Comprehensive Flashcards
To Learn
Covenants in leases (including assumption agreement)
Stages in real property sale (e.g., closing)
Fee Simple Absolute
An estate in fee simple absolute is the largest estate permitted by law. It is
what we typically think of as full ownership of real property. At common law, the phrase “and his heirs” was required to convey or bequeath real property to someone. It is no longer required, and if you see this language on your exam, know that it simply denotes a fee simple absolute—it creates no interest in the grantee’s heirs
Defeasible Fees
Infinite duration, but may be terminated by a specified event
(1) Fee Simple Determinable (possibility of reverter)
(2) Fee Simple Subject to a Condition Subsequent (Right of Entry)
(3) Fee Simple Subject to an Executory Interest
Fee Simple Determinable
Possibility of Reverter
automatically terminates upon a stated
Created by the use of durational, adverbial language, such as “for so long as,” “while,” “during,” or “until.”
Fee Simple Subject to Condition Subsequent
Right of Entry - grantor must exercise right of entry (power of termination) to retake property
Created by the use of words such as “upon condition that,” “provided that,” “but if,” and “if it happens that.
Fee Simple Subject to an Executory Interest
If the same language used to create a fee simple determinable or a fee
simple subject to a condition subsequent is used, but the grant creates the future interest in favor of a third party rather than the grantor, the
estate is a fee simple subject to an executory interest.
The third party has an executory interest
Life Estate
ownership interests for life. When
that interest ends, the land either reverts back to the grantor or, more
commonly, to a third party.
Grantor or third party holds a remainder
Types:
(1) for life of grantee
(2) Pur Autre Vie
–> e.g., A owns an estate measured by B’s life; it ends when B dies.
Waste Doctrines
A life tenant is entitled to all the ordinary uses and profits of the land but cannot do anything that would injure the interests of the person who owns the remainder or the reversion.
1) Affirmative (Voluntary) Waste—Natural Resource
–> life tenants generally may not consume or exploit resources on property
2) Permissive Waste
–> life tenant has duty to maintain property (e.g., prevent/remediate weather damage)
3) Ameliorative Waste
–> Property changed in a manner that increases its value
Future Interests
Reversionary interests
interest retained by grantor (reverter, right of entry, and reversions)
Remainders
(1) is capable of becoming possessory immediately upon the expiration of the prior estate; and
(2) does not divest (or cut short) any interest in a prior transferee
- Executory interest – a future interest in a transferee that must divest another estate or interest to become possessory.
o Exact opposite of remainder
o Springing executory interest = follows an interest in the transferor
o Shifting executory interest = follows an interest in the transferee
No substantive legal difference between springing and shifting executory interests
o E.g., “O conveys to B for life, then one year after B’s death, to D and his heirs.” In this hypothetical, Once B’s life ends, O regains a fee simple that has a duration of one year. D has a springing executory interest, not a remainder.
Four types of remainders
o Indefeasibly vested remainder
Must be (1) created in an ascertainable person and (2) not subject to a condition precedent other than the natural termination of the prior estate
E.g., “O conveys to A for life, then to B”
Ascertainable person = alive and identifiable
* Unborn children are not ascertainable
* A person’s heirs cannot be ascertainable until their death
Condition precedent = condition that must be met before the remainder can become possessory other than the natural termination of the prior estate
o Vested remainder subject to divestment
A remainder that is vested, but is subject to a condition subsequent
* E.g., “O conveys to B for life, then to D, but if D does not survive B, then to E” D has a vested remainder subject to divestment
o Vested remainder subject to open (or vested remainder subject to partial divestment)
A vested remainder held by one or more living members of a group or class that may be enlarged in the future
* E.g., “O conveys to B for life, then to D’s children.” If E and F are D’s current children (both vested because both ascertainable and there is no condition precedent), but may have to share E and F may have to share property with later-born children of D, who are not presently ascertainable
o Contingent remainder
A remainder that is not vested is contingent
* Either given to an unascertainable person or subject to a condition precedent
o Note, grantor often retains reverter (e.g., “O conveys to D for life, then to M if M is married” means that if M does not marry, property reverts to O)
Rule against perpetuities
The Rule Against Perpetuities provides that, to be valid, an interest in property
must vest or fail not later than 21 years after a life in being at the time of the
creation of the interest. If there is any chance the interest will vest after that time, the interest is void and is stricken from the grant.
Interests that are exempt from application of the Rule Against
Perpetuities: a charitable gift following a charitable gift, vested interests
(other than open class gifts), and reversionary interests
Rule against Perpetuities Reform Legislation
“wait and see” - the validity of an interest following one or more life estates is determined on the basis of facts existing at the end of the life estate rather than at the creation of the interest;
cy pres - invalid interests are reformed to comply with the rule and carry grantor’s intent
uniform statutory rule against perpetuities - alternative 90-year vesting period (with a “wait and see” approach)
Restraint on alienation
Generally, any restriction on the transferability of a legal (as distinguished from an equitable) interest in property violates the common law Rule Against Restraints on Alienation and is void.
Types of restraints:
(i) disabling restraints - any attempted transfer is ineffective (always void);
(ii) forfeiture restraints - an attempted transfer results in a forfeiture of the interest;
(iii) promissory restraints - an attempted transfer breaches a covenant.
Joint Tenancy
Same as tenancy in common except that rights are not devisable or descendible (if A and B share joint tenancy, when A dies their share goes to B or vice versa)
Rights are alienable, but transfer converts joint tenancy converted to tenancy in common (“severs” joint tenancy)
Four conditions for creation:
TIME - All joint tenants must acquire interests at the same time
TITLE - All joint tenants must acquire title by same instrument
INTEREST - All joint tenants must have equal shares in estate
POSSESSION - All joint tenants must have equal rights to possess, use and enjoy the whole property
Joint tenancies are disfavored over tenancies in common, must be expressly written into contracts
Ending Joint Tenancies
A joint tenancy can be terminated by a suit for partition
inter vivos conveyance by one joint tenant destroys joint tenancy, converts to tenancy in common.
–> if there are more than two joint tenants, the joint tenancy persists between remaining tenants
–> judgment liens do not sever joint tenancies unless they are enforced
–> mortgages similarly do not cause severance
states are split on whether leases sever joint tenancies
testamentary disposition (e.g., will)
murder causes severance
Tenancy by the entirety
marital estate akin to a joint tenancy between spouses.
if conveyance is unclear, most states presume tenancy by the entirety
Carries right of survivorship
can only be terminated by death, divorce, mutual agreement, execution by a joint creditor of both spouses
one spouse cannot convey or encumber
Tenancy in Common
a concurrent estate with no right of survivorship.
each owner has distinct undivided interest that is freely alienable and subject to creditors
a co-tenant out of possession cannot bring possessory action unless there has been an ouster by tenant in possession
–> ouster = claim of right to exclusive possession; ousted co-tenant entited to their share of fair rental value of property for time they were deprived of possession
only unity required is possession
co-tenants in possession have right to retain profits stemming from their use of property
–> do not need to share profits with co-tenants out of possession unless use reduces land’s value
individual tenants can encumber their interest but not co-tenants interests
Partition of Joint Tenancies and Tenancies in Common
Tenants have right to
partition in kind (division of land into individual parcels)
–> preferred unless not possible to perform in an equitable manner
Partition by sale
Enforceable expenses between concurrent owners
A co-tenant who pays more than her pro rata share of the cost of necessary repairs, taxes, mortgages, and maintenance is entitled to contribution from the other co-tenants in actions for accounting or partition.
Co-tenant cannot compel contributions for improvements
Leaseholds
A leasehold is an estate in land. The tenant has a present possessory interest in the leased premises, and the landlord has a future interest (reversion).
Four major types:
tenancies for years
periodic tenancies
tenancies at will
tenancies at sufferance
lease co
Tenancies for years
expires following a fixed period of time
landlord may terminate upon breach or failure to pay rent
terminate upon surrender (tenant giving up leasehold and landlord accepting)
Periodic Tenancies
Continue from year to year (or successive fractions of a year). End date is uncertain until notice is given
can be expressly created or by implication (lease provides no set end period but includes specific rent periods)
Tenancies at Will
terminable at the will of either the landlord or the tenant
–> if lease provides unilateral right to landlord to terminate, that right is automatically granted to tenant
–> if lease provides unilateral right to tenant to terminate, most courts interpret lease as a life estate or fee simple that is terminable by the tenant
Tenancies at Sufferance
arises when a tenant wrongfully remains in possession after the expiration of a lawful tenancy
lasts until landlord takes steps to evict tenant
tenant liable for rent
Hold-Over Doctrine
When a tenant continues in possession after the termination of his right to possession, the landlord has two choices of action:
–> eviction
–> creation of periodic tenancy
Altered terms: 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 have acquiesced to the new terms if he does not surrender. The tenant will be held to the new terms even if he objects to the increased rent, provided that the rent increase is reasonable.
Constructive Eviction
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Implied warranty of habitability
Requires reasonable suitability for human residence
Tenant remedies:
1) terminate lease
2) make repairs and charge landlord for cost
3) abate rent equal to loss of rental value based on property defects
4) Remain in possession, pay full rent, and seek damages
Retaliatory Eviction
If a tenant exercises the legal right to report housing or building code violations or other rights provided by statute (e.g., a residential landlord-tenant act), the landlord is not permitted to terminate the tenant’s lease in retaliation or penalizing tenant in other ways.
Retaliatory motive is presumed if landlord acts in a punitive manner within certain period (e.g., refuses to renew lease or increases rent more than normally 90 or 180 days) following action by tenant
Leaseholds - Anti-Discrimination Legislation
Civil Rights Act - bars racial/ethnic discrimination
Fair Housing Act - The Fair Housing Act bars discrimination based on race, color, religion,
national origin, sex, or disability in the sale or rental of a dwelling.
–> landlords exempted if:
1) Owner-occupied buildings with no more than four units in which persons live independently of each other
2) Single family homes of owners of no more than 3 single family homes
3) Religious organizations and private clubs
Assignments and Subleases
ASSIGNMENT: the transfer must be on the same terms as the original lease except that the tenant may reserve a right of termination (reentry) for breach of the terms of the original lease.
–> The assignee and the landlord are in “privity of estate,” and each is liable to the other on all lease covenants that “run with the land.”
–> After assignment, the original tenant is no longer in privity of estate with the landlord. But a lease is a contract, and the original tenant and the landlord remain in privity of contract
E.g., L rents to T for three years at $9,400 per year. After one year, T assigns to T1. T1 pays the rent for one year, and then assigns to T2. T2 fails to pay rent. L can collect from T or T2 but not from T1 (unless T1 made some promise on the basis of which L can sue him)
Sublease
sublessee is considered the tenant of the original lessee, and usually pays rent directly to the original lessee, who in turn pays rent to
the landlord under the main lease. Sublessee not liable to landlord
Nonpossessory interests in land
Easements, profits, covenants, and servitudes create a right to use land possessed by someone else.
Types of easements
Easement in Gross - rights with an individual
–> only transferable if economic or commercial in purpose
Appurtenant Easement - rights run with land
Affirmative Easement - entitle the holder to enter upon the servient tenement and make an affirmative use of it
Negative Easement - entitle the privilege holder to compel the possessor of the servient tenement to refrain from engaging in activity
Express vs. Implied
–> Note: express easements subject to statute of frauds
Easement Implied From Existing Use
Requirements:
1) prior to the time the tract is divided, a use exists on the “servient part” that is reasonably
necessary for the enjoyment of the “dominant part”
2) the parties intended the use to continue after division of the property (apparent, obvious, continuous, notorious)
3) reasonable necessity
Easement by Necessity
(1) there was a division of commonly owned land
(2) the division resulted in creating a landlocked parcel.,
(3) easement is strictly necessary for use and enjoyment of dominant estate
–> The easement is said to remain in effect so long as the necessity exists
–> distinction is between mere inconvenience and necessity, with a lack of reasonably practical access required to find an easement by necessity.
Note: no prior use required
Prescriptive Easement
(1) the adverse use of another’s land;
a. adverse use is a wrongful use made without express or implied permission
–> no presumption that use is adverse
(2) that the adverse use was continuous and uninterrupted for at least ten years;
(3) that the adverse use was actually known to the owner of the land, or so open, notorious and visible that a reasonable owner of the land would have noticed the use; and
(4) the reasonably identified starting point, ending point, line, and width of the land that was adversely used, and the manner or purpose for which the land was adversely used
Easement by estoppel
established if injustice can be avoided only by establishment of a servitude, the owner or occupier of land is estopped to deny the existence of a servitude burdening the land when:
the owner or occupier permitted another to use that land under circumstances in which it was reasonable to foresee that the user would substantially change position believing that the permission would not be revoked, and the user did substantially change position in reasonable reliance on that belief.
Irrevocable License
o Landowner allows another to use his land, thus creating a license
o Licensee relies in good faith on license
o Licensor knows or reasonably should expect such reliance will occur
Similar to easement by estoppel
Scope of an easement
The common law does allow some flexibility in determining an easement holder’s rights. In particular, the manner, frequency, and intensity of an easement’s use may change over time to accommodate technological development.
–> But such changes must fall within the purposes for which the easement was created, as determined by the grant’s terms
Abandonment of an easement
In order to establish an abandonment there must be in addition to nonuser, acts by the owner of the dominant tenement conclusively and unequivocally manifesting either a present intent to relinquish the easement or a purpose inconsistent with its future existence.
Prescription – an easement may be terminated by prescription, using essentially the same standard for acquiring a prescriptive easement. Thus, if the servient owner blocks use of the easement in an open and notorious, adverse and hostile, and continuous manner for the prescriptive period, the easement ends.
Condemnation: Condemnation of the servient land also terminates the easement. In this event, the easement holder is entitled to just compensation.
Estoppel: An easement ends if the servient owner substantially changes his position in reasonable reliance on the holder’s statement that the easement will not be used in the future.
Merger (Unity of Ownership): If one person obtains title to both the easement and the servient land, then the easement terminates under the doctrine of merger.
Misuse: In some jurisdictions, if the holder seriously misuses the easement, it may be ended through forfeiture.
Release: The easement holder may release the easement to the servient owner by executing and delivering a writing that complies with the Statute of Frauds.
Destruction of Servient estate
Real Covenants
A breach of a real covenant generally is remedied by an award of money damages. If equitable relief, such as an injunction, is sought, the promise may be enforced as an equitable servitude
For burden to run
(1) Intent - inferred from circumstances
(2) Notice - actual or constructive
(3) Horizontal privity (e.g., grantor-grantee, landlord-tenant, mortgagor-mortgagee)
(4) Vertical privity
(5) Touches and concerns
(6) Statute of frauds
For benefit to run
(1) Intent - inferred from circumstances
(2) Vertical privity
(3) Touches and concerns
(4) Statute of frauds
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Equitable Servitudes
Allows injunction or specific performance
For burden to run
(1) statute of frauds
(2) intent
(3) touch and concern
(4) notice
For benefit to run
(1) statute of frauds
(2) intent
(3) touch and concern
Defenses to equitable servitudes
Unclean hands- The person seeking enforcement is in violation of the same nature
Acquiescence - If a benefited party acquiesces in a violation of the servitude by one burdened party, he may be deemed to have abandoned the servitude as to other burdened parties.
Estoppel - If the benefited party has acted in such a way that a reasonable person would believe that the covenant was abandoned or waived, and the burdened party acts in reliance thereon
Changed conditions make enforcement inequitable
Adverse Possession
Requirements
(1) Actual possession
(2) Exclusive possession
(3) Continuous possession
(4) Adverse and Hostile
(5) Open and notorious
(6) For a statutory period
No adverse possession against future interests
Tacking
There need not be continuous possession by the same person. Ordinarily, an adverse possessor can take advantage of the periods of adverse possession by her predecessor. Separate periods of adverse possession may be “tacked” together to make up the full statutory period with the result that the final adverse possessor gets title, provided there is privity between the successive adverse holders.
Disabilities in Adverse Possession
The statute of limitations does not begin to run for adverse possession (or easements by prescription) if the true owner was under some disability to sue when the cause of action first accrued
some jurisdictions suspend the running of the period until the disability is removed. But most states provide a limited period of time after the disability ends within which suit must be brought. For example, in our hypothetical above, assume a state statute allows an owner to bring suit within five years after her disability is removed. Suppose B’s adverse possession period begins in 2006, and thus would normally end in 2016, ten years later. If A became mentally incompetent in 2001, and is cured in 2018, then A still has five years to sue to eject B, that is, until 2023.
Disabilities do not tack
EXAMPLE 1
O, the true owner, is five years old when A goes into adverse possession. The
statute will not begin to run until O reaches the age of majority.
EXAMPLE 2
O, the true owner, is declared insane six months after A begins using a pathway adversely. The statute has begun to run because O’s disability arose
after A’s adverse use began
Equitable Conversion
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 personal property.
Marketable Title
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.”
Marketable means reasonably free from doubt regarding chain of title (unencumbered fee simple)
–> no mortgages or liens
–> only easements that do not lower value of property
–> noncompliance with zoning restrictions
Property defects generally do not render titles unmarketable unless there is concealment or misrepresentation that materially affected the apparent value of the property
Deeds - Standard Components
Compliance with Statute of Frauds
Description of parties and real property
Words of intent
NOTE: no consideration needed for validity
Note: deed voidable if one or more parties lack capacity (e.g., are minors)
Deed - Delivery
A deed is not effective to transfer an interest in realty unless it has been delivered.
Physical transfer of a deed is not necessary for a valid delivery.
delivery” refers to the grantor’s intent; it
is satisfied by words or conduct evidencing the grantor’s intention that the deed have some present operative effect; i.e., that title pass immediately
and irrevocably, even though the right of possession may be postponed until some future time
delivery cannot be canceled (e.g., returning or destroying deed has no effect). New conveyance is required to return property
Delivery is presumed if the deed is: (1) handed
to the grantee, (2) acknowledged by the grantor before a notary, or (3) recorded.
Valid conditional deliveries can occur in situations akin to escrow
Acceptance is usually presumed
EXAMPLE 1
delivery for ‘safekeeping’ does not transfer interest
EXAMPLE 2
O drafts an instrument conveying Blackacre to A. O attempts to give the instrument to A personally but is unable to find A; nevertheless, O quits possession of Blackacre and thereafter treats A as the owner thereof. Nearly all courts would hold that there has been a sufficient delivery
EXAMPLE 3
If O (the grantor) gives B a deed naming A as grantee and instructs B to give the deed to A, has a delivery occurred? Most courts say yes. Because O indicated an intent to make the deed presently operative, A has a right to the deed and O should not be able to get it back. However, if O told B to retain the deed and give it to A upon O’s later instructions, no delivery would have occurred
EXAMPLE 4
O gives B a deed naming A as grantee and tells B to transfer the deed to A when A has paid $5,000 on O’s account on or before September 1.
Types of deeds
General Warranty Deed
–> the grantor covenants against title defects created both by himself and by all prior titleholders.
Special Warranty Deed
–> Only assurances regarding grantor
Quitclaim Deed
–> No assurances
Deed Covenants
PRESENT COVENANTS
Covenant of Seisin
–> grantor has title and possession
Covenant of the Right to Convey
–> grantor has the power and authority to make the grant
Covenant Against Encumbrances
–> there are neither visible encumbrances (easements, profits, etc.) nor invisible encumbrances (mortgages, etc.) against the title or interest conveyed.
FUTURE COVENANTS
Covenant of Quiet Enjoyment
–> grantee will not be disturbed in her possession or enjoyment of the property by a third party’s lawful claim of title.
Covenant of Warranty
–> grantor agrees to defend on behalf of the grantee any lawful or reasonable claims of title by a third party, and to compensate the grantee for any loss sustained by the claim of superior title
Covenant of 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.
NOTE: In the absence of a statute, no covenants of title are implied in deeds.
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