MBE Property Flashcards
What are the 3 types of recording statutes?
(1) Race
(2) Notice
(3) Race-Notice
Recording statute: Race
First person to courthouse who records deed, wins!
Recording statute: Notice
Last BFP wins!(bfp bc has no notice)
Recording Statute: Race-Notice
BFP + who records first, wins!
“No conveyance or mortgage of real property shall be good against subsequent purchasers for value and without notice unless the same be recorded according to law.”
Notice statute
What are the 3 types of notice that impede someone from being a BFP?
(1) Actual
(2) Constructive
(3) Inquiry
Actual Notice
When a purchaser has direct, personal knowledge of a prior interest
Constructive Notice
When notice is given through proper recording of a prior interest
Like a deed recording
Inquiry Notice
When a reasonable investigation would have disclosed the existence of a prior interest
Like an inspection of property
BFP
(1) someone paid for value for the land
CANT be a BFP:
- Someone that conveyed title through gift, will, adverse possession (bc they didn’t pay for its value)
- Creditors and lien holders
CAN be BFP:
- Morgagee bc money they were loaned is paying for the land
(2) had NO notice of any earlier transactions
- Innocent purchaser; you didn’t know what was going on
- Notice would be like recording of a deed
“No conveyance or mortgage of real property shall be good against subsequent purchasers for value and without notice who shall first record.”
Race-Notice statute
Is this a fee simple or a life estate?
“To P for life”
Life estate
fee simple subject to executory interest
there is an event that if it happens, the future interest will go to a THIRD PARTY
that third party has = executory interest
(cus when it goes back to GRANTOR its condition subsequent)
class gift = vested remainder subject to open
but what must happen for this to be the case?
At least 1 member of the class must be vested
bc if not its just contingent
Springing interest
vs.
Shifting interest
Springing interest:
> divests Grantor
> usually 2 parties
Shifting interest:
> divests grantee
> usually 3 parties
Can Tenants in common possess unequal shares of the property?
Yes;
> Anna can have 1/3 as T in common
> Ben/Carmen can have 2/3 as Joint Tenants
True or False:
With Tenancy in common each co-tenant can transfer the property freely at death as well as during life.
True
4 Unities to create a Joint Tenancy
PITT:
> Possession = each person has to have the right to posses
> Interest = Joint tenants have to have equal interest/shares
> Time = joint tenants have to receive the interests at the same time
> Title = joint tenants must receive their interest in the same instrument of time
Does an inter vivos transfer sever a joint tenancy?
Yes; converts it into tenancy in common
Under which of these does a tenant need to have moved out:
> Implied Warranty of Habitability
Quiet enjoyment and constructive eviction
constructive eviction
can someone who has a vested remainder be affected by the person who has a life estate who isn’t making mortgage payments?
yes they could lose the property
the life estate holder requires them to pay interest on the mortgage and the remaindermen to pay the principal on the mortgage
Can an easement be terminated because of excessive use?
No
what type of privity do you need to run a burden?
horizontal privity + strict vertical privity (meaning the successor got the entire interest)
what type of privity do you need to run a benefit?
only relaxed vertical privity
horizontal privity not needed
Requirements to “Run with the Land” (to bind a successor)
5 elements:
(1) in writing
(2) intent
(3) touch and concern
(4) Notice
(5) Privity
remedy for breach of:
> a real covenant
vs.
> equitable servitude
> a real covenant = damages
vs.
equitable servitude = injunction
why is this a fee simple and not fee simple determinable:
“To B to be used as a farm”
Grantor’s language merely indicates his desire, intent, or purpose for which the property should be used rather than imposing a condition that could limit the duration of the estate.
What is a major difference between a vested remainder subject to open and a contingent remainder?
A vested remainder subject to open is transferred to a group rather than individual, and at least one member of the group is individually ascertainable and entitled to the remainder interest.
A contingent remainder is created in a grantee who is unascertainable.
What kind of tenants have the right to unilaterally partition a piece of property?
A tenant in common or a joint tenant may unilaterally partition property.
(NOTE: A tenant by the entirety does not have this right.)
Springing executory interest
divests the interest of the grantor or fills a gap in possession in which the estate reverts to the grantor
Shifting executory interest
divests the interest of the grantee by cutting short a prior estate created in the same conveyance. The estate “shifts” from one grantee to another on the happening of the condition
does a life tenant have to pay taxes on a property?
Yes, if they’re receiving a financial benefit from the property
> benefit from occupying the property:
~measured by its fair rental value
> benefit when not occupying:
~ measured by the income derived from the land
A fee simple subject to an executory interest
“To A, but if ___, then to B”
“To A as long as ____, then to B”
present estate limited by durational or conditional language. + after event occurs title automatically passes to a third party
(who holds a future, executory interest)
does RAP apply to leases?
No
what is a restraint on alienation
a restriction on the transferability of real property
Shelter Rule
someone who receives from a BFP is entitled to the same protection under the recording act as the BFP.
estoppel by deed
a grantor who conveys an interest in land by warranty deed before owning it is estopped from later denying the effectiveness of that deed
deed in lieu of foreclosure
mortgagee takes immediate possession w/out foreclosure sale (extinguishes the mortgage)
but takes w any junior interests attached
when will the transfer of a deed conditioned on death be effective if its delivered through an independent third party (instead of an agent)?
if someone is transferring a property conditioned on the death of a grantor (themselves or etc) it will only be effective if the grantor intends to make a PRESENT gift
It won’t be effective if the grantor intends the give to be effective only upon their death
Can a bank foreclosure on a property that was conveyed “subject to” or “assumed”?
Yes they could foreclosure on either one
> subject to = grantee not liable
> assumed = grantee becomes primarily liable
In either instance, the lender can foreclose on the mortgage if the debtor defaults on the loan.
Does the statute of limitations for adverse possession run against a true owner afflicted with a disability (e.g., insanity, infancy, imprisonment)?
No, the SOL for adv possession won’t run against a true owner with a disability (e.g., insanity, infancy, imprisonment) at the inception of the adverse possession until the disability is removed
For recording statute issues: when is it relevant that someone got a property as a gift?
relevant if they got the gift after BFP = NOT OK: BFP, gift
not relevant if they got the gift before it was sold to a BFP = OK: gift, BFP (bc doesn’t matter how u got it first)
> Grantees who acquire title of property by gift, intestacy, or devise are not protected by the recording act against prior claims to the same property, even when those claims are not recorded.
does a senior interest in a mortgage preclude a junior interest from foreclosing if the lender defaults on the loan?
No, a mortgagee (lender) can foreclose on his junior mortgage if the mortgagor (debtor) defaults on their loan
someone who gets subsurface rights will be strictly liable if they fail to support the land/buildings in the way they were before the rights got conveyed if they didn’t contribute to the subsidence
true
Does a prior owner have a right to reenter the land to remove the crops they had?
No, wild, uncultivated crops (i.e., fructus naturales) are considered part of the real property, and they pass automatically with the land. The prior owner has no right to reenter the land to remove the crops.
Exoneration
Allows beneficiary of specifically devised real property to use estate’s remaining assets to pay off any encumbrances on that property
True or False
In a title-theory state, the lender has legal title to mortgaged land and can take possession of the land at any time even if the mortgagor is not in default.
when will the transfer of a deed conditioned on death be effective if its delivered through an independent third party (instead of an agent)?
if someone is transferring a property conditioned on the death of a grantor (themselves or etc) it will only be effective if the grantor intends to make a PRESENT gift
It won’t be effective if the grantor intends the give to be effective only upon their death
competing equities (e.g., BFPs) take precedence over equitable mortgages like absolute deed transferrings
An absolute deed transferring unrestricted title to property with the intent to secure a debt is usually enforceable as an equitable mortgage unless competing equities (e.g., good-faith purchaser) take precedence.
When is a delivery of a transferred deed effective
> when it’s delivered by the grantor and accepted by the grantee
when a deed that benefits the grantee is recorded
For people to have a joint tenancy the entire property needs to have been given to both of them (ex: not 1/3 to A and 2/3 to B)
otherwise its just a tenancy in common
Can a joint tenancy be devised by will or inherited through intestate succession?
No bc of the right to survivorship
what is required to give an effective joint tenancy
possession, interest, time, title
same time/same amount
order of what needs to get paid back first after a default
- purchase money mortgage
- first recorded liens
- all other recorded liens
- unrecorded liens
who is considered a purchase money mortgage
(1) the seller of real property or
(2) a third-party lender if the loans are used to buy real property
A PMM has super priority over all other liens that arose before the PMM—regardless of whether the PMM or those liens were recorded.
Can a buyer who assumed a mortgage as part of the purchase price raise defenses (e.g., duress, statute of limitations, lack of legal capacity) that the debtor could have raised to avoid the mortgage obligation?
No; otherwise, the buyer would be unjustly enriched.
When mortgaged property is transferred to a donee, the donee may assert the donor-mortgagor’s defenses against the mortgagee-lender.
But a purchaser who assumes an existing mortgage obligation as part of the purchase price may not do so.
The Rule of Convenience
The Rule of Convenience prevents RAP from being applied to class gifts by closing class membership when any member of the class is entitled to immediate possession of a share in the class gift.
True or False
if the common scheme arose after some of the lots were already sold, then the previously sold lots will not be incorporated into the common scheme or subject to the implied equitable servitude.
is it
remainder and an executory interest
or
executory interest
remainder and an executory interest
If a foreclosing mortgagee is going to have a judicially supervised foreclosure sale, what must they do for junior interests to actually extinguish?
the foreclosing mortgagee must give notice to the holders of any junior interests of the foreclosure sale.
Any others who have an interest in the property or are liable on the debt may be joined as proper but unnecessary parties.
exceptions to times when a bank can enforce a due on sale clause
> when a conveyance of residential property is to the debtor’s spouse or ex-spouse upon divorce
when the transfer is to the mortgagor’s own living trust
Right of First Refusal reqs
A right of first refusal (ROFR) gives its holder the opportunity to acquire property from a seller before it is transferred to a third party.
To be valid, a ROFR must comply with the statute of frauds and its terms must be reasonable.
Can a real estate K be rescinded if there’s failure to perform on a specified closing date?
No; it can be a breach but when time isn’t of the essence the K can’t be rescinded if the breaching party can perform within a reasonable time thereafter (and a parry can sue for specific performance if they don’t wanna perform)
are judgment creditors purchasers for value?
No bc the attachment of a judgment lien to a debtor’s property is merely security for a preexisting debt—not payment of value.
Are rights of first refusal are generally subject to the Rule Against Perpetuities?
Yes; Rights of first refusal are generally subject to the Rule Against Perpetuities
Is a joint tenancy severed in a lien theory or title theory?
Title theory bc there a mortgage constitutes a transfer of title
(in a lien theory, a mortgage is merely a lien on the property)
“For the purpose of using the building for religion”
Is this a fee simple absolute or fee simple determinable?
Its’ s a fee simple absolute
> Defeasible fees are limited by specific durational or conditional language (e.g., “so long as,” “but if”)
> Language that limits only the purpose of the transfer creates a fee simple absolute
Can a judgment obtained against a seller after they execute land-sale contract against the property?
No; if an owner incurs a debt before making a K to sell the property, the creditor can’t enforce a judgment against the house bc the new buyer’s interest is protected under their equitable conversion
when is a deed effective to convey a real property interest
when it (1) is in writing and signed by the grantor, (2) identifies the grantor and grantee, (3) describes the property being transferred, and (4) contains words of transfer.
True or False:
an intent to transfer a deed that is implied from the grantor’s words or other conduct is an effective delivery
True
A deed transfers ownership when it is delivered by the grantor and accepted by the grantee. Delivery is shown by the grantor’s intent to make a present transfer of the property—which can be implied from the grantor’s words and conduct—and acceptance is presumed when the transfer is beneficial to the grantee.
liability for owners of mineral rights (liable to the surface owner)
Strict Liability:
> for any failure to support the land and any buildings that predate the conveyance of those rights
Negligence:
> liable for negligence for any damage to improvements built after the mineral rights were conveyed.
What can a buyer do if a seller cant 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.
Who does interest earned of a security deposit in an escrow account belong to?
Landlords are often required to keep security depots in an escrow account and the interest earned belongs to the tenant
death escrow
when a grantor gives an escrow agent a deed to deliver upon their death, to a grantee. its effective as long as:
(1) the grantor’s death is the only condition
(2) the grantor doesn’t retain the legal right to take the deed back out of escrow
if a burden isn’t placed on a Lot of a subdivision, just bc the rest of the Lots have that burden doesn’t mean it will incorporate into the one that doesnt even if its the scheme of the rest of the subdivision
is payment required for an effective conveyance?
no; the only requirements for a valid conveyance are:
(1) Execution
> satisfied as long as its signed by the seller
(2) delivery of the deed
> proven by intent even if not physically given
who pays taxes on a life estate property if there is someone w a remainder
the life tenant pays the taxes during their life estate. but they don’t have to ay more than what the income that can be generated from the property is
if the remainderman pays any taxes, they’re entitled to reimbursement from the life tenant
EXCEPTION:
if the property isn’t generating income then there is no obligation to pay taxes as life tenant
estoppel by deed
ensures that if a grantor purports to convey title that he doesn’t actually hold, and then later acquires title correctly, it will automatically effectuate the prior benefit conveyed to the grantee
someone who has a vested remainder OR an executory interest can assign that to someone else and itll come true once the occurrence of the state event happens (even if it hasn’t at the same its assigned/given away)
Are vested interest subject to RAP
no
do you need to record a mortgage to have an enforceable lien?
yes
When a lender utilizes their interest in the property by entering it and running it, are they acting as an owner?
Yes, if the mortgagor isn’t done paying the mortgage but they abandon the property, the mortgagee would be entitled to take possession of the property and take care of it to maintain its interest
what happens if a buyer refuses to perform on the closing date for no reason
the seller can sue for damages or specific performance
do notice of covenants need to be given for the covenant to be enforced?
yes; either actual or constructive
(inquiry is fine for equitable servitudes)
Can someone cancel a K before closing bc the seller is selling a property they don’t own yet?
no bc title doesn’t have to be marketable until the date of the closing itself
do options to repurchase fall within RAP
yes; if the triggering event can take more than the life + 21 years to occur then it violates RAP
option to repurchase can create unvested interests (RAP needs it to vest)
when K quiet as to title what is implied?
marketable title is implied
(buyer can waive marketable title bc that’s their problem)
does an easement affect the marketability of title?
no
choice of law
property issues:
where property is located
collateral matters:
law of place where there is most significant interest (ex: where the fraudulent conveyance occurred)
if there is a joint tenancy and both parties give away their portions in a will > then A dies > then B dies.
Only the people in Bs will get it.
can a grantor deliver a deed to an entity that has not been formed yet?
no; it’d be void bc they’d be a non-existing grantee
does a possibility of reverter make a title unmarketable?
yes
when it a mortgage is entered into jointly, even if the property is owned by tenants in common and not joint tenancy, the debtors are one entity and cant split off from the debt
if a deed is not delivered effectively is it void?
yes
standard for marketable title
title that is free from an unreasonable risk of litigation
In most jurisdictions, the risk of loss shifts to the buyer during the executory period.
What’s the minority?
in the minority of jurisdictions that have adopted the 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.
When is an equitable mortgage created?
An equitable mortgage is created when an absolute deed—i.e., a deed that is free of encumbrances and transfers unrestricted title to property—is given with the intent to secure a debt.
A deed is void and unenforceable, even by a bona fide purchaser, if (1) the grantor’s signature is forged, (2) the deed itself is forged, or (3) the grantor is deceived about nature of the executed document.
If an easement is shared and an owner does something to maintain/repair, who can they seek contribution from
(1) the other owners and
(2) the servient-estate owner if he/she uses the easement.
When a seller refuses to perform a land-sales contract, what remedy can the buyer seek?
When a seller refuses to perform a land-sales contract, the buyer can seek specific performance of the seller’s contractual obligation (i.e., transfer marketable title)
That is because money damages cannot compensate for the loss of real property.
Tenant duties in a
partial condemnation
vs.
complete condemnation
Partial condemnation:
> a tenant must continue to pay rent but is entitled to compensation for the portion of the leased property that was taken.
Complete condemnation:
> the tenant is discharged from their rent obligation and is entitled to compensation for the taking.
True or False:
A tenant’s duty to pay rent is not discharged when only a portion of the leased property is condemned.
True
A debtor remains personally liable for the mortgage debt even after the mortgaged property is transferred to another. But the debtor will be relieved of personal liability if the lender releases or impairs the mortgaged property.
A mortgage is generally enforceable only to the extent that the underlying obligation is enforceable. Therefore, a mortgage is subject to the same defenses as the underlying obligation secured by the mortgage—e.g., mistake, duress, lack of capacity, statute of limitations.
When a foreclosure is conducted by a judicially supervised sale, the foreclosing mortgagee (here, the original owner):
must give notice to the holders of any junior interests in the property and make them parties to the foreclosure action so that they can participate or send a representative—otherwise, the junior-interest holder’s interest will remain after the sale
There are two types of assignment: for value and gratuitous. An assignment for value is irrevocable, but a gratuitous assignment can be revoked (e.g., by subsequently assigning the same right) unless an exception applies.
A modification of a senior mortgage that materially prejudices a junior interest will subordinate the senior mortgagee’s interest only as to the modification—but the senior mortgagee’s original interest will remain superior.
in a tenancy in common, if one tenant is profiting from a business on the property, do they have to share profits w the other tenant?
no;
nor do they have to for the value of her own use of the property, even when the other cotenants do not make use of the property.
does a deed have to be recorded to be valid and convey good title?
no, it can be delivered and accepted by the other party and it’ll be a valid gift transfer
when has a taking occured?
A taking has occurred when the governmental regulation results in a permanent physical occupation of the property
how can an express easement be created?
(1) be reservation
(2) by grant
> SOF so must be in writing
must be recorded to be valid
can a sale of the servient estate to a BFP of the easement can make the easement unenforceable?
yes unless there is notice
true or false:
The purchaser of property at a foreclosure sale takes the property free and clear of any junior mortgage
true
All interests that are junior to the mortgage that is foreclosed are generally destroyed at the foreclosure sale.
Land Excavation:
natural state + excavation damage = strictly liable
improved + excavation damage =
liable if would’ve been damaged anyway in its natural state
BUT if improvement contributed to collapse = liable only if excavating landowner was negligent
Is a private encumbrance such as an easement a defect that renders title unmarketable?
Yes
A subsequent purchaser with actual or constructive notice of a burdening covenant is bound by it
meaning the restrictive covenant doesnt have to be recorded in more deeds than the first if there is notice
can a residential lease place the duty to make repairs, on the tenant?
no
what is a landlord entitled to withhold from a security deposit?
> costs of damages to the premises that don’t include normal wear and tear
> the amount of any unpaid rent.
when is an implied covenant of quiet enjoyment breached?
when the possession of the tenant is disrupted by
> the landlord
> someone claiming through the landlord, or
> someone with superior title
Once the location is fixed can the owner of the servient estate unilaterally change the location of the easement?
No
*dimensions/use can be changed if reasonable but not unilaterally/ just by one party
can the owner of the servient estate fix/determine the location of an easement when it is not specified?
yes
Who is a right of re-entry held by
A right of re-entry is held by a grantor in a condition subsequent
if to someone else other than grantor then its an executory interest
If a lender adds more money to a borrower’s mortgage, and they know about another mortgage on the property, that extra money might not get paid back before the second mortgage if the borrower can’t pay.
an area variance can be granted in a residential setting when there is unnecessary hardship being caused by strict application of a zonig ordiance
the hardship cany be self created, it has to be conditions unique to that property
when there’ a death escrow meaning the grantor gives a deed to an agent to deliver to someone once the grantor dies 2 things are requeired
(1) the only condition is the grantor’s death
(2) the grantor doesn’t keep the legal right to take the deed back out of escrow
