Mid Term Flashcards
Applies only to the sale or rental of “dwellings”
It is unlawful to:
Refuse to sell or rent a dwelling to any person based on race, color, religion, sex, handicap, familial status, or national origin
Discriminate against any person in the terms and conditions of a sale or rental of a dwelling based on the protected categories
Make, publish or advertise any preference, limitation or discrimination based on the protected categories
Discriminate in the sale or rental because of a handicap of the buyer or tenant
Refuse to make reasonable modifications to the premises to accommodate a handicapped tenant
Fair Housing Act of 1968
FHA does not apply to any single-family house sold or rented by the owner provided the owner:
Does not hold title to more than 3 single-family houses, and
Does not use in any manner the rental facilities or rental services of a real estate broker
Exemptions under the FHA
Religious organizations
Dormitories, fraternities, and sororities
Senior housing
“Rooming houses”: rooms or units in dwellings which contain living quarters occupied or intended to be occupied by no more than 4 families living independently of each other, if the owner actually resides in one of the living quarters
exempt under the FHA
All citizens of the United States shall have the same right, in every State and Territory, as is enjoyed by white citizens thereof to inherit, purchase, lease, sell, hold, and convey real and personal property.
Civil Rights Act
covers 7 types of discrimination but only applies to selling, renting, or advertising a dwelling
FHA
covers only racial discrimination but is not limited to dwellings
CRA
Fixed duration which is agreed upon in advance
Does not have to be for years; can be for a number of months
Once the term ends, the right of possession automatically terminates
Frequently used in commercial leases and residential leases
Tenancy for years (a/k/a term of years tenancy)
Automatically renewed for successive periods unless the landlord or tenant terminates by giving advance notice
State statutes govern how much notice must be given
Can be year-to-year, month-to-month, week-to-week
Frequently used in residential leases
Periodic tenancy
No fixed end
The tenancy continues until one party terminates
State statutes govern how much notice must be given; it is usually equal to the frequency of rent payments (monthly, yearly, etc.)
Automatically terminates upon either party’s death, tenant’s abandonment, or landlord’s sale of the property
Usually arises when there is no written lease
Tenancy at will
Label given to a holdover tenant who remains in the premises beyond the term of his lease
Created when a tenant who rightfully took possession of the premises continues beyond the term of his lease
State statutes govern how the estate is terminated and whether rent may be increased
Tenancy at sufferance
If a lease does not meet the criteria of a term of years or a periodic tenancy, and if the tenant is not a “holdover”, the lease MUST be a
Tenancy at will
T has sufficient legal and equitable remedies (T can sue to evict the former tenant)
LL should not be held accountable for the wrongful act of a third party
English rule might prevent LL from leasing the premises until the prior tenant has moved out
this would lead to increased rent to all tenants to account for the lost rent for the “downtime” between tenants
American Rule
Serves the reasonable expectations of the parties
LL is in a better position to know if the prior tenant is vacating on time
LL has access to the evidence needed to determine and prove that the prior tenant should be evicted
T bargained for space, not for a lawsuit to evict the prior tenant
If T has to evict the prior tenant, it is an increased cost to T that T did not factor into the amount T was willing to pay in rent
English Rule
If Prior Tenant Doesn’t Vacate
New tenant has the right to bring an eviction action against the prior tenant and to recover damages from the prior tenant
New tenant does not have a claim for damages against the landlord
American Rule
If Prior Tenant Doesn’t Vacate
New tenant may terminate the lease and sue the landlord for damages, OR
New tenant may affirm the lease, pay no rent until the premises are vacant, and sue the landlord for damages
English Rule
Depriving the tenant of even one inch of the premises constitutes a breach of the covenant of quiet enjoyment and relieves the tenant from all obligations to pay rent
Note that tenant will be liable in quasi-contract for the actual rental value of the premises if the tenant remains in possession
One Inch Rule
Partial Actual Eviction
Wrongful conduct by LL that substantially interferes with T’s use and enjoyment of the premises
Constructive Eviction
There must be substantial interference with the tenant’s use and enjoyment of the premises, and
The tenant must vacate the premises within a reasonable time
Constructive Eviction
The interference need not totally prevent use of the premises, but a minor interference is insufficient
The key is whether a reasonable person would see the interference as so serious that the leased premises cannot be used in a normal manner for the intended purpose
substantial interference
Traditional rule is that a landlord’s actual eviction of the tenant extinguishes the tenant’s entire liability for future rent, whether the eviction was total or partial
Actual Eviction
Tenant has a choice of remedies: terminate the lease, withhold rent, sue for damages, repair and deduct, injunction for repair
Implied Warranty of Habitability
Modern trend is to require compliance with local housing codes and the general standard of habitability
IWH
T must notify LL of the defects (preferably in writing)
T must allow LL a reasonable time to cure
Unlike constructive eviction, T is not required to vacate the premises
T has a choice of several remedies
To invoke the IWH
Tenant claiming a breach of the ________ __ ______ ________ must vacate the premises within a reasonable time
covenant of quiet enjoyment
Tenant claiming a breach of the IWH has a choice of remedies:
Termination of the lease
Withholding rent
In most jurisdictions, T may withhold all rent, even for a partial breach of the IWH
Breach of the IWH is a defense to eviction for failure to pay rent
Sue for damages
T may remain in the premises or vacate
Courts differ on the appropriate measure of damages
Repair and deduct
Injunction or specific performance
choice of remedies IWH
The determination of whether a dwelling is “habitable” depends on the facts of each case
The IWH does not require the LL to maintain the premises in perfect condition
Minor code violations or other minor defects do not automatically constitute a breach of the IWH
Compliance with codes constitutes a prima facie case of LL’s compliance with his duty to provide habitable premises
Code violations are not necessary to establish a breach so long as the defect has an impact on the health or safety of a tenant
It is possible for a LL to be in compliance with codes but still breach the IWH (e.g., mold)
Whether the IWH Has Been Breached
LL must maintain “_______ _____ _______” and ensure that the premises are fit for human occupation
bare living requirements
The LL’s failure to act or failure to remedy a problem substantially interferes with T’s use and enjoyment of the premises, and
The condition is a substantial threat to the health or safety of the occupants, or the premises cannot be used for its normal purpose as a residence
Breach of IWH
IWH cannot be _________
Waived
tenant must prove:
Wrongful conduct (may be an act or an omission to act)
By landlord
That substantially interferes with tenant’s use and enjoyment
Tenant MUST vacate within a reasonable time
Cannot be waived by tenant
Tenant’s remedy is to terminate the lease
Covenant of Quiet Enjoyment
Under common law, every lease includes an implied covenant of quiet enjoyment Promise by LL that LL will not wrongfully interfere with T’s possession of the premises Actual eviction (obviously) violates the covenant Actions short of actual eviction can also substantially interfere with T’s possession - those actions constitute constructive eviction
Covenant of Quiet Enjoyment
Active interference with T’s possession or interference that results from LL’s inaction in the face of a legal duty to act, and
Interference that is attributable to LL, LL’s agent, or a paramount title holder, and
After timely notice and a reasonable opportunity to correct the problem, T must vacate the premises
Covenant of Quiet Enjoyment
LL’s breach of the covenant of quiet enjoyment may lead to a claim by T of _________ _________
constructive eviction
____________ is a transfer for the entire remainder of the term; sublet is anything less
assignment
Each party has rights and duties under property law regardless of contract law
These rights and duties are those that “run with the land” – also called the “real covenants” (this includes most terms of a lease)
allows both parties to enforce the real covenants in the lease
privity of estate
Each party has rights and duties under contract law
allows both parties to enforce all covenants in the lease (both the real covenants and the personal covenants)
privity of contract
Term of the lease
Conditions on the use of the premises
Obligation of T to pay rent
Obligation of LL to make repairs and provide services
Real Covenants:
Obligation to pay the other party’s attorneys’ fees if litigation occurs
Payments for equipment or other personal property
Personal Covenants:
An ____________ occurs whenever a tenant transfers the right of possession to all or a portion of the premises for the full time remaining on the term of the lease
assignment
A ___________ is created whenever a tenant transfers the right of possession to all or a portion of the premises for a time that is less than the full time remaining on the term of the lease
sublease
Whether the transfer is an assignment or a sublease depends on the ________ of the parties
intent
If no assumption, sublessee cannot be sued for money
LL’s only option is to evict sublessee in possession if not paying rent
Landlords options
Sublease
Assignee can be sued for rent, but only for the period when assignment occurred b/c in privity of estate
Landlords options
Assignment
In the absence of a covenant that prohibits transfer, the tenant has an _________ ______ to transfer either as an assignment or as a sublease
absolute right
A covenant against assignment will only prohibit assignments – subleases will be allowed
A covenant against subleasing will only prohibit subleases – assignments will be allowed
Prohibitions by LL
That LL may prohibit assignment or subleasing altogether, or
That LL permit assignment or subleasing with LL’s consent, or
Be silent on the issue of assignment and subleasing (in which case the default rule applies, meaning T is free to assign or sublease without obtaining LL’s consent)
LL & assignment or sublease
Three Standards of LL consent
Reasonableness
Sole Discretion
No Standard Stated
Where a lease does not specify the standard to be applied, LL may withhold consent to a proposed assignment or sublease only if LL has a commercially reasonable objection to the proposed assignment or sublease
LL Consent to assignment/sublease
Modern trend / minority rule - reasonableness
Where a lease does not specify the standard to be applied, LL may withhold consent in LL’s sole discretion, even if it is arbitrary and not commercially reasonable
LL Consent to assignment/sublease
Majority rule – sole discretion
When LL and T mutually agree to terminate the lease prior to the expiration date
Surrender
When LL seeks to retake possession of the premises due to a default by T
Eviction
When T vacates the premises without justification and without the intention of returning and T defaults in the payment of rent
Abandonment
Terminate the lease
LL could accept T’s surrender of the lease thereby terminating the lease and T’s liability for rent that would have accrued under the lease in the future
Mitigate and sue
LL could refuse to accept T’s surrender of the lease, but re-enter the premises and re-lease to a replacement tenant, then sue T for any lost rent
Abandonment LL could
Landlord has an obligation to __________ _______ in both residential and commercial leases
mitigate damages
The duty to ________ applies to both residential leases and commercial leases
mitigate
LL has the burden of proving he used ________ ________ to re-let the abandoned premises
reasonable diligence
LL is not required to accept _______ ______ rent or substantially alter other lease terms
below-market
T is also liable for all _________ _______ incurred by LL in attempting to re-let the premises
reasonable expenses
landlord cannot evict for certain actions by tenant (e.g., reporting code violations)
Retaliatory Eviction
Tenant cannot ______ the prohibition on self-help evictions
waive
Under modern law, ________ eviction is generally prohibited; LL’s only option is to bring suit against T for eviction
self-help
The rule: in a majority of states, the only lawful way to remove a defaulting tenant is to evict the tenant through the ________ _______
judicial process
Upon T’s default, LL could bring suit against T to obtain a judgment ordering T’s eviction, then have the judgment enforced by the local law enforcement
Judicial eviction
Oral agreements for the sale of real property are not generally enforceable
Contracts for the sale of real estate must be in writing and must contain certain essential terms
Also applies to documents for the conveyance of an interest in real property (deeds, mortgages
Statute of Frauds
At a minimum, the writing must: Identify the buyer and the seller Identify the purchase price Identify the property Be signed by the party against whom enforcement is sought
Statute of Frauds
Oral contract may be enforced if there is some combination of:
Transfer of possession
Payment of a portion of the purchase price
Making of improvements
Part Performance
Oral contract may be enforced if:
One party acts to his detriment in reasonable reliance on the other party’s oral promise, and
Substantial injury would result if the contract is not enforced
Equitable Estoppel
Unless the real estate contract specifies a different standard, the seller is _______ to deliver “marketable title” to the real property
obligated
The promise of the seller to deliver ________ ______ is expressly or impliedly included in every real estate contract (unless the contract specifies a different standard)
marketable title
title that is reasonably free from doubt as to its validity
Marketable Title
Title is not “reasonably free from doubt” if it exposes the owner to potential litigation
Marketable Title
If a reasonable and prudent buyer would pay fair market value for the property, then the title is considered “marketable”
Marketable Title
The seller’s interest in the property is less than the seller purports
The seller’s title is subject to an encumbrance
There is reasonable doubt as to #1 or #2
Unmarketable Title
Zoning ordinances
State statutes and municipal ordinances
Defects in the condition of the property
Conditions that reduce the value of the property (such as hazardous substances)
Encumbrances or conditions that do not render title unmarketable:
Mortgages Liens Judgments Utility easements Other easements and rights of way Private restrictions and restrictive covenants
Encumbrances or conditions that do render title unmarketable:
Seller is required to deliver marketable title at the ______
closing
During the inspection period, the seller has the opportunity to _____ any title defects
cure
The buyer cannot rescind the contract until the seller ____ __ ______ marketable title at the closing
Exception: if it is CLEAR that seller will not be able to deliver marketable title at closing, buyer may have the right to rescind the contract prior to closing
fails to deliver
Perfect title Title acceptable to the buyer Marketable title Insurable title Record title
Hierarchy of Title Standards
presence of any encumbrance makes title ___________ (unless the contract specifies that the buyer will accept the property with that type of encumbrance)
unmarketable
The mere existence of _________ _______ and similar laws does not render title unmarketable
zoning ordinances
An existing violation of a ________ _________ will render title unmarketable
zoning ordinance
The marketable title doctrine only applies to _______ that are discovered before the closing
defects
The buyer becomes the “equitable owner” of the property as of the time the parties execute the real estate contract
Equitable Conversion
Absent an express clause in the contract regarding which party bears the risk of loss, the doctrine of equitable conversion places the risk of loss on the buyer as the equitable owner of the property during the executory period
Equitable Conversion
The buyer becomes the equitable owner when the contract is executed and is responsible for the condition of the property from that date forward
Buyer bears the risk of loss during the executory period
Traditional Rule / Doctrine of Equitable Conversion:
The seller, as the legal owner of the property, bears the risk of loss until the closing
Massachusetts Rule:
Equitable Conversion
The party entitled to possession bears the risk of loss during the executory period
Emerging Rule / Uniform Vendor and Purchaser Act:
Equitable Conversion
Under the doctrine of equitable conversion, the contract is still valid and enforceable
If the seller dies, the seller’s estate should proceed with the sale and distribute the proceeds to the heirs who receive the seller’s personal property
If the buyer dies, the buyer’s estate should proceed with the purchase and distribute the property to the heirs who receive the buyer’s real property
Death and Equitable Conversion
Under the common law, disputes concerning the physical condition of the property applied the rule of caveat emptor (buyer beware) except in cases where the seller made an express warranty that the property was free of defects or the seller committed fraud by affirmatively misrepresenting the condition of the property
Seller actively concealed defects in the property, or
Seller owed a fiduciary duty to the buyer
Duty to Disclose CL
In a majority of jurisdictions today (and under Johnson v. Davis), the seller of residential property has a duty to disclose defects in the property:
That are known to the seller, and
That materially affect the value of the property; and
That are not known to or readily discoverable by the buyer
Duty to Disclose Majority Rule
In a majority of jurisdictions, _____ ______ ______ have the same duty to disclose as sellers
real estate brokers
In most states, caveat emptor is still the rule in commercial transactions
Even in the jurisdictions that follow the majority approach, many do not extend the disclosure requirements to sales of commercial properties
Commercial properties:Duty to Disclose
The transfer of real property is accomplished by the _______ __ _ ______
delivery of a deed
A deed is only _________ if it is delivered and accepted
effective
Once delivery has occurred, the title vests in _______
The physical location of the deed does not matter
grantee
A deed _____ _____ need to be recorded to be valid
does NOT
(1) the grantor intends to convey an interest in property, (2) the grantor delivers a deed to the grantee, and (3) the grantee accepts the deed.
A deed transfers title only when
An undelivered deed, even if signed by the grantor, _______ ______
conveys nothing
Seller is “on the hook” for all defects, liens and encumbrances – even those that pre-date Seller’s ownership
Warranty Deed (sometimes called General Warranty Deed)
Seller is “on the hook” for defects, liens and encumbrances that occurred during Seller’s ownership of the property
Special (or Limited) Warranty Deed
Seller makes no representations or warranties whatsoever
Quit Claim Deed
Where the grantor delivers a deed and ________ the right to retrieve it, and attaches the condition that the deed is to become operative only after the death of the grantor, and where the grantor continues to use the property as if no transfer had occurred, then grantor’s actions are “nothing more than an attempt to employ the deed as if it were a will”
reserves
“Where the grantor delivers a deed to a ______ _______ with the intent to part with all control, the legal effect of the transaction is tantamount to a delivery of the deed to the grantee . . . .”
third person
Manual delivery of the deed to the grantee creates a rebuttable presumption that the deed has been delivered
Recording of a deed creates a rebuttable presumption that the deed has been delivered
Delivery presumptions:
DEED
A grantee cannot be the grantee’s own escrow agent
For commercial transactions, delivery to a 3rd party acting as an escrow agent is valid
For residential transactions, delivery to a 3rd party acting as an escrow agent could be invalidated if the court determines that the grantor retained the power to revoke the instrument
Validity of escrows:
The critical issue is the grantor’s _______ at the time the deed is delivered
intent
Courts generally hold that “death escrows” (delivery of a deed to a 3rd party with instruction to hold it until the grantor’s death) constitute the valid delivery of the deed so long as the deed is placed with a neutral 3rd party and the grantor releases all power and control over it
Death Escrow
A mortgage is an interest in real property given as _______ for the repayment of a loan
security
Borrower’s promise to repay the loan; formal IOU
Promissory Note
Borrower’s “pledge” of the real property as security for the repayment of the loan
Mortgage
Lawsuit filed by the lender
Judgment of foreclosure is issued by the court
Public official holds a foreclosure sale
Judicial Foreclosure
Permitted in many (but not all) states
Mortgage document must expressly provide for non-judicial foreclosure
Mortgagee forecloses on the property itself without a court proceeding
Mortgagee notifies mortgagor of default; if debt is not repaid within a stated number of days, the mortgagee may hold a foreclosure sale
Non-Judicial Foreclosure
Extinguishes the mortgagor’s title to the property
Transfers title to the winning bidder at the foreclosure sale
Causes the secured property to be sold and apply the sales proceeds to satisfy the unpaid debt
In general, eliminates all liens and interests, including leases, that are subsequent in time to the mortgage
May result in a deficiency judgment against the borrower
Monetary judgment for the difference between the amount owed to the lender and the proceeds received through the foreclosure sale
Deficiency judgments are not always permitted; function of state law
Occurrence of Foreclosure
A low price at the foreclosure sale is NOT enough to set aside the sale unless the price is “so grossly inadequate as to ______ _____ _________ of the Court”
shock the conscience
Repaying the loan in full prior to the foreclosure sale
Applicable in all states
Reinstating the loan by paying the past due amount (plus the mortgagee’s costs resulting from the default) prior to the foreclosure sale
Applicable in most states
Repaying the loan in full within the statutory redemption period (3mo. to 2yrs.)
Applicable in some states
Saving foreclosure
