Competing Claimants

Question 1

What are the 3 major components of Adverse Possession?

Answer 1

Physical - actually, openly, notoriously and exclusively occupying land
Mental - Occupying land with a hostile intent
Time - has to be on land continuously for stat. period (common law - 20 years)

Question 2

What is tacking?

Answer 2

Tacking allows an adverse possessor to satisfy a statutory requirement by adding his time in possession to that of his predecessor (must be privity - a transfer from one adverse possessor to another.

Question 3

What does the adverse possessor get?

Answer 3

Generally - portion of land she actually occupied.
Exception - if you occupy a significant part of the land described in the deed, you take the entire property described in the deed. (Color of title)

N.B - Adverse possessor can only take what the current owner has

Question 4

Disability

Answer 4

An issue with the record owner can suspend or toll the running of the statute of limits. *minority status TX, insanity TX and imprisonment. Disability can toll the running of statute of limits ONLY if disability exists in the record owner when adverse possession begins.

Question 5

Statute of Frauds

Answer 5

Requires a writing for transfer of interest in real property. Terms needed - description of property, description of parties, price, and any conditions

Question 6

Exceptions to statute of frauds

Answer 6

Doctrine of part performance - may be used to enforce an otherwise invalid oral contract of sale, provided part performance (payment of all/part of purchase price, taking of possession, and making substantial improvements. (TX requires all 3)

Question 7

Rules on Equitable conversion

Answer 7

Majority - Buyer bears the risk of loss upon formation of the K
Minority uniform vendor and purchaser risk act(TX) - Risk of loss placed with seller, unless legal title/possession has passed to the buyer

Question 8

Marketable title

Answer 8

1. All Ks for sale of real property include implied promise to convey marketable title. Doesn’t mean perfect title, just reasonably free from doubt in both law and fact.
2. Remember - obligation to provide marketable title arises only at the time of the closing of the deal.
3. • can use proceeds of the sale to remove a cloud on title and make it marketable

Question 9

Duty to Disclose Defects

Answer 9

seller of a residential home has duty to disclose to buyer - material latent defects know to the seller, but not readily observable or known to the buyer

• Only applies to commercial builders/developers of new residential homes
• TX: in writing, applies only to sellers, not real estate agents, and applies to the sale of new or used homes

Question 10

Implied warranty of quality

Answer 10

Applies to contractors and commercial sellers of real property.

• Covers significant latent defects caused by the D’s poor workmanship
• TX - applies to both first and subsequent purchasers, and NO DISCLAIMER ALLOWED

Question 11

Merger doctrine

Answer 11

• at closing, land sale K merges into the deed, and seller loses the ability, in general, to sue on the K
• after closing, buyer must sue on covenants contained in the deed

Question 12

Quitclaim Deed

Answer 12

Contains no covenants. Buyer can’t sue on it. Take it as is

Question 13

Warranty Deed

Answer 13

Buyer can sue on one or more covenants of title contained in the deed

Question 14

General warranty deed

Answer 14

Contains all 6 covenants of title, and covers all of the period prior to seller conveying to the buyer.

Question 15

Special warranty deed

Answer 15

May contain some of the covenants, usually is limited to the period of the grantor’s ownership

Question 16

Covenants of Title: Present Covenants

Answer 16

1. Seisin - promise by grantor that they own the property
2. Right to convey
3. Covenant against encumbrances
   (n. b. - present covenants do not run with land - can only be breached at the time of closing. Suit can be brought later on, but breach occurs at closing)

Question 17

Covenants of Title: Future Covenants

Answer 17

1. Quiet enjoyment
2. Warranty
3. Future assurances
   Runs with land, breach can be at the time of closing or afterwards
4. SOL begins to run when the grantee is evicted by someone w/paramount title

Question 18

Death during the Executory Period

Answer 18

1. If seller dies after execution of the K but before closing - legal title passes to heirs; MUST honor sales agreement
2. If buyer dies after execution of K but before closing - Right to close passes to his heirs/devisees

Question 19

3 Requirements of a valid conveyance of real property by deed

Answer 19

1. Deed sufficient to satisfy Statute of Frauds
2. Delivery of the Deed
3. Deed must be accepted by the buyer

Question 20

How does a deed satisfy the Statute of Frauds?

Answer 20

1. Identify the parties
2. Words indicating an intent to make a present transfer of the property
3. Sufficient description of the property
4. Must have grantor’s signature

Question 21

Recording Statutes

Answer 21

1. Race Statute
2. Notice statute
3. Race-notice statute

Question 22

Notice Statute

Answer 22

TX. Subsequent purchaser prevails if he pays valuable consideration and takes without notice of prior interest.
(both mortgagee and judgment creditor is considered to have paid value)

Question 23

Types of notice

Answer 23

1. Actual notice - what you actually know
2. Constructive notice - comes through recording act. As soon as you properly record a deed - constructive notice to world that property is yours
3. Inquiry notice - exists if appearance of land is such that claimant should have asked more Qs about title to the property

Question 24

Race-Notice Statute

Answer 24

Subsequent purchaser prevails against a prior interest only if the subsequent purchaser:

1. pays valuable consideration
2. takes his interest w/o notice of prior interest
3. records before the prior interest

Question 25

Mortgage

Answer 25

Conveyance of an interest in real property made to secure repayment of a debt

Question 26

Instruments that make up a mortgage

Answer 26

1. Mortgage deed - creates an interest in real property that secures the debt
2. Promissory note - represents financial obligation of the borrower. Creates personal liability for the named individual

Question 27

2 kinds of Mortgage theories

Answer 27

1. Title theory - mortgagee receives legal title to the property and has a right to possession and any rents from property
2. Lien theory (TX) - Mortgagee receives a lien and holds equitable title. Mortgagor has legal title/right of possession

Question 28

What are the remedies on default of a mortgage debt?

Answer 28

1. Foreclosure

2. Nonjudicial foreclosure

Question 29

What are the steps for foreclosure?

Answer 29

1. Creditor initiates judicial foreclosure proceeding
2. Property seized and sold at foreclosure sale.
3. Proceeds on the sale are used, in this order, to:
   - pay off cost of sale
   - pay off debt
   - pay off any extinguished junior liens
   - pay to borrower - represents his equity in the property

Question 30

What are the steps for nonjudicial foreclosure (followed in TX)

Answer 30

1. Trustee designated by mortgagee sells the property at public auction without court intervention

Question 31

How to qualify as a valid sale under Texas law?

Answer 31

1. “power of sale” clause must be included in mortgage docs
2. Public auction must occur: between 10am and 4pm on the 1st Tuesday of the month at the County courthouse in county where land is located.

Question 32

What are the notice requirements for a nonjudicial foreclosure under TX law

Answer 32

1. 21 days before the sale; must include the earliest time a sale would occur; must be given to the general public and debtor.
2. If property is debtor’s residence - must receive certified mail notice giving him at least 20 days to cure the defect before notice of the sale can be given.

Question 33

What is a deficiency judgment?

Answer 33

A judgment holding someone personally liable for the amount of the debt not required by the foreclosure sale.
TX - limits deficiency judgement to the difference between the amount owed on the debt and the fair market value of the property.

Question 34

What is a debtors remedy with respect to a foreclosure?

Answer 34

Redemption - stopping the foreclosure process by paying off the entire amount due

Question 35

Equitable right of redemption (TX)

Answer 35

exists anytime up until foreclosure sale takes place

Question 36

Statutory right of redemption

Answer 36

Exists only if there is a statute giving this right - allows for redemption even after foreclosure sale takes place. (TX does not recognize this)

Question 37

Transfer of the Mortgaged Property

Answer 37

if there is ambiguous language, treat the grant as subject to the mortgage (subject to - not personally liable)