PQ 3 Rules Flashcards
What happens if you fail to give notice to the junior interests of an upcoming foreclosure?
After the homebuyer defaulted on the bank loan, the bank sought a foreclosure conducted by a judicially supervised sale. Under this method of foreclosure, the foreclosing mortgagee (the bank):
MUST give NOTICE to the holders of any junior interests in the property so that they can participate or send a representative—otherwise, the junior-interest holder’s interest will remain after the sale
may, but need not, join others who have an interest in the property (e.g., senior-mortgage holder) or are liable on the debt (e.g., guarantor) as proper, but not necessary, parties*
How does the doctrine of mergers work with regards to contract obligations?
The doctrine of merger provides that all obligations contained within a land-sale contract merge into the deed once the deed is delivered to and accepted by the buyer. Any obligations contained within the land-sale contract can be enforced thereafter only if they are incorporated into the deed.
When there is a transfer of property that has a “due-on-sale” clause, can the bank foreclose and who can they hold liable?
Mortgage documents may contain a due-on-sale clause, which is a federally enforceable provision that allows a lender to demand full payment of the remaining mortgage debt if the debtor (mortgagor) transfers the mortgaged property without the lender’s consent. If the mortgage is not paid, then the lender can initiate foreclosure proceedings to recover any remaining debt against the entity that assumed the debt (primarily liable) or the original mortgagor (secondarily liable as bank did not release the mortgagor from its liabilities).
How does the rule of convenience work?
A remainder may be given as a class gift to persons as members of a group (e.g., children, siblings, heirs) whose number, identity, and share of the interest are determined in the future. If at least one but not all members of the class receive a vested remainder at the time of the conveyance, then that vested remainder is subject to open. Additional members can be added once they satisfy the condition precedent. But absent a closing date, the rule of convenience closes the class once any member becomes entitled to immediate possession of the property.
When is the right of first refusal enforceable?
A right of first refusal (ROFR) gives its holder the opportunity to acquire property from a seller before it is transferred to a third party. To be valid, a ROFR must comply with the statute of frauds (be in writing, be signed by the person against whom the paper is being enforced against, and contain all essential terms) and its terms must be reasonable.
What type of transfer is exempt from a due-on-sale clause triggering?
A due-on-sale clause permits the mortgagee to demand payment in full of the remaining mortgage debt if the mortgaged property is transferred without the mortgagee’s consent. However, the transfer of residential property to the mortgagor’s living trust is exempt from this clause.
The others are:
-> Devise, descent, or transfer to joint tenant upon death
-> Transfer to spouse or child
-> Transfer to ex-spouse in divorce
-> Transfer to borrower’s living trust
-> Creation of subordinate lien without occupancy rights
-> Granting leasehold interest of less than 3 years without option to purchase
Can the increased usage of the easement destroy the easement?
An easement also anticipates reasonable and natural development of the easement holder’s land (i.e., the dominant estate). Therefore, the easement holder may increase the manner, frequency, and intensity of the easement’s use—so long as that increase does not unreasonably damage or interfere with the use or enjoyment of the servient estate.
What happens when a party fails to close on the closing date?
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.
Can a bank foreclose on a property even if the mortgagor has the capacity to pay for the loan?
Yes, the bank doesn’t have to sue the mortgagor first for repayment of the loan simply because the mortgagor has the money.
A mortgage is an interest in real property that serves as security for the repayment of a debt or other obligation. If the loan secured by the mortgage goes into default, then the mortgage holder (i.e., the mortgagee, typically a bank) may foreclose on the property and use the proceeds from the foreclosure sale to satisfy the outstanding debt.
Who still has possessory interest in the following situation:
A grants his land to B under the condition that if the land is developed on then the land goes to A’s heirs who are C.
A granted a fee simple subject to condition subsequent to B because the third party here is A’s heirs (not a third party). Once the condition is triggered, B still has possessory interest because C has a right of reentry and a right of termination but they MUST act on it in order to take away B’s possessory interest.
Whose interests are still at play when a land has been foreclosed on, and the foreclosed land has been sold?
A foreclosure sale eliminates the mortgagor’s property interest, the mortgage interest being foreclosed upon, and any junior interests attached to the property (unless the junior interests were not given notice of the foreclosure).
Can an assignee-landlord enforce a lease covenant?
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.
Does the rule against perpetuities apply to the right of first refusal?
Yes.
Rights of first refusal are generally subject to the Rule Against Perpetuities, so this contingent future interest is void if it there is any possibility that it could vest more than 21 years after some relevant life in being at the creation of the interest.
Does a mortgage in a joint-tenancy property severe the joint-tenancy?
A joint tenant may grant a mortgage on his/her joint-tenancy interest without the other joint tenant’s consent. In a lien-theory jurisdiction (majority rule), the mortgage does not sever the joint tenancy—but it does in a title-theory jurisdiction.
What happens if a person dies without a will or the will doesn’t cover all the property the person has at death?
When there is no will or a will fails to address the disposition of the decedent’s real property, then the property will transfer to the decedent’s heir(s) by intestate succession or, if the decedent has no heirs, escheat to the state.
