWO requirements must be satisfied to rely on this
Hypo No. 106:
exception:
(i) The oral contract must be certain and clear; and
(ii) The acts of partial performance must clearly prove the existence of a contract.
390
There was an alleged oral contract ofsale and the buyer went into possession and was making periodic cash payments to the owner when the owner died. Buyer sues for specific performance of the oral contract.
(a) Should the Doctrine of Part Performance apply?
No. These facts do not clearly show the existence of a contract. All we have is evidence o f the buyer making periodic cash payments
and that conduct is just as consistent with treating this arrangement as some type of tenancy
as with treating it as a sale ofthe property.
391
T/F. Because of the Doctrine of Equitable Conversion, if either party to the contract dies before closing, equity will still order specific performance of the contract if necessary. The death of either party generally will not affect the rights of the parties as set out in the contract.
T
392
Common FL essay:
Seller contracted to sell 100 acres for $200,000. Before closing, Buyer discovers that Seller owned only 90 acres.
(a) I f Seller can give good title at closing to only 90 acres, what can Buyer do?
(b) If Buyer sues for specific performance, what is the purchase price, assuming that each acre is worth exactly $2,000?
(c) What if Buyer proceeds to close on the contract and accepts the deed without the problems being cured?
(i) rescission
(ii) damages
(iii) specific performance
180k - reduce purchase price by defect
Buyer has no recourse against Seller based on the contract. Thereafter, any action must be based on what is in the deed.
393
Time is NOT of the essence in land sale contracts UNLESS . . .
the contract states otherwise or parties make clear that time is of the essence
394
Damages available for breach of contract for sale of real property:
1. damages - difference between contract price and value of property on date of breach
2. liquidated damages - buyer deposit can be forfeited
3. specific performance to either buyer or seller
395
The land description in the deed reads: "All of my land and dwelling known as 44 Main Street, Midtown, United States, being one acre." It was not one acre; it was really only 7/8 acre. Is the deed description sufficient?
Yes.
Minor discrepancy in area does not matter - so long as the property can be identified.
396
T/F. Florida is a notice jurisdiction.
T
397
For notice or race notice look for the words _____.
Then look for the words _____, which indicate _____. If the words are not present that this is a _____. If the words _____ or _____, then it is a race statute.
```
without notice or in good faith
recorded first or first recorded
race notice
notice
notice or in good faith
```
398
The State ofMystic has adopted the following statute: "A conveyance ofan estate in land shall not be valid against any subsequent purchaser for value without notice thereof unless the conveyance is recorded."
What type ofrecording statute is this?
notice
399
The State of Oz has adopted the following statute: "Any conveyance o f an estate in land other than a lease for less than one year shall not be valid against any subsequent purchaser in good faith for value whose conveyance is first recorded."
What type of recording statute is this?
race notice
400
The State of Alpha has adopted the following statute: "A conveyance ofan estate in land shall not be valid against a subsequent purchaser for value unless the conveyance is first recorded."
What type of recording statute is this?
pure race
401
T/F. Judgment creditors are not protected by the recording statutes.
T and F.
```
T = MBE
F = FL
```
402
0 sold Blackacre to A who did not record. B, a judgment creditor of 0, files a lien against O's real property. B did not know that 0 had earlier sold Blackacre to A. Does the recording statute protect B because B knew nothing of A's prior unrecorded deed?
```
MBE = no
FL = yes
```
403
Florida's marketable title statute requires title searcher to go back ____ years.
30
404
*****O sells to A, no recording. Then O sells to B and B records promptly. Next, A records. Finally, B sells the farm to C and C had no actual notice ofthe earlier sale to A. Since A recorded before C bought, is C charged with constructive notice of the prior sale to A?
NO, because A recorded his deed TOO LATE and therefore it is recorded OUTSIDE the direct chain oftitle. A's recording therefore does not impart constructive notice to C, the subsequent purchaser.
ANAL YSIS: Using Grantee index, C's lawyer constructs chain of title leading back to 0. C's lawyer then adverses this chain by going over to Grantor index-looking for all recordings from the time 0 got the property until the time 0 conveyed the property to B. Nothing is found in that time period and so the search is over once C's lawyer finds the recorded deed from 0 to B. And, therefore, C's lawyer never sees the recorded deed from 0 to A because it got recorded too LATE.
405
The Grantor (Borrower) owes the Grantee (Lender) money and gives the Grantee a deed that is absolute on its face. Separately, the Grantee promises to reconvey the land to the Grantor when the debt is paid. There's no mention of the word "mortgage" anywhere, and the deed
is absolute.
Courts treat this as _____.
equitable mortgage. mortgage (even though they never used the word mortgage)
that's why equitable)
406
Hess (Landowner) sold his Napa Valley estate to by delivering a deed to his vineyard to Coppola (Lender), but then Hess immediately leased back the property with an option to repurchase the vineyard at the end ofthe lease period. The lease payments are about what you would expect mortgage payments to be in amount, and the repurchase price is nominal. Courts treat this as ____.
mortgage
sale leaseback with option to repurchase = mortgage
Both situations (equitable mortgage and sale-leaseback) must be foreclosed on like mortgages--and therefore will receive all the protections of a mortgage.
407
******* Batman mortgaged his Gotham City mansion to Robin. Robin placed the mortgage in his safety deposit box and did not record it. Some years later Batman, in need of more money, gave a mortgage on the same property to the Gotham National Bank, and that mortgage was promptly recorded. Batman did not tell the Bank of the earlier mortgage to Robin, nor did he tell Robin of the Bank's mortgage. Robin did not otherwise know ofthe Bank's mortgage, and the Bank did not otherwise know of Robin's. Later, Batman became insolvent and defaulted on both mortgages.
A statute in effect in the jurisdiction provides that "any conveyance of an estate in land, other than a lease for less than one year, shall not be valid against any subsequent purchaser for value without notice thereof whose conveyance is first recorded."
(a) What type of recording statute is this?
(b) When Batman's property is sold at foreclosure, which mortgage gets paid first: Robin's or the Bank's?
(c) The______ is paid FIRST--because the
_____ is protected by the recording statute.
race notice
bank
bank
bank
408
Batman bought his Gotham City Mansion by borrowing $100,000 from Gotham National Bank and the Bank has recorded a first mortgage on the property. Later, Batman borrowed money from his good buddy Robin, who recorded a second mortgage on the Gotham City mansion in the amount of $30,000. Batman now goes to Gotham Bank to borrow an additional $50,000 to refurbish his Mansion and the Bank agrees to lend Batman an additional $50,000 secured by its existing mortgage on the Gotham City Mansion. So the first mortgage now secures a loan balance of $150,000 and the second mortgage
secures a loan balance of$30,000.
What is the ORDER of PRIORITY of these mortgages?
bank for 100k
Robin for 30k
bank for 50k
If the mortgagor does anything to increase a senior mortgage (for example, borrows more money or increases interest rate), then that senior mortgage loses its priority over junior mortgages-BUT only to the extent ofthe change.
409
*****Fergie mortgaged her horse farm to the First National Bank. Later she took out a second mortgage with Second National Bank. The horse
raising business was not producing enough income because Fergie did not have a new stable. She built a new stable with money from Third National Bank, which took a third mortgage on the property. As time went by Fergie needed more money. She convinced Fourth National Bank to lend her money, and they took a mortgage. Later another loan was made by Fifth National Bank, and another mortgage was entered into. Fergie is unable to make the payments on all five mortgages. Fergie makes payments to First National, Second National and Fifth National, but is unable to make payments to Third National and Fourth National. Third National sues to foreclose on its mortgage. When its mortgage is foreclosed, what happens to the other mortgages?
(a) First National---------------
(b) Second National---------------
(c) Fourth National ---------------
(d) Fifth National ______
a. senior - continue in place
b senior - continue in place
c. junior - therefore wiped out
d. junior - therefore wiped out
INSUM: ThebuyerattheforeclosuresaleheldonbehalfofTHIRD National Bank will take the property subject to the senior mortgages held by First National and Second National Banks. The senior mortgages continue in place; they do not get paid off when a junior mortgage is foreclosed on. However, if a senior mortgage is not paid, then it will sue to foreclose on its security interest.
410
Assume that Fergie mortgaged her horse farm to First National Bank, who recorded promptly. Six months later, Fergie granted an easement to her neighbor, Charles, to use a road across her horse farm, which was recorded promptly. The next year, Fergie took out a second mortgage with Second National Bank, which was recorded promptly. A few months later, Fergie gave her father a 3 year lease to stable his horses on her farm, which was recorded promptly. Subsequently, Fergie's financial affairs suffered significant setbacks leaving her unable to make payments to Second National Bank, although she was able to make payments on the mortgage to First National Bank. Second National Bank foreclosed on its mortgage.
At the foreclosure sale ofFergie's horse farm, will the purchaser take the property:
Subject to the MORTGAGE held by First National Bank? YES or NO
Subject to the EASEMENT held by Charles? YES or NO
Subject to the LEASE made with Fergie's dad? YES or NO
Yes - senior
Yes - senior interest
No - junior interest
411
What is a forfeiture clause and are they enforceable?
If a Debtor misses a payment, the Seller
can cancel the contract, keep all the monies paid to date, and retake the property.
2. Enforceability of a "Forfeiture Clause": For Bar Exam purposes, forfeiture clauses will be enforced, even though courts are quite hostile to such clauses. However, if the Seller chooses to enforce the forfeiture clause, the Seller is limited to that remedy and cannot also obtain damages or specific performance.
412
In FL, land sale contracts are treated just like a _____ -- which means that _____.
mortgage
that ALL the legal safeguards of mortgage law will apply to land sale contracts as well
413
Cher mortgaged the farm to the Visa National Bank. Later she sold the farm to Madonna "subject to the mortgage to Visa National Bank." Madonna agreed to assume the mortgage. Two years later, Madonna sold the farm to Pele and he took the property "subject to the mortgage of Visa National Bank." Subsequently, Pele failed to pay the mortgage, Visa Bank foreclosed on its mortgage, and the farm was sold for less than the balance due on the mortgage. Who can Visa Bank sue for the deficiency?
(a) Cher: YES or NO (Cher________ the note)
(b) Madonna: YES or NO (She________ thenote)
(c) Pele: YES or NO
(d) What ifthe facts show that after assuming the mortgage, Madonna and Visa National Bank enter into a modification of the mortgage. Does Cher continue to have liability on the mortgage?
YES or NO
a. YES, she signed the note.
b. YES, she assumed the note.
c. NO, because he did NOT specifically assume the mortgage, although he may later lose the property to a buyer in a foreclosure sale if Visa Bank should later foreclose on its mortgage because Pele took the property subject to the mortgage.
d. No b/c
General RULE: Any modification of the obligation by the creditor/mortgagee and the grantee will release the original borrower/mortgagor (Cher) of all liability.release
414
Dharma and Greg are adjoining landowners. Dharma goes out and, using all due care, excavates Dharma's land right up to Greg's property line. Even though Dharma used all due care, Greg's land collapsed into the excavation.
(a) Is Dharma liable for the collapsed land? YES or NO
(b) What if not only Greg's land collapsed, but the house and barn that were on his land collapsed into the excavation also. Is Dharma going to be strictly liable for damage to the improvements-house and barn-as well?
YES. SL but not tort.
General RULE: The landowner, Dharma, will be strictly liable for these improvements only ({the land would have collapsed anyway, even without the weight of the improvements, i.e., if the land would have collapsed anyway, even without these buildings on it.
415
Majority rule difference between riparian uses of water for domestic and non-domestic purposes. Minority Rule?
```
domestic = all the water he needs
non-domestic = limited to reasonable use for commercial or industrial uses
```
minority rule: first in time takes.
416
Approaches to surface water (runoff or flood water).
no consensus.
FL is NATURAL FLOW
natural flow = a.
In theory, the natural flow approach requires a landowner NOT to make any changes at all in the flow of the flood water as it rushes across the surface of the land.
1) As a practical matter, it is almost impossible to follow this approach and still make productive use of the land.
2) Therefore, modem courts allow the landowner to take REASONABLE means to deal with surface waters.
vs.
common enemy approach = landowner can do anything he wants whether or not reasonable
460
When a landowner owns a chattel that is annexed to the realty, whether the item is a fixture generally depends on _____, which is determined by considering: 1. The _____ of the chattel (i.e., _____);2. The manner in which the chattel is _____ to the realty (the more _____, the more likely it was intended to be permanent);3. The amount of _____ that would be caused by the chattel’s removal; and4. The _____ of the chattel to the _____ of the realty (e.g., _____).
the annexor’s objective intentionnature (i.e. how essential it is to the normal use of the realty_attachedsubstantially attacheddamageadaptationusecustom window treatments, wall-to-wall carpet
474
The implied covenant of marketability is a covenant implied in _____(unless _____), obliging the _____ to provide _____ at _____.
every land sale contract modified by express language in the contractsellermarketable title (i.e., title reasonably free from doubt)closing
