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mbe - real property - bar > Ownership > Flashcards

Ownership Flashcards

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1
Q

What is a present estate?

A

An estate is a freehold if immobile and for indeterminate duration.

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2
Q

What does fee simple absolute (FSA) or fee simple (FS) mean?

A

It means you have absolute ownership of potentially infinite duration in a property.
- “To A” or “To A and his heirs”
- Rights: freely alienable, devisable, and descendible; there is no accompanying future interest (from anyone else)

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3
Q

What does alienable mean?

A

Transferable

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4
Q

What does devisable mean?

A

Transfer the property via a will.

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5
Q

What does descendible mean?

A

Transfer the property via intestate succession (there is no will in place and goes to your heirs).

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6
Q

Defeasible fee

A

You have an interest of potentially infinite duration the property (property is alienable, desirable, and descendible) BUT this interest in the property is subject to termination by the occurrence of an event.

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7
Q

What does fee simple determinable mean (FSD)?

A

The interest in a property is limited by. specific durational language (e.g. “so long as,” “while,” “during,” or “until”).

Your interest automatically terminated upon happening of the stated event.

There are future interests at play here, in which either the grantor (or his successor in interest) retains possibility of reverter; OR if the future interest is from a a third party then that third party has an executory interest.

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8
Q

What does a fee simple subject to condition subsequent (FSSCS) mean?

A

The interest in the property is simply a present fee simple that is limited by a specific conditional language (e.g. “upon condition that,” “provided that,” “but if,” or “if It happens that”).

The present fee simple will terminate only if the conditional event is met AND the grantor affirmatively demonstrates an intent to terminate.

Future interest: Grantor reserves right to terminate estate upon happening of a state event; grantor must specifically retain the right to reenter.

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9
Q

What does fee simple subject to executory interest/limitation mean?

A

The property interest is a present fee simple that is limited by specific conditional language.

The unrest is automatically terminates upon happening of the stated event, AND title passes to a third party.

Future interest: The future interest is an executory interest held by the third party (someone other than the grantor).

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10
Q

What is a life estate (LE)?

A

It’s.a present possessory estate that is fully transferable during/ in relation to a measuring life.

Language:
- “to A for life”
- “to B after the life of A”
- “to B for the life of C” (pur autre vie)
- “to A for life, but if A drinks, then to B” (defeasible fee)

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11
Q

Is a life estate alienable, devisable, or descendible?

A

Alienable -> Yes as long as it’s during the grantee’s life, BUT the grantor can add a further restriction if it’s reasonable.

If measured by the grantee’s life, then it isn’t devisable nor descendible (both of these happen when the grantee dies so their life is over, so does the life estate end).

If measured by another’s life then MAYBE LE is devisable or descendible (it depends).

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12
Q

Can a life estate be cut short?

A

Yes, by a specified event which makes the life estate a “defeasible life estate.”

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13
Q

What are the rights of a life tenant (LT) with regards to the LE?

A

The life tenant has the:
- right to possess the property
- right to collect rents, lease/sell/mortgage (must pay taxes on financial benefit from the land).

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14
Q

What is “waste”?

A

Waste limits the rights of a holder of a LE, as the LT must deliver property to future interest holder in substantially the same condition as when LT took possession.

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15
Q

What is “permissive waste”?

A

Occurs when LT permits the premises to deteriorate through neglect, failure to preserve, or a failure to reasonably protect the property THEN LT must make reasonable repairs (up to amount of income produced by property or, if LT Is in actual possession, then it would be up to fair rental value).

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16
Q

What is a “voluntary waste”? And an “ameliorative waste”?

A

This occurs when the condition of the property is substantially changed due to LT’s affirmative action.

Any action that would lead to a decrease in property value Is not permitted.

Any action that would lead to an increase in property value (called “ameliorative waste”), is permitted when the change results in a reasonable use of the property unless future interest holders have reasonably objection.

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17
Q

What can a holder of future interest do vis-a-vis a LT and waste?

A

A holder of ANY future interest may bring suit against LT for an injunction.

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18
Q

What are the allocations of burden for the life tenant regarding the life estate?

A

The LT must pay property taxes to the extent LT receives financial benefit from the land; pre-existing mortgage obligations and assessments for public improvements are allocated between LT and future interest holder.

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19
Q

What are “future interests”?

A

It’s an ownership interest in presently existing property which may commence in possession or enjoyment sometime in the future.

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20
Q

What does “reversion” mean?

A

The type of interest that is held by a grantor who transfers a LE or estate for years without conveying the remaining future interest (FI) to a third party.

The interest is not subject to RAP.

The interest is alienable, devisable and descendible.

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21
Q

What does “possibility of reverter” mean?

A

It’s a FI retained by a grantor when a FSD (fee simple determinate) is conveyed.

The interest is alienable, devisable, and descendible.

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22
Q

What is the right to reentry?

A

It’s equivalent to the right to terminate, right of entry, or power of termination, in which the FI is retained by the grantor after a FSSCS (fee simple subject to condition subsequent) is granted.

In most states the right is alienable, devisable, and descendible.

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23
Q

What is a remainder?

A

It’s a FI that becomes possessory upon the natural expiration (meaning that a defeasible fee simple wouldn’t place us in “remainder territory”) (most common with life estates) of a prior estate that is created in the same conveyance in which the remainder is created.

E.g. “X conveys his property for A’s life and then to C.” C has a remainder in the property.

E.g. - much less common - “X conveys his property for 10 years to A, then to C.” This is a fee simple determinable for A, and C has a remainder and not an executory interest because there is nothing that could end A’s interest in the land short.

24
Q

What happens if a party has a remainder but there is a defeasible fee that happens?

A

A remainder can’t follow a fee defeasible, as only an executory interest can follow a fee defeasible. So the remainder never vests and it goes back to grantor.

25
Q

What is a vested remainder?

A

It’s a remainder that isn’t subject to a condition precedent and the there is an ascertainable grantee.

26
Q

What is a vested remainder that is subject to open?

A

If at least one class member is qualified to take possession at the time of the conveyance (but less than all of them), each class member’s share is subject to partial diminution because additional takers who are not yet ascertained can still vest.

27
Q

What is a vested remainder subject to complete divestment?

A

It’s a vested remainder in which the occurrence of a condition subsequent will completely divest the remainder.

28
Q

What is a contingent remainder?

A

It’s a remainder that is created in an unascertainable grantee or is subject to an express condition precent to grantee’s taking.

This happens when we have an unknown beneficiary OR a known beneficiary but who is subject to a condition precedent that has not yet occurred.

29
Q

What is an executory interest?

A

It’s a FI in a third party (not a remainder)) that cuts the prior estate short (if it didn’t then it would be a remainder) upon the occurrence of a specified condition.

The interest is transferable and subject to RAP.

30
Q

What is a shifting executory interest?

A

It’s when there is a cutting short of a prior estate created in the same conveyance, which leads the estate from shifting from one grantee to another grantee upon the happening of a condition.

31
Q

What is a springing executor interest?

A

It’s an interests that divests the grantor’s interest or fills a gap in possession in which the estate reverts to the grantor.

32
Q

Are remainders/executory interests transferable?

A

Yes they are transferable inter vivos and devisable/descendible.

33
Q

What is a class gift?

A

It’s a transfer to members of a group in which the beneficiaries and amount of the gift are subject to change.

34
Q

What is a survival contingency?

A

It’s when a gift is expressly conditioned on survival, the donee must satisfy the condition to take the gift.

35
Q

What happens if the survival contingency is ambiguous?

A

A split between states.

Majority ruling: the only donees who receive the gift are those who are alive at the death of the donor.

Minority ruling: all donees who were in that group of donees receives the gift, and not just those who were alive. This means that the dead donee’s estate takes the gift.

36
Q

What is the rule against perpetuities?

A

It’s a rule that states that specific FIs are valid only if they are able to vest or fail by the end of a life plus 21 years.

E.g. “Blackacre to B for life , then to B’s first child who turns 18, then to C.” This is good because by the time B dies, if he has any first child then that child will reach 18 before the 21 year mark.

37
Q

What are the types of future interests that the RAP does and does not apply to?

A

RAP applies to
- contingent remainders
- vested remainders subject to open
- executory interests
- powers of appointment

RAP may apply unless they are linked to commercial transactions:
- right of first refusal
- options

RAP does not apply under any circumstance:
- FIs that revert back to the grantor such as Reversion, Possibility of Reverter, or Right of Reentry)

38
Q

How do you measure lives under RAP?

A

It must be a human life, but there can be more than one.

If not specified, then the measuring life is the life directly related to the FI that is subject to RAP. This means that once the future interest starts then you start the 21 year counter.

A person needs to be alive at the time the interests were created.

39
Q

What’s the creation event in RAP?

A

The creation event for which RAP tests is the event in which the FI is created.

40
Q

What is RAP’s vest or fail requirement?

A

If there is ANY POSSIBILITY that it will not be known whether the interest will vest or fail within the applicable period, then RAP has NOT been satisfied.

41
Q

What is the effect of a RAP violation?

A

Except in rare cases when voiding the FI undermine the grants intent, only the offending interest fails.

42
Q

What is the special RAP rule for class gifts?

A

“Bad as to one, bad as to all.”

If RAP voids a transfer of any class member, then the transfer is void as to all class members, even those whose interests have already vested.

43
Q

What is the rule of convenience?

A

The rule can operate to prevent the application of RAP to a class transfer, but the application of the rule of convenience to a class transfer does not automatically forestall the application of RAP.

The rule states that membership in a class closes whenever any member of the class is entitled to immediate possession of a share of the class gift.

Rule doesn’t apply if grantor states that the class needs to remain open even if immediate possessionn is possible.

44
Q

What is the exception to the RAP’s rule for class gifts?

A

Transfers of a specific dollar amount to each class members and/or transfers to a subclass (e.g. children of the children in the examples we commonly have) that vests at a specific time.

45
Q

What is the charity-to-charity exception under RAP?

A

If property passes from one charity to another, then RAP doesn’t apply.

46
Q

What are the common violations of the RAP?

A

“Survival beyond age 21” condition:
- If a transfer of a class is conditioned on the class members surviving to an age beyond 21 and the class is open, then the transfer to the class violates the Rule.

Fertile octogenarian:
- Anyone, regardless of age or physical condition is deemed capable of having children for the purposes of the Rule.

Unborn spouses:
- A validating life needs to be alive at the time of conveyance, in order to validate any future conveyances. E.g. B’s unborn widow can’t validate the interests of B’s children in the conveyance, meaning that B’s children’s interest violates RAP. But this applies only if it states “children who are then alive” because it’s pointing to the widow needing to be the validating life, which it can’t be.

Defeasible fee followed by executory interest:
- An executory interest that follows a defeasible fee violates the Rule, unless there is a time limit on the vesting of the executory interest that satisfies the Rule.

Conditional passage of interest:
- If there is a condition imposed on the passing of a future interest subject to the Rule that is not confined to a specified time limit that meets the Rule’s testing period, such as probating the will or termination of a current military conflict, then the future interest runs afoul of the Rule.

47
Q

What is a tenancy in common?

A

It’s the default co-tenancy form in which:
- two or more grantees with unity of possession
- no right of survivorship (ROS means that if the other grantees die then you get the land)
- each covenant holds undivided interest with unrestricted rights to possess whole
- interest freely devisable/transferable

48
Q

What is a joint tenancy?

A

A joint tenancy happens when two or more persons own the property with ROS, and they need to meet the following four unities (PITT)
- equal rights to possess the whole
- with identical equal interests
- created at the same time
- by the same title

49
Q

How do you sever a joint tenancy and what happens?

A

When you sever a JT then it converts it into a TC (but only with respected to the severed share).

Sale - don’t need consent; severs JT as to seller but JT of non-transferors remain intact as a JT.

Mortgage - severs JT under title theory (minority of states), but not under lien theory (majority of states - only severs if there is a foreclosure sale following a default on the mortgage).

Judicial lien - the lien typically will not sever the JT; severance occurs when the property is levied and sold.

50
Q

What is a tenancy by entirety?

A

Same unities as JT, plus unity of person (parties must be married to each other when deed is executed or conveyance occurs).

Neither party can alienate or encumber the property without the consent of the other.

Recognized in about half the states; where recognized, the majority presumes a conveyance to a married couple created a TE, and that divorce converts it to a TC.

51
Q

What are a covenants rights/obligations under co-tenancies?

A

Each co-T has the right to possess the entire property ad is generally not required to pay rent when other co-Ts do not use the property (unless co-T has been ousted).

Co-T can collect contribution from other co-Ts for operating expenses (e.g. taxes), but if in sole possession, only if they exceed the rental value of the property.

Co-T cannot compel other co-Ts to share expenses for repairs by an action for contribution; may maintain a separate action for contribution in some states if notified other co-Ts of need for the repairs; in an action for accounting/partition, necessary repair expenses recouped indirectly.

Co-T has no right to contribution for improvements (may be entitled to additional value in a partition action).

Co-T must account for rent received from third parties, but can deduct expenses; net proceeds are divided among co-Ts based on ownership interest.

Co-T owes a duty of fair dealing to other co-Ts, but generally doesn’t owe fiduciary duties to other co-Ts; exception: a co-T buys the property at a tax or foreclosure sale (the other co-Ts can buy back their interests within a reasonable time).

Partition - a TC or JT (but not a TE) generally has the right to unilaterally partition property; a partition in kind, preferred by courts, is a physical division of the property (courts don’t like partitions in sale).

Easements - co-Ts may agree to create an easement; a unilaterally created easement is only enforceable against the co-T who created it.

52
Q

What does the Fair Housing Act prohibit?

A

Prohibits discrimination in the sale, rental, and financing of homes and in other housing-related transactions (such as advertising; homeowner’s insurance, and zoning).

53
Q

What are the exemptions to the Fair Housing Act?

A

Owner-occupied buildings with no more than four units (including the owner’s unit) and single-family homes sold or rented without a broker are generally not subject to FHA (but are subject to adversjitisng rules).

54
Q

What are the protected classes under the Fair Housing Act?

A

Prohibition applies to diescrimanstion based on race, color, religion, national origin, sex, disability and familial status.

55
Q

How to prove racial discrimination?

A

Plaintiff need only show a disparate racial impact, not a racial intent or purpose.

56
Q

Which laws to apply for conflicts regarding the matters of real property?

A

Generally apply law of the situs (state where real property (RP) is located).

Exceptions:
- when a document that conveys/transfers an interest in land specifies applicable law
- when dealing with property acquired during marriage, the law of the spouses’’ domicile when the property was acquired determines whether the property is marital or separate property
- collateral issues (e.g. transfer of land attacked as fraudulent), the law of the state with the most significant interest may apply

mbe - real property - bar (11 decks)

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