deck_8023115 Flashcards
Present Possessory Estates
1) Freehold Estates (FSA, DEs, FT)2) Life Estates3) Term Estates
Freehold Estates
1) Fee Simple Absolute (best estate, all possible right)2) Defeasible estates (may terminate, includes: FSD, FSSCS, FSSEE)3) Fee Tails (CL rule to limit to grantee’s children only, now disfavored)
Language to create a Fee Simple Absolute
“to A and his heirs” (common law);“to A” (modern law)
Defeasible Estates: def and types (3)
An estate that may terminate upon some happening or event before its maximum duration has run. Includes:(1) Fee Simple Determinable:Terminates automatically on happening of a named future event, and estate returns to grantor(2) Fee Simple Subject to a Condition Subsequent:terminates on occurrence of a condition, power of termination must be expressly reserved to grantor(3) Fee Simple Subject to Executory Interest: on happening of event that terminates estate, property passes to someone other than grantor
Language to create a Fee Simple Determinable
created by durational language (“to A for so long as liquor is not served on the premises”)
Language to create a Fee Simple Subject to a Condition Subsequent
Created by: conditional language as to occurrence of a condition that will terminate estate
Ambiguous language in a FSSCS
If power of termination is not expressly reserved to the grantor, courts interpret it as an attempt to create FSSCS (but it fails, and is just a fee simple, i think)
language creating Fee Simple Subject to Executory Interest
Created by: either conditional or durational language, that places the remainder with a third party (not grantor)
Fee Tail: under CL and modern
A type of defeasible estate, under Common law, which descended to grantee’s children only (“issue of his body” or something)Modern law: fee tails are disfavored and are treated as a fee simple absolute
language creating a Life Estate
limits duration to someone’s life, e.g. “to B for life, solong as B farms land.” Can be made defeasible, as in the example above.
Term Estate
a non freehold estate, limited in duration (basically a landlord-tenant relationship)
Future Interests (5)
Non possessory interest1) Possibility of Reverter2) Power of Termination3) Reversionary Interest4) Remainder5) Executory Interests
Possibility of Reverter
future interest in grantor that follows a determinable estate, created automatically along with a FSD, no speciallanguage needed.Upon happening of the FSD’s event/condition: land automatically reverts back to grantor.
Transferability of FSD
Common law: could not be devised or transferred inter vivos (could pass through intestacy or will)Modern law: freely transferable, devisable, and descendible
“Life estate pur autre vie”
type of Life Estate, where duration of estate is measured by life of someone other than grantee(i.e., “to B for the life of C”)
Right of Reentry
= same thing as Power of Termination, non automatic future interest which must be spelled out
Power of Termination
= same as Right of Reentry, a future interest in grantor when grantor attempts to create a FSSCS or a defeasible life estate. This power is not automatic, and must be spelled out in the conveyance. Upon happening of the event/condition, land does not automatically revert; grantor must do something to retake property.
Remainder, types
a future interest created in a third person that is intended to take after natural terminationof preceding estate. Could be Contingent or Vested.
Transferability of Power of Termination/RoR
Common law: could descend through intestacy or will but could not be devised or transferredinter vivosModern law: freely descendible and devisable but many jurisdiction still limit inter vivos transfers
Language to create a Remainder
mean to begin after natural termination of preceding estate, i.e., “A to B for life, then to C,” creates a remainder for C.
Reversionary Interest, language to create
A future interest retained by grantor when he transfers less than a fee to a third person(i.e., “A to B for 10 years,” creates a reversion back to A after 10 years.)
Transferability of Reversionary interest
Common law: could descend through intestacy or will, but could not be devised or transferredinter vivosModern law: freely transferable, devisable, and descendible
Contingent remainder
Any remainder that isn’t vested
Vested Remainder
a remainder is vested at the point that it is:(a) Created in an ascertainable person; and(b) Not subject to any condition precedent other than termination of preceding estate
Types of vested remainders
Vested remainder subject to total divestment;Vested remainder subject to open
Vested remainder subject to total divestment
A remainder that is presently vested but may be terminated on happening of a future event
language creating a Vested remainder subject to total divestment
“A to B for life, remainder to C, so long as liquor is never served on the premises” C has vested remainder but could lose it by serving liquor on premises
Vested remainder subject to open
A remainder to a class with at least one ascertainable member who has satisfied any conditions precedent to vesting, but other members may join class later
types of class openings in a Vested remainder subject to open (2)
(1) Inter vivos conveyance: class opens at time of conveyance(2) Testamentary conveyance: class opens at death of testator
application of RAP to class closing
The Rule Against Perpetuities (RAP), which can void a future interest, generally does not apply to vested interests except: vested remainder subject to open.If any member of a class could potentially claim in a way that violates the RAP, it will knock out entire class gift
Executory Interest
A future interest in a third person that ends previous estate before it would have naturally terminated.Any interest created in a 3rd party that follows granting of a fee will always be an executory interest.An executory interest in subject to the RAP.
Types of executory interests (2)
(1) Shifting executory interest: passes from grantee to grantee (most common)(2) Springing executory interest: transfers property from grantor to grantee or grantee to grantee
Waste and future interests
An owner of less than a fee estate cannot commit waste (i.e., harm property at expense of person who will hold it after them).A remainderman has standing to sue for past or future waste.
Types of waste (3)
(a) Voluntary waste = cannot intentionally or negligently damage property(b) Permissive waste = failure to take take reasonable steps to avoid damage(c) Ameliorative waste = tenant makes improvements to the land
Common law re waste
tenant was not allowed to make substantial alterations unless authorized to do so. Tenant could be liable for cost of restoring the land to its previous condition
Modern law re waste
A tenant is now allowed to commit ameliorative waste if:1. Market value of remainderman’s interest is not impaired; and2. Permitted by remainderman; or3. Substantial and permanent change in neighborhood that justifies improvement
Rights of different types of remaindermen to sue for future waste:
(a) Vested remainderman: can sue for damages or an injunction to stop waste from occurring(b) Contingent remainderman: can sue for an injunction to stop waste from occurring (no damages)
Application of the Rule Against Perpetuities (RAP)
(1) Identify type of interest RAP applies to: executory interest; contingent remainder; vested reminder subject to open; purchase option; right of first refusal(2) Is it possible to interpret facts so someone can claim an interest more than 21 years after everyone currently alive is dead? (a) If yes, the interest is wiped out and interpret the rest accordingly; (b) if no, the interest will stand
Restraints on Alienation
Total restraint(1) On a fee: generally not valid(2) On less than a fee: will be upheld if reasonablePartial restraint (i.e., purchase option and right of first refusal): valid if reasonable, on both a fee and less than a fee.
Types of co tenancies
Tenancy in common = each co-tenant owns an undivided interest in the whole of the property. No right of survivorshipJoint tenancy = each co-tenant owns an undivided interest in the whole of the property and has a right of survivorship
Creation of a Tenancy in common
Creation requires unity of possession (each tenant has right to possess whole)
Creation of joint tenancy
Traditionally, a joint tenancy requires for unities (TTIP):(a) Time (take at the same time);(b) Title (take by the same instrument);(c) Interest (take equal shares of the same type); and(d) Possession (each tenant has the right to possess the whole)Today, most jurisdictions require only interest and possession
Severance of a joint tenency:
Severance can be done by inter vivos act if one of the parties:(1) Seek a partition action(2) Joint tenant sells his interest in the property(3) Joint tenant mortgages his interest in the property (a) Majority view (lien theory): mortgage is viewed as a lien on the property, will not sever (b) Minority view (title theory): mortgage is viewed as a title to property, will sever
Tenancy by the entirety, and its severance
A joint tenancy where the parties are married.Severance occurs when:(1) they jointly convey the property to another;(2) one spouse conveys propertyto the other; or(3) divorce
Rights and duties of co-tenants
(1) Possession: each has a right to possess the whole(2) Profit(3) Payments/Expenses
Co tenants’ rights to profit
(1) A profit produced by one of the co-tenant’s efforts: other co-tenants have no right to share in those profits (unless they’ve been ousted from the property)(2) A profit generated by a third party (i.e., rent): all co-tenants are entitled to a proportionate share of the profit
Expenses of co-tenants
(1) Taxes/mortgage payments: each co-tenant must pay proportionate share(2) Repairs: a co-tenant may be permitted to reimbursement from rents collected(3) Improvements: generally, a co-tenant is not entitled to reimbursement. Exception: if property is sold, amount attributable to the improvement goes to tenant who made the improvement.
Landlord/Tenant relationship creation
creation is through a lease, which can be oral or in writing (writing is necessary for leases longer that one year)
Types of Leases (4)
(1) Term of years(2) Periodic Tenancy(3) Tenancy at-will(4) Tenancy at sufferance (holdover tenant)
Term of years
(1) A lease that has a definite beginning and end (need not be a year)
creation and termination of a Term of Years
Creation: express agreement between LL and tenant for a term specified in the leaseTermination: automatically at the end of the period; no notice is required
Periodic Tenancy
A lease with a set beginning date and continues from period to period until proper notice is given
Creation/Termination of a Periodic Tenancy
Creation: expressly or by implication with a holdover tenant.Termination: LL or tenant must give appropriate notice of intent to terminate
Requirements for proper notice for a Periodic Tenancy
Appropriate notice must be:(i) in writing, if the lease/state statute so specifies, otherwise it can be oral; and(ii) equal to the rental period up to a maximum of six months (i.e., one-year tenancy reqs six-months’ notice)Timing of notice(i) Common law: notice had to be given at the start of the rental period(ii) Modern law: notice is good whenever given but does not take effect until the start of the next rental period
Tenancy at-will (creation/termination)
Creation: generally, express agreement of partiesTermination: it terminates:(a) freely as soon as either party decides (no notice requirement)(b) if either the LL or tenant dies(c) if either party attempts to transfer their interest
Tenancy at sufferance (holdover tenant)
Creation: a holdover situation (i.e., tenant does not move out at end of the agreed-upon tenancy)A holdover tenant becomes: a periodic tenant or a tenant at sufferance. Determining factor is the LL:(i) If LL wants tenant to remain on the land, tenant become a periodic tenant(ii) If LL does not want the tenant to remain on the land, becomes a tenant at sufferance until the LL can get tenant off the propertyCrucial factor: acceptance of rent. If the LL accepts rent, this is evidence that LL wants tenant to stay.
Common Disputes between LL and Tenant
(1) Fights over Rent(2) Condition of the Premises and Who has the Obligation to Maintain (including disputes of possession, improvements )(3) Assignment and subletting
How much rent the LL can sue for (for 4 types of tenancies)
Tenancy for years = tenant is liable for all unpaid rent in the lease(a) Common law: LL could only sue for rent as it accrued(b) Modern majority: follows anticipatory repudiation but LL has a duty to mitigate (i.e., make reasonable efforts to rent the property)Periodic tenancy = tenant liable for rental obligation until notice is given to terminate the leaseTenancy at-will = tenant liable for amount of rent stated in the agreement that is alreadyowedTenancy at sufferance = tenant liable for the reasonable rental value of the property
Tenants defenses in rental disputes (4)
(1) Failure to deliver possession(2) Tenant has been evicted(3) Tenant surrenders premises to LL (LL must accept the surrender and retake possession of the premises)(4) Destruction(5) Warranty of Habitability
tenant’s defense of Failure to deliver possession
(a) Majority rule: LL has obligation to deliver possession(b) Minority (“American”) rule: LL has no obligation to deliver possession of the premises; tenant must take it
Types of eviction
Actual eviction = tenant is physically removed from all or party of the property (tenant is excused from paying rent)Constructive eviction = the property is in such bad condition that tenant is essentiallybeing forced out (tenant must actually move out within a reasonable time)Total constructive eviction: defense to the payment of any rentPartial constructive eviction: reduction in rent only
tenant’s defense of destruction
Common law: generally did not excuse payment of rentModern law: destruction is a defense to payment of rent. Exception: tenant intentionally or negligently causes the destruction.
LL’s Warranty of Habitability
Requires LL to maintain the premises in a habitable conditionRule: to claim breach of implied warranty of habitability, the tenant must:1. provide LL with notice; and2. allow LL reasonable time to repair itMajority: applies to residential leases onlyMinority rule: applies to residential and commercial leases
Condition of the Premises and Who has the Obligation to Maintain: LL’s obligations
(1) Common law: LL has no obligation to maintain or repair leased premises(2) Modern law: warranty of habitability (see above)
Condition of the Premises and Who has the Obligation to Maintain: Tenant’s obligations
Ameliorative waste(a) Common law: no obligation to make improvements and LL could hold tenant liable(b) Modern law: tenant can improve if expressly authorized or a change in circumstances warrant the improvements to be made
LL/T Fight over possession
Rule: LL can retake the property if the tenant has committed a material breach of the lease.Common law: LLs were entitled to use reasonable force to retake possession from the tenant.Modern law: majority of jurisdictions no longer allow use of any force and LL must use legal process.
LL/T Dispute over improvements
Common law: anything (except a trade fixture) affixed to the land became part of the land and had to stay (w/trade fixture exception)Modern law: if the fixture can be removed without effecting the premises, the tenant is entitled to remove the fixture (no distinction between trade fixtures)
Trade fixtures
item used in the course of the tenant’s trade or business.Rule: trade fixture could be removed unless removal would cause substantial damage to the property
LL’s transfer of interest
If a LL transfers his interest, whoever is the LL of record on the date rent is due is entitled to that rent
types Tenant’s transfer of interest (2)
Assignment = tenant transfers all of the remainder of the rental obligationSublease = tenant transfers only a portion of the time left on the rental obligation
Liability of parties when a tenant assigns his interest
The assignee comes into privity of estate with LL.Assignee is liable to LL for rent unless he re-assigns to a new assignee whotakes over privity of estate.Tenant remains in privity of contract with LL, and is liable to LL for rent, even after assignment, unless there is a contract novation.
Liability of parties when a tenant subleases
The sublessee comes into privity of estate and privity of contract with the tenant, owing the tenant rent.Tenant continues to owe rent to LL.
Permissibility of Transfer of interest in leases
Generally, interests in leases are fully transferable.To prohibit both an assignment and a sublease, the lease must specifically state that both are prohibited.
Covenants that Run with the Land
(1) Covenants(2) Equitable servitudes(3) Implied reciprocal servitude
Covenants (creation)
for a covenant to run with the land, the following elements must be met (PINT):1) Privity: horizontal and vertical2) Intent that the covenant runs with the land (SoF appllies)3) Notice: The current owner of the servient estate must take with notice of the restriction (requirement on servient side only)4) Touch and concern the use and enjoyment of the land (must reduce/increase u&e of serviant/dominant estate)
Equitable servitudes (creation)
three elements of an equitable servitude (TIN):(1) Touch and concern the land: Burden must run with the servient estate; benefit with the dominant estate(2) Intent: the writing (Statute of Frauds applies) shows intent that the restriction run to future landowners(3) Notice: current owner of the servient estate took with notice
Implied reciprocal servitude
Elements:(1) Restriction is party of a common scheme or plan for development of the area; and Factors to show “common scheme”(2) Current owner of the servient estate takes with notice of the restriction
Horizontal privity
= relationship between original covenantor and covenantee.Requires privity of contract in connection with land (i.e., LL/tenant, grantor/grantee, mortgagor/mortgagee)
Vertical privity
= the relationship between an original party and the successor in interest to the original party (privity of estate).In order for the burden to run, privity of estate will only exist when the holder ofthe servient estate transfers all of his interest in the servient estate to the newowner.
Factors showing a “common scheme” for the purposes of an Implied reciprocal servitude
a large percentage of lots expressly burdened; oral representations to buyers; statements in advertisements to buyers; or recorded plot maps or other declarations, etc
Terminating a covenant or equitable servitude
May be terminated by:written release;merger of the dominant and servient estates;abandonment;estoppel, or changed circumstances so that the reason behind the restriction is no longer valid
Servient estate
estate that is burdened by the easement (must always have a servient estate)
Dominant estate
estate that is benefited by the easement (do not always have to have a dominantestate)
Easement appurtenant
benefits a parcel of land and has a dominant estate
Easement in gross
benefits a person or entity rather than a piece of land (no dominant estate)
Ways a Easement may be created:
1) Expressly – a writing must satisfy the Statue of Frauds2) By Implication (by Prior Use; by Necessity)3) By Prescription (Adverse Possession): actually, openly, notoriously, and exclusively uses land with hostile intent for the statutory period.
Types of Easement by implication
Easement implied by prior useEasement by necessity
Easement implied by prior use, elements
requires:(a) Common ownership of dominant and servient estates, then severance;(b) Prior use of quasi-easement;(c) Use was apparent or could be discovered upon a reasonable inspection; and(d) Reasonable necessity
Easement by necessity, elements
(a) Common ownership of dominant and servient estates, then severance; and(b) Strict necessity
Scope of Easements
If express easement states use, then that is only allowable use. Apart from that, an easement can be used to the extent that it is reasonably necessary to do so.Holder of easement may do what is reasonably necessary to maintain the easement, even if it interferes with the servient owner’s use of his property.
“Surcharging the easement”
Going beyond what is reasonable. Doesn’t terminate the easement, but the servient estate can sue for an injunction ordamages.
Termination of Easements
1) Destruction of the servient estate2) Termination based on actions of the easement holder3) Termination based on actions of the owner of the servient estate4) End of necessity: for easement by necessity, ends when the necessity ends
Destruction of the servient estate…
…generally will terminate an easement unless the owner of the servient estate intentionally caused the destruction
Termination based on actions of the easement holder
1) Merger of title2) Written release: expressly terminating his rights in the easement (SoF)3) Abandonment: an affirmative act in furtherance of the intent; and intent to abandon4) Estoppel: owner of the servient estate foreseeably and detrimentally relies on the holder’s action/abandonment5) Severance: owner of dominant estate tries to sever the easement from the dominant estate (only arises with easement appurtenant)
Termination based on actions of the owner of the servient estate
1) Prescription: owner of the servient estate interferes with the use of the easement for the statutory period2) Servient estate is sold to a bona fide purchaser (pays value and takes without notice)
Merger of title
owner of the dominant estate also acquires the servient estate. terminates easement
Profits
The right to go on someone else’s land and take something off of it.Creation: can be created expressly or by prescription only (analysis is otherwise same as easements).Termination: same as easements
Licenses
A privilege to go on land (a personal right, not an interest in the land).Licenses are freely revocable at any time, for any reason, unless the license is Coupled with an Interest, or Executed.
License Coupled with an interest
The licensee purchases personal property that is located on the licensor’s property and is given permission to come onto the land to claim that property
Executed License
The licensee expends money or labor in reliance on the license; license is irrevocable until the person gets value out of the expenditure.
Transferability of licenses
Licenses are not transferable unless the licensor so intends
Termination of Licenses
Licenses terminate on the death of the licensor or the conveyance of the servient estate
Support rights include
lateral support and subjacent support
Lateral Support
General rule: someone has an absolute right to lateral support, so if someone fails to provide it, the adjoining landowner will be strictly liable for any damages suffered.
Approach to Lateral Support disputes:
If the land has been improved, ask:would the property have subsided anyway, or was it the weight of the improvement that caused the land to subside?(1) If the land would have subsided anyway: remains strictly liable(2) If the weight of the improvement caused the land to subside, the adjoining landowner is liable Only if he was negligent in depriving the property of lateral support
Subjacent Support
General rule: the right of support extends to:(1) Land in its natural state; and(2) Buildings existing on the date when the subjacent estate was severed from the surfaceHowever, the underground landowner is liable for damages to subsequently erected buildings Only if he is negligent.
Riparian View of water rights
Majority view:Anyone within the watershed (touches the lake or stream) has a right to make reasonable use of the water
Prior Appropriation/Use View of water rights
Minority view:Awards the right to use water to the first person to take water for beneficial purposes.
Requirements of land contracts
The Statute of Frauds requires a writing for a transfer of an interest in real property.The writing must be signed by the party to be charged and must include:(1) Description of the property;(2) Description of the parties;(3) Price; and(4) Any conditions of price or payment if agreed on
Exceptions to the Statute of Frauds for transfers of interests in land
1) Doctrine of part performance2) Equitable and promissory estoppel
Doctrine of part performance
The acts of part performance unequivocally prove the existence of the contracts (even w/o a writing), and requires a showing of some combination or all three of the following:(a) Payment of all or part of the purchase price;(b) Taking of possession;(c) Making substantial improvements
Equitable and promissory estoppel to prove an oral contract for the sale of land
Exception to SoF.Equitable estoppel is based on an act or a representation.Promissory estoppel is based on a promise
Equitable Conversion
Definition: there is a bifurcation of title when a land-sale contract is formedEquitable title: passes to the buyerLegal title: remains with the seller until the deal closesMajority rule: risk of loss is deemed to follow equitable title, so the risk of loss is on the buyerMinority rule: risk of loss remains with the seller until the legal title or possession of the property passes to the buyer.
Covenant of Marketable title
= title reasonably free from defects in both fact and law (not perfect title).This covenant only manifests itself at the date of closingMajority rule: a seller may use the proceeds of the sale to remove a cloud on title and make it marketable.
Defects to marketable title may include:
(1) Unpaid mortgage or lien;(2) Covenant or easement that restricts use of land;(3) Title acquired by adverse possession until the adverse possessor quiets title; or(4) Existing condition on the land that violates a zoning ordinance
Merger (in transfer of interest in land)
Land-sale contract merges into the deed, and since the covenant of marketable title is implied in the contract, buyer cannot assert the contract, and must sue on the deed.
Types of deed
1) Quitclaim2) General Warranty3) Special Warranty
Quitclaim deed
an as-is deed (no warranties/covenants), and seller conveys whatever interest he has and buyer can’t sue
Warranty deed:
buyer can sue on the deed through one of the covenants of title contained in thewarranty deed.Can be general or special
General warranty deed
contains all six covenants of title (3 past and 3 future), which covers the period prior to the sale, and Seller warrants there are no defects in the chain of title
Special warranty deed
may contain some or all of the covenants, and may limit liability to the period that the grantee owned the land.Seller warrants that no defects have occurred during his ownership.
Present covenants in a general warranty deed
*do not run with the land and can be breached only at the time of closing:(1) Seisin (grantor promises he owns the property)(2) Right to convey (grantor promises he has the power to convey the property)(3) Covenant against encumbrances (grantor promises there are no encumbrances on the property)
Future covenants in a general warranty deed
*runs with the land and breach can be at the time of closing or afterwards:(1) Quiet enjoyment (grantor promises that grantee won’t be disturbed by a third partyasserting a valid claim to the land)(2) Warranty (grantor promises he will defend the grantee against any third-party claim)(3) Further assurances (grantor promises he will do everything reasonably necessary to perfect grantee’s title)
Fitness and Suitability
Duty to disclose material latent defects known to the seller but not readily observable and not known to the buyer.Applies to commercial builders and developers of new homes.
Implied Warranty of Quality
Applies to sale of new or remodeled homes by builders and developers (does not apply to commercial structures).Defects must be discovered within a reasonable time after construction or remodeling (covers significant latent defects).
Types of Security Devices
1) Mortgages2) Deed of Trust3) Purchase-Money Mortgage (PMM)
Mortgages
Mortgages must be in writing to satisfy the Statute of FraudsCreditor’s remedies: choice to sue in personam (on note); or an in rem foreclosing on the land (through mortgage)
Instruments that make up a mortgage:
(1) Mortgage (document that represents an interest in land)(2) Note (represents the personal obligation of debtor to repay the debt.Creditor can sue on either.
Deed of Trust
Debtor (the settlor) borrows money and executes deed to property, and a third person (the trustee) keeps the deed until debtor pays debt
Purchase-Money Mortgage (PMM)
= A mortgage that covers part or all of the purchase price (i.e., not a mortgage obtained to remodel a home).A PMM that is recorded has priority over other types of mortgages
Security Relationship Theories
1) Lien theory: mortgagee receives lien on property, mortgagor possesses property and has right to rents and profits from property2) Title theory: mortgagee has rights to rents and profits from the property, mortgagor retains possession (until default)3) Intermediate theory: lien theory applies until default (mortgagor has rights to possession, rents, and profits); thenupon default, title theory applied (i.e., mortgagee is entitled to possession, rents, and profits)
Duties in a securities relationship
a person in possession has duty to manage property in a reasonably prudent manner (i.e., can’t commit waste)
Transfers by Mortgagor
Mortgagor can make three types of sales of land encumbered by a mortgage:1) Buyer takes “subject to the mortgage” (i.e., buyer has no responsibility to pay on it, either before or after foreclosure, this is the default);2) Buyer “assumes the mortgage” (i.e., buyer becomes personally liable for it, along with original borrower);3) Buyer “assumes the mortgage” plus a novation with the lender, so that buyer is only personally liable for paying mortgage.In each case, the mortgage remains on the land and is available if the mortgagee needs to foreclose on it.
Liability when mortgage is assumed:
(1) If debt falls into default: creditor can sue grantor, and grantor can get a court order compelling grantee to pay debt(2) If grantor makes payments following the transfer: grantor can sue grantee forreimbursement
Due-on-sale clause
Gives mortgagee the option to require entire debt be due and payable upon any transfer (enforceable if in the mortgage)
Transfers by Mortgagee
Mortgagee may transfer the note and mortgage, which travel together
Discharge of Debt and Mortgage
a) Prepayment of Mortgage: No right to prepay mortgage debt unless the terms of mortgage expressly authorize payment.b) Deed in lieu of Foreclosure: Mortgagor issues a deed in lieu of foreclosure, which takes subject to all mortgages on the property. Junior lienholders are unaffected
Types of foreclosure:
i) Judicial foreclosure (i.e., judicial proceeding with pleadings, service of process, etc.)ii) Private sale/power of sale (i.e., private party conducts a public sale)There is no limit to the number of mortgages that one may have (“first in time, first in right” principle applies)
Deficiency judgment
when foreclosure sale raises less money than the amount of theoutstanding debt
Redemption
Debtor’s remedy is redemption. Redemption will stop the foreclosure if debtor pays off debt or brings loan current (all payments due and fees paid)An acceleration clause prevents debtor from using redemption (not always upheld)
Adverse Possession (AP)
3 major components: physical, mental, timePhysical: Adverse possessor actually, openly, notoriously, and exclusively occupies the land in a manner sufficient to put the true owner on reasonable notice of the AP.(a) Minority rule: Requires adverse possessor to also pay taxes on the property.Mental: adverse possessor has to occupy the land with a sufficiently hostile intent(a) Hostile = claiming the land as your own(b) Permission to be on the land destroys hostile intentTime: adverse possessor has to be on the land continuously for the statutory period(common law: 20 years)(a) “Continuously” is a question of fact based on the nature of the land and the use to which it is being put
Two ways to satisfy the “hostile” requirement for AP
(a) Claim of right (claiming the land as your own); or(b) Color of title (falsely believing you have good title to the property under a deed)
Split of authority on whether encroachment is hostile intent:
(a) Majority rule: a mistaken encroachment is sufficient hostile intent(b) Minority rule: hostile intent exists only if the person who was doing the encroaching intended to encroach
Tacking for AP
Combines AP periods to meet the statutory requirement; musty be a transfer from oneadverse possessor to another
Scope of what the adverse possessor takes
Generally, can only claim the portion of the land actually occupiedException: when claiming under color of title, adverse possessor gets all the land described in the flawed deedAdverse possessor gets whatever the true owner has (i.e., if true owner sold sub-surface rights, adverse possessor gets surface rights only)
Disability in AP context
A disability (infancy, incompetence, imprisonment) can suspend the running of the statute of limitations if: the disability exists at the time the AP startsThe AP period begins to run once the disability ends (i.e., true owner gets out of jail or turns 18)
Rights of the adverse possessor and true owner
True owners: can eject the adverse possessor and collect damages up to the point the statutory period has run.Adverse possessor:(1) When the AP begins, the possessor is considered to be the owner against the entire world except the true owner(2) Once the statute of limitations runs, the adverse possessor is the true owner as of the date he entered the land
Transfer by Deed
Three requirements for a valid conveyance: writing, delivery, acceptance
Deed sufficient to satisfy the Statue of Frauds
Four written requirements of a valid deed:(a) Sufficient identification of the parties;(b) Words indicating an intent to make a present transfer of the property;(c) Sufficient description of the property; and(d) Grantor’s signature (grantee doesn’t need to sign deed)
Delivery of the deed
Delivery exists if: grantor has the mental intent to transfer the property to the granteeWays to deliver the deed:(a) Give it to the grantee (rebuttable presumption of delivery)(b) Retain the deed (rebuttable presumption of no delivery)(c) Give deed to a third party (i.e., escrow) to give to grantee(i) Relation-back doctrine: conveyance to grantee relates back to the date grantorgave the deed to third party(ii) If grantor expressly retains the right to reclaim deed from the third party, there isno transfer of title
Acceptance of the deed by the buyer
Acceptance is presumed if the transfer is beneficial to grantee.If grantee refuses to accept, there’s no transfer of property.
Transfer by Operation of Law and Will: When seller dies before closing
If seller dies after executing a sales contract but before closing, decedent’s personal representative must complete the sale.Money received goes to the beneficiary who inherits personal property.
Transfer by Operation of Law and Will: Ademption
Ademption by extinction: property is described in a will but isn’t in testator’s estate at time of deathAdemption by satisfaction: property was gifted during testator’s lifetime but the property is still mentioned in the willIf a gift of property was made during testator’s lifetime, but a general devise is in the will (e.g., “one-third of my estate”), then the property already received will not be adeemed by satisfaction unless:(1) Will provides for deducting the gift;(2) Testator, in writing, declared that the gift was part of the general devise; or(3) Devisee, in writing, acknowledged that the gift was part of the general devise
Transfer by Operation of Law and Will (4 ways)
1) Transfer by Operation of Law and Will2) Ademption3) Exoneration4) Lapse
Exoneration
Majority rule: inherited property is taken subject to all outstanding liens and mortgages (estate does not pay them off)
Lapse
Common law: if a beneficiary predeceases a decedent, any gift to the beneficiary failsModern law: many states not have anti-lapse statutes (i.e., beneficiary’s heirs “stand in his shoes” and get the bequest)
Title Assurance Systems
1) Recording Acts2) Indexes (how to record a conveyance)3) Estoppel by deed4) Shelter rule5) Title Insurance
Recording Acts (3)
1) Race Statute: the person who records first prevails2) Notice Statute: a purchaser for value who takes without notice of any other claim (a bona fide purchaser) prevails; Pays value = paying more than a nominal amount (i.e., purchase price or reasonable amount)3) Race-Notice Statute: an unrecorded conveyance is invalid against a subsequent bona fide purchaser who records first
Types of notice
actual, constructive, or inquiry
Indexes
=how to record a conveyanceTract index (minority)(1) A legal description of the tract of land followed by a chronological listing of all conveyances involving that piece of land(2) You would immediately see any recorded conveyance and will always have constructive notice of a claim to propertyGrantor-grantee index (majority)(1) Two sets of books where the conveyance is recorded: one arranged by name of grantor, the other by name of grantee
Estoppel by deed
Applies to a situation where someone transfers title to property that they do not have but then later acquire title to(1) Majority rule: if grantor transfers title to property before he has title to property and then attempts the transfer property to another person, the first grantee may go to court and estop the grantor from denying title to him(2) Minority rule: title automatically passes by operation of law to grantee (operation-of-law theory)
Shelter rule
Protects a subsequent purchaser who wouldn’t otherwise have good title, “shelters” under good title of predecessor
Title Insurance
Title insurance can be purchased at the time of closing so that if there is a defect in the chain of title, an unexpected encumbrance, or other similar problem, the buyer can make a claim under the insurance policy
well pleaded complaint rule
for FQ jxn, a question of federal law must arise in P’s affirmative claim
Can have state law in addition to federal if the FQ is:
i) Actually in dispute +ii) Demands federal judges expertise and ought to be resolved uniformly +iii) Not so commonly present in state law actions to trample their jurisdiction
Diversity jurisdiction
Action between citizens of different states (need complete diversity) + amount in controversy is greater than $75k
Diversity Jxn for class actions
Class actions where more than 100 persons and $5M, Diversity need only be “minimal” (a single P diverse from a single D)
Determining citizenship
i) Human begins = only a citizen of 1 place at a time, state where resides and intends to remain indefinitelyii) Corporations = could be citizen of 2 places, citizen of state incorporated and state in which it maintains its principal place of business (nerve center)iii) Unincorporated associations (unions, LLCs, partnerships) = citizenship is the citizenship of everymember, could be all 50 states
Aggregation of claims
P brings multiple claims against a single D will be added together to see if amount in controversy reached.Can be totally unrelated, no same transaction or occurence requirement
approach to determining Supplemental jurisdiction
Step 1: Determine relatedness ( same transaction/occurrence)Step 2: Sneaky plaintiffs (Rule 14, 19, 20, 24, P may be trying to slip it in. SJ not available for these claims, need Div or FQ for these)Step 3: is there a good reason for the court to decline anyway?
Reasons a court might decline to exercise supplemental jurisdiction: (4)
i) Involves novel or complex issue of state law;ii) Claim “substantially dominates” over FQ or Div;iii) Anchor claim was dismissed;iv) Other compelling reasons
Home-state defendant rule
D can’t remove if Fed jurisdiction would be grounded only in diversity juris + D is a citizen of state where P filed suit
Removal
D can remove from state to fed court if case could have originally be filed in fed court (subject to Home-state defendant rule). If multiple Ds, removal only allowed if ALL Ds agree to remove.
Timing for removal
D must remove within 30 days of when grounds become apparent.Normally, when D served w/ complaint, can be later: if P amends, then 30 days from that point.Multiple Ds, later service on other Ds gives them, not D1 right to choose (but D1 can join later D’s removal).If removal based on diversity, D must remove within 1 year of filing unless P attempted to thwart removal.
PERSONAL JURISDICTION (PJ) = Power of court over particular person
=Power of court over particular person
Approach for personal jurisdiction
Step 1: Look at state law (could a state court in that state assert PJ over that party?)Step 2: Look at 14th Amend (State law must be constitutional under the Due Process Clause (DP) of the14th Amend)
State law constitutional if authorizes PJ in 1 of 5 circumstances:
a) Residencyb) Consent (by Appearance, Contract, Appointment/agent)c) Serviced) Minimum contactse) Substantial business – High bar, “essentially at home”
Minimum contacts – need all 3:
i) D has established a minimum contact with forum state, established if D causes harm in state, does business, or has an interest in real property in stateii) Claim against D arises from that contact, andiii) PJ wont offend traditional notions of fair play + substantial justice
VENUE =
Region within a particular state where suit can be brought. Dictated by where the bad guy lives and/or where bad thing went down.
Determining Venue
If all D’s reside in same state, then in district where any single D resides.If Ds reside in multiple states, then in location of harm (defined as the district where a substantial part of the events giving rise to the claim occurred)
Transferring venues (3 reasons)
a) Convenience (common) – Could have been filed there in first place + transfer is necessary forconvenience of parties and/or witnessesb) Agreement – If all parties join request to transfer, court does not need to consider PJ or venue (if agree, consenting)c) Interest of justice – If filed in improper venue, court can dismiss or in the interest of justice, transfer where could have been filed originally
Forum non conveniens
If most convenient forum not in the US, court cannot transfer, but can dismiss without prejudice so P can refile in proper country, may not be in US. Same factors considered as in transfer of venue
Contents of Complaint (3)
a) Grounds for subject matter jurisdictionb) Statement of facts that are sufficient to show that P is entitled to reliefc) Demand for judgment and specify the relief sought
Amendments (Rule 15)
Party can amend complaint once as a matter of right: within 21 days of serving it or if an answer or motion to dismiss has already been filed, within 21 days after that service. Party can amend an answer within 21 days of serving itParty can amend with permission: oermission of opposing parties, then can amend; permission of court - will consider reason for delay and prejudice (usually granted)
relation back rule
When adding new claims, amended complain is considered filed on date of original claim IF new claim arises from the same transaction or occurrence as existing claim
Adding new parties: amended complaint will relate back to original filing date if party to be added:
i) Knew of the suit soon enough to not be prejudiced and not later than time permitted for service, +ii) Should have expected to be named as a D, +iii) Was originally left out because of mistake in identity
SERVICE OF PROCESS
Must serve both the complaint + summons, if not, service isn’t proper.Process can be serve either in a manner prescribed by state court in state where federal suit has been filed or where the D will be served; OR in a Manner specified by Fed Rule 4.
Timing for service
Must be served within 90 days of filing complaint.
Who can serve?
Anyone over 18 and not a party can serve.
Options for service under Rule 4
(1) Deliver to D himself (through 3rd party);(2) Leave at D’s usual abode with a person of suitable age and discretion residing there;(3) Serve D’s registered agent; or(4) Mail with letter requesting D waive in-person service (if D declines to waive, he becomes responsible for cost of personal service)
