MBE questions Flashcards
The most recent feed in the chain of title to a tract of land, a man conveyed the land as follows:
“To niece and her heirs and assigns in fee simple until my niece’s daughter marries, and then to my niece’s daughter and heirs and assigns in fee simple.”
There is no applicable statute and the common law RAP has not been modified in the jurisdiction.
Which of the following is the most accurate statement concerning title to the land?
A) Niece has a life estate and daughter has a contingent remainder
B) Niece has a fee simple and daughter has no interest, because after the grant of a fee simple there can be no gift ever
C) Niece has a fee simple and the daughter has no interest, because she might not marry within 21 years after the date of the deed
D) The niece has a fee simple subject to executory interest and the daughter has an executory interest
D) The niece has a fee simple subject to executory interest and the daughter has an executory interest
Note that the verbiage for C is incorrect, even if it failed under RAP.
Woman dies with a will. In it, she devised a farm she owned to her husband for life, with remainder to her niece. Her will did not specify the duties of the husband and the niece with regard to maintenance and expenses related to the farm. The husband took sole possession of the farm, did not farm the land, and did not rent the land to a third person (despite it would have been $$$$ to do so).
For two years after the woman died, the county assessor sent tax bills to the niece, but the niece did not pay the bills, because she and the husband could not agree on who should pay them. Finally, the niece paid the taxes to avoid a tax foreclosure sale. The niece then sued the husband for reimbursement.
Is the niece likely to prevail?
A) No because remaindermen are solely responsible for property taxes
B) No because the county assessor sent the bills to the niece
C) No because the woman’s will was silent on responsibility for payment of property taxes
D) Yes because the niece paid an obligation that was the sole responsibility of the husband
D) Yes because the niece paid an obligation that was the sole responsibility of the husband
Current possessory interest = taxes
Husband and wife acquired land as common law as joint tenants with ROS. One year later, without wife’s knowledge, husband executed a will devising the land to his best friend. Husband subsequently died.
Is the wife now sole owner of the land?
A) No because a joint tenant has the unilateral right to end a joint tenancy without consent of the other joint tenant
B) No, because the wife’s interest in the husband’s undivided 50% ownership in the land adeemed
C) Yes, because of the doctrine of after-acquired title, or estoppel by deed
D) Yes, because the devise to the friend did not sever joint tenancy
D) Yes, because the devise to the friend did not sever joint tenancy
Cannot devise JT with ROS in a will. BFF has nothing, wife has all the land.
For many years, Alison owned Lot A, a parcel of land bordered on the west by a public road. Barbara owned Lot B, which located immediately to the least of Lot A. Barbara had an easement to cross Lot A to enter the public road adjoining lot A. Lot B is surrounded by swampland on the north, south, and east. Thus, the only route of ingress to and egress from lot B over dry land passed through Lot A.
12 years ago, B decided to move out of state. A purchased the lot from B and proceeded to use both lots as a common tract. 10 years later, A sold Lot B to C.
Does C have an easement over Lot A?
A) Yes, she has an easement in gross
B) Yes, because her only access to Lot B is across Lot A
C) No because the easement was extinguished when A purchased Lot B
D) No because she had not used the property long enough to gain an easement by prescription
B) Yes, because her only access to Lot B is across Lot A
Easement pertinent: Part of land, necessity – stays with transfer of land
The mother of a son and a daughter was dying. The daughter visited her mother in a hospice facility and said, “You know that i have always been a good child and my brother has always been the bad child. Even so, you have left your property in the will to us 50/50. But it would be really nice if you would sell me the family home for $100,000.”
“I don’t know,” said the mother. “It’s worth a lot more than that – at least $250,000.” “That is true,” said the daughter. “But I have always been good and visited you, and my brother has never visited you, so that ought to be worth something. And besides, if you won’t sell me the house for that price, maybe I won’t visit you anymore, either.”
“Oh, I wouldn’t want that,” said the mother. and she signed a contract selling the house to her daughter for $100K. Shortly thereafter, the mother died. When the son found out that the house had been sold and was not part of the mother’s estate, he sued to have the contract avoided on behalf of the mother.
On what grounds would the contract most likely be avoided?
A) Duress
B) Inadequate Consideration
C) Mistake
D) Undue Influence
D) Undue Influence
Requires:
1) confidential relationship;
2) influence; and
3) overcome will
A woman borrowed $800K from a bank and gave the bank a note for that amount secured by a mortgage on her farm. Several years later, at a time when the woman still owed the bank $750K on the mortgage loan, she sold the farm to a man or $900K. The man paid the woman $150K in case and specifically assumed the mortgage note. The bank received notice of this transaction and elected not to exercise the optional due-on-sale clause in the mortgage. Without informing the man, the bank later released the woman from any further personal liability on the note. After he had owned the farm for a number of years, the man defaulted on the loan. The bank properly accelerated the loan and the farm eventually sold at a foreclosure sale for $500K. Because there was still $600K owed on the note, the bank sued the man for the $100K deficiency.
Is the man liable to the bank for the deficiency?
A) No because the woman would still be primarily liable for payment but the bank had released her from personal liability.
B) No because the bank’s release of the woman from personal liability also released the man
C) Yes because the bank’s release of the woman constituted a clogging of the equity of redemption
D) Yes because the man’s personal liability on the note was not affected by the bank’s release of the woman
D) Yes because the man’s personal liability on the note was not affected by the bank’s release of the woman
O conveyed Redacre “to my best friend Nelson, and upon Nelson’s death to my daughter, Dora.” Nelson took up possession of Redacre and lived there for two years. He then conveyed “my interest in Redacre” to his longtime, and much younger mistress, Magnolia. Although Dora was fond of her father’s friend, Nelson, she could not abide Magnolia, and the thought of Magnolia taking over Redacre made Dora sick. Dora tried to get Magnolia to leave Redacre but Magnolia told Dora, “Redacre is mine until I die and you’d better get used to the idea.” Since Magnolia took up residence on Redacre, she has been sent two county property tax bills, which she has refused to pay. The county is now threatening to bring an action to force a judicial sale of Redacre to cover the tax deficiency. Dora files an appropriate suit asking the court to evict Magnolia from Redacre and to compel her to pay the taxes for her period of occupancy.
The court will rule that
A) Magnolia has a life estate in Redacre for the period of her own life and Magnolia must pay the taxes on the property.
B) Magnolia has a life estate in Redacre for the period of Nelson’s life and Magnolia must pay the taxes on the property.
C) Magnolia has a life estate in Redacre for the period of Nelson’s life, but Magnolia does not have to pay the taxes on the property because taxes are the responsibility of the remainder grantee.
D) Dora owns Redacre because Nelson could not convey his interest to Magnolia
B) Magnolia has a life estate in Redacre for the period of Nelson’s life and Magnolia must pay the taxes on the property.
Nelson - life estate (on his own life) –> Magnolia - life estate (Nelson’s life
Dora – remainder in FSA
Taxes and waste:
Permissive = not paying taxes, current possessor must pay taxes unless the grant specifies otherwise
Jet inherited Shaleacre, a parcel of land, from Luz. Bick owned Rockacre, a much larger piece of property, which was adjacent to Shaleacre. Bick began to drill for oil on Rockacre, but all of Bick’s exploratory wells were nonproductive “dry holes”. Bick was certain that there was oil in the area and he importuned Jet to grant him a lease to drill on Shaleacre. Jet turned down Bick’s offer. After Jet’s refusal, Bick drilled an exploratory well on Rockacre. However, Bick drilled the well on a slanted angle, so that he was actually drilling under Shaleacre, even though his rig was located on Rockacre. Bick struck oil, but shortly thereafter, Jet discovered the oil was coming from underneath Shaleacre.
Does Jet have an action for damages against Bick?
A) Yes because Bick has invaded Jet’s subterranean rights
B) Yes, but only if Bick’s drilling interferes with Jet’s use and enjoyment of Shaleacre
C) No, because oil is a free-flowing liquid and may be captured wherever it flows
D) No because Bick’s action does not interfere with Jet’s right to drill for oil on Shaleacre
A) Yes because Bick has invaded Jet’s subterranean rights
An owner conveyed one of his properties to “my son for life, remainder to my daughter.” The son lived on the property without paying any rent, although the property could have been rented for $4,000 a month. The property was assessed annual property taxes of $10,000. The son did not pay the taxes on the property. Not wanting to have a lien on the property or otherwise have it foreclosed upon, the daughter paid the annual property taxes. The fair market value of the life estate was 10 percent of the fair market value of the property held in fee simple absolute.
How much can the daughter recover from the son for the tax payments?
A) $10,000, because life tenants are responsible for paying annual taxes assessed on the property in their entirety.
B) $10,000, because the taxes did not exceed the reasonable rental value of the property.
$1,000, the amount of taxes owed based on the proportion of the fair market value of the life estate to the fair market value of the property held in fee simple absolute.
Nothing, because the property taxes are the responsibility of the holder of the remainder interest.
B) $10,000, because the taxes did not exceed the reasonable rental value of the property.
When the life tenant occupies the land, the financial benefit is measured by its fair rental value.
An attorney was a sole practitioner specializing in family law. Her niece was a recent law school graduate, and her nephew was an attorney. The attorney decided to retire and conveyed the historic building that housed her law practice “to my niece, but if she fails to pass the bar exam within a year of her law school graduation, to my nephew.”
Which of the following is an accurate description of the property interests created?
A) The niece has a fee simple subject to condition subsequent, the nephew has a right of reentry, and the attorney has no interest.
B) The niece has a fee simple subject to an executory interest, the nephew has an executory interest, and the attorney has no interest.
C) The niece has a fee simple determinable, and the attorney and the nephew each have a possibility of reverter.
D) The niece has a fee simple subject to condition subsequent, the attorney has a right of reentry, and the nephew has an executory interest.
B) The niece has a fee simple subject to an executory interest, the nephew has an executory interest, and the attorney has no interest.
FSSCD + EI = Upon the occurrence of the specified event or condition, title automatically passes to a third party who holds a future, executory interest.
Attorney/aunt has nothing left
Pursuant to a written lease, the owner of a warehouse leased the premises to a manufacturer for a term of one year at a total rent of $60,000. The lease called for the rent to be paid in monthly installments of $5,000 at the beginning of each month. The lease contained no provisions regarding termination or extension. The manufacturer promptly made the required rental payment each month. At the end of the lease term, the owner did not provide notice to the manufacturer of the termination of the lease. The manufacturer tendered a rental payment of $5,000 for the following month to the owner, which the owner refused to accept.
In the absence of an applicable statute, how much advance notice must the owner give the manufacturer before seeking to evict the manufacturer?
A) None, because the manufacturer is a tenant at sufferance.
B) a reasonable time, because the manufacturer is a tenant at will.
C) A month, because the manufacturer, by tendering a rental payment, has created a periodic tenancy.
D) Six months, because the manufacturer, by tendering a rental payment, has created a tenancy for years.
A) None, because the manufacturer is a tenant at sufferance.
Tenancy in Years = terminates automatically after the stated period ends.
A tenant who remains on the premises after the lease expires without the landlord’s permission is considered a tenant at sufferance.
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.
An adult college student entered into a written, one-year lease of a condominium unit owned by a professor who was taking a one-year sabbatical in France. The lease, which began on September 1, called for a yearly rent of $12,000 to be paid in monthly installments of $1,000. The student lived in the unit for four months and paid $1,000 in rent to the professor each of those months. The student moved out of the unit on December 31 and stopped paying rent thereafter. Before moving out, the student transferred all of his rights under the lease for the remaining eight months to an employee of the college. Nothing in the lease prohibited the student from making this transfer.
The employee moved into the unit on January 1. She lived there for five months and, each month, mailed $1,000 to the professor. She otherwise had no contact with the professor. At the end of May, the employee moved out and made no further rental payments. Despite making a good-faith effort, the professor was unable to rent the unit for the remaining three months of the lease. Under the terms of the lease, the student is liable to the professor for any unpaid rent. However, upon his return in September, the professor sued the employee for $3,000 in unpaid rent.
Is the employee liable to the professor for the unpaid rent?
A) No, because the employee did not enter into a lease agreement with the professor.
B) No, because the student remained liable for the rent under the terms of the lease.
C) Yes, because the employee was the person who vacated the condominium unit.
D) Yes, because the employee was in privity of estate with the professor.
D) Yes, because the employee was in privity of estate with the professor.
Assignment = transfer of a tenant’s entire interest to a third party (assignee) for the remainder of the lease term.
The tenant (through privity of contract) and the assignee (through privity of estate) are jointly and severally liable for the landlord’s entire harm arising from a breach of the lease.
An accountant owned a small farmhouse and land that he planned to pass on to his two children, a son and a daughter. The accountant was contacted by a longtime family friend who said that she had retired and was looking for a place to live. In order to help the friend, the accountant made an inter vivos conveyance of the farmhouse and land “to the friend for her life, and then to my heirs; but if none of my heirs survive the friend, then to my lawyer.” Two years later, the accountant died, leaving the son and the daughter as his only heirs. Recently, the daughter died, but the friend is still living.
The jurisdiction does not apply the Rule in Shelley’s Case or the doctrine of worthier title.
Which of the following best describes the son’s current property interest in the land?
A) A contingent remainder.
B) A vested remainder subject to complete divestment.
C) A vested remainder subject to open.
D) No interest in the land.
B) A vested remainder subject to complete divestment.
A vested remainder is subject to complete divestment if the occurrence of a subsequent condition will eliminate the remainder interest (e.g., “then to my heirs; but if none survive my friend, then to my lawyer”).
A widower owned a house in fee simple absolute. His daughter is his only child. The daughter also has one child, the widower’s grandson. The grandson and his wife had just had their first child when the widower executed a will in which the house was devised to his daughter for her life and the remainder to his grandson’s children. The widower left the rest of his estate to a charity.
After the widower’s death, his grandson had a second child and the widower’s daughter died shortly thereafter. A year later, the grandson had a third child. The widower’s grandson recently died, survived by all three of his children.
The jurisdiction follows the common-law Rule Against Perpetuities as well as the Rule of Convenience.
Who now owns the house?
A) The first child.
B) The first child and the second child.
C) The first child, the second child, and the third child.
D) The charity named in the will.
B) The first child and the second child.
Rule of Convenience closes class membership once any member of the class is entitled to immediate possession of a share in the class gift
Here, that occurred when the widower’s daughter died and the remainder interest in the grandson’s children became a present interest. Only the first child and the second child were born* before the class closed upon the daughter’s death, so only they own the house
The sole, unmarried owner of a residence died. She had validly devised the residence to her long-term companion with whom she had lived for over 20 years. The residence was devised to the companion “for life or until she vacates the premises, and then to my nephew.”
Several years after the owner’s death, the nephew transferred by quitclaim deed “any interest I have” in the residence to a creditor in satisfaction of a debt that the nephew had incurred. The deceased owner’s companion continues to live in the residence.
Which of the following most accurately describes the creditor’s interest in the residence?
A) The creditor has a vested remainder in the residence.
B) The creditor has an executory interest in the residence.
C) The creditor has both a vested remainder and an executory interest in the residence.
D) The creditor has a mere expectancy with regard to the residence until the companion dies or vacates the premises.
C) The creditor has both a vested remainder and an executory interest in the residence.
Here, the owner devised her residence to the companion “for life or until she vacates the premises, and then to my nephew.” This means that the companion received a defeasible life estate and the nephew received two future interests in the residence—a vested remainder and an executory interest.
The nephew then transferred his interests to a creditor by quitclaim deed, so the creditor has both a vested remainder and an executory interest in the residence
A landlord, the owner of the only shopping center in a small town, and a tenant, a new small-business owner, entered into a lease for a commercial shopping space in the shopping center. The tenant was unsure that the community would support her new business, so she wanted to limit the term of the lease to a maximum of two years. The landlord, however, insisted on an at-will tenancy for a minimum of 10 years, and he included the following clause in the lease: “Pursuant to this Lease, Landlord is given the express right to terminate the leasehold with Tenant by giving 30 days’ notice.” The lease omitted language giving the tenant a similar termination right. Due to the lack of commercial space available to rent in the area, the tenant agreed.
Six months into the lease, the tenant terminated the lease in writing with 30 days’ notice, explaining that, although sales at the shopping space technically covered all of the tenant’s expenses, she had found lower rent in a nearby town, which she believed would be a more successful market.
The landlord has sued the tenant for breach of the lease.
Will the landlord likely prevail in the breach-of-lease action?
A) No, because termination rights in at-will tenancies cannot be limited.
B) No, because the lease’s unconscionability gave the tenant the right to terminate the lease.
C) Yes, because the lease contract reserved the right of termination only for the landlord.
D) Yes, because the tenant’s reasons for terminating the lease were in bad faith.
B) No, because the lease’s unconscionability gave the tenant the right to terminate the lease.
If only one party is expressly given the right to terminate the leasehold, the lease may be deemed unconscionable and both parties will have the ability to terminate it.
Here, the landlord owned the only commercial shopping center in town, so he had superior bargaining power over the tenant. And the landlord insisted on an at-will tenancy for a minimum of 10 years that gave him the sole right to terminate the lease. Given these circumstances, the court will likely deem the lease unconscionable and find that both parties had the right to terminate it
The owner of a used-car lot put the property up for sale. A car dealer was looking for another car lot upon which to sell his cars, and he made a generous offer to the owner. The owner and the dealer promptly executed a valid land-sales contract for the used-car lot. The contract contained all of the essential terms.
Prior to the closing date, the owner’s estranged son discovered that his father had contracted with the dealer to sell the car lot. The son immediately contacted the dealer and truthfully informed him that the owner only had a life-estate interest in the car lot and that he, the son, had a future interest in the property in fee simple. The son also said that he would not agree to the sale unless his father paid him $25,000. The owner promised the dealer that his son would agree to the sale because the owner would pay the son $25,000 in the future. On the closing date, the dealer refused to close.
The owner has filed an appropriate action against the dealer for specific performance.
Will the owner be likely to prevail?
A) No, because the owner may not keep his promise.
B) No, because the title was unmarketable.
C) Yes, because the owner conveyed marketable title.
D) Yes, because the owner had a life estate in the car lot.
B) No, because the title was unmarketable.
Title need not be perfect to be marketable, but it must be free from an unreasonable risk of litigation such that a reasonable person would accept and pay for it.
Title can be rendered unmarketable by a future interest if the holder of that interest does not agree to the transfer. If the seller cannot convey marketable title by the time of closing, then the buyer can refuse to close.
Because the owner had not paid the son and the son had not consented to the sale at the time of closing, the owner could not convey marketable title to the dealer. Therefore, the dealer could refuse to close.
In exchange for $1,000, the owner of a ranch granted a potential buyer a 90-day option to purchase the ranch for $10 million. The next day, the owner was stricken with an illness that has left her unable to manage her own affairs. As a consequence, a guardian for the owner’s property was appointed. Prior to the end of the option period, the potential buyer proposed to the guardian that he would purchase the ranch immediately for $9.5 million. The guardian rejected this offer. On the 90th day, the potential buyer mailed his intent to exercise the option, which the guardian received the following day. The guardian has refused to sell the ranch to the potential buyer.
In an action brought by the potential buyer to compel the guardian to sell the ranch, if the court rules for the guardian, what is the likely reason?
A) The option terminated at the time that the owner became incapacitated.
B) The option was revoked by the potential buyer’s counteroffer.
C) The potential buyer failed to record the option.
D) The potential buyer failed to timely exercise the option.
D) The potential buyer failed to timely exercise the option.
Mailbox rule does not apply to option contracts. Instead, the grantor must receive the option holder’s decision to exercise the option within the time period specified in the contract.
Although the potential buyer mailed his decision to exercise this option on the 90th day, the guardian did not receive it until the following day—after the 90-day option period had terminated.
A farmer had two children, a daughter and a son. The farmer was diagnosed with a terminal illness by his doctor. Upon arriving home immediately after receiving the news, the farmer wrote the following: “I, [farmer], now transfer my farm at [address] to [the son].” The farmer, who owned the farm in fee simple absolute, then signed and dated the document. The farmer took the document to his neighbor, told her that the document belonged to his son, and asked her to give it to his son when the farmer died. The neighbor complied with the farmer’s directions.
Shortly after the farmer’s death, a will was found among his personal papers. The farmer had executed the will in compliance with all of the required formalities after his wife’s death 11 years prior to his own. This will devised the farm to the farmer’s daughter. The son and the daughter, who were the farmer’s only heirs, learned of the document and the will, and each claimed ownership of the farm outright.
The farmer’s personal representative admitted the will to probate then filed an appropriate action to determine ownership of the farm.
Who is entitled to ownership of the farm?
A) The daughter, because the document was neither delivered to nor accepted by the son prior to the owner’s death.
B) The daughter, because the will was executed before the document.
C) The son, because the document took effect before the will.
D) The son, because the document was executed after the will.
C) The son, because the document took effect before the will.
Here, the farmer’s deed expressed his present intent to “now transfer my farm” because it was delivered to the neighbor (independent third party) with no right to take it back. The son is presumed to have accepted this beneficial gift, so the transfer was effective when the deed was delivered to the neighbor.
This means that the deed took effect before the farmer’s will became effective upon his death
A mother owned a vacation cabin, but as she no longer visited it, she decided to convey the cabin to her daughter. The mother executed a valid, written deed, and she promptly and properly recorded it. The mother did not tell her daughter that she intended to give the cabin to the daughter because the mother wanted to surprise the daughter with this gift at an upcoming family reunion.
Prior to the reunion, the daughter died suddenly. In her will, the daughter left her entire estate to her best friend. The mother, not wanting the cabin to go to someone who was not a family member, brought an action to set aside the conveyance to the best friend.
Who will be likely to prevail in this action?
A) The best friend, because the mother recorded the deed conveying the cabin to her daughter.
B) The best friend, because the mother’s intent was evidenced by a valid deed in writing.
C) The mother, because she did not deliver the deed to her daughter.
D) The mother, because the daughter did not accept the mother’s gift.
A) The best friend, because the mother recorded the deed conveying the cabin to her daughter.
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.
Here, the deed to the cabin is presumed to have been delivered to the daughter when the mother recorded it. And the daughter is presumed to have accepted this beneficial gift when it was recorded, even though she died before knowing of it. And since the cabin was a part of the daughter’s estate when she died, it was devised to the best friend.
A man purchased undeveloped land with a bank loan secured by a mortgage on the property. The man recorded the deed, and the bank promptly recorded the mortgage. A year later, the man decided to sell the property to a wealthy widower. The widower purchased the property, recorded his interest, and assumed the mortgage. Several years later, the widower gave the property to his daughter. The widower did not tell his daughter about the mortgage but instead continued to make the mortgage payments. The deed, which contained no mention of the mortgage, was promptly recorded by the daughter.
When the widower died, he devised all of his real property to his daughter. He left the remainder of his estate to his son. Following the widower’s death, no one made payments on the bank loan, causing it to fall into default.
May the bank foreclose on the property?
A) No, because of the exoneration-of-liens doctrine.
B) No, because the daughter’s deed made no mention of the mortgage.
C) Yes, because the bank recorded its mortgage.
D) Yes, because the daughter received the property as a gift.
C) Yes, because the bank recorded its mortgage.
A donee who receives property from a grantor protected by a recording act will receive the same protection as the grantor under the recording act IF 1) grantor was purchaser for value, 2) recorded first, 3) acquired property without notice of prior interest
Here, the bank recorded its mortgage before the widower acquired the property, so the widower is not protected by a recording act and cannot “shelter” the daughter. Since no recording act applies, the common-law “first in time, first in right” rule will determine the priority of the daughter and the bank’s interests.
A widow executed a will in which she left her house to her son and the remainder of her estate to her daughter. The house was subject to a purchase-money mortgage at the time of the widow’s death, the unpaid portion of which was nearly equal to the value of the residuary estate. The son now demands that the personal representative of the estate use the residuary estate to pay off the mortgage. The will contains a general provision for the payment of all the testator’s debts, but not a specific provision authorizing the payment of the outstanding balance of the mortgage.
The jurisdiction follows the common law.
Should the personal representative accede to the son’s demand?
A) No, because the doctrine of satisfaction does not apply to a specific devise.
B) No, because the mortgage is a purchase-money mortgage.
C) Yes, because the son has a right to the exoneration of the mortgage.
D) Yes, because the will contains a general provision for the payment of the testator’s debts.
C) Yes, because the son has a right to the exoneration of the mortgage.
Under the common-law exoneration-of-liens doctrine, the recipient of a specific devise of real property can use the remaining assets in the testator’s estate to pay off any encumbrances on that property.
As a result, the personal representative should accede to the son’s demand to use the estate’s remaining assets to pay off the mortgage on the house.
*Most states have abolished this doctrine, and payment of an encumbrance on devised real property is required only if the will so specifies.
A widower who owned a vacation cabin in the mountains executed a will under which the cabin was devised to his niece. The will contained a residuary clause that devised the testator’s remaining estate to his son. Subsequent to executing the will, the widower sold the cabin and invested the proceeds in an oceanside condominium.
After the widower died, the personal representative of his estate determined that the niece was entitled to the condominium. The son has challenged this determination in court.
Which of the following legal concepts provides the strongest support for the son’s position that the condominium should pass under the terms of the will to him?
A) Ademption
B) Exoneration
C) Intestate succession
D) Lapse
A) Ademption
Ademption by extinction causes a devise of a specific asset to fail if a testator does not own it at the time of death. Proceeds from the sale of the asset, or property purchased with those proceeds, then become part of the general estate.
Here, the widower specifically devised the cabin to his niece. That devise will fail under ademption by extinction because the widower later sold the cabin and used the proceeds to purchase a condominium. The condominium will then be deemed part of the general estate, which the widower devised to his son under the residuary clause. Therefore, ademption provides the strongest support for the son’s position that the condominium should pass to him.
After inheriting a substantial amount of money, a man purchased a large estate in the mountains adjacent to a ski resort, intending to operate the estate as a seasonal rental property used exclusively to generate rental income. The man purchased the estate with cash. Unable to properly manage his wealth, he was impoverished a few months later.
The man procured a mortgage on the estate from a credit union, and the mortgage was properly executed and recorded. In light of a struggling economy, credit union executives were confident that the man would default on the loan and wanted to ensure that the estate was properly maintained in anticipation of a subsequent sale. The credit union therefore sought to obtain a court order confirming its right to possession of the estate in order to make repairs and prevent further deterioration of the property.
Can the credit union take possession of the estate?
A) No, in a lien-theory state, unless the mortgage included an acceleration clause.
B) No, in a title-theory state, absent default by the mortgagor.
C) Yes, in a lien-theory state, because the mortgagee is considered the owner of the land during the term of the mortgage.
D) Yes, in a title-theory state, until the mortgage has been fully satisfied.
D) Yes, in a title-theory state, until the mortgage has been fully satisfied.
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.
*In practice, the terms of the mortgage typically prohibit the lender from taking possession of the property (even in a title-theory state) unless a default occurs.
In anticipation of the Fourth of July holiday, a fireworks dealer borrowed money from a lender to finance the purchase of fireworks to sell at a roadside stand. Later the same day, the dealer transferred ownership of real estate to the lender. The deed, which contained no mention of the loan, was promptly recorded by the lender.
When the dealer paid off the loan, he demanded that the lender return the property, contending that the parties had an oral agreement that the lender would return the property when the loan was paid off. The lender instead sold the property to an unrelated third party who had no knowledge of the loan. The dealer files an action against the lender seeking the return of the property.
Which of the following is the most likely reason for the dealer’s action to fail?
A) The parol evidence rule prohibits the introduction of evidence regarding the agreement.
B) The statute of frauds prohibits the oral transfer of property rights.
C) The property has been sold to a good faith purchaser.
D) The lender recorded the deed.
C) The property has been sold to a good faith purchaser.
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.
A buyer entered into a contract to purchase a house from its owner. The contract called for the buyer to make equal monthly installment payments over 10 years. During that time, the owner was to retain title to the house and the buyer was granted the right to occupy the premises. Once the buyer made all of the required payments, the owner was to transfer ownership of the house to the buyer. The contract contained an acceleration clause under which all future installment payments were to become due in the event the buyer failed to timely make a required installment payment. Additionally, the contract included a forfeiture clause, which stated that time was of the essence and permitted the owner to terminate upon the buyer’s failure to timely make a required installment payment, regain possession of the house, and retain any payments already made by the buyer.
After making timely payments for seven years, the buyer failed to make three monthly payments. In accordance with his rights under the contract, the owner filed a summary ejectment action to evict the buyer from the house. The buyer appeared at the summary ejectment proceeding, and she tendered the missed payments.
The applicable jurisdiction treats an installment land contract as a mortgage, follows the lien theory of mortgages, and does not recognize a mortgagee’s right of strict foreclosure.
Should the court award possession of the house to the owner?
A) No, because the buyer tendered the missed payments.
B) No, because there has not been a foreclosure sale.
C) Yes, because the buyer failed to timely make required installment payments.
D) Yes, because the owner did not utilize self-help but acted through the judicial system.
B) No, because there has not been a foreclosure sale.
In a jurisdiction that treats an installment land contract like a mortgage, a buyer in default may redeem the property by tendering to the owner the full balance due under the contract prior to foreclosure.
A limited partnership purchased land with a loan from a bank. Neither the individual partners nor the limited partnership was personally obligated to repay the loan. As security for the loan, the limited partnership granted the bank a mortgage on the land. Subsequently, the limited partnership sold the land to a buyer. The buyer did not enter into an agreement with respect to the limited partnership’s loan. After the sale, the limited partnership defaulted on the loan.
The applicable jurisdiction follows the lien theory of mortgages.
Can the bank foreclose on the land owned by the buyer?
A) No, because no one was personally obligated to repay the loan.
B) No, because the buyer did not agree to assume the limited partnership’s loan.
C) Yes, because the applicable jurisdiction follows the lien theory of mortgages.
D) Yes, because the buyer took the land subject to the mortgage.
D) Yes, because the buyer took the land subject to the mortgage.
A mortgagor can freely transfer mortgaged land to a grantee but remains personally liable for the debt thereafter. The grantee takes the land subject to the mortgage obligation without personal liability for the debt unless the grantee expressly agrees to assume the mortgage.
An investor purchased undeveloped land with the aid of a loan from a bank. The loan, which was evidenced by a note, was secured by a mortgage on the property. The note contained a “due on sale” clause. Subsequently, the investor sold the land to a developer. The bank agreed to waive the “due on sale” clause if the developer assumed the mortgage, which the developer did.
The following year, the developer failed to make timely payments on the note, resulting in a default. The developer filed for bankruptcy, and his personal liability for the note was completely discharged.
The bank has brought an action against the investor based on the default of the note.
Is the bank likely to prevail?
A) No, because the bank waived the “due on sale” clause.
B) No, because the developer assumed the mortgage.
C) Yes, because the developer is no longer liable on the note.
D) Yes, because the investor is liable on the note.
D) Yes, because the investor is liable on the note.
Allows a lender to demand full payment of any remaining mortgage debt if the debtor transfers the mortgaged property without the lender’s written consent. If this clause is waived, the debtor remains liable on the note—even after transferring the mortgaged property—until the debtor is released by the lender.
Here, the bank waived the “due on sale” clause when the investor sold the mortgaged land to the developer. This means that the remaining loan debt did not need to be paid in full at that time, but it did not release the investor from liability on the note. Instead, the investor became secondarily liable when the developer assumed the mortgage
A businessman mortgaged his residence as security for a bank loan, the proceeds of which were used in his business. The bank duly recorded the mortgage. Subsequently, the businessman obtained a second loan for his business, this time from a private investor. The businessman again pledged his residence as security for this second loan. The promissory note executed by the businessman provided that the sole remedy for the private investor upon default of the loan obligation was foreclosure on the mortgage.
Several years later, the businessman failed to make timely payments to the private investor and defaulted on that loan.
Can the private investor foreclose on the mortgage of the residence?
A) No, because a mortgage is unenforceable if the borrower is not personally liable on the loan for which the mortgage serves as security.
B) No, because the businessman has not defaulted on the senior bank loan.
C) Yes, because the mortgage secured repayment of the loan and the loan was in default.
D) Yes, because the private investor’s mortgage, as the more recent mortgage, has priority over the bank’s mortgage on the residence.
C) Yes, because the mortgage secured repayment of the loan and the loan was in default.
A foreclosure on mortgaged property terminates interests in that property that are junior to the foreclosed interest but does not affect any senior interests.
Here, the businessman mortgaged his residence to the bank and then to the private investor. Since the bank’s mortgage was first in time, it is senior to the private investor’s mortgage. But this does not preclude the private investor from foreclosing on his junior mortgage.
The private investor’s mortgage secured repayment of his loan to the businessman and the loan was in default, so the private investor can foreclose on the mortgaged residence. However, the bank’s senior mortgage will remain attached to the property.
A developer obtained a loan from a bank to construct an apartment building. The loan was evidenced by a note and secured by a mortgage on the apartment building. After making the required installment payments on the note to the bank for several years, the developer defaulted on the loan. The bank elected not to foreclose on the mortgage. Instead, the bank sued the developer personally for the unpaid balance of the note because the note contained an acceleration clause that made the entire unpaid balance due upon default. The court rendered a judgment in the bank’s favor.
The bank promptly and properly filed the judgment creating a lien, pursuant to the applicable state law, on any real property then owned or acquired by the developer over the next 10 years. Later, the developer secured a loan from a private investor to purchase a small strip mall. This loan was also evidenced by a note and secured by a mortgage on the mall. Once again, after making the required installment payments on the note to the private investor for several years, the developer defaulted on this note.
The private investor filed an action to foreclose on the mortgage she held on the strip mall. The bank was made a party to this action and sought to enforce its judgment lien against the mall. The court recognized the rights of both the private investor and the bank in the mall, and ordered the sale of the mall. The proceeds from the sale, after the costs associated with the sale were paid, were more than sufficient to satisfy the developer’s outstanding obligation to the private investor or the judgment obtained by the bank, but not both.
Who has a priority right to the net sale proceeds?
A) The bank, because a judgment lien has priority over a mortgage.
B) The bank, because its judgment lien arose before the mortgage on the mall.
C) The private investor, because she initiated the foreclosure on the mall.
D) The private investor, because the funds from her loan were used to purchase the mall.
D) The private investor, because the funds from her loan were used to purchase the mall.
A purchase-money mortgage (PMM) has super priority over all other liens that arose prior to the PMM—regardless of whether the PMM or those liens are recorded.
Here, the private investor has a PMM because she loaned the developer the funds to purchase the strip mall. And though the bank’s judgment lien arose before the private investor’s mortgage on the mall, this does not defeat the PMM’s super priority
A restaurant owner purchased kitchen equipment from a supplier and gave the supplier an unsecured, nonnegotiable promissory note. Prior to the date on which payment of the note was required, the owner asked the supplier for an extension of time to pay the note. The supplier demanded in exchange that the owner execute a deed of trust with respect to the restaurant and the land on which it is situated to serve as security for payment of the note. When the owner refused this demand, the supplier threatened to falsely report health code violations by the owner to the local health department. Acting under duress, the owner executed the deed of trust, which the supplier promptly recorded.
Shortly thereafter, the owner sold the restaurant to the restaurant’s chef. The chef assumed the obligation to pay the promissory note. The cash amount paid by the chef to the owner was less than the fair market value of the restaurant because the cash payment reflected the assumed obligation.
The note is now in default and the trustee has instituted foreclosure proceedings on the deed of trust.
Can the chef assert the owner’s defense of duress against the trustee?
A) No, because the cash amount paid by the chef reflected the assumption of the owner’s obligation on the note.
B) No, because the supplier recorded the deed of trust prior to the sale of the restaurant to the chef.
C) Yes, because duress is a defense to the enforcement of a mortgage.
D) Yes, because the chef, by assuming the owner’s obligation, is entitled to assert the owner’s defenses.
A) No, because the cash amount paid by the chef reflected the assumption of the owner’s obligation on the note.
A buyer who assumes a mortgage is primarily liable for the debt. And if the assumption of the mortgage was part of the purchase price, then the buyer may not raise defenses that the debtor could have raised against enforcement of the mortgage obligation.
A man owned a tract of land that he divided into two parcels, each of which was adjacent to a stone retaining wall. The man sold both parcels. In the deeds that conveyed the parcels, the purchasers each agreed that “the owners, their heirs, and their assigns will maintain a retaining wall made of stone between the properties.” They further agreed that they “will share equally any expenses associated with the retaining wall.” The deeds were properly recorded.
Subsequently, each of the parcels was sold several times, and none of the owners properly maintained the retaining wall. Fifteen years ago, the owners of the two parcels made the joint decision to dismantle the wall. Two years ago, one of the parcels was sold, and the new owner decided to rebuild the retaining wall. The new owner asked the other owner to pay half of the expenses to rebuild the wall, and the other owner refused. The new owner paid to erect the retaining wall and then brought suit against the other owner to collect half the expenses.
Can the new owner successfully bring suit against the other owner for half of the expenses?
A) No, because the covenant was effectively terminated by a change in circumstances.
B) No, because the previous owners decided to dismantle the retaining wall.
C) Yes, because the covenant ran with the land.
D) Yes, because the deed created an equitable servitude.
A) No, because the covenant was effectively terminated by a change in circumstances.
A covenant is terminated by abandonment when an affirmative act—something more than neglect or nonuse—shows a clear intent to relinquish the covenant.
A rancher subdivided a portion of his ranch that had recently been annexed by the city into 30 two-acre lots. At the time the ranch was annexed, the city’s building code prohibited a single-family residence of more than two stories. The rancher filed a subdivision plan that restricted the use of each lot to one single-family residence but placed no other restrictions on the lots. The rancher then sold one lot to a speculator. The speculator’s deed restricted the lot to residential use only, but it did not restrict the residence to two stories.
Immediately thereafter, the housing market in the area plummeted, and the rancher was unable to sell any of the remaining lots for almost three years. The city, acting in response to consumer demand, modified its building code to permit three-story single-family residences. During the next two-year period, the rancher sold 28 of the remaining 29 lots. Since the rancher did not want any of the residences built on the lots to be as high as his own three-story residence located on the ranch, he included a two-story height restriction in all 28 deeds. None of the owners of those 28 lots violated the two-story height restriction. The rancher notified the speculator of the two-story height restriction by letter, but the speculator did not respond. Subsequently, the speculator sold his lot to a couple. The couple’s deed contained the single-family residence restriction but made no mention of the two-story height limitation.
The rancher, upon learning of the couple’s plans to construct a three-story family residence, has filed suit on his own behalf and on behalf of the owners of the 28 lots seeking an injunction to prevent the couple from building a three-story family residence.
For whom is the court likely to rule?
A) The couple, because the city building code has priority over a private restrictive covenant.
B) The couple, because the two-story height restriction was not contained in their deed, the speculator’s deed, or the subdivision plan.
C) The rancher, because he made the speculator aware of the height restriction before the speculator sold his lot to the couple.
D) The rancher, because the common scheme of the two-story height restriction was readily apparent to the couple.
An equitable servitude can be implied from a common scheme IF:
(1) the owner intended to create a common scheme;
(2) the intended servitude was restrictive; and
(3) persons to be bound had notice of the servitude.
But it cannot be enforced against lots sold before the common scheme arose.
Since the rancher’s scheme was created after the lot was sold to the speculator, neither the speculator nor the couple is subject to the implied equitable servitude.
A man and a woman were neighbors whose small yards were separated only by a hedgerow consisting of small shrubs. After a discussion about building a one-foot-thick stone wall to separate the two properties, the neighbors agreed that the man would pay for the materials and construction of the wall, as the woman did not have the funds to do so. In return, they agreed that the wall would be built on the woman’s property so as not to reduce the square footage of the man’s yard.
Years later, the woman sold her property in a valid transaction with a buyer. At the time of the sale, the woman told the buyer that the man had paid for and built the wall and that she had agreed to keep it there. However, there was no mention of the wall in the sales contract or the deed. After the buyer moved in, she spoke to the man about her desire to tear down the wall to open up the space and stated that she would pay for the destruction of the wall. The man objected to tearing down the wall.
May the man prevent the buyer from tearing down the wall?
A) No, because the buyer validly purchased the land from the woman.
B) No, because the wall constituted an easement in gross.
C) Yes, because he has a separate security interest in the materials used to build the wall.
D) Yes, because the wall constituted an easement by implication.
A) No, because the buyer validly purchased the land from the woman.
A fixture is a chattel that is
(1) attached to real property in such a manner that it is treated as part of the realty and
(2) used for some larger component or function of the land (e.g., a wall separating adjoining properties)
fixture automatically transfers with the land unless the conveying instrument (e.g., deed) provides otherwise.
Here, the wall became part of the woman’s land, which was then sold to the buyer. Since the wall is a fixture, it was included in the valid sale to the buyer. Therefore, the man cannot prevent the buyer from tearing down the wall.
A widow held a life estate in a house and several acres of land in a semi-rural area. She lived in the house and harvested berries from the numerous wild berry bushes on her property each June. The widow personally consumed the berries or gave them away to family and friends, but she did not sell them to third parties.
One day at the end of May, just as the berries were ripening enough to be harvested, the widow died. In her will, the widow left her personal property to her children, but the land reverted to a distant relative who was the remainderman. The widow’s children sought to enter the land to harvest the berries, but the remainderman objected, claiming that he had sole right to the berries.
Do the widow’s children have the right to return and harvest the berries?
A) No, because the berries grew wild.
B) No, because the widow did not sell the berries to third parties.
C) Yes, because the berries were the widow’s personal property.
D) Yes, because the widow would have been able to harvest them had she survived.
A) No, because the berries grew wild.
Wild, uncultivated crops (i.e., fructus naturales) are considered part of the real property on which they grow, and they pass automatically with the land. The prior owner has no right to reenter the land to remove the crops.
A private company managed a publicly funded experimental project for the conversion of garbage into energy through biological means. Despite locating the project in a sparsely populated area on land purchased from a real-estate investment trust, the company has received complaints from those living near the project about the repugnant smells emanating from the site.
One neighbor who rents a farmhouse for use as his personal residence on an annual basis from an individual farmer can no longer reside on the property due to the smell. He has filed suit against the company, seeking damages.
Of the following doctrines, which provides the neighbor with the best chance for recovery?
A) Constructive eviction.
B) Private nuisance.
C) Public nuisance.
D) Waste.
B) Private nuisance.
Private nuisance = a defendant’s interference with the plaintiff’s use and enjoyment of his/her property is both substantial (offensive, annoying, or intolerable to normal person in community) and unreasonable (severity of plaintiff’s harm outweighs utility of defendant’s conduct).
Here, the smell is likely offensive to a normal person in the community because the company has received complaints from others living near the project (substantial interference). And since the smell is so severe that it has prevented the neighbor from living in the farmhouse, it is at least arguable that the harm outweighs the utility of the defendant’s conduct (unreasonable interference).
Note: To prevail on a public nuisance claim, an individual plaintiff must show that he/she suffered a different kind of harm than the rest of the community (not seen here).
A painter and a dentist own adjacent parcels of land. A one-story building was located on each of the parcels. The dentist’s office was on her parcel. The painter lives in the rear portion of the building on his parcel and runs a morning painting class in the front room. Last year, the dentist decided to demolish her office and build a three-story office building, planning to rent out the additional office space.
After obtaining all of the necessary governmental approvals and verifying that the zoning code will allow the construction, the dentist demolished her old office and began construction of the three-story building. As construction progressed, the painter realized that the new structure would cast a dark shadow over his property. Because his painting class relied primarily on natural light, the painter predicted that the structure would significantly reduce his profits by deterring student attendance.
The painter brought an action against the dentist to enjoin the construction and to demand damages for his predicted loss of business. The painter presented uncontroverted evidence that another painting studio had suffered an extreme drop in profits when deprived of natural light.
How should the court rule on the painter’s action?
A) Award the painter monetary damages.
B) Grant the injunction requested by the painter.
C) Hold in favor of the dentist, because the construction complied with the zoning code and the dentist obtained all necessary approvals.
D) Hold in favor of the dentist, because the painter does not have a legal right to natural light.
Absent a negative easement or statute, a landowner has no legal right to prevent neighbors from blocking his/her land from access to natural light.
landowners can only restrict another’s blockage of light if they are protected by statute or enter into an agreement with the neighboring landowner to create a negative easement
The owner of a commercial building leased the premises at fair rental value to a civic organization for a 25-year term. The lease contained a reasonable right-of-first-refusal provision granting the organization a right to purchase the building if the owner found a buyer who was ready, willing, and able to purchase the building at a price agreed to by the owner and the buyer. Fifteen years into the lease, the owner was approached by a friend who was ready, willing, and able to purchase the building. Because of the friendship, the owner agreed to a purchase price that was below the market price. The owner notified the civic organization of the proposed sale, and the organization invoked its right of first refusal. However, the owner refused to sell the building to the organization for less than its fair market value. The applicable jurisdiction has retained the common law with respect to the Rule Against Perpetuities.
May the civic organization compel the owner to sell the building to the organization at the price agreed upon by the owner and the friend?
A) No, because the organization’s right of first refusal violates the Rule Against Perpetuities.
B) No, because the organization’s right of first refusal constitutes an encumbrance on marketable title.
C) Yes, because the right of first refusal was reasonable.
D) Yes, because the right of first refusal was a valid covenant running with the land
Correct Answer: Yes, because the right of first refusal was reasonable.
A right of first refusal is a partial restraint on alienation that, if reasonable, is valid and enforceable by an injunction. This right is generally reasonable if the holder of the right can purchase the property under the same terms offered to another party.
Anticipating the death of his mother and needing money, the only child of a terminally ill widow represented himself as owner of the widow’s residence to a couple. The couple paid the son $200,000 for the residence. Although the couple did not immediately move into the residence, they promptly recorded the warranty deed they received from the son in the land records for the county in which the residence was located. The couple was unaware of the mother’s ownership of the residence, which was also reflected in those same land records.
One week after the land sale, the mother died. Upon her death, the residence passed by the terms of the mother’s will to her son. The son, claiming ownership of the residence, has moved into it. The son has offered to return the $200,000 to the couple and pay for any expenses they have incurred with regard to this matter.
The recording act of the applicable jurisdiction reads: “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.”
Of the following, which provides the best argument for the couple that they hold title to the residence?
A) The son’s rights to the residence have been lost through ademption.
B) The couple’s ownership of the residence is protected by the recording act.
C) The son’s ownership of the residence vests automatically in the couple under the Shelter Rule.
D) The residence belongs to the couple by application of the “estoppel by deed” doctrine.
Correct Answer: The residence belongs to the couple by application of the “estoppel by deed” doctrine.
Estoppel by Deed: grantor who conveys an interest in land by warranty deed before actually owning it is estopped from later denying the effectiveness of that deed. When the grantor acquires ownership of the land, the after-acquired title is transferred automatically to the prior grantee.
Here, the son conveyed the widow’s residence to the couple by warranty deed before he received it. When he acquired title to the residence under the widow’s will one week later, his after-acquired title transferred automatically to the couple. And since this doctrine bars the son from denying the effectiveness of his deed to the couple, it provides the best argument for why the couple holds title to the residence.
A man owned a 25-acre tract of land. He conveyed 20 of the 25 acres to a developer by warranty deed and continues to live on the 5-acre portion he retained. The deed to the 20-acre tract was promptly recorded and contained the following provision: “It is a condition of this deed that all owners, and their heirs and assigns, of any portion of the 20-acre tract shall use the land for single-family residences only.” The applicable zoning ordinance allows for single and multi-family homes in this area. The developer fully developed the tract into a residential subdivision consisting of 20 lots with a single-family home on each lot. The lots were subsequently sold and the deed to each lot referenced the quoted provision.
A woman who owned one of the lots on the perimeter of the subdivision has decided to build an addition to her house, which would contain an apartment she intends to rent to students of a nearby college. An individual who lives in an adjacent residential neighborhood opposes the woman’s addition because he does not want rowdy college students nearby.
Can the individual prevent the woman from building the apartment?
A) No, because the zoning ordinance allows for multi-family homes as well as single-family homes.
B) No, because the individual does not have the right to enforce the restriction.
C) Yes, because the original parties intended for the rights and duties to run with the land.
D) Yes, because the restriction is valid under the common-law Rule Against Perpetuities.
B) No, because the individual does not have the right to enforce the restriction.
Covenant = $ damages
Equitable Servitude: Injunction
The express equitable servitude in the deed between the man and the developer (original parties) restricting the use of the 20-acre tract is enforceable. However, it can only be enforced by the original parties or their successors in interest. Since the individual’s property is adjacent to the subdivision—not part of the 20-acre tract—he is not a successor in interest.
A year ago, a man and a woman inherited adjacent parcels of land upon the death of a relative. Parcel One, the man’s parcel, was landlocked. The woman granted the man an easement in writing over her parcel, Parcel Two, so that he could build a road to access the sole public road that ran beside Parcel Two. The easement was not recorded.
Six months ago, the man, having never set foot on Parcel One, sold it to the woman. Shortly thereafter, the woman sold Parcel One to a buyer who knew about the easement the woman had granted the man even though no access road across Parcel Two had been built. After selling Parcel One, the woman gave Parcel Two to her daughter.
The buyer of Parcel One now seeks to construct a road across Parcel Two to access the public road, but the daughter has refused to allow the buyer to do so.
Does the buyer have a right to construct a road across Parcel Two to reach the public road?
A) No, because the man’s easement was not recorded.
B) No, because the man’s easement was extinguished upon the woman’s acquisition of Parcel One.
C) Yes, because the buyer possesses an easement by necessity.
D) Yes, because the buyer had knowledge of the man’s easement before purchasing Parcel One.
C) Yes, because the buyer possesses an easement by necessity.
Here, Parcel One is virtually useless without an easement over Parcel Two because Parcel One is landlocked and has no access to a public road (necessity). The woman acquired ownership of both parcels (common ownership), and Parcel One was still landlocked when she sold it to the buyer (severance). As a result, the buyer has an easement by necessity over Parcel Two and can construct a road across it to reach the public road.*
*The easement will continue until the necessity ends—e.g., when an alternative means of access becomes available.
The owner of a house in a suburban neighborhood converted a driveway from rock to asphalt. The owner’s neighbor did not have a driveway but instead parked on the street that ran in front of both of their homes. When asked by the neighbor, the owner told the neighbor that she could also use the driveway to access her house. For 11 years, the neighbor used the driveway on occasion when engaged in tasks such as bringing furniture and appliances into her house, or on days when it was raining heavily. Throughout these years, only the owner maintained the driveway.
Recently, the owner sold his house to a couple. The owner informed the couple about the neighbor’s use of the driveway when they first looked at the house, but neither the contract of sale nor the deed made reference to it. When the neighbor used the driveway on the first rainy day after the couple moved in, the couple told her that she could no longer use the driveway.
The neighbor sued the couple, seeking a judgment that she has a right to use the driveway. In the applicable jurisdiction, the term for the creation of a prescriptive easement is 10 years.
Who is likely to succeed?
A) The couple, because a license, as a property interest, must be in writing.
B) The couple, because the neighbor’s license to use the driveway has been revoked.
C) The neighbor, because her use of the driveway created a prescriptive easement.
D) The neighbor, because the couple had notice of her driveway use before buying the house.
B) The couple, because the neighbor’s license to use the driveway has been revoked.
A license is freely revocable—by the licensor, upon the death of either party, or upon conveyance of the licensed property—unless the licensee detrimentally relied on it or the license is coupled with an interest.
Here, the owner (licensor) created a license when he told the neighbor (licensee) that she could use his driveway to access her house. The license was revocable because it was not coupled with another interest and there is no indication that the neighbor expended money on the driveway or otherwise relied on the license to her detriment. And since the license was automatically revoked when the owner sold his house (the licensed property) to the couple, the couple is likely to succeed.
A speculator and the original owner of a condominium unit entered into a contract for the sale of the unit. The contract, which contained no reference to the marketability of the title, called for the owner to transfer the unit to the speculator by quitclaim deed, which the owner did on the date called for in the contract.
A year later, the speculator entered into a contract to sell the unit to a third party at a price significantly higher than the price paid by the speculator for the unit. The contract specifically required the speculator to provide the third party with title to the unit free from all defects. Upon investigation, the third party discovered that the unit was subject to a restrictive covenant that rendered the title to the unit unmarketable and that the restrictive covenant had existed at the time that the speculator had purchased the unit. The third party refused to complete the transaction.
The speculator subsequently sued the original owner of the condominium unit for breach of contract.
For whom is the court likely to rule?
A) The speculator, because a covenant of marketable title was implied in the contract.
B) The speculator, because of the warranty against encumbrances.
C) The original owner, because the condominium unit was transferred by a quitclaim deed.
D) The original owner, because of the merger doctrine.
D) The original owner, because of the merger doctrine.
doctrine of merger = the seller’s duties in a contract for the sale of real property—including the duty to deliver marketable title—merge into the deed at closing. As a result, these duties are enforceable thereafter only if they are contained in the deed.
Here, the covenant of marketable title was implied in the land-sale contract between the speculator and the original owner. But this covenant was extinguished when it merged into the deed upon closing,
A woman who owned a vacant cottage contracted to sell it to a man. The contract was silent as to the risk of loss and contained no contingencies. The parties agreed that closing would occur the following month at which time the man would take possession of the cottage. The woman maintained casualty insurance on the cottage, but the man did not obtain such insurance. On the evening before the closing was to take place, a fire caused by lightning destroyed the cottage. The jurisdiction has not adopted the Uniform Vendor and Purchaser Risk Act.
May the man rescind the contract for the sale of the cottage?
A) No, because of the doctrine of equitable conversion.
B) No, because the man failed to obtain casualty insurance on the cottage.
C) Yes, because the woman has casualty insurance on the cottage and can more easily bear the loss.
D) Yes, because the man was not in possession of the cottage when it was destroyed.
A) No, because of the doctrine of equitable conversion.
doctrine of equitable conversion places the risk of loss on the buyer once the contract is formed and can be specifically enforced.
When, as here, no conditions/contingencies appear in the contract—e.g., a condition that the buyer secure financing before closing—the contract is specifically enforceable as soon as it is formed. And since the woman (seller) was not at fault for the fire, the man (buyer) had equitable title at the time the cottage was destroyed by the fire.
A corporate officer purchased land with the aid of a loan at a favorable interest rate from the corporation. The officer granted the corporation a mortgage as security for the loan, and the corporation promptly recorded the mortgage instrument. The officer also signed a note promising to repay the loan over a period of 10 years. The note contained a due-on-sale clause that required, at the corporation’s option, payment of the full outstanding amount of the loan if the officer sold the land without first obtaining the corporation’s written consent.
After making timely payments on the loan for three years, the officer sold the land to a buyer who was unrelated to the officer without obtaining the corporation’s consent. The deed given by the officer acknowledged that the land was being transferred subject to the mortgage. After payment of the purchase price to the officer, the buyer promptly recorded his deed.
Subsequently, neither the officer nor the buyer made any payments on the loan to the corporation. The corporation, in order to avoid lengthy foreclosure procedures, has sued the buyer for the full outstanding amount of the loan obligation.
Is the buyer liable for the full outstanding amount of the loan?
A) No, because the corporation has not foreclosed on its mortgage.
B) No, because the buyer purchased the land subject to the mortgage.
C) Yes, because the corporation promptly recorded its mortgage.
D) Yes, because of the due-on-sale clause in the note.
B) No, because the buyer purchased the land subject to the mortgage.
A grantee who takes real property subject to a mortgage does not agree to pay and is not personally liable for the debt. As a result, only the debtor is liable for any failure to make payments on the mortgage loan.
A married couple bought a house to use as a residence. Their bank loan was secured by a mortgage on the house. The following year, the couple granted a second mortgage to a savings and loan association in exchange for a loan. The proceeds from this loan were used in the couple’s business. Several years later, the couple defaulted on both loans. The couple offered their interest in the house to the bank by deed in lieu of foreclosure and the bank accepted; the bank did not reserve the right to foreclose.
What effect does this transaction have on the savings and loan association’s mortgage?
A) As an interest with priority over the bank’s mortgage, the savings and loan association’s mortgage is unaffected.
B) As a junior interest to the bank’s mortgage, the savings and loan association’s mortgage is completely eliminated.
C) The savings and loan association cannot foreclose on its mortgage, but must look to the personal liability of the couple, now that the bank owns the house.
D) The house remains subject to the savings and loan association’s mortgage.
D) The house remains subject to the savings and loan association’s mortgage.
A man owned a building. He executed a deed conveying the building to a local church “for the purpose of using the building to further religious education.” Six years later, the man died, leaving his niece as his sole heir. The man’s duly probated will left his entire estate to a friend. Eighteen months later, the local church, having never made use of the building, conveyed all of its interest in the building to an investor for valuable consideration.
The investor has filed an action to quiet title against the friend and the niece. The investor has also joined a state official who argues that a valid charitable trust was created and that the attorney general of the state should be permitted to enforce the charitable trust.
In whom should the court find proper title is vested?
A) The friend.
B) The investor.
C) The niece.
D) The state official.
B) The investor
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.
Here, the man’s deed to the local church did not include conditional or durational language. Instead, he conveyed the building “for the purpose of using the building to further religious education.” This conveyance created an FSA—not a defeasible fee. As a result, the church had absolute ownership of the building, and the man had no interest in the building to devise to the friend
A fitness company entered into a 10-year lease with the landlord of a gym facility. The lease required the fitness company to maintain the gym equipment in proper, working condition and to upgrade or replace any of the equipment as required by the safety guidelines for gymnasiums issued by a national organization of gymnasiums. In addition, the lease specified that all of the fitness company’s clients must sign a valid waiver releasing the current landlord from liability for any injury arising from their improper use of the gym equipment.
One year into the lease, the landlord transferred the remaining term of the fitness company’s lease to a large fitness conglomerate. The transfer occurred without the fitness company’s consent. The fitness company paid rent to the conglomerate, but the company stopped making its clients sign the liability waiver because the conglomerate did not require any of its gym members to sign one.
The conglomerate has brought an action against the fitness company to enforce this covenant in the lease.
Who will likely prevail?
A) The conglomerate, because the fitness company had required its clients to sign the waiver in the past.
B) The conglomerate, because the liability-waiver requirement touches and concerns the land.
C) The fitness company, because the conglomerate does not require liability waivers from its gym members.
D) The fitness company, because it did not consent to the assignment of the lease to the conglomerate.
B) The conglomerate, because the liability-waiver requirement touches and concerns the land.
A lease covenant can be enforced by an assignee-landlord if the covenant runs with the land—i.e., the original parties intended to bind their successors, the covenant touches and concerns the land, and there is privity of estate.
Even if the intent to bind successors in interest is not explicitly stated in the lease, it is generally presumed when the covenant touches and concerns the land.
Here, one year into the fitness company’s lease, the landlord assigned the remaining lease term to the conglomerate (privity of estate). A covenant in the lease requires a liability waiver, which relates to the use of the gym facility (touch and concern), so the covenant is presumed to bind a successor in interest (the conglomerate). Therefore, the covenant runs with the land and can be enforced by the conglomerate.
*When a lease covenant does not run with the land, the original landlord retains the right to enforce it.
An owner entered into a contract to sell her house to a buyer. The contract’s only provision concerning the closing date provided that the closing would occur on July 1. On July 1, the buyer informed the owner that he was unable to close at that time because of an unavoidable overseas obligation required by his job. The buyer stated that he would be able to close on July 8. The owner, having recently found another buyer willing to pay more for the house, has filed an action to rescind the contract.
Is the owner likely to succeed in her action to rescind the contract?
A) No, because strict adherence to the closing date set in the contract is not required.
B) No, because the buyer has not breached the contract.
C) Yes, because the buyer has breached the contract.
D) Yes, because the owner was ready to perform her duties under the contract by the closing date.
A) No, because strict adherence to the closing date set in the contract is not required.
When time is not of the essence in a real estate contract, failure to perform on the specified closing date constitutes a breach, but the contract cannot be rescinded if the breaching party can perform within a reasonable time thereafter.
A man decided to sell his house after receiving a new job in a neighboring state. Before putting the house on the market, the man told his friend that he was selling the house and that she could buy it at a lower price than he would seek from other potential buyers. Excited at the prospect of home ownership and the lower price, the friend immediately agreed to purchase and entered into a contract with the man for the sale of the house without inquiring as to any issues with the house. The man did not mention anything to the friend as he was unaware of any issues.
Pursuant to the contract, the man delivered a general warranty deed to the friend at closing. The friend then moved into the house and decided that she would hire a contractor to perform some slight renovations to the upstairs guest bathroom. As soon as the contractor broke through the wall, he discovered black mold throughout the interior of the bathroom and along the pipes. The friend brought suit against the man for damages.
Pursuant to a statute, a seller has a duty of disclosure in all home-sale transactions in the jurisdiction.
For whom is the court likely to rule?
A) The friend, because the black mold constituted a material physical defect in the house.
B) The friend, because the covenants contained in the general warranty deed were breached.
C) The man, because he was not aware of the black mold.
D) The man, because the friend did not ask about the condition of the house.
C) The man, because he was not aware of the black mold.
Here, the friend’s contractor discovered black mold throughout the interior of the upstairs guest bathroom. This physical defect was material because the presence of black mold substantially affects the value of the residence and impacts the friend’s health. But since the man was unaware of any issues with the house, he did not breach the duty to disclose such defects.
