MBE Notes Flashcards
Is a general ‘as is’ disclaimer sufficient to disclaim:
- A warranty of fitness?
- The duty to disclose?
In a land sales contract, an ‘as is’ disclaimer is insufficient to disclaim the warranty of fitness for new builds.
An ‘as is’ disclaim is sufficient to disclaim the duty to disclose (but not for misrepresentation or fraudulent concealment)
What happens if both parties fail to perform their obligations in a land scales contract?
If both parties fail to perform their obligations in a land sales contract, the closing date is extended until one party either repudiates or performs.
What happens if one party repudiates in a land sales contract?
The other party’s obligation to perform is excused.
If a seller fails to disclose a material, physical defect to a home buyer, what can the buyer do?
The buyer can either rescind the contract or seek damages. The buyer can also sue for misrepresentation or fraudulent concealment.
What is the seller’s duty to disclose defects to a buyer?
A seller must disclose all material defects to the buyer.
A seller has the duty to disclose material defects. What does ‘material’ mean?
Material means a defect that:
- Substantially affects the value
- Impacts health or safety
- Influences desirability of the property
What damages are available for a breach of the warranty of fitness (new builds)?
For a breach of the warranty of fitness, the buyer can claim the cost of repair to bring the home into compliance with the warranty.
If the defect cannot be fixed without significant damage, buyer can recover the difference between the home with and the home without the warranty.
When must a buyer bring a claim for breach of the warranty for fitness (new builds)?
Within a reasonable time. The statute of limitations runs from when the buyer learns about the defect.
Can a seller compel a buyer to purchase property under specific performance?
Yes, this is called the mutuality of remedies.
True or False:
Buyers are entitled to specific performance of a land sales contract because monetary damages are inadequate to the cure the loss
True - land is a unique commodity, so monetary damages are inadequate to cure.
What damages are available to a seller if the buyer breaches a land sales contract?
The seller can keep the buyer’s deposit as liquidated damages.
If a seller is entitled to keep the buyer’s deposit as liquidated damages, what percent of the purchase price is usually considered reasonable?
10% of purchase price is reasonable as liquidated damages for a buyer’s breach
What damages are available to a buyer for breach in a land sales contract?
The buyer is entitled to expectation damages if the seller is in breach.
Some jurisdictions limit this to the buyer’s out-of-pocket expenses if the seller cannot delivery marketable title but acted in good faith.
Can government-owned land be adversely possessed?
No, government owned land cannot be adversed possessed.
What is the doctrine of equitable conversion?
The doctrine of equitable conversion states that equitable title passes to the buyer upon entry of the land sales contract. The seller holds property in trust for the buyer while the seller maintains possession.
What is the rule with ‘time is of the essence’ clauses in land sales contracts?
Unless stated otherwise, time is NOT of the essence. However, a party who fails to perform on time (at closing) is in breach. But the contract cannot be rescinded for mere delay.
When is a seller expected to deliver marketable title?
At closing
Can a seller use sale proceeds to cure title defects?
Yes, a seller can use sale proceeds to cure a title defect (e.g. paying off an existing mortgage).
If title is unmarketable, a buyer may…
3 things
- Rescind the contract and recover damages
- Sue for breach
- Seek specific performance with a price adjustment
What is the implied covenant of marketable title?
The seller promises that the title is free from defects that pose an unreasonable risk of litigation
Can oral land sales contracts be rescinded?
Yes
What are the five required elements for adverse possession?
Open and notorious
Continuous
Exclusive
Aactual
Non-permissive (hostile)
What is the mnemonic device to remember the elements of adverse possesion?
OCEAN
What are the two categories for remedying a land sales contract breach?
Damages and specific performance
What happens if a buyer or seller dies after a land sales contract?
If either dies, the proceeds (or the property) go to their respective devisee.
Who bears the risk of loss if there is damage to (or destruction of) the property being sold between execution of the contract and closing?
Majority and minority position
The majority position is that the buyer bears the risk as holder of equitable title.
The minority position is that the seller bears the risk of loss until closing.
What is the rule for causalty insurance in a risk of loss scenario?
The seller is not required to purchase / have casualty insurance, but if they do they must offset the insurance proceeds against the purchase price.
A buyer may purchase casualty insurance as equitable title holder.
What is an ‘option’ in a land sales transaction?
Is it subject to the Statute of Frauds or RAP?
An option grants the right to purchase property within a specied period of time. During that time, the offer cannot be revoked.
Subject to Statute of Frauds but not RAP.
What is an ‘right of first refusal’ in a land sales transaction?
Is it subject to the Statute of Frauds or RAP?
A right of first refusal allows a holder to buy property before it is transferred to another. This right is valid unless unreasoanable.
Subject to Statute of Frauds but not RAP.
What is the implied warranty of fitness/suitability?
Applies to new build properties. Warrants the use of adequate materials and workmanship.
Replaces the common law ‘caveat emptor’
Also applies to latent construction defects
What is the merger doctrine in a land sales contract?
After closing, all obligations contained in the contact are merged into the deed. If something was featured in the contract but not reflected in the deed, that cause of action is lost.
All remedies flow from the deed.
What is the continuous requirement for adverse possession?
Requires uniterupted possession for the statutory period.
Seasonal or infrequent use is allowed if typical for the property type.
True or False
The clock for adverse possession does not run if the property’s true owner has a disability at the start of the adverse possession.
True - disability covers both serious illness and incarceration.
What do we do to an interest that violates the Rule Against Perpetuities?
We strike out the offending interest that violates the Rule Against Perpetuties
True or False
A grantor can disclaim the Rule of Convenience
True. It is just a rule of interpretation, so it can be disclaimed.
The Rule Against Perpetuities does not apply to property transferred between ________.
charities
What are two exceptions to the ‘bad as to one, bad as to all’ rule?
(1) Transfer of a specific dollar amount to each class member
(2) Transfer to a subclass at a specific time
What is the Rule of Convenience?
A rule of interpretation used to save class gifts from violating the Rule Against Perpetuities.
A class closes when any member of the class is entitled to immediate possession of their share.
What is the ‘bad as to one, bad as to all’ rule?
If the Rule Against Perpetuities, invalidates the interest of even one member of a class, ALL class members lose their interest (even if they’ve already vested)
What estates does an executory interest follow?
Defeasible fees and the life estate
How do Eastern and Western states differ in their approach to groundwater?
Eastern States: follow a reasonable use or absolute ownership approach. Broad extraction of groundwater is allowed.
Western States: follow a prior appropriation or correlative rights approach - balancing reasonable use among landlords.
What is the rule for navigable waterways?
Controlled by the government for public use
What are the three doctrines/approaches for dealing with surface water?
(1) Common Enemy Doctrine: landowners can take steps to control/combat water flow but liability may arise if they negligently cause harm.
(2) Natural Flow Theory: restricts any waterflow alteration unless reasoanble modification is justified
(3) Modern Trend: negligence-based reasoanble use
What is the Riparian Rights approach to water rights?
Water belongs to landowners adjacent to the watercourse. What matters is whether you border the waterway.
Riparians share the right to reasoanble use (although domestic use takes priority).
What is the prior appropriation approach to water rights?
Adopts a first in time, first in right approach.
The first person to use water (regardless of where their land is located) has the rigth to it.
The user must put the water to beneficial use, but any productive use counts.
What is spot zoning?
Arbitrary discrimination against (or in favor) of the owner of rezoned land
True or False
Leases under one year are subject to the Statute of Frauds.
False, only leases more than one year are subject to the Statute of Frauds.
How can partial performance satisfy the Statute of Frauds in a land sales contract?
Any two of the following:
- Possession by the buyer
- Substantial improvements made to the property
- Payment of purchase price
True or False
If the opposing party in a land sales contract acknowledges a contract exists, it may be enforceable without writing.
This is true - this is called a judicial admission.
When a party to an oral contract who has promised to convey land fully performs, that party can ____________.
Demand the other party’s oral promise to perform in turn
What are some other ways (besides writing) to satisfy the Statute of Frauds with a land sales contract?
There are 3
- Full or partial performance
- Detrimental reliance
- Admission in court
For a land sales contract, what three requirements must be met to satsify the Statute of Frauds?
(1) Must be in writing
(2) Must be signed by the parties to be charged
(3) Must contain essential terms (i.e. parties, description, and price)
After the doctrine of merger occurs in a land sales contract, any liability must be based on __________.
A deed warranty
What are the two crucial stages in a land sales contract?
(1) Contract formation
(2) Deed execution
Who is responsible for rent in a sublease?
Just the original tenant
Who is responsible for rent in an assignment?
Both the original tenant and the subsequent tenant. The tenant is in privity of contract and the subsequent tenant is in privity of estate.
What is condemnation (both partial and complete)?
The taking of land either for public use or because the land is unfit for use.
Partial: only some of the property is taken
Complete: entire property is taken
The building where a tenant is staying is condemned. Are they still liable to pay rent?
Consider both partial and complete condemnation
Partial: tenant must still pay rent, but they are entitled to compensation for the property taken
Complete: the tenant is discharged from rent obligations and can seek damages
What are the two types of zoning variances?
- Use Variance - refers to the right to use property in a way not permitted by zoning
- Area Variance - refers to the structural and spatial restrictions on building
What must you show to obtain a zoning variance?
(1) Compliance creates hardship, which arises from unique circumstances
(2) Owner did not create the hardship
(3) Variance is in keeping with the overal purpose of the ordinance and will not cause harm to the general welfare
Can a nonconforming use be exapanded? Transferred?
Expanded: no
Transferred: yes
What is a nonconforming use and what is the goal of property owners with a nonconforming use?
When a zoning law is changed and a structure already there no longer satisfies the new requirements.
Goal: get your property grandfathered in
What are the two approaches to zoning?
(1) Cumulative Zoning: residential use is permitted everywhere and commercial use is restricted. Industrial use is most restricted.
(2) Mutually Exclusive Zoning: only one type is permitted by zone
Who has the authority to enact zoning laws?
Federal Government: usually limited to powers regulating federal land or DC
State Government: can enact zoning laws under their broad police powers - often delegates to local governments
For life tenants and leasehold tenants, the presumption is that they can ______ fixtures unless doing so would _______ the property.
remove
permamently damges
What are some defenses to an action for breach of an equitable servitude?
- Unclean hands
- Laches
- Acquiescence
- Changed circumstances
- Estoppel
What is an implied reciprocal servitude?
These are commonly found in planned/common communities.
This requires a common scheme and an intent ot create covenants on all plots. Must show reciprocal promises, that the promise is restrictive, and that the successor was on notice.
What is required for the benefit to run with an equitable servitude?
Writing
Intent
Touch and Concern
True or False
Equitable servitudes do not require privity
True!
For a burden to run with a real covenant, what is needed?
Writing
Inent
Touch and Concern
Vertical Privity (strict)
Horizontal Privity
Notice
For a benefit to run with a real covenant what is needed?
Writing
Intent
Touch and Concern
Vertical Privity (relaxed)
Notice for a covenant or servitude is only required for the _______ to run.
burden
What is the difference between a real covenant and an equitable servitude?
The remedy sought.
If monetary damages, real covenant.
If injunctive relief, equitable servitude.
What is teh duty of maintain an easement?
All users of an easement must maintain the easement. One user may seek contribution from another for cost of reasonable repairs and maintainance.
How do you terminate an easement?
- Merger
- End of necessity
- Express release
- Abandonment
- Estoppel
- Severance
To say someone has abandoned an easement, what must be shown?
Requires more than non-use. We are looking for an affirmative act of abandonment.
What is an easement by estoppel?
Arises when a property owner givers another permission to use their land and the user detrimentally relies on that promise. Such reliance must be reasonable.
When permission is withdrawn, estoppel prevents the owner from rescinding their permission to the user.
What is an easement by necessity?
An easement by necessity will be found only when absolutely necessary to prevent land from becoming entirely useless.
E.g. landlocked
Easements by necessity require common ownership, then severance, then a need. It ends when the necessity is abated.
What is an easement by implication?
An easement by implication (also called ‘prior use’) is there land is owned by one person, then gets severed into two estates, and the original owner continues to use the land that no longer belongs to her.
Prior use must be contintuous and apparent at the time of the severance.
What is an easement by prescription?
Similar to adverse possession.
An easement user acquires the right to use another’s land. That use must be: continuous, open and notorious, and actual (but not exclusive or hostile).
What happens if the easement user exceeds the scope of their easement?
An easement user who exceeds the scope of their easement has trespassed.
What happens if an easement user wants to change the use?
Any change in use of an easement has to be reasonable.
The desired change must have been an ordinary and reasonably foreseeable development when the easement was granted.
How do courts determine the scope of an easement?
Courts look to the reasonable of the use and the intent of the parties.
If the scope of an easement is ambiguous, the ambiguity is solved in favor of the __________.
Grantee
What are the four kinds of implied easements?
- Easement by necessity
- Easement by implication
- Easement by prescription
- Easement by estoppel
What mnemonic device can be used to remember the implied easements?
PINE
(prescription, implication, necessity, and estoppel)
Are express or implied easements subject to the Statute of Frauds?
Express: yes, must be in writing
Implied: no
A negative easement must be created _________ and not by implication.
Expressly
An easement can be created by _______ or by _______.
Grant or reservation
What is an easement in gross?
An easement granted to a particular person (as opposed to the land)
When is an easement in gross transferable?
What happens to the benefit and burden if transferred?
Burden: transfered automoatically
Benefit: transferable if commercial or the parties intended it.
What is an easement appurtenant?
An easement that runs with (and is tied to) the land.
How is an easement appurtenant transfered? What happens to the benefit/burden?
An easement appurtenant transfers wtih the dominant estate.
Benefit and burden are automatically transfered
How does the doctrine of merger apply to mortgages?
When the same person becomes both the owner of the property and the holder of the mortgage, the mortgage is extinguished.
You cannot owe a debt to yourself.
Acceptance of a deed is _________ for any transfer that benefits the grantee.
presumed
What are some examples where delivery of a deed has not occurred?
- When the grantor delivers the deed to his agent.
- When the grantor transfers the deed to a third party on the condition that she keep the right to recover the deed.
- When the grantor keeps the deed herself.
What are some ways to deliver a deed?
(1) Physical delivery to grantee or their agent
(2) Transfer to an indepedent third party
(3) Escrow in contract
To effectuate a deed, what three things must happen?
(1) Grantor must intend to make a present transfer
(2) Grantee must accept there interest
(3) The transfer must comply with the Statute of Frauds
What does ‘color of title’ mean?
A claim to ownership of land based on a written document that appears valid on its face but is actually defective.
What is constructive adverse possession?
Occurs when an adverse possessor enter under color of title from an invalid instrument and occupies a portion of the property described in the instrument.
The adverse possessor is in actual possession of the occupied land, but is ALSO in constructive possession of the remaining land named in the deed.
For the hostile element in adverse possession, what is the split of opinion?
The split of opinion between the majority and minority is over whether we take a subjective or objective approach to the APer’s state of mind.
Majority: ignores subjective intent. Must show an objective intent to claim land/property as her own.
Minority: considers subjective intent.
- Good Faith: must believe that the proeprty is unowned (or she owns it)
- Bad Faith: aggressive trespass
What is ‘tacking’ in adverse possession?
Successive possessor can combine periods of possession if they are in privity and there are no gaps or ouster.
What is the cy pres doctrine for the Rule Against Perpetuties?
Courts may reform a conveyance to align ‘as close as possible’ with the transferor’s intent while still complying with RAP.
What is the ‘wait and see’ approach for RAP?
Any interest is valid if it vests or fails within 90 years.
What are two modifications to the Rule Against Perpetuties adopted by several jurisdictions?
(1) Wait and See approach
(2) Cy pres
What are five common Rule Against Perpetuties violations?
Five common RAP violations:
- Fertile Octogenarian
- Unbown Widow
- Age Contingencies > 21 Years
- Conditional Passage of an Interest
- Defeasble Fee Followed by Executory Interest
What is a vested remainder subject to complete divestment?
A remainder where the occurence of a stated event will completely divest the person of their interest
What two things can a future interest holder do if the life tenant fails to pay?
(1) Pay expenses themselves and seek reimbursement
(2) Place a lien on the life estate and enforce it through judicial sale
In a life tenancy, who pays for public improvement assessments?
Allocated between the life tenants and future interest holders.
What is the doctrine of worthier title? What is its status today?
At common law, this doctrine prevented the creation of a remainder in the grantor’s heirs.
Today, heirs take a contingent remainder.
What is the Rule in Shelley’s Case? What is its status today?
The Rule in Shelley’s Case prevents the creation of a contingent remainder in a grantee’s heirs.
Abolished today.
What is required for a vested remainder subject to open?
A remainde ris given to a group or class and at least one member is ascertainable and has a right
and
the group is not yet closed because more individuals could be added
What future interests are subject to the Rule Against Perpetuties?
There are three main ones.
- Contingent remainders
- Vested remainders subject to open
- Executory interests
What is the Rule Against Perpetuties?
To avoid uncertainty, a future interest must vest or fail within a life in being plus 21 years.
If we will not know within that time if the interest vests (or fails), the future interest is struck.
What is a shifting interest?
A shifting interest cuts short the prior estate held by another grantee.
What is a springing interest?
A springing interest cuts shorts the grantor’s interest.
What is the rule for life tenants and property taxes?
Life tenants must pay property taxes or interest payments to the extent they receive a financial benefit from the land.
If the life tenant occupies the property, then the life tenant is responsible for property taxes only to the extent of _____________.
The fair rental value of the property
Can a holder of a future interest sue a life tenant?
Yes, they can bring suit for an injunction to stop harmful action such as decrease in value.