mbe property Flashcards
ownership of land
Ownership of real property may be transferred by sale, by gift, or, upon death, by devise or intestate succession.
The seller or donor is called the “grantor,” and the buyer or recipient is called the “grantee.”
estates in land
ownership interests: divided in time between present interests and future interest
key distinction is timing of posession
someone must be in possession of the property at all times
example:
o transfers blackacre to a for life, then to ben
anna has the right of possession presently
ben has the right to possession in the future
oliver transfers blackacre to a once she passes the bar exam
oliver has the right to possession presently
anna has the right to possession in the future
fee tail
- freehold estate that limits the estate to the grantee’s lineal blood descendants by specific words of limitation
- “and to the heirs of his body”
- has been eliminated in most states; it is treated as a fee simple absolute estate.
ownership: fee simple absolute
owns *100% *for all time, can last forever and thus has no accompanying future interest
most common form of property ownership and the broadest ownership interest recognized by law.
magic words: “and his/her heirs”, but even if conveyance is ambiguous, presume it is fee simple
It is “freely alienable”, can transfer inter vivos, by will, or intestacy without restriction.
DO NOT be fooled by words of intent or purpose (precatory words), like: O to A, my hope and wish being that on A’s death, A will give property to B; A has fee simple, B has nothing
A conveys Blackacre “to B and his heirs.” C conveys Whiteacre to “B.” Both conveyances give B a fee simple absolute estate in the property.
defeasible fees
May be conditioned by the occurence of an event; the condition will cut short the fee simple
Like fee simple absolute estate, a defeasible fee is ownership of potentially infinite duration.
But, a defeasible fee may be terminated early by the occurrence of an event.
Three defeasible fee simples are:
- fee simple determinable (so long as, while, during)
- fee simple subject to a condition subsequent (provided that, on the condition that), and
- fee simple subject to an executory interest.
A defeasible fee is freely alienable by the owner during his life, and upon his death, it is devisable ( by will) and descendible (by intestacy).
remember: If a statement in a conveyance of real property merely indicates a grantor’s desire, intent, or purpose for which the property is to be used rather than imposing a condition on the ownership of the property itself, the property interest is treated as a fee simple absolute, rather than a defeasible fee.
defeasible fee: fee simple determinable
Limited by specific durational language.
Magic words: so long as, while, during, until
Fee simple lasts while period is in play (while land is used as farm, could be forever) but as soon as period ends, fee simple ends
when it ends, there is possibility of reverter, interest automatically reverts back
If the language in the conveyance is ambiguous, courts typically adopt a preference for the fee simple subject to a condition subsequent over a fee simple determinable.
o conveys blackacre, so long as the land is used as a farm (while the land is used a s a farm/during its use as a farm)
defeasible fee: fee simple subject to condition subsequent
Limited by specific conditional language
magic words: “but if”, “provided that”, “on the condition”
upon the occurrence of the condition, the grantor (or his successor interest, think who he devised to in will not an inter-vivos transfer) has the right to terminate this estate (not automatic)
O conveys Blackacre to A but if the land is not farmed, O may re-enter and re-take properrty.
If the language in the conveyance is ambiguous, courts typically adopt a preference for the fee simple subject to a condition subsequent over a fee simple determinable.
defeasible: fee simple subject to executory interest
will end upon the happening of an event and the future interest will vest in a third party (someone other than grantor)
future interest will cut short or terminate an earlier ninterest
magic words “divest a prior interest”
Like possibility of reverter, upon the occurrence of the stated event, the passage of the estate is automatic; the third party is not required to take any action in order to become the owner of the estate.
executory interest is freely alienable during life, devisable upon death, and if not devised its descendible.
O conveys Blackacre to A and her heird, but if liquor is served on the premises, then to B and his heirs”
B has executory interest because B will cut short A’s interest if liquor is ever being served
A has fee simple subject to executory interest
life estate
present estate that is measured by a life
magic words “for life” but if ambiguous, look for grantor’s intent to create an estate that will end upon death of measuring life
termination: ends naturally when measuring life ends
life tenant (or life estate measured by the life tenant’s life) cannot pass the property by will or intestate succession, but they can mortage it/give it away and the new guy gets the life estate, until you die
if possession of land goes back to grantor after life estate ends, grantor retains reversion
if possession of land goes to 3rd party (transferee) after life estaate ends, 3rd party takes a remainder
O conveys Blackacre to A for life. This is life estate measured by A’s life
O conveys Blackacre to A for B’s life, A’s life estate is measured against B’s life (“pur outre vie”)
O conveys Blackacre to A for life, A transfers her interest to B; B’s interest will terminate when A dies
O conveys Blackacre to A for life, A dies leaving B as her sole heir, B does not inherit
life estate: doctrine of waste
comes into play when more than one party has an interest in the same piece of real property
The rights of a life tenant are limited by the doctrine of waste.
three types of waste:
1. affirmative waste: caused by voluntary conduct, which causes decrease in value. (dumping hazardous waste on property)
2. permissive waste: caused by neglect toward the property, which causes decrease in value. (tenant failed to take action after storm, property is harmed)
3. ameliorative waste: life tenant/other person in possession changes use of property and actually increases the value (renovating house, constructing dam, fixing fence)
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doctrine applies:
* landlord-tenant
* co-tenant out of possession v. tenant in possession (concurrent estates)
* mortgagee (bank/lender) v. mortgagor (borrower), because it impairs the bank’s security interest
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a life tenant generally must deliver the property to the future interest holder in substantially the same condition that it was in when she took possession, with allowance for normal wear and tear.
The holder of a future interest, such as a remainder interest, has a license to inspect the property for waste. This license is not subject to revocation by the holder of the current possessory interest in the property.
* remainderman can show up to property to check for waste, even if current owner does not want him to come in
The owner of property in fee simple absolute who divides ownership of the property into a life estate and one or more future interest may alter or eliminate the applicability of this doctrine to the life tenant.
In addition, the future interest holders may consent to the life tenant’s conduct.
look for:
1. multiple parties with simultaenous interest
2. change in value of property due to actions/inactions of party in possession
3. waste substantially change interest taken by party out of possession
future interest: remainder
remainder is future interest that follows a life state
a remainder cannot follow a vested fee simple because a future interest followed by a vested fee simple would have to divest the prior interest (Fee simple) but a remainder does not function that way, it waits for the prior interest to be vest
can be vested or contingent
life estate: contingent remainder
contingent=
1. given to unascertained or unborn person or
2. its made contingent on anything but natural termination of preceding estate
* basically, remainder becomes contingent when it was subject to a condition precedent or made in favor of someone unknown at the time of the question.
* if contingent remainder does not vest before it becomes possessory, the grantor has a reversion
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RAP applies only to contingent remainders, not vested remainders
life estate: vested remainder
vested=3rd person gets it no matter what
1. given to ascertained grantee and/or
2. not subject to condition precedent;
if remainder fails either of these, it is a contingent remainder
If the holder of a vested remainder dies, interest passes to the holder’s heirs
If contingent remainder does not vest before it becomes possessory, the grantor has a reversion
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vested remainder is subject to complete divestment if the occurence of a subsequent condition will eliminate the remainder interest
example: to my friend for life and then to my heirs, but if none survive my friend, then to my lawyer
O conveys Blackacre to A for life, then to B. A has a life estate; B is ascertainable grantee, there is no condition precedent, so B has vested remainder.
class gifts- vested remainder subject to open
- vested remainder in a class gift and
- full class membership is unknown
at least one member of the class must be vested, if no one is vested then the remainder is contingent
when all members of class identified, class is closed
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RAP applies to vested remainder subject to open
Rule of convenience: class-closing mechanism to avoid application of RAP
if the grant does not have an express closing date, the rule closes the class when any member of the class becomes entitled to immediate possession
in property law, presumed party can have a child at any time before the party’s death, regardless of age
O conveys Blackacre to A for life, then to A’s children who reach 21. A has 3 kids B is 24, C is 18, and D is 15. B’s interest is vested remainder. it is subject to open because C and D might make it to 21. We know when the class closes and who the members are 21 yrs after A’s death. If more of A’s children reach 21, they will partially divest B.
Rule of convenience: O conveys to A for life, then to B’s children. B has one child. Class closes when B dies.
special cases: doctrine of worthier title
prevents against remainders in a grantor’s heirs
creates a presumption of a reversion to grantor
o conveys to a for life, then to my heirs. o retains reversion under doctrine of worthier title
special cases: rule in shelley’s case
- prevents against remainders in a grantee’s heirs
- uses doctrine of merger to create a fee simple
o conveys to a for life, then to a’s heirs. a has FSA under rule in shelley’s case
executory interests
subject to RAP
future interest in a third party that is not a remainder and that generally cuts the prior estate short upon the occurrence of a specified condition
- springing executory interest: divests the grantor
- shifting executory interest: divests a prior grantee
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if there are two parties (grantor+grantee) it is most likely a springing executory interest because the grantee will divest the grantor
if there are three parties (grantor + grantee + grantee), it is most likely a shifting executory interest because a grantee will divest another grantee (the executory interest will shift from one grantee to another)
O conveys blackacre to A for life then to B one yr after A’s death.
A has a life estate, right after A’s death there is a 1 yr reversion to O, B divests O’s interest, B has a springing executory interest
O conveys blackacre to A but if the land is used for commercial purposes, to B. a has a Fee simple subject to execturoy interest. B takes the property if the land is used for commercial purposes. B divests A’s interest, who is prior grantee. B has a shifting executory interst.
O conveys blackacre to A after she is admitted to the bar. A has a springing executory interest. A divests O’s interest, the grantor. O has a fee simple subject to executory interest.
rule against perpetuity
prevents remote vesting, we are testing for certainty; this is like a statute of limitations
a life + 21 yrs
when: interest is created
1. inter vivos transfers: interest created at time of grant
2. devise (will): interests created at testator’s death
what: RAP applies to
1. contingent remainders,
2. executory interest (springing and shifting), and
3. class gifts (subject to open), if not closed by rule of convenience
4. vested remainders subject to open
who:
1. relevant life= person who affects vesting, usually mentioned/implied by the grant
2. validating life: person who tells us whether or not the interest vests within the perpetuities perios (lifetime plus 21 yrs)
* validating life must have been alive when interest created
* validating life can validate own interest
* if no validating life, interest is no good and we strike it from grant; if there is a validating life, the interest is good
O conveys Blackacre to A, but if the land is ever used as a business during A’s life, to B.
Interest created at O’s conveyance inter vivos.
B’s executory interest is subject to RAP.
Lives in being are: O, A, and B.
Validating life: we know 21 yrs after A’s life whether this interest vests (whether she used land for busienss purposes)
RAP is not violated, B’s executory interest is valid.
Professor K conveys $1000 to my themis students who are admitted to the bar.
interest created inter vivos.
interest subject to rap is students springing executory interest.
lives in being at creation of interest are professor k and his students.
we know when 21 yrs after his last student dies, whether the interest vested or failed.
no violation, student’s executory interest is valid.
Professor K example is exception to bad as to one, bad as to all rule for class transfers because transfers of specific dollar amount to each class member tested separately, even though RAP may fail as to some members of the class
RAP is not about whether an interests vests/fails, its about whether we will know if it vests or fails, it cannot have uncertainty
O conveys to A for life, then to A’s first child who reacheds age of 22. This violateds RAP. Contingent remainder, possible for that remainder to vest in A’s child more than 21 yrs after A’s life. A’s first child, even if alive, is not validating because child could die. Strike out offensing interest: O conveys to A for life. A now has a life estate. Her first child has nothing. O has possiblity of reverter.
rule against perpetuities: special cases–> class gifts
RAP and class gifts:
* if the gift to any member of the class is void under RAP, then the gift is void as to all members of the class.
* the gift is “bad as to one, bad as to all” (all or nothing rule)
exception:
1. transfer of a specific dollar amount to each class member,
2. and transfers to a sub-class that vests at a specific time “to children of b, and upon death of each, to that child’s issue)
remember: property law assumes anyone who is alive can still have children
rule against perpetuities: exceptions
charities
* RAP doesnt apply to a gift from one charity to another chairty
* the gift to the alternate charity is not subject to RAP
options
* RAP doesnt apply to an interest held by a current tenant to purchase a fee interest in the leasehold property
rule against perpetuities: special cases–> wait and see approach
- The traditional RAP has been softened by reform (e.g., Uniform Statutory Rule Against Perpetuities).
- The most common modern approach is to “wait and see” if an interest subject to RAP vests within the perpetuities period.
The bar exam still tests the traditional RAP though you should be aware of the modern “wait and see” approach.
contingent future interests: Options and Right of first refusal
RAP applies only to contingent future interests; interests held by unknown/unborn people or subject to condition precedent.
must satisfy RAP (if it could vest more than 21 yrs after some relevant life in being at creation of interest)
* will almost always violate RAP if it does not provide a termination date that falls within perpetuities period
types:
1. option to purchase: Gives exclusive right to purchase property at specified price, usually within specified time
2. right of first refusal: Gives first opportunity to purchase property if it ever goes up for sale
* This right is generally reasonable if the holder of the right can purchase the property under the same terms offered to another.
* If so, the right of first refusal is valid and enforceable by an injunction.
- option contract for the purchase of real property is formed when one party (the option holder) receives the exclusive right to purchase the property (“exercise the option”) during a specified time period in exchange for consideration.
- under option k:
1. the grantor cannot revoke the option during the specified time period
2. the option does not terminate upon the death or incapacity of the grantor, and
3. the option holder can make a “counteroffer” without losing the right to exercise the option
The option holder must exercise the option pursuant to the terms of the contract.
Mailbox rule does not apply to option contracts.
Grantor must receive acceptance within the time period specified in the contract.
Otherwise, the option holder loses the option and any consideration that was paid.
rule against perpetuities: special cases–> cy pres
An equitable doctrine (borrowed from the law of trusts) that allows a court to reform a transfer to avoid RAP.
concurrent estates
Ownership or possession of real property by two or more persons simultaneously
concurrent owners each have right to use or possess the whole property.
Exception: Concurrent owners can contract out of the basic rule.
Three Kinds of Concurrent Ownership/Concurrent Estates
1. tenancy in common;
2. joint tenancy;
3. tenancy by the entirety
- ouster: Co-tenant in possession denies another co-tenant access to the property (one tenant changes the locks, or throws out the co-tenant’s stuff)
-
Remedies for the ousted tenant:
1. Get an injunction granting access to the property; and/or
2. Recover damages for the value of the use while the co-tenant was unable to access the property.
concurrent estate: tenancy in common
default concurrent interest; any conveyance to more than one person is presumed to be a tenancy in common (TIC)
TIC can receive their interests at different times and from different conveyances
Concurrent owners have separate but undivided interests in the property (can be unequal shares, but will still have full use of premises)
NO rights of survivorship (will go down heir and not the other co-tenant)
each co-tenant can transfer the property freely at death as well as during life
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in two tenant situation, where one co-tenant cannot pay the tax deed, she cannot retain her interest in the property; other co-tenant can quiet title to be ower in fee simple
O conveys Blackacre in equal shares to A and B. Their interests are separate because they have equal shares in Blackacre. Their interests undivided because Blackacre is not physically divided, A and B each have right to possess whole of Blackacre
O conveys in equal shares Blackacre to A,B,C. A cnnveys her interest to D. B dies and his will gives entire estate to his son E. C, D, E each have 1/3 interest.
requires unity of possession (equal right to possess whole property)
concurrent estate: joint tenancy
Right of survivorship= surviving joint tenant(s) automatically take the deceased tenant’s interest
Created when grantor makes clear expression of intent PLUS must be survivorship language
magic words: “as joint tenants with right of survivorship”
(PITT): To create JT, need four unities
1. Possession: Every JT has an equal right to possess the whole of the property
2. Interest: JT must have an equal share of the same type of interest.
3. Time: Joint tenants must receive their interests at the same time.
4. Title: JT must receive their interests in the same instrument of title
Severance:
If any of the four unities are severed, then the JT is terminated and turns into TIC
commonly happens in
1. inter vivor transfer: transfer during life will destroy the right of survivorship and convert estate into TIC
2. mortgages:
A joint tenant may only grant a mortgage on his/her own joint-tenancy interest without the other joint tenant’s consent.
A mortgage executed by one joint tenant will only attach to that tenant’s property interest.
But whether the jurisdiction follows the lien theory or the title theory is irrelevant when all of the joint tenants execute a mortgage.
In this scenario, the mortgagee may enforce the mortgage against all joint interests upon default.
if only one joint tenant executes mortgage:
under majority lien theory, it will not destroy JT;
But under minority title theory, it severs JT into tic
CANNOT DEVISE INTEREST IN PROPERTY TO ANYONE AT DEATH, THE OTHER JT JUST SWALLOWS IT !
- leases: in some jurisdictions leasing tenant does sever JT and in others its temporary suspension of JT
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After severance of interest into TIC:
if only one joint tenant remained, that joint tenant will be tenant in common
If two or more joint tenants remain after the transfer, then a tenancy in common will exist for the severing tenant, but the remaining joint tenants will retain a joint tenancy with respect to each other
will always stay as tenancy in common unless legally reconveyed as joint tenant
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If lien placed on one JT, never pays it, that jT dies, the lien is terminated upon the death of the dead JT
* any mortgage attached to joint tenant’s interest also disappears when that tenant dies and cannot be enforced against the deceased tenant’s heir or the surviving tenant.
- if multiple JT die= look to who dies first
- (where there are three brothers at JTWROS, youngest brother sells his interest to another oldest, oldest brother now has a 1/3 TIC interest along with his 1/3 JTWORS, and when oldest dies middle child absorbs the 1/3 and now has 2/3, whichi will go to his heirs)
concurrent estates: tenancy by the entirety
Joint tenancy between married perople
Has right of survivorship
TBE cannot convey without the other’s consent
magic words: property conveyed “as tenants by the entirety, with a right of survivorship”
If grant is ambiguous, presume its JT or TIC
Rights & duties of cotenants
rights:
* Possess & enjoy entire property
* Receive proportionate shares of net profits from removal of natural resources
* Receive pro rata shares of rent from third parties
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duties
* Pay proportionate shares of expenses that may give rise to lien (eg, mortgage, property tax), divided based on ownership interests of each co-tenant
* But a cotenant in sole possession can collect only for the amount that exceeds the property’s rental value
* cotenant who pays more than his or her fair share of necessary property related expenses can generally compel the other co-tenant to contribute based on ownership interest of each co-tenant
* There is no right to reimbursement from co-tenants for necessary repairs or improvements, unless there was an agreement
* However, the co-tenant who makes the repairs can get credit in a partition action.
* A co-tenant can collect contribution from the other co-tenants for payments in excess of her share of the operating expenses.
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consent between cotenants in common
consent required
* convey entire co-owned property
* obtain exclsuive possession over part of property
* bind other cotenants interest in contract with third party (if they do this without consent, like in mortgage, it DOES NOT AFFECT THE COTENANT’S INTEREST, mortgagor can only foreclose on interest of cotenant who consented)
no consent required
* sell, lease, or devise personal ownership interest
* possess entire co-owned property
* extract minerals from co-owned property (unless committing waste)
concurrent estates: partition
Equitable Remedy
Available to all holders of a tenancy in common or a joint tenancy
Tenants by the entirety do not have the unilateral right to partition.
Effect
The court will divide the property into equal portions.
Courts have a preference for a physical division (i.e., a partition in
kind).
Court will order a partition by sale if the physical partitions:
- Not even (e.g., land has complicated terrain); or
- Not fair to all parties.
Proceeds
Proceeds from a partition by sale are divided among the co-tenants based on their ownership interests.
Agreement
Co-tenants can agree not to partition. Such an agreement is enforceable, provided:
- The agreement is clear; and
- The time limitation is reasonable.
Fair Housing and Discrimination
prohibits discrimination (based on race, color, religion, national origin, sex, disability, and familial status- family and children under 18 and pregnant women) in the sale, rental, and financing of homes and in other housing-related transactions (such as advertising, homeowner’s insurance, and zoning)
* prohibits refusing bona fide offer
* prohibits discriminating in temrs, conditions, privileges, or services of purchase/rental
* prohibits falsely representing dwelling availability for inspection/sale/rental
* prohibits inducing sale/renting with discriminatory representations about neighborhood
* prohibits denying reasonable modifications to accomodate handicap at occupant’s expense
also prohibits advertising that states a discriminatory purpose
disability provision mandates reasonable accomodations for people with disabilities
general exemptions:
- Owner-occupied buildings with no more than four living units (including the owner’s living unit) but this exemption does not apply to the ad restriction (ads/ making statement indicating limitation/preference based on protected characteristics), unless its a sex-based restriction for shared living area
- single-family housing sold/rented without a broker, and
- housing operated by religious organizations and private clubs that limit occupancy to members
prohibitions:
1. refusing to rent, sell, or finance a dwelling
2. requiring different rents
3. falseley denying a unit is available
4. providing different services to facilities except where making a reasonable accomodation for a disabled tenant
5. stating a discriminatory preference in an ad
intent
FHA allows for disparate treatment (intent) and disparate impact (effect) cases
causation
prohobited behavior must be linked to protected basis
L advertises available 1-bedroom unit in one of his apt. buildings. two applicants apply, a black woman and white male. both filled out app and after running credit and background check, L rented unit to T. L didnt violate fair housing act, no evidence of causation.
conflict of laws
basic rule: in cases about property, controling law is based upon where property is located
exceptions
1. instrument desginates applicable jurisdiction
2. cases involving marriage, specifically with respect to classifying property as marital/separate, domicile of party may override law of situs
3. in mortgage cases, where mortgage docs require repayment to be made in another state
4. damages for fraudulent conveyances (not the valiidity of the fraudulent conveyance itself), suit for damages will be law of most interested state (look to where the plainitff’s action in reliance and where false misrepresentations made)
5. for determining validity of will, location of testator’s domicile is used BUT for the real property devised in will, the law of the state in which the property is located will be used
tricky question: where divorce decree in state A ordered husband to transfer title of house in state B to wife and husband did so and but then conveyed a deed to the same house to his friend in state B who recorded first; state A was race-notice and state B was race jurisdiction, the friend would win.
lease
creates a contract interest and a property interest
tenancies
- four types, which involve a land-lord tenant relationship
1. the tenancy for years
2. the periodic tenancy
3. the tenancy at will
4. tenancy at sufferance
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- each of these non-freehold estates normally include a duty on the tenant’s part to pay rent
- RAP doesnt apply to option to purchase land when its contained within lease of property and may only be exercised during term of lease
- typically tenant permitted to assign his ENTIRE interest in leased premises to 3rd party (assignee)
- A sublet is NOT AN ASSIGNMENT.
- courts split as to whether tenants entire alienable interest includes option to purchase and whether option to purchase contained in lease can be assigned separately from lease
tenancy for years
Measured by fixed and ascertainable amount of time (does not have to be for a yr, could be 6 mos)
creation:
agreement by langlord and tenant, with intent to create leashold
if the term is logner thana yr , agreement must be signed and in writing because of SOF
termination:
automatically upon expiration of term, notice not required unless lease requires it
before the term is over: tenant surrenders lease or
tenant/landlord commit a material breach of lease (fail to pay rent)
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* option to purchase property may be included in tenant lease so long as option exercised during term of lease
At the end of the fixed term, a tenancy for years automatically expires. A tenant who remains on the premises after the lease expires without the landlord’s permission is considered a tenant at sufferance.
periodic tenancy
Estate that is repetitive and ongoing for a set period of time (month-to-month, year-to-year)
Renews automatically at the end of each period until one party gives proper notice (before the start of what will be the last term) of termination
Creation:
Parties must intend to create a periodic tenancy
Intent can be express (a signed lease) or
implied (payment of rent)
Termination:
Renews automatically until proper notice is given
Old approach: In a year-to-year lease, you must give notice at least 6 months in advance.
New approach: Shorter notice requirements; many states have lowered to a month’s notice.
Most jurisdictions require written notice of termination.
Notice is effective on the last day of the period.
Larry and Tara did not execute a formal lease agreement. Every month, however, Tara pays rent and Larry accepts the payment. This will create a periodic tenancy by implication.
Larry leased Blackacre to Tara on a month-to-month basis. Tara gives notice of termination on February 15. Termination is effective March 31st.
tenancy at will
Creation:
* Express agreement
* Implied when person allowed to possess premises without paying rent
Duration
* no specific term required
* continues so long as landlord and tenant desires
Termination
* generally, tenant or landlord can terminate
* At any time with reasonable notice (unless otherwise agreed)
if only one party is expressly given the right to terminate the leasehold, the arrangement may be deemed unconscionable if, for example, the arrangement is unfair due to one party’s superior bargaining power.
* In such a case, both parties are given the ability to terminate the lease.
tenancy at sufferance
creation:
Implied when tenant keeps possession after lease expires (ie, holdover tenancy)
temporary tenancy exists when prior tenant either evicts prior tenant /re-rents property to tenant
tenant owes landlord reasonable value of her daily use (like rnet from prior lease) as well as reasonably foreseeable special damages
duration
Continues until terminated
- tenant voluntarily leaves
- landlord evicts tenant
- landlord re-rents to tenant
termination
* Landlord evicts
* Tenant vacates
* Landlord accepts rent (forms periodic tenancy)
Absent an applicable statute, the landlord is not required to give the tenant at sufferance notice to vacate the premises before taking steps to recover possession of the property. Therefore, the owner need not provide any notice before seeking to evict the manufacturer—a tenant at sufferance.
landlord-tenant
- day 1 of tenancy, landlord needs to deliver actual physical possession of property, or else in breach
- but under american view = landlord only has duty to deliver legal possession, not actual possession at the start of the lease (protects landlord form new tenant suing landlord because hold-over tenant is still there)
tenant duties– to pay rent, no waste
-
do not have to pay rent if landlord:
1. premises destroyes, so long as tenant did not cause the damage
2. the landlord completely/partially evicts the tenant (complete: removal of tenant from entire property; partial: removal of tenant from a part of the property)
3. the landlord materially breaches the lease
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breach of implied covenant of quiet enjoyment: The tenant can withhold rent when the landlord takes actions that make the premises wholly or substantially unsuitable for their intended purposes, and the tenant is constructively evicted.
* elements:
1. Premises were unsuitable for their intended purposes (i.e., breach of the covenant of quiet enjoyment);
2. The tenant notifies the landlord of the problem;
3. The landlord does not correct the problem; and
4. The tenant vacates the premises after a reasonable amount of time has passed.
breach of implied warranty of habitability: The landlord has an obligation to maintain the property such that it is suitable for residential use. We are concerned with conditions that threaten the tenant’s health and safety.
Background points:
* The tenant cannot waive habitability protection;
* The landlord’s failure to comply with applicable
housing codes constitutes evidence of a breach;
Applies to residential properties, usually multi-family buildings; not to commercial leases;
IWH and rent: If the premises are not habitable, the tenant may:
1. refuse to pay rent;
2. remedy the defect and offset costs against therent; or
3. defend against eviction.
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duty to:
avoid waste
- The duty to avoid waste is a background rule; it does not have to be expressed in a lease in order to apply.
- The tenant has a duty not to commit affirmative (voluntary) waste or permissive (neglectful) waste.
- A tenant may make changes to the property that increase the property’s value (“ameliorative waste”), unless the landlord and tenant agree otherwise. Landlords usually require permission before a tenant can make the change.
make ordinary repairs + provide notice to landlord:
- In a residential lease, the landlord is presumed to be responsible for repairs. The tenant must notify the landlord of any needed repairs.
landlord duties- habitability, make repairs
duty to mitigate damages
If the tenant abandons the property early or is evicted by landlord, does the landlord have an obligation to mitigate damages by re-renting the property?
Majority rule
- The landlord must make reasonable efforts to re-rent the property.
- The landlord must treat leasehold as if it was vacant stock, that is, like any other property she would try to rent ( advertise, allow for viewings).
- If the landlord does not make diligent efforts tomitigate, the tenant is relieved from the obligation to continue paying rent.
- If the landlord does seek to mitigate, the landlord is entitled to the difference between the original rent and the rent received from the replacement tenant.
- The landlord does not have to accept an unacceptable replacement tenant.
minority rule
Minority rule: The landlord does not have to mitigate damages.
The minority rule is more common in cases involving commercial leases.
Conditions of Leased Premises
The landlord cannot deny the tenant quiet enjoyment. In practice, quiet enjoyment is violated when the landlord, or someone connected to the landlord, renders the premises unsuitable for the intended purpose.
The landlord must control:
- common areas, such as a lobby, hallway, or laundry room;
- nuisance-like behavior of other tenants (Remember: Don’t
touch the stinky wall!).
The landlord does not have to control:
- Off-premises actions of third parties that are beyond the landlord’s control (e.g., the noisy bar across the street);
- In a residential lease, the landlord must provide habitable premises.
- If a tenant complains about conditions, the landlord cannot retaliate by evicting the tenant.
Landlord and tenant: tort liability and transfers
tort liability
The tenant owes a duty of care. This extends to invitees, licensees, and foreseeable trespassers.
The landlord’s liability to invitees, licensees, and foreseeable trespassers is as follows:
- Common law:
Responsible in negligence for latent (hidden) defects about which the tenant has not been warned;
Responsible for faulty work completed by the landlord (or the landlord’s agent) negligently;
Responsible for negligence that causes injuries in common areas of the property.
Payment of the tort judgment by the association is an expense of the association, and each member is liable for a share of the association’s expenses.
- modern trend
Landlords have a general duty of reasonable care.
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Silent lease: If the lease is silent on the issue, a tenant may assign or sublet freely.
Permission: If the lease requires the landlord’s permission to transfer, but is silent as to the applicable standard, then:
Majority rule: A landlord may deny permission to a transfer only for a commercially reasonable reason.
Minority rule: A landlord may deny permission at her discretion, which means for any reason or no reason at all.
Transferring a landlord’s interest: A landlord does not need the tenant’s permission before transferring her interest. The new landlord is bound by terms of the existing lease.
Sellers of real property: negligence liability arising from dangerous condition on land
injured party
person on land
seller is liable for physical harm caused by natural or artificial condition if:
* condition existed at time of sale
* seller knew or should have known condition existed & posed unreasonable risk to persons on land
* buyer neither knew nor should have known of condition or risk and
* seller had reason to believe buyer would not discover condition or realize risk
duration of liability:
If seller created or actively concealed condition: liable until buyer discovers condition & has reasonable opportunity to remedy it
Otherwise: liable until buyer has reasonable opportunity to discover & remedy condition
person off land
seller liable for physical harm caused by artificial condition if:
* condition existed at time of sale and
* seller knew or should have known condition existed & posed unreasonable risk to persons off land
seller of real property: defects
sellers required to disclose all known defects that will not be open and obvious to a buyer (latent defect), and are prohibited from concealing such defects in any way
landlord tenant: sublease
- original tenant remains primarily liable for rent payment
- sublease: give away portion of your term
- t1 still owes rent
- The subsequent tenant only has rent obligations to the original tenant.
- BUT the owner has a right under the lease to receive timely monthly rental payments. If the owner does not receive the payments, the owner has a right to reclaim possession of the property from T2, even if T2 had been making payments to T1.
landlord tenant: assignment
- new tenant becomes primarily liable
- give away rest and reaminder of lease term
- new guy, t2, pays rent
- if he does not pay landlord can go after t1
- unless novation
T1 (through privity of contract) and the assignee (T2) (through privity of estate) are jointly and severally liable for the landlord’s entire harm arising from a breach of the lease.
sublease is NOT an assignment
real estate contract: key elements
(1) must satisfy SOF (in writing, signed by party to be charged, include essential terms like parties description of property and price and paymnet info)
* if it does not say parties name but it says the signed this counts as complete
(2) Must include parties, price, terms, etc, k principles
(3) execution of k = equitable conversion.
* risk of loss placed with party with equitable title at the time property destroyed, unless other party is at fault for loss.
* the seller retains legal title to real property during pendency of sales k (executory period)
* but buyer receives equitable title once the k formed and can be specifically enforced.
* but Uniform Vendor and Purchaser Risk Act, the risk of loss remains with the seller until the buyer takes possession of or receives legal title to the property.
(4) marketable title implied in all real estate k’s ( standard is that the seller, at the time of closing, deliver title to the buyer that is free from an unreasonable risk of litigation.)
* If a seller cannot convey marketable title, the buyer can rescind the land-sale contract.
* But if the buyer accepts the land with the defect and the seller refuses to perform, then the buyer can:
(1) rescind the contract and seek restitution,
(2) seek specific performance with an abatement of the purchase price, or
(3) sue for damages.
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Exceptions to the Statute of Frauds
- Part performance:
Partial performance by either the seller or the buyer is treated as evidence that the contract existed.
If there is part performance, the buyer CAN STILL order specific performance of the contract even if he still has the deposit (this is like a type of liquidated damage)
Look for acts of performance, such as:
payment of all or part of the purchase price; posession by the purchaser; or improvements by the purchaser.
- Detrimental reliance (also called estoppel):
An estoppel doctrine that applies where a party has reasonably relied on the contract and would suffer hardship if the contract were not enforced.
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liquidated damages clause allows the seller to retain the buyer’s deposit if the buyer breaches the real-estate contract.
A breach/failure to perfrom is insufficient to support the validity of the liquidated damages, more importantly the clause is enforceable so long as the amount of liquidated damages is reasonable (no more than 10 percent of the purchase price)
But it may not be enforced if the seller suffered no actual loss.
if a k doesnt specify otherwise, title doesnt have to be marketable until date of closing itself. conveyor may sell a property that he doesnt own yet, and purchaser cannot cancel contract before the closing on this basis
Under a land-sales contract, the seller can use the proceeds from the sale to eliminate a mortgage obligation on the property. If the proceeds exceed the amount of the outstanding mortgage, then the title defect will be extinguished and the seller can deliver marketable title to the buyer upon closing.
buyer may waive the right to have a marketable title
zoning is not subject to enforcement by private suit; it can only be enforced by local govt officials
equitable conversion: fact pattern will say land-sale k is silent regarding the risk of loss.
unmarketable title
variety of defects that make title unmarketable (Calls for recission):
* covenants
* easement
* liens
* gaps in chain of title
* boundary disputes
* existing zoning violations
* adverse possession
if any of the above apply, then the buyer can refuse to purchase the land (recission)
note: zoning violation may render title unmarketable, but mere existence of zoning code does not
presumptive delivery of deed
For a transfer by deed to be effective, the deed must be:
1. delivered by the grantor – demonstrates the grantor’s present intent to convey ownership to the grantee and
2. accepted by the grantee – presumed if the transfer is beneficial to the grantee.
- intent to transfer can also be implied from the grantor’s words or other conduct
- Delivery is presumed when the deed has been recorded in the county land records since the recording creates a rebuttable presumption that the deed is intended to be presently operative.
- Physically handing over a deed is not required and does not conclusively prove a grantor’s present intent to convey property
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note on delivery element
if deed is delivered physically to a person, it is presumed to have completed delivery
this presumption is not rebuttable since evidence of a oral condition (please do not record it until after i am dead) is inadmissible
condition would not be enforceable, and that deed is rightfully that person’s to record whenever
foreclosure: mortgage
- A mortgagee (lender) may foreclose on a mortgage when the obligation to which the mortgage relates is in default (when the mortgagor [debtor] fails to make timely loan payments)
- in foreclosure, the mortgagor’s interest in the property is terminated
- property is generally sold to satisfy the debt in whole/part
- priority of morgage is determined by time placed on property
- when mortgage is foreclosed, buyer at sale will take title as it existed when mortgage was placed on property
This typically occurs when the mortgagor (debtor) fails to make timely payments on the mortgage loan. - BUT WHERE the owner took a nonrecourse loan (a loan secured by collateral) owner (borrower) is not personally liable, meaning if there is a deficiency they cant hold borrower personally liable to ge the rest of the $ (facts can be confusing, can say borrower took out nonrecourse loan secured by mortgage)
mortgage: foreclosure–> junior and senior interests
- Lien priority is determined by the “first in time, first in right” rule unless a recording act applies
- under this rule, liens that arise first (senior liens) typically have priority over liens that subsequently arise (junior liens).
- But if the jurisdiction has an applicable recording act, then the recording act will determine priority.
- foreclosure will terminate interest junior to mortgage being foreclosed, but will not affect senior interests
- junior mortgages, liens, leases, easements and all other interests will be wiped out if they are junior to mortgage being foreclosed
- foreclosure does not affect any interest senior to the mortgage being foreclosed
- if lien senior to that of mortgageee is default, junior mortgagee has right to pay it off in order to avoid being wiped out by its foreclosure
- those with interests subordinate to those of foreclosing party are necessary parties to foreclosure action
- failure to include necessary party results in preservation of party’s interest despite foreclosure and sale (JUNIOR MORTGAGE!)
- buyer takes subject to such an interest and doesnt become personally liable on such senior investments
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Modification of a senior mortgage (or the obligation it secures) generally has no impact on the senior mortgagee’s priority over junior mortgages or liens.
However, a modification that materially prejudices a junior interest (increase in interest rate) will subordinate the senior mortgagee’s interest only as to the modification.
The senior mortgagee’s original interest will therefore remain superior to the junior interest.
Additionally, if an original mortgagee loans an additional amount to a mortgagor that is optional rather than obligatory such amount may not enjoy priority over a second mortgage if the original mortgagee has notice of the second mortgage.
This is true even though the mortgage by its terms serves as security for future advances.
if landowner took out mortgage from two different sources, first source recorded has priority and doesnt need to foreclose a smaller parcel just because there is another source which landowner took mortgage from. pro rata foreclosure might prejudice rights of bank, where two mortgages dont cover different tracts of land.
watch out for When there no recording act is provided, the “first in time, first in right” rule is used to prioritize interests. (does not matter if it is junior vs senior interest)
if ther is a recording act, value, they offer protection to mortgage (paid value) interests but not necessarily judgment liens.Since recording acts protect purchasers for value
subrogation
- where there are multiple mortgages given on a property, and none are purchase money mortgages, priority is determined according to which mortgage came first in time; BUT under doctrine of equitable subrogation, a person other than mortgagor who pays off mortgage can step into shoes of now-paid-off- mortgagee
- this is done to the extent necessary to prevent unjust enrichment.
- subrogee may seek reimbursement from the debtor (the former owner) or enforce the mortgage.
- subrogee can also foreclose on property, even in lien theory
example: manager and the bookkeeper own the store as tenants in common with equal ownership interests. They they took store subject to mortgage; they are not liable for the mortgage debt. But as cotenants, the manager and the bookkeeper still owe each other a duty to pay their proportionate share of necessary expenses. Here, a necessary expense arose when the bank threated to foreclose on the mortgage and the manager paid the owner’s debt in full to prevent the foreclosure. If manager pays off mortgage, she can enforce the mortgage against the bookkeeper’s one-half interest in the store to recover the bookkeeper’s share of necessary expenses. look at picture
land use: zoning –> nonconforming uses
(1) existing nonconforming properties
When zoning is changed and a structure does not satisfy the zone’s requirements, it is called a “nonconforming use.”
The goal of the property owner is to get the nonconforming use grandfathered in
Vested rights: If the project is in process when the change happens, the developer must have the proper building permits by the time the ordinance takes effect. The developer must also demonstrate the project was in good faith.
(2) post-ordinance nonconforming properties
When the property owner requests a change after the zoning ordinance is in place.
Variance
Owner applies for a variance, essentially permission to violate the zoning rules.
1) Use variance: Obtain the right to use property in a manner not permitted by zoning
2) Area variance: Focuses on restrictions concerning property development.
Standard
The person applying for a variance must show ALL of the following:
* Compliance would create unnecessary hardship;
* The hardship arises from circumstances unique to the property;
* The owner did not create the hardship;
* The variance is in keeping with the overall purpose of the ordinance; and
* The variance will not cause substantial harm to the general welfare.
note on creating hardship: if man moves into place where zoning requires 2 acres of land for each house, and he moves into 3 acre land and build his house such that he can not add another house on the land for his daughter to take care of him in old age (he faces running out of money and having to go to nursing home), this is self-imposed. he could have built the house another way to comply. no variance is granted
