PQ 2 Rules

Question 1

What happens when a party to the joint tenancy transfers their interest to another party?

Answer 1

A lifetime transfer of a joint tenant’s interest severs that interest from the joint tenancy. The transferee holds that interest as a tenant in common with the remaining joint tenant(s). If two or more joint tenants remain after the transfer, then they retain a joint tenancy with respect to each other.

Question 2

When a grantor gives a friend a life estate, and upon the death of the friend then the estate goes to the grantor’s heirs, but if the heirs don’t survive the friend’s life then to the grantor’s lawyer, what interest do the heirs have?

Answer 2

The heirs have a remainder, which is a future interest in real property that is capable of becoming possessory upon the expiration of a life estate or term of years.

Remainders are either:

vested – not subject to any condition precedent AND held by an identifiable living person –> if the heirs are identifiable at the time of the grantor’s death then it’s a vested remainder.

contingent – subject to some condition precedent (other than the natural termination of the prior estate) OR held by an unknown or unborn person –> if the heirs are not identifiable at the time of the grantor’s death then it’s a contingent remainder.

A vested remainder is subject to complete divestment if the occurrence of a subsequent condition will eliminate the remainder interest. Here we are dealing with such a situation as the heirs need to outlive the friend in order to get it, if not the remainder will be eliminated.

The heirs (if identifiable) have a vested remainder subject to complete divestment, but if they are not identifiable then they have a contingent remainder subject to complete divestment.

Question 3

If two neighbors agree to build. something on one of their lands like a wall but that same neighbor later sells their land with the wall on it. Can the new person tear down the wall, even if both prior neighbors agreed to build it and the other neighbor (not the one with the wall) paid for it?

Answer 3

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).

An owner of land can do whatever they want to the fixtures on their property.

Question 4

What’s the difference between a public and private nuisance?

Answer 4

A nuisance can be either public (interfering with a right common to the general public) OR private (interfering with a private property right—as alleged here). Liability for private nuisance arises when the defendant’s interference with the plaintiff’s use and enjoyment of his/her property is both:

substantial – offensive, annoying, or intolerable to a normal person in the community and
unreasonable – the severity of the plaintiff’s harm outweighs the utility of the defendant’s conduct.

Question 5

What is and how do you enforce an equitable servitude?

Answer 5

A covenant is a promise between parties to do or not do something on land that is enforceable by an action for money damages (real covenants) or an injunction (equitable servitudes—as seen here). The promising parties can enforce a covenant through contract law. But the covenant, as an equitable servitude, is enforceable by and against their successors in interest only if the following requirements are met:

1. The covenant must be in writing (e.g., the rancher’s deed).
2. The promising parties must have intended for the restriction to be enforceable by and against successors (e.g., a deed binding “heirs and assigns” to the servitude).
3. The covenant must touch and concern the land (i.e., relate to the use, enjoyment, or occupation of the dominant and servient estates).
4. If the person against whom the covenant is to be enforced is a purchaser, that person must have notice of the covenant (e.g., notice from a recorded deed).

Note: Horizontal and vertical privity are required for a real covenant to be enforceable by and against subsequent landlowners. However, these requirements are not needed to enforce an equitable servitude.

Question 6

Can a bank foreclose on property for which the grantor took out a mortgage on, but then sold it to the grantee (who did not assume the mortgage on the land)?

Answer 6

Yes, but the grantee won’t be liable for the mortgage as they took the land subject to the mortgage. Doesn’t negate the bank’s ability to foreclose on the land, the mortgagor (aka the grantor) is still liable.

Question 7

What happens if a true owner is imprisoned while someone is trying to claim adverse possession of their land?

Answer 7

The statute of limitations for adverse possession will not run against a true owner afflicted with a disability (e.g., insanity, infancy, imprisonment) at the inception of the adverse possession until the disability is removed.

Question 8

Will a good faith purchaser for value win in a race-notice statute state if it recorded its deed first and lacked knowledge of the other person’s deed to the land?

Answer 8

In a race-notice jurisdiction, a good-faith purchaser for value (BFP) has priority over an earlier competing property interest if the BFP lacked notice of the earlier interest AND recorded first.

Question 9

What happens if only one party in a tenancy at will is given the express right to terminate?

Answer 9

A tenancy at will is a leasehold estate that has no specific term and continues so long as the landlord and the tenant desire. 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.

Question 10

Can a junior interest foreclose on a property that had a senior interest when the mortgagor defaulted on the loan that was the junior interest?

Answer 10

Yes, but this doesn’t kill the senior interest, as the senior interest will still be attached to the property.

A foreclosure on mortgaged property terminates interests in that property that are junior to the foreclosed interest but does not affect any senior interests.

Question 11

When is a party with mining strictly liable to the owner of the property under which it is mining?

Answer 11

A landowner has the right to have the land physically supported in its natural state. The right to subjacent support—i.e., support from beneath the surface of the land—arises when the landowner conveys to a third party (here, the company) the right to access and remove oil, gas, or minerals from beneath the land. Then the owner of the rights is strictly liable—i.e., liable without proof of fault—for any failure to support the land and buildings that existed on the land when the mining rights were conveyed, PROVIDED that the damage would have occurred in the land’s natural state.

Question 12

How does a novation work with regards to mortgages?

Answer 12

A novation is the substitution of a new contract for an old one when a party to the original contract agrees to release the other party and substitute a new one.

Question 13

How does the exoneration-of-liens doctrine work?

Answer 13

The common-law exoneration-of-liens doctrine* applies when a devisee (the son) receives a specific devise of real property (the house) that is subject to an encumbrance (e.g., mortgage, lien). Under this doctrine, the devisee is entitled to pay off any encumbrances on that property—including a purchase-money mortgage—from the remaining assets in the testator’s estate.

Question 14

How does the planting of crops on a land work when the land is transferred? Does it stick with the land and become the property of the new owner, or can the previous owner come in and remove the crops?

Answer 14

Wild, uncultivated crops (i.e., fructus naturales) are considered part of the real property on which they grow, so they pass automatically with the land. Crops that are purposely planted and cultivated (i.e., fructus industriales) are considered the landowner’s personal property and, similarly, are generally conveyed with the land. However, the prior owner has the right to reenter to remove these crops if they were:

-> harvested and therefore severed from the land

-> ripe (i.e., mature) and therefore deemed constructively severed from the land (in some courts) or

-> planted by a tenant with a lease of uncertain duration or an adverse possessor under a claim of right.*

Question 15

What is the doctrine of ademption?

Answer 15

The doctrine of 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.

Question 16

Can a mortgagee take possession of the land in order to prevent waste and repair the land if it believes the mortgagor will default on the loan, but the mortgagor has not yet actually defaulted? Does it depend on the lien theory vs. title theory distinction?

Answer 16

A lender’s (mortgagee’s) interest in mortgaged land depends on the mortgage theory followed by the state in which the property is situated:

-> lien theory (majority rule) – the lender has only a security interest in the mortgaged land
-> title theory – the lender has legal title to the land until the mortgage is fully satisfied.

In a lien-theory state, the lender cannot take possession of the land prior to foreclosure because the borrower (mortgagor) is considered the owner of the land during the term of the mortgage. And though an acceleration clause makes the full amount of the mortgage obligation due when the borrower defaults, it has no effect on the right to possess the land prior to default.

However, in a title-theory state, the lender is theoretically entitled to take possession of the land at any time—even if the mortgagor has not yet defaulted. Therefore, in a title-theory state, the credit union could take possession of the estate to make repairs, take rent, prevent waste, and lease out vacant space.

Question 17

How do you make a deed effective immediately that is conditioned on the grantor’s death and which also passes via a third-party?

Answer 17

A grantor can deliver the deed to the grantee through an independent third party. But if the third party’s transfer to the grantee is conditioned on the grantor’s death, then the grantor’s delivery of the deed to the third party must evidence the intent to make a present gift to be effective. This typically occurs when the grantor relinquishes the right to take back the deed by placing it beyond the grantor’s control.

Question 18

What happens when a good faith purchaser buys land that has no mortgage attached to it, but for which the seller received the land in a prior transaction as guarantee of repayment of a loan (if the loan was repaid then the seller in this case would need to transfer back the property to its original owner)?

Answer 18

However, there are alternative means of establishing a mortgage. For example, an absolute deed—one that transfers title free of all liens and encumbrances—given with the intent to secure a debt is generally enforceable as an equitable mortgage. But competing equities such as a good-faith purchaser takes precedence over an equitable mortgage.

Question 19

When is delivery and acceptance of a deed presumed?

Answer 19

A transfer by deed is effective when the deed is delivered by the grantor and accepted by the grantee. Delivery is presumed when the deed has been recorded, and acceptance is presumed if the transfer benefits the grantee.

Question 20

What are the unities required to create a joint tenancy? What happens if one the unities doesn’t exist?

Answer 20

Joint tenancy is a concurrent estate in which each cotenant has an equal, undivided interest in property with a right of survivorship. This means that a joint tenant’s interest disappears at death and the remaining joint tenants’ interests automatically expand proportionally to absorb it. As a result, a joint tenancy cannot be devised by will or inherited through intestate succession.

To create a joint tenancy, the property must be conveyed with the express intent to create survivorship rights and four unities must coexist (PITT):

-> Possession – tenants share an equal right to possess or use the property
-> Interest – tenants have an equal interest in the property
-> Time – property interests simultaneously vest in all tenants
-> Title – property interests received in the same instrument of conveyance

A conveyance that meets some but not all of these requirements creates a tenancy in common, in which each tenant has an equal right to possess the entire property but no survivorship rights. As a result, a tenant in common’s interest can be devised or inherited.

Question 21

How can you terminate a covenant?

Answer 21

A real covenant is an agreement between parties to do or not do something on land (e.g., maintain a retaining wall) that is enforced by an action for money damages. The promising parties are bound to the covenant under contract law, but their successors in interest are bound only if the covenant runs with the land. This occurs when the following elements are met:

Writing – covenant is in a writing that satisfies the statute of frauds (purchasers’ deeds)

Intent to run – promising parties intend for the covenant to run to their successors in interest (deeds say “the owners, their heirs, and their assigns”)

Touch and concern – covenant relates to the use, enjoyment, or occupation of the land (maintain the retaining wall)

Horizontal privity – promising parties simultaneously transfer the land and create the covenant (covenant was created when the man sold the parcels to the purchasers)

Vertical privity – successors have an unbroken chain of ownership from the original parties (the purchasers’ successors have the same ownership interest)

Notice – person to be bound had notice of the covenant (deeds containing the covenant were recorded)

Therefore, the covenant can be enforced by the purchasers’ successors in interest—so long as it was not terminated.

A covenant can be terminated in the same manner as an easement, including by abandonment. Abandonment occurs when an affirmative act—something more than neglect or nonuse—shows a clear intent to relinquish the covenant. This occurred 15 years ago, when the previous owners jointly decided to dismantle the wall. Therefore, the covenant no longer exists and cannot be enforced by the new owner.

Question 22

Is a purchase-money mortgage more senior to other mortgages that were recorded before it?

Answer 22

A purchase-money mortgage (PMM) is a mortgage granted to (1) the seller of real property or (2) a third-party lender to the extent that the loan proceeds are used to acquire title to the real property.* A PMM has superpriority over all other liens that arose before the PMM—regardless of whether the PMM or those liens were recorded.

Question 23

How do court’s handle a buyer’s failure to pay in an installment land contract ?

Answer 23

An installment land contract (i.e., contract for deed) is a contract under which the seller retains title to the property until the buyer makes the final payment under an installment plan. Traditionally, a buyer who missed a single payment was deemed to have defaulted on the contract, and the seller could keep all prior installment payments and take back the property. Today, states handle a buyer’s failure to pay in one of three ways:

-> Allow the seller to retain ownership of the property but require some form of restitution to the buyer

-> Offer the buyer an equitable right of redemption—i.e., the buyer can keep the property by paying the full balance of the installment contract at any time prior to the foreclosure sale

-> Treat the installment land contract as a mortgage, so the seller must foreclose to gain title to the property and the buyer has an equitable right of redemption and other protections

Question 24

When will courts grant a partition in sale over a partition in kind?

Answer 24

A joint tenant may bring an action for partition in kind or by sale. If a partition in kind (i.e., physical division of the land) is impossible, impracticable, or inequitable, then the court will grant a partition by sale.

Question 25

Can a buyer who assumed the mortgage on a property raise a defense against the mortgage that the seller could’ve raised themselves prior to the conveyance to the buyer?

Answer 25

A buyer who assumed a mortgage as part of the purchase price may not raise defenses—e.g., duress, statute of limitations, lack of legal capacity—that the debtor could have raised to avoid the mortgage obligation. Otherwise, the buyer would be unjustly enriched.

Question 26

How does the rule of convenience work?

Answer 26

The Rule of Convenience prevents the Rule Against Perpetuities from being applied to class gifts by closing class membership when any member of the class is entitled to immediate possession of a share in the class gift. All identifiable members of the class are part of the class gift at the moment the first member is entitled to the class gift, and no other person can enter the class gift even if they would be a part of it without the Rule of Convenience (the rule of convenience helps stop RAP from taking place).

Question 27

Do recording acts protect donnees? If not, how can a donnee receive protections under the recording act?

Answer 27

All recording acts protect purchasers for value—not donees—from competing claims to the same property interest. However, under the Shelter Rule, 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. A grantor will be protected by any recording act if the grantor was a purchaser for value who (1) recorded first and (2) acquired the property without notice of the prior competing interest.

Question 28

Does a person have a legal right to light?

Answer 28

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.

Question 29

How does an option contract work for the purchase of land? Does it terminate when the grantor dies? Does the mailbox rule apply?

Answer 29

An option contract for the purchase of real property is formed when one party (the option holder) receives the exclusive right to purchase the property (i.e., “exercise the option”) during a specified time period in exchange for consideration. Under an option contract:

-> the grantor cannot revoke the option during the specified time period
-> the option does not terminate upon the death or incapacity of the grantor and
-> the option holder can make a “counteroffer” without losing the right to exercise the option.

The option holder must exercise the option pursuant to the terms of the contract. However, the mailbox rule—which treats the acceptance of an offer as valid when mailed—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. Otherwise, the option holder loses the option and any consideration that was paid.

Question 30

How can an equitable servitude be implied from a common scheme? And what happens if some of the implicated lots were sold prior to the common scheme arising?

Answer 30

An equitable servitude can also be implied from a common scheme if three elements are met:

-> Intent to create common scheme – the owner intended to impose a servitude on all lots in the subdivision

-> Restrictive servitude – the intended servitude is a promise not to do something on land

-> Notice – the person to be bound by the servitude had actual, record, or inquiry notice of the servitude

Nevertheless, if the common scheme arose after some of the lots were already sold, then the previously sold lots will not be incorporated into the common scheme or subject to the implied equitable servitude.

Question 31

Is the debtor still liable to a lender if that lender waives the “due on sale clause” when the land is conveyed to another party who assumed the mortgage?

Answer 31

These documents may contain a “due on sale” clause, which allows the lender to demand full payment of the remaining mortgage debt if the debtor transfers the mortgaged property without the lender’s written consent. The lender may waive this clause, but the debtor is still liable on the note unless the lender releases the debtor from that obligation.

Question 32

Can a buyer refuse to close if they don’t receive marketable title by closing?

Answer 32

All land-sales contracts have an implied warranty that the seller will convey marketable title to the buyer upon closing unless otherwise stated. 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. Therefore, 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.

Question 33

What interest does a third party have in a defeasible life estate?

Answer 33

A defeasible life estate is a present possessory interest that terminates upon the end of the measuring life or the happening of a stated event. If title passes to someone other than the grantor when the present interest terminates, then the estate is followed by a remainder and an executory interest.

A life estate is a present possessory interest that terminates upon the death of an individual (e.g., “to my companion for life”). The future interest that follows a life estate is called a reversion (if title reverts to the grantor) or a remainder (if it passes to someone other than the grantor). A remainder is vested if the interest is not subject to a condition precedent and is created in an ascertainable grantee.

In contrast, a defeasible life estate is a life estate that may be terminated upon the death of an individual OR by the occurrence of a stated event (e.g., “to my companion for life or until she vacates the premises”). A defeasible life estate is followed by a reversion (if the estate reverts to the grantor) or an executory interest (if the estate passes to a third party). These future interests may be transferred during life or upon death.

Question 34

What’s the majority vs minority rule under the hostile element of adverse possession?

Answer 34

In most jurisdictions, possession is hostile if the adverse possessor objectively demonstrates an intent to claim the land. However, a minority of jurisdictions considers the possessor’s subjective intent.