PQ 4 Flashcards
Can a seller use the proceeds from the sale of the property to payoff the mortgage attached to the property and deliver marketable title?
Yes.
Under a land-sales contract, the seller can use the proceeds from the sale to eliminate a mortgage obligation on the property. If the proceeds exceed the amount of the outstanding mortgage, then the title defect will be extinguished and the seller can deliver marketable title to the buyer upon closing.
Can a donnee and/or purchaser assume the same defenses against the mortgage that the mortgagor can use?
A mortgage is subject to the same defenses (e.g., mistake, duress, fraud) as the underlying obligation or debt secured by that mortgage.
So when mortgaged property is transferred to a donee, the donee is entitled to assert the donor-mortgagor’s defenses against the mortgagee-lender.
However, a purchaser who assumes an existing mortgage obligation as part of the purchase price may not assert the donor-mortgagor’s defenses.
If party A and B own a joint tenancy in property X, but A sells his interest to C who sells it back to A, is there still a joint tenancy?
No, it becomes a tenancy in common between A and B since the selling of the interest to C broke the joint tenancy.
Can you transfer a life estate to a third party even though once the life estate it was meant to go to someone else? If so, what are the interests of each party?
What are the obligations and rights of the person in possession of the life estate?
A life estate is a present possessory interest that terminates upon the death of an individual (the measuring life). A life estate is freely transferable, but it becomes a life estate pur autre vie when it is measured by the life of someone other than the current holder of the life estate (the life tenant). The future interest that follows a life estate is either a reversion (if held by the grantor) or a remainder (if created in a grantee).
What is the standard used to determine whether a title is marketable or not?
The warranty of marketable title is implied in all real estate contracts unless otherwise provided. This guarantees that, upon closing, the seller will convey the buyer title that is free from an unreasonable risk of litigation.
What does the Uniform Vendor and Purchaser Risk Act state?
In most jurisdictions, the risk of loss shifts to the buyer during the executory period. But in the minority of jurisdictions that have adopted the Uniform Vendor and Purchaser Risk Act, the risk of loss remains with the seller until the buyer takes possession of or receives legal title to the property.
Can a lender foreclose on a property if he has received from the mortgagor the absolute deed from the property in exchange for the mortgage, and the mortgagor has defaulted on the loan?
Yes.
An equitable mortgage can be established when a debtor gives an absolute deed—i.e., a deed that is free of encumbrances and transfers unrestricted title to property—to a lender with the intent to secure a loan. The debtor-grantor must prove by clear and convincing evidence that the deed was intended as security for a loan—not as an outright transfer. The deed recipient, like any other lender, may then bring a foreclosure action if the debtor defaults.
Must the owner of the servient estate upon which an easement is located, pay for upkeep and repairs to the easement?
Only if they use the easement.
When an easement is shared, the owner who maintains or repairs the easement may seek contribution from (1) the other owners and (2) the servient-estate owner if he/she uses the easement.
What is a purchase-money mortgage and what happens if it isn’t recorded? Does it have priority vis-a-vis other mortgages that were recorded?
A PMM is a mortgage granted to the seller of real property if the mortgage is given as part of the same transaction in which title is acquired (as seen with the seller’s mortgage here).* A PMM has priority over liens that arose prior to the PMM regardless of whether the PMM was recorded. But a PMM does not necessarily have priority over subsequent liens. Instead, the recording act (or, if there is no recording act, the “first in time” rule) will control.
How do the renter’s obligation shift between a complete and partial condemnation?
Upon a partial condemnation, a tenant must continue to pay rent but is entitled to compensation for the portion of the leased property that was taken. In contrast, upon a complete condemnation, the tenant is discharged from his/her rent obligation and is entitled to compensation for the taking.
Does a subsequent marriage convert a joint tenancy into a tenancy in its entirety? Do you need consent to transfer an interest from a tenancy in its entirety? If so, from who?
No.
Both joint tenancies and tenancies by the entirety have survivorship rights, so they are not devisable or inheritable. But joint tenancies—unlike tenancies by the entirety—are transferable during a tenant’s lifetime without the other tenant’s consent.
Is a tenant’s obligation to pay rent discharged when only a portion of the property is condemned?
No.
A tenant’s duty to pay rent is not discharged when only a portion of the leased property is condemned
Is a debtor liable to the lender if the mortgaged has been transferred? What happens if after the transfer, the lender releases the mortgaged property?
Yes until the lender releases the debtor from its liabilities
No because the lender released the debtor by releasing the mortgaged property.
A tenant’s duty to pay rent is not discharged when only a portion of the leased property is condemned
When does the implied warranty of habitability work and what does it imply?
The implied warranty of habitability (or of fitness, suitability, quality, workmanlike construction, performance) is implied in almost all jurisdictions in a contract for the sale of a NEWLY constructed residence.
But since the contract at issue involves the sale of a 10-year-old home, this warranty does not apply.
How does a fee simple determinable work?
A fee simple determinable (FSD) is created with durational language such as “so long as,” “during,” or “until.” The future interest that follows an FSD is either a possibility of reverter (if the estate automatically reverts back to the grantor) or an executory interest (if the estate automatically passes to a third party).
