Property Flashcards
1
Q
Rule against perpetuities basics
A
Will the future interest vest or fail within 21 years after everyone then alive dies?
purpose: to prevent remote vesting
2
Q
Assignment (landlord tenant law)
A
Assignment: Transfer of ENTIRE leasehold balance
Assignee steps into the shoes of the tenant (privity of estate) and has to pay the rent
If the tenant retains any part of the remaining lease term, other than a right of reentry for breach of the original lease terms, the transfer is a sublease.
3
Q
Easement basics
A
Easement: right to use or do something on someone else’s land. Runs with the land.
- An interest in land
- Nonpossessory interest in the use of another’s land
- Grant of an easement for more than 1 year must comply with SOF
Easement appurtenant:
1) Dominant parcel is benefited by easement
2) Servient parcel is burdened by easement
common ownership can extinguish easement through merger.
4
Q
Equitable Conversion
A
After execution of real estate contract, buyer is equitable owner of land and seller is equitable owner of the cash.
5
Q
Bona Fide Purchaser
A
Pays value
Good faith
without notice
-To prevent BFPs, record your interest!
Recording statutes:
- notice: Last BFP always wins
- race-notice: First BFP to record wins
Foreclosure has no effect on senior interests*
6
Q
How to acquire prescriptive easement
A
To acquire a prescriptive easement,
- the use must be open and notorious,
- adverse, and
- continuous and uninterrupted for the statutory period.
oral permission from owner will destroy the “adverse” element
7
Q
License
A
- Not an interest in land
- Revocable personal privilege to enter another’s land without liability for trespass
- A license results when the grant of an easement violates the SOF
- Personal to the licensee and is not alienable
8
Q
Foreclosure
A
Foreclosure terminates all junior interests that have been joined in the foreclosure action
9
Q
Present Estates
A
We are concerned here with three categories of free- hold estates, so named because they grew out of the English system of feudalism.
- The Fee Simple Absolute
- The Defeasible Fees (of which there are three types); and
- The Life Estate
The examiners will expect you to know three things with respect to each of these estates:
- What language will create the estate?
- Once identified, what are the estate’s distinguish- ing characteristics? In other words, is the estate de- visable, meaning, can it pass by will? Is the estate descendible, meaning, will it pass by the statutes of intestacy if its holder dies intestate (without a will)? Is the estate alienable, meaning, is it transfer- able inter vivos, or during the holder’s lifetime?
- Which future interests, if any, is the estate capable of?
10
Q
Present Estates: Fee Simple Absolute
A
- How Created
“To A” or “To A and his heirs.” Today, those common law words “and his heirs” are not needed.
What happens if the stated condition is violated? - > forfeiture is automatic
Thus, “to A” suffices to create the fee simple absolute.
- Distinguishing Characteristics
A fee simple absolute is absolute ownership of poten- tially infinite duration. It is freely alienable, devisable, and descendible. - Accompanying Future Interest
O conveys “to A” or “to A and his heirs.” A is alive and well. What do A’s heirs have?
-> Nothing. Only A has absolute ownership.
Why?
**A living person has no heirs. Thus, while A is alive, he has only prospective heirs. They are powerless.
11
Q
Present Estates: The Defeasible Fees*
A
Think of these as three types of fee simple (“to A”) with a catch or condition attached that renders the estate subject to the risk of forfeiture. To be defeasible means to be capable of forfeiture.
- The Fee Simple Determinable
How Created
“To A so long as . . .” “To A during . . .” “To A until . . .” Look for clear durational language.
What happens if the stated condition is violated?
Distinguishing Characteristics
This estate, like all of the defeasible fees, is devisable, descendible, and alienable, but always subject to the condition.
Accompanying Future Interest
Only one future interest accompanies the fee simple determinable. What is it called? -> possibility of reverter
hypo: Frank Sinatra conveys Sinatra Palace “to Orville Redenbacher, so long as popcorn is never made on the premises.” Classify the interests.
What does Orville have? -> fee simple determinative. What doe Frank have? -> possibility of reverter
to remember: FSDPOR -> Frank Sinatra Didnt Prefer Orville Redenbacher
- The Fee Simple Subject to Condition Subsequent
How Created
“To A, but if X event occurs, grantor reserves the right to re-enter and retake.”
Here, two ingredients are needed. What are they? 1. clear durational language 2. a clear statement of the right of reentry
Distinguishing Characteristics
This estate is NOT automatically terminated, but it can be cut short at the grantor’s prerogative if the stated condition occurs.
Accompanying Future Interest
What is the grantor’s prerogative to terminate called? -> The right of entry (synonymous with the power of termination)
- The Fee Simple Subject to Executory Limitation
How Created
“To A, but if X event occurs, then to B.” What do you notice?
Distinguishing Characteristics
This estate is just like the fee simple determinable, only now, if the condition is broken, the estate is automatically forfeited in favor of someone other than the grantor.
Accompanying Future Interest
Which future interest accompanies the fee simple subject to executory limitation? -> The shifting executory interest
- TWO IMPORTANT RULES OF CONSTRUCTION FOR DEFEASIBLE FEES
• Words of mere desire, hope, or intention are in- sufficient to create a defeasible fee.
Remember: Courts will not find a defeasible fee unless clear durational language is used.
Thus, in each of these instances, A is vested with a fee simple absolute, and NOT a defeasible fee:
• “To A for the purpose of constructing a day care center”;
• “To A with the hope that he becomes a lawyer”;
• “To A with the expectation that the premises will be used as a hardware store.”
• Absolute restraints on alienation are void. **
What is an absolute restraint on alienation?
hypo: O conveys: “To A so long as she never attempts to sell.” -> This is an absolute restraint on alienation and that is a problem.
An absolute restraint on alienation is an absolute ban on the power to sell or transfer, that is not linked to any reasonable time-limited purpose.
contrast reasonable time limited purpose… this is okay:
O conveys: “To A so long as she does not attempt to sell until the year ____, when clouds on the title will be resolved.”
12
Q
Present Estates: THE LIFE ESTATE
A
- How Created
This is an estate that must be measured in explicit lifetime terms, and never in terms of years.
Think of the life estate as the romantic estate. For example, O conveys: “To A for life.”
Contrast with: “To A for 50 years, if she lives that long,” or “To A for life, but in no event more than 10 years,” both of which create the term of years (a leasehold interest), and NOT the life estate.
The life estate pur autre vie:
A life estate measured by a life other than the grant-
ee’s. For example, “To A for the life of B.”
- Accompanying Future Interest
If held by O, it is called a reversion. If held by a third party, it is called a remainder. - Distinguishing Characteristics
The life tenant’s entitlements are rooted in the important doctrine of waste. Note two general rules:
• The life tenant is entitled to all ordinary uses and profits from the land.
• The life tenant must not commit waste.
There are three types of waste: voluntary, permissive, and ameliorative.
Voluntary (Affirmative) Waste Voluntary waste (also known as affirmative waste) is actual, overt conduct that causes a drop in value.
Permissive Waste (Neglect) Permissive waste occurs when land is allowed to fall into disrepair or the life tenant fails to reasonably protect the land. That’s why permissive waste is synonymous with neglect.
- Permissive waste and the obligation to repair: The life tenant must simply maintain the premises in reasonably good repair.
- Permissive waste and the obligation to pay all ordinary taxes: The life tenant must pay all ordinary taxes on the land, to the extent of any income or profits that the life tenant is reaping from the land. If there is no income or profit, the life tenant is required to pay all ordinary taxes only to the extent of the premises’ fair rental value. What that means is that when no income or profits are coming in from the land, the life tenant’s tax liability for the parcel will be computed not on the basis of Blackacre’s fair market value but instead on the basis of its mere fair rental value (a considerably lesser sum).
Ameliorative Waste
The life tenant must not engage in acts that will enhance the property’s value, unless all future interest holders are known and consent. Why?
Because property law honors the future interest holders’ reasonable expectations and sentimental value.
13
Q
Future Interests: FUTURE INTERESTS CAPABLE OF CREATION IN THE GRANTOR
A
There are only three future interests capable of creation in the grantor:
- The Possibility of Reverter: Which present estate does the possibility of reverter accompany?
- The Right of Entry (also known as Power of Termination): Which present estate does the right of entry or power of termination accompany?
- The Reversion: A reversion is the future interest that arises in a grantor who transfers an estate of lesser duration than she started with, other than a fee simple determinable (which gives O the possibility of reverter) or a fee simple subject to condition subsequent (which gives O the right of re-entry).
14
Q
Future Interests: FUTURE INTERESTS IN
TRANSFEREES
A
If our future interest is held by someone other than the grantor, it has to be either:
- A contingent remainder, OR
- A vested remainder (of which there are three types: (i) the indefeasibly vested remainder, (ii) the vested remainder subject to complete defeasance (also known as the vested remainder subject to total divestment), and (iii) the vested remainder subject to open), OR
- An executory interest (of which there are two types: (i) the shifting executory interest, and (ii) the springing executory interest).
What Is a Remainder?
A remainder is a future interest created in a grantee that is capable of becoming possessory upon the expiration of a prior possessory estate created in the same conveyance in which the remainder is created.
Exam Tip~~~ Think of the remainder as sociable. Here’s why:
Remainders never travel alone. In other words, remain- ders always accompany a preceding estate of known fixed duration (such as a life estate or term of years).
Think of remainders as patient and polite. Here’s why:
A remainder never cuts short or divests the prior taker. Instead, it patiently waits its turn and won’t take until the present life estate or term of years comes to its conclu- sion.
~Remainders Are Either Vested or Contingent~
- Contingent Remainders
A remainder is contingent if: (1) it is created in an unascertained or unknown person or (2) it is subject to an unmet condition precedent, or both.
The Remainder That Is Contingent Because It Is Created in an Unascertained or Unknown Person
For example:
• “To A for life, then to B’s first child.” A is alive. B, as yet, has no children.
• “To A for life, then to B’s heirs.” A is alive. B is alive. Because a living person has no heirs, while B is alive his heirs are unknown.
• “To A for life, then to those children of B who survive A.” A is alive. We don’t yet know which, if any, of B’s children will survive A.
The Remainder That Is Contingent Because It Is Subject to an as Yet Unmet Condition Precedent
A condition is a condition precedent when it appears before the language creating the remainder or is woven into the grant to the remainderman.
- Vested Remainders
A remainder is vested when it is created in a known taker who is not subject to a condition precedent. - The Three Types of Vested Remainders
There are three types of vested remainder. The first is called the indefeasibly vested remainder. The second is called the vested remainder subject to complete defeasance (synonymous with the vested remainder subject to total divestment). The third is called the vested remainder subject to open.
How to distinguish the three types of vested remainder
The indefeasibly vested remainder: The holder of this remainder is certain to acquire an estate in the future, with no strings or conditions attached.
The vested remainder subject to complete defeasance (also known as the vested remainder subject to total divestment): Here, the remainderman exists. His taking is NOT subject to any condition precedent. However, his right to possession could be cut short because of a condition subsequent.
Here, it is important to know the difference between
a condition precedent, which creates a contingent remainder, and a condition subsequent, which creates a vested remainder subject to complete defeasance. To tell the difference, apply the “Comma Rule”: When conditional language in a transfer follows language that, taken alone and set off by commas, would create a vested remainder, the condition is a condition subsequent, and you have a vested remainder subject to complete defeasance.
The vested remainder subject to open: Here, the re- mainder is vested in a group of takers, at least one of whom is qualified to take possession. But each class member’s share could get smaller because additional takers, not yet ascertained, can still join the class.
A CLASS IS EITHER OPEN OR CLOSED When is a class open? -> When others can still join When is a class closed? -> when no others can join. How will you know when the given class has closed? -> apply the rule of convenience (class closes whenever any member is within its rights to demand possession
The rule: The class closes when any member can demand possession.
- Executory Interests An executory interest is a future interest created in a transferee (a third party), which is not a remainder because it takes effect by either cutting short some interest in another person (“shifting”) or in the grantor or his heirs (“springing”).
Shifting Executory Interest
A shifting executory interest always follows a defeasible fee and cuts short someone other than the grantor. (think of them as the spoiler)
Springing Executory Interest
A springing executory interest cuts short the interest of O, the grantor.
15
Q
The Rule Against Perpetuities: FOUR-STEP TECHNIQUE FOR ASSESSING POTENTIAL RAP PROBLEMS
A
Certain kinds of future interests are void if there is any possibility, however remote, that the given interest could vest more than 21 years after the death of a measuring life.
_______
First, determine which future interests have been created by the conveyance. The RAP potentially applies only to contingent remainders, executory interests, and certain vested remainders subject to open.
The RAP does NOT apply to any of the three future interests capable of creation in O, the grantor (the possibility of reverter, the right of re-entry, and the reversion). It does not apply to indefeasibly vested remainders or to vested remainders subject to complete defeasance.
Second, determine what has to happen for the future interest holder to take.
Third, look for the people alive at the date of the conveyance whose lives and/or deaths are relevant to what has to happen for the future interest holder to take. That person(s) is a measuring life.
Fourth, determine whether we will know for sure within 21 years of the death of a measuring life if the future interest holder(s) can take. If so, the conveyance is good. By contrast, if we won’t know for sure within 21 years of the death of a measuring life whether the future interest holder can take, the future interest is void.
16
Q
The Rule Against Perpetuities: REMEMBER THIS BRIGHT LINE RULE OF COMMON LAW RAP
A
An executory interest with no limit on the time within which it must vest violates the RAP.
17
Q
The Rule Against Perpetuities: REFORM OF THE RAP
A
- “Wait and See” or “Second Look” Doctrine
Under this majority reform effort, the validity of any suspect future interest is determined on the basis of the facts as they now exist, at the conclusion of our measuring life. - The Uniform Statutory Rule Against Perpetuities (USRAP)
Codifies the common law RAP and, in addition, pro- vides for an alternative 90-year vesting period. - Cy Pres Doctrine (“As Near As Possible”)
If a given disposition violates the rule, a court may reform it in a way that most closely matches the grant- or’s intent, while still complying with the rule against perpetuities. Both reform measures apply cy pres.
18
Q
Adverse Possession: THE ELEMENTS OF ADVERSE POSSESSION
A
The basic concept: Possession for a statutorily prescribed period of time can, if certain elements are met, ripen into title.
____
Remember C O A H: For possession to ripen into title it must be: • Continuous: • Open and Notorious: • Actual: • Hostile:
Note: Possessor’s subjective state of mind is irrelevant. It does not matter, for example, that the possessor actually thought that he was on his own land or knew that he was encroaching on another’s land.
19
Q
Adverse Possession: Tacking
A
One adverse possessor may tack on to his time with the land his predecessor’s time, so long as there is privity between the possessors
Privity is satisfied by any non-hostile nexus, such as a contract, deed, or will.
By contrast, privity is absent when the possessor acquires possession by ousting his predecessor in possession.
20
Q
Adverse Possession: DISABILITIES
A
The statute of limitations will not run against a true owner who is afflicted by a disability at the inception of the adverse possession. What are some common disabilities?
- insanity, infancy, imprisonment.
21
Q
Concurrent Estates
A
There are three forms of concurrent ownership.
• The Joint Tenancy
Two or more own with the right of survivorship.
• The Tenancy by the Entirety
A protected marital interest between spouses with the right of survivorship.
• The Tenancy in Common
Two or more own without the right of survivorship.
22
Q
Concurrent Estates: THE JOINT TENANCY
A
- Distinguishing Characteristics
- The right of survivorship: When one joint tenant dies, what result? -> her share goes to surviving joint tenant
- Alienability: A joint tenant’s interest is alienable inter vivos. What does that mean? -> transferable during its holders lifetime.
- Not devisable or descendible: A joint tenant’s interest is neither devisable nor descendible. Why not? -> because of the right of survivorship
- How to Create a Joint Tenancy
The Four Unities
Remember this “T-TIP”: Joint tenants must take their interests:
T: Time
T: Title
What does that mean? -> (same dead or legal document)
I: Identical shares
P: Privity? [2:02]
Clear Expression of Right of Survivorship
In addition to the four unities, to create a joint tenancy the grantor must clearly express the right of survivor- ship. How? “To A and B as joint tenants with the right of survivorship.”
- Severance of a Joint Tenancy
Remember “SAP”: Sale And Partition
Severance and Sale
• A joint tenant may sell or transfer her interest during her lifetime.
May she do so secretly? -> yes, even without others knowledge or consent.
Severance and Partition
Remember the three types of partition:
• By voluntary agreement: An allowable and peaceful way to end the relationship.
• Partition in kind: A judicial action for a physical division of the property, if in the best interests of all parties. When would a partition in kind work best?
• Forced sale: A judicial action when, in the best interests of all parties, the land is sold and the sale proceeds are divided up proportionately. When would a forced sale work best?
23
Q
Concurrent Estates: THE TENANCY BY THE ENTIRETY
A
It can be created only between married partners, who take as fictitious “one person” with the right of survivorship.
- How Created
In states that recognize the tenancy by the entirety,
it arises presumptively in any conveyance to married partners unless the language of the grant clearly indicates otherwise. - Very Protected Form of Co-Ownership
Remember: “CAN’T TOUCH THIS”
Creditors: Creditors of only one spouse cannot touch this tenancy for satisfaction of the debt.
Unilateral conveyance: One spouse, acting alone, cannot defeat the right of survivorship by unilaterally conveying to a third party.
24
Q
Concurrent Estates: THE TENANCY IN COMMON
A
Remember these two features:
- Each co-tenant owns an individual part, and each has a right to possess the whole.
- Each interest is devisable, descendible, and alien- able. Why?
25
Concurrent Estates: RIGHTS AND DUTIES OF CO-
| TENANTS
Suppose that siblings Kevin and Randall co-own a cab- in. Kevin contributed 90% of the purchase price and Randall 10%.
Which form of ownership is this? -> tenancy in common
Why? -> they dont have equal shares
- Possession
Kevin takes a can of white paint and divides up the premises. “Randall,” he says, “you can use and enjoy that 10% on that side of the line, and only that.” Are Kevin’s actions permissible? -> NO
If one co-tenant wrongfully excludes another co-tenant from possession of the whole or any part, he has com- mitted ouster. Ouster is an actionable wrong.
- Rent from Co-Tenant in Exclusive Possession
Kevin leaves the cabin voluntarily, for a three-month tour of Europe to promote his latest movie. On his return, he demands rent from Randall for the three months in which Randall enjoyed exclusive posses- sion. Will Kevin prevail?
No. Absent ouster, a co-tenant in exclusive possession is not liable to the other co-tenants for rent.
- Rent from Third Parties
Randall leases the cabin’s basement to William, a tenant. Is Kevin entitled to a portion of the rental in- come?
A co-tenant who leases all or part of the premises to a third party must account to his co-tenants, providing them their fair share of the rental income. Here, what are the parties’ respective fair shares of the rental income? Kevin 90% Randall 10%
- Adverse Possession
Kevin loses interest in the cabin and decides instead to relocate to Los Angeles, where he stays for the next 20 years. In his absence, can Randall acquire title to the whole, to the exclusion of Kevin, through adverse possession? -> No
Unless he has ousted the other co-tenant, the co- tenant in exclusive possession for the statutory ad- verse possession period cannot acquire title to the whole to the exclusion of the other co-tenant. Why not?-> the hostility element is missing
- Carrying Costs (taxes and mortgage interest payments)
What are Kevin’s and Randall’s respective responsibilities with respect to the cabin’s carrying costs? -> each pays his fair share
- Repairs
A persistent squirrel breaks the cabin’s front window. Randall has repaired the window. He seeks contribution from Kevin for the cost of that repair. Will he succeed?
Yes. The repairing co-tenant enjoys a right to contribu- tion during the life of the co-tenancy for reasonable, necessary repairs, provided he gave notice to the other co-tenant(s) of the need for the repairs.
Kevin contributes __90%___ and Randall __10%____.
- Improvements
Randall unilaterally converts part of the cabin into a science laboratory, to foster his passion for chemistry. To do so, he had to eliminate the cabin’s game room. He seeks contribution from Kevin, for Kevin’s fair share of Randall’s “improvements.” Will Randall succeed?
No. During the life of the co-tenancy there is no right to contribution for “improvements” made by one co- tenant.
What about at partition? -> The improver gets the credit for any value that his enhancement cost.
- Waste
A co-tenant must not commit waste. During the life of the co-tenancy, a co-tenant is permitted to bring an action for waste against another co-tenant.
Recall the three types of waste: voluntary, permissive, ameliorative.
Which forms of waste might reside on the basis of the previous hypothetical where Randall unilaterally converted part of the cabin into a chemistry lab, eliminating the premises’ game room in the process? -> voluntary or ameliorative
- Partition
A joint tenant or tenant in common has a right to bring an action for partition. Recall the three types of partition here: voluntary agreement, partition in kind, and forced sale.
26
The Four Leasehold or Nonfreehold Estates
```
There are four leasehold estates:
• The tenancy for years
• The periodic tenancy
• The tenancy at will
• The tenancy at sufferance
```
27
The Four Leasehold or Nonfreehold Estates: THE TENANCY FOR YEARS
This lease, also known as the estate for years or term of years, is for a fixed, determined period of time. That period could be, for example, as short as one week or as long as 50 years.
exam tip: Watch for a termination date. Whenever you know the termination date from the start, you have a tenancy for years.
How much notice is needed to terminate a term of years? -> none.
A term of years greater than one year must be in writing to be enforceable. Why? -> SOF
28
The Four Leasehold or Nonfreehold Estates: THE PERIODIC TENANCY
This is a lease which continues for successive inter- vals until L or T give proper notice of termination.
What is the hallmark of the periodic tenancy? -> continuous until properly terminated
- Creation
Express
The periodic tenancy can be created expressly.
By Implication
The periodic tenancy can also arise by implication, in any one of three ways:
• Land is leased with no mention of duration, but provision is made for the payment of rent at set intervals.
• An oral term of years in violation of the Statute of Frauds creates an implied periodic tenancy, measured by the way rent is tendered.
• In a residential lease, if a landlord elects to hold over a tenant who has wrongfully stayed on past the conclusion of the original lease, an implied periodic tenancy arises measured by the way rent is now tendered.
- Termination
How is a periodic tenancy terminated? -> Notice, usually in writing, must be given
How much notice is necessary? -> at common law, at least equal to a given interval or period itself
Exam Tip:
In a month-to-month periodic tenancy, how much notice is required? -> 1 month
In a week-to-week periodic tenancy, how much notice is required? -> 1 week
In a tenancy that is year-to-year or greater, how much notice is required? ->
• Six months at common law, but one month under the Restatement. One month is the bar examiners’ preferred approach.
Note: By private agreement, the parties may lengthen or shorten these common-law prescribed notice provisions.
29
The Four Leasehold or Nonfreehold Estates: THE TENANCY AT WILL
This is a tenancy of no fixed period of duration. For example, “To T for as long as L or T desires.”
- Creation
Unless the parties expressly agree to a tenancy at will, the payment of regular rent will cause a court to treat the tenancy as an implied periodic tenancy.
- Termination
In theory, a tenancy at will can be terminated by either party at any time.
Yet today, a reasonable demand to quit the premises is typically required.
30
The Four Leasehold or Nonfreehold Estates: THE TENANCY AT SUFFERANCE
- Creation
It is created when T has wrongfully held over, past the expiration of the lease. We give this wrongdoer a leasehold estate (the tenancy at sufferance), to permit L to recover rent.
- Termination
The tenancy at sufferance is short-lived. It lasts only until L either evicts T or elects to hold T to a new tenancy.
31
Tenant's Duties
T HAS TWO PRIMARY DUTIES:
• T’s duty to repair;
• T’s duty to pay rent.
32
Tenant's Duties: T’S DUTY TO REPAIR
- T’s Duty to Repair When Lease Is Silent
T need only maintain the premises. What does that mean? -> routine repairs others than those attributable to ordinary wear and tear
What is the difference between a routine repair (which T is obliged to make) and a repair occasioned by ordinary wear and tear (which T is not obliged to make)? [its common sense; this lady sucks and gave terrible examples]
T Must Not Commit Waste
T’s duty to repair is linked to the doctrine of waste. Recall the three types of waste:
• Voluntary waste -> over destruction
• Permissive waste -> pattern of neglect
• Ameliorative Waste -> changes that enhance value
The Law of Fixtures
The law of fixtures is related to the doctrine of waste. How so? -> when a tenant removes a fixture they commit voluntary waste
To make sense of that precept, it is important to know the meaning of the term “fixture.” A fixture is a once movable chattel that, by virtue of its annexation to realty, objectively shows the intent to permanently improve the realty.
FIXTURES PASS WITH OWNERSHIP OF THE LAND
This means that if what T installed amounts to a fixture, T must not remove it.
How to Tell When a Tenant Installation Qualifies as a Fixture
There are two ways to tell.
• First, express agreement controls.
• What if there is no express agreement on point?
T may remove a chattel that she has installed so long as removal does not cause substantial harm to the premises.
Note: If removal will cause substantial damage to the premises, then in objective judgment T has shown the intention to install a fixture. Thus, it must stay put.
Remember: Fixtures pass with ownership of the land. If T removes a fixture, she is liable for voluntary waste.
- T’s Duty to Repair When T Has Expressly Covenanted in Lease to Maintain Property in Good Condition for Duration of the Lease
At common law, historically, T was responsible for any loss to the property, including loss attributable to force of nature, such as:
Today, the majority view is: T may end the lease when the premises are destroyed without T's fault
33
Tenant's Duties: T’S DUTY TO PAY RENT
- T Breaches the Duty to Pay Rent and Is in Possession of the Premises
The landlord’s only options are: -> evict through the courts or continue relationship and sue for rent due.
If the landlord moves to evict, is she nonetheless entitled to rent?
By virtue of the eviction action, the defaulting tenant is now deemed:
LANDLORD MUST NOT ENGAGE IN SELF-HELP, such as:
Self-help is flatly outlawed and is punishable civilly and criminally.
- T Breaches the Duty to Pay Rent But Is Out of Possession
For example, suppose that T wrongfully vacates with time left on a term-of-years lease.
Remember S I R
• Surrender: L could choose to treat T’s abandon- ment as an implicit offer of surrender, which L accepts. What is surrender?
• Ignore the abandonment and hold T responsible for the unpaid rent, just as if T were still there. This option is available only in a minority of states.
• Re-let the premises on the wrongdoer-tenant’s be- half, and hold the wrongdoer-tenant liable for any deficiency.
Majority rule: L must at least try to re-let. Why?
34
Landlord's duties: DUTY TO DELIVER POSSESSION
The majority rule requires that L put T in actual physical possession of the premises. Thus, if at the start of T’s lease, a prior holdover T is still in possession, what result?
35
Landlord's duties: THE IMPLIED COVENANT OF QUIET ENJOYMENT**
This exceedingly important promise arises by implication in every residential and commercial lease. What does it provide? -> T has right to quiet use and enjoyment of premises without interference from L
- Breach by Wrongful Eviction
When does this occur? -> When L wrongfully evicts or excludes T
- Breach by Constructive Eviction
How might this occur? -> look to SING
Suppose, for example, that every time it rains, Dido’s apartment floods. She has a claim for constructive eviction if three elements are met.
To recall the elements of constructive eviction, remem- ber S I N G:
• Substantial Interference:
• Notice: (T must tell L and L must fail to fix the issue)
• Goodbye:
Acts of Other Tenants
Is the landlord liable to a tenant for the wrongful acts of other tenants?
General Rule: No
Two exceptions: L must not allow a nuisance on site; L must control common areas
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Landlord's duties: THE IMPLIED WARRANTY OF
| HABITABILITY **
This important implied promise applies only to residential leases and not to commercial leases. The implied warranty of habitability is non-waivable.
- The Standard
What does the implied warranty of habitability provide? -> Premises must be fit for basic human dwelling
How is the appropriate standard for habitability discerned? -> case law and statutory law
What sorts of problems trigger breach of the implied warranty of habitability? -> no heat, running water, plumbing
T’s Entitlements When Implied Warranty of Habitability Is Breached
Remember M R 3: Move, Repair, Reduce, Remain.
• M:
• R:
• R:
Typically, T must place withheld rent into an escrow account to show her good faith.
• R: pay rent and sue for money damages
Exam Tip: On the exam, remember the difference between the covenant of quiet enjoyment (where to plead constructive eviction successfully T must vacate), and the implied warranty of habitability, where T could vacate but is not required to.
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Landlord's duties: RETALIATORY EVICTION
If T lawfully reports L for housing code violations, L is barred from penalizing T, by, for example, raising rent, ending the lease, harassing T, or taking any other reprisals.
The reason for the doctrine of retaliatory eviction? -> to encourage good faith tenant whistle blowing
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Transfers of leaseholds/landlord's tort liability: TRANSFER OF LEASEHOLD—THE
ASSIGNMENT VERSUS THE SUBLEASE
In the absence of some prohibition in the lease, a T may freely transfer his or her interest in whole (thereby accomplishing an assignment) or in part (thereby accomplishing a sublease). In the lease, L can prohibit T from assigning or subletting without L’s prior written approval. However, once L consents to one transfer by T, L waives the right to object to future transfers by that T, unless L expressly reserves the right.
- The Assignment
T1 has 10 months remaining on a two-year term of years lease. T1 transfers all 10 months to T2. Is this an assignment or a sublease? -> assignment
L and T2
As a result of the assignment, L and T2 are in privity of estate. Why? -> T2 is in possession
Because L and T2 are in privity of estate, they are liable to each other for all of the covenants (promises) in the original lease that: -> run with the land
Note: L and T2 are not in privity of contract. Why not?
They never exchanged the original promissory words of contract that created the lease.
L and T1
As a result of an assignment, L and T1 are no longer in privity of estate. Why not? -> T1 is no longer in possession
However, they remain in privity of contract. Why?
They shared the original words of contract that created the lease.
Because L and T1 remain in privity of contract: -> the are secondarily liable to each other. This means that if T2 cannot pay, T1 is liable.
L leases Blackacre to T1. T1 assigns to T2. T2 assigns to T3. T3 then engages in flagrant abuse to the premises.
Can L proceed against T3, the direct wrongdoer? -> Yes
Can L proceed against T1, the original tenant? -> Yes (under privity of K)
Can L proceed against T2? -> No, privity of estate ended when T3 took
- The Sublease
When does a sublease arise? -> T1 transfers less than time left
What is the result of a sublease? -> T2 is responsible to T1. T2 and L are not in privity of K.
The landlord and sublessee are in neither privity of estate nor privity of contract. Instead, T2 is responsible to T1 and vice versa.
Note: The relationship between L and T1 remains ful- ly intact. Thus, for example, if T2 fails to pay rent, L proceeds against T1 and T1 in turn proceeds against T2. If the residential premises betray the implied warranty of habitability, T2 proceeds against T1 and T1 in turn proceeds against L.
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Transfers of leaseholds/landlord's tort liability: LANDLORD’S TORT LIABILITY
- Common Law of Caveat Lessee
The norm: Let the tenant beware. In tort, L was under no duty to make the premises safe.
- Five Most Important Exceptions
To remember: When tenant learns of these excep- tions to the harsh common law of caveat lessee, she CLAPS.
• Common Areas: (L must maintain common areas)
• Latent Defects Rule: L must warn T of hidden defects of which L has knowledge or reason to know.
Note: This is a duty to warn, and not a duty to re- pair.
• Assumption of Repairs: While under no duty to make repairs, once undertaken, L must complete them with reasonable care.
• Public Use Rule: L who leases public space (e.g., a convention hall or museum), and who should know, because of the significant nature of the defect and the short length of the lease, that T will not repair, is liable for any defects on the premises.
• Short-Term Lease of Furnished Dwelling: L is responsible for any defective condition which proximately injures T. Why? -> T has neither the time or ability to make repairs themselves
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Easements
An easement is a grant of a nonpossessory property interest that entitles its holder to some form of use or enjoyment of another’s land. Some common examples of easements:
• The right to lay utility lines on another’s land;
• The right of way over another’s land;
• The right to tap into a neighbor’s drain.
- EASEMENTS ARE AFFIRMATIVE OR NEGATIVE
Affirmative
Most easements are affirmative. An affirmative easement is the right to go onto and do something on servient land.
Negative
The negative easement entitles its holder to prevent the servient landowner from doing something that would otherwise be permissible. Negative easements are generally recognized in only four categories:
```
Remember L A S S :
• L: light
• A: air
• S: support
• S: stream water from artificial flow
```
A minority of states also allow a negative easement for scenic view.
Creation of a Negative Easement
Negative easements can only be created expressly, by a writing signed by the grantor. There is no natural or automatic right to a negative easement.
- APPURTENANT OR IN GROSS
An easement is either appurtenant to land or it is held in gross.
Appurtenant
The easement is appurtenant when it benefits its holder in his physical use or enjoyment of his property. How will you know when you’ve got an easement appurtenant?
->
Two parcels of land must be involved:
• a dominant tenement, which derives the benefit and
• a servient tenement, which bears the burden.
In Gross
The easement is in gross if it confers upon its holder only some personal or pecuniary advantage that is not related to his use or enjoyment of his land. Here, servient land is burdened. However, there is no benefited or dominant tenement.
Some common examples of an easement in gross:
• The right to place a billboard on another’s lot
• The right to swim in another’s pond
• The utility company’s right to lay power lines on another’s lot
- TRANSFERABILITY
The Easement Appurtenant
The appurtenant easement passes automatically with the dominant tenement, regardless of whether it is even mentioned in the conveyance.
The burden of the easement appurtenant also passes automatically with the servient estate, unless the new owner is a bona fide purchaser without notice of the easement.
The Easement In Gross
An easement in gross is not transferable unless it is for commercial purposes.
- CREATION OF AN AFFIRMATIVE EASEMENT
Remember P I N G
P: prescription
I: implication
N: necessity
G: grant
By Grant
An easement to endure for more than one year must be in a writing that complies with the formal elements of a deed. Why? -> SOF
What is the writing that evidences the easement called? -> deed of easement
By Implication
This is also known as the easement implied from existing use.
hypo:
A owns two lots. Lot 1 is hooked up to a sewer drain located on lot 2. A sells lot 1 to B, with no mention of B’s right to continue to use the drain on A’s remaining lot 2. For the court to imply an easement on B’s behalf it would have to find:
• the previous use was apparent; AND
• the parties expected that the use would survive division because it is reasonably necessary to the dominant tenement’s use and enjoyment.
By Necessity
An easement by necessity will be implied when grantor conveys a portion of its land with no way out, except over some part of the grantor’s remaining land.
By Prescription
An easement may be acquired by analogy to adverse possession.
Remember C O A H:
C: Continuous use for the given statutory period
O: Open and notorious use
A: Actual use that need not be exclusive*
H: Hostile use (without the servient owner’s permission)
Note: Permission defeats the acquisition of an easement by prescription. An easement by prescription requires that the use be hostile.
- SCOPE
How is the scope of an easement determined? -> By the terms or the conditions that created it.
- TERMINATION
There are 8 ways to terminate an easement. Remember END CRAMP: Estoppel, Necessity, Destruction, Condemnation, Release, Abandonment, Merger, Prescription
Estoppel
Here, the servient owner materially changes his or her position in reasonable reliance on the easement holder’s assurances that the easement will no longer be enforced.
Necessity
Easements created by necessity expire as soon as the necessity ends, unless the easement was reduced to an express grant.
Destruction
Destruction of the servient land, other than through the willful conduct of the servient owner, will terminate the easement.
Condemnation
Condemnation of the servient estate by governmental eminent domain power will terminate the easement.
Release*
A release given by the easement holder to the servi- ent land owner will terminate the easement. Does the release have to be in writing? -> yes
Abandonment
What must an easement holder show to terminate the easement by abandonment? -> physical action
(Note: Abandonment requires physical action by the easement holder.)
Merger
The easement is extinguished when title to the easement and title to the servient land become vested in the same person.
For example, assume now that A sells the parcel over which she once enjoyed the easement of right of way. The easement is not automatically reinstated. To create it, A would have to start from scratch.
```
Prescription
The servient owner may extinguish the easement by interfering with it in accordance with the elements of adverse possession.
Remember C O A H:
C: Continuous interference
O: Open and notorious
A: Actual
H: Hostile to the easement holder
```
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Licenses and Profits
- THE LICENSE
Creation
The license is a mere privilege to enter another’s land for some delineated purpose. Is a writing needed to create a license? -> No, licenses are not subject to the SOF
Revocation
Licenses are freely revocable, at the will of the licen- sor, unless estoppel applies to bar revocation.
Note the classic license cases:
• The ticket cases: What does a ticket create? -> a freely revocable license
• Neighbors talking by the fence: Here, beware of seemingly oral easements. An easement to endure for more than one year must be in writing.
Estoppel
When will estoppel apply to bar revocation?
Only when the licensee has invested substantial money or labor or both in reasonable reliance on the license’s continuation.
- THE PROFIT
The profit entitles its holder to enter the servient land and take from it:
What are the rules for creating and terminating profits? -> same as for easements
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Restrictive Covenants
- THE COVENANT
The covenant is a promise to do or not do something related to land. It is unlike the easement because it is not the grant of a property interest. Instead, it is a contractual limitation or promise regarding land.
Negative and Affirmative
Covenants can be negative. These are known as re- strictive covenants. What is a restrictive covenant? -> a promise to restrain from doing something related to land
What are some examples of restrictive covenants? -> promise not to build commercially, post for sale sign on lawn, etc.
Covenants can be affirmative: The affirmative cov- enant is a promise to do something related to land. What are some examples? -> I promise maintain common fence.
Covenant vs. Equitable Servitude
On the exam, the same set of facts could seem to give rise to either a covenant or an equitable servitude. How will you know which analysis to apply?
->
What that means is that if the plaintiff wants money damages, you must construe the promise as a covenant. If the plaintiff wants an injunction, you must construe the promise as an equitable servitude.
Running with the Land
In covenant parlance, one tract is burdened by the promise and another is benefited.
When will the covenant run with the land? In other words, when is it capable of binding successors? -> see below acronym
Suppose neighbor A promises neighbor B that A will not build for commercial purposes on A’s property. A’s parcel is burdened by the promise. B’s parcel is benefited. Later, A sells her burdened parcel to A-1. B sells his benefited parcel to B-1. Now, A-1 has commenced manufacture of a steak sauce plant on the premises. B-1 wishes to proceed against A-1 for money damages. Will B-1 succeed?
It depends on whether the facts support the conclusion that the burden and benefit run. [see chart page 67]
First, does the burden of A’s promise to B run from A to A-1?
Note: Always analyze the burden side first. It is harder for the burden to run than for the benefit to run.
For the Burden of a Covenant to Run Remember W I T H N:
~Writing: The original promise (between A and B) must have been in writing.
~Intent: The original parties (A and B) must have intend- ed that the covenant would run.
Note: Courts are generous in finding the requisite intent.
~Touch and concern the land:
The promise must affect the parties’ legal relations as landowners and not simply as members of the community at large.
Note: Covenants to pay money to be used in connection with the land (such as homeowners’ association fees) and covenants not to compete do touch and concern the land.
~Horizontal and vertical privity: Both are required for the burden to run.
• Horizontal privity refers to the nexus between the original promising parties (A and B).
It requires that they be in succession of estate, meaning that they were in a grantor/ grantee or landlord/tenant or mortgagor/ mortgagee relationship when the covenant was created.
Horizontal privity is difficult to establish. Its absence is the reason why many burdens will not run.
• Vertical privity refers to the nexus between A and A-1.
It simply requires some non-hostile nexus, such as: contract, devise, or descent. The only time vertical privity will be absent: when A-1 acquired her interest through adverse possession.
~Notice: A-1 must have had notice of the promise when A-1 took.
Second, does the benefit of A’s promise to B run from B to B-1?
For the Benefit of a Covenant to Run Remember W I T V:
~Writing: the original promise (between A and B) was in writing.
~Intent: the original parties (A and B) must have intend- ed that the benefit would run.
~Touch and concern: The promise must affect the par- ties as landowners.
~Vertical privity: a non-hostile nexus between B and B-1.
Note: Horizontal privity is not required for the benefit
to run.
That’s why it’s easier for the benefit to run than for the burden to run.
- EQUITABLE SERVITUDES
The equitable servitude is a promise that equity will enforce against successors.
The equitable servitude is accompanied by which form of relief? -> injunctive relief
Creation
To create an equitable servitude that will bind successors:
Remember W I T N E S:
~ Writing: Generally, but not always, the original promise
was in writing.
~ Intent: The original parties intended that the promise would be enforceable by and against assignees.
~ Touch and concern: The promise affects the parties as landowners.
~ Notice: The assignees of the burdened land had notice of the promise when they took.
~ ES: Equitable Servitude
NOTE: PRIVITY IS NOT REQUIRED TO BIND SUCCESSORS TO AN EQUITABLE SERVITUDE
The Implied Equitable Servitude—The General or Common Scheme Doctrine
Suppose A subdivides her land into 50 lots. She sells lots 1 through 45 through deeds that contain cove- nants restricting use to residential purposes. A then sells one of the remaining lots to a commercial entity, B, by deed containing no such covenant. B now seeks to build a convenience store on his lot. Can B be en- joined from doing so? -> Yes
Under the common scheme doctrine, the court will imply a reciprocal negative servitude to hold the unrestricted lot holder to the promise. (Reciprocal negative servitude means an implied equitable servitude).
The two elements of the general or common scheme doctrine:
When the sales began, the subdivider (A) had a general scheme of residential development which included the defendant’s lot.
The defendant lot-holder (B) had notice of the promise contained in those prior deeds when it took.
The three forms of notice:
Remember A I R:
~ Actual notice, meaning: you actually knew
~ Inquiry notice, meaning: the neighborhood conforms to the common restriction
~ Record notice, meaning the form of notice sometimes imputed to buyers on the basis of: -> the public documents
//from a question explanation:
in the absence of a writing, reciprocal negative servitudes may be implied if:
1. There is a common scheme for development (i.e., a plan existing at the time sales of the subdivision parcels began that all parcels be developed within the terms of the negative covenant); and 2. The grantee had actual, record, or inquiry notice of the covenant.
Equitable Defenses to Enforcement of an Equitable Servitude
Changed Conditions
The changed circumstances alleged by the party seeking release from the terms of an equitable servitude must be: -> so pervasive that the entire area has changed
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Conveyancing generally
- LAND CONVEYANCING: THE PURCHASE AND SALE OF REAL ESTATE
Every conveyance of real estate consists of a two- step process.
Step I: The land contract, which conveys equitable title. The land contract endures until step II.
Step II: The closing, where the deed passes legal title and becomes our operative document.
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The land contract
- STATUTE OF FRAUDS
The Standard
Under the Statute of Frauds, the contract must:
• be in writing,
• signed by the party against whom enforcement is sought,
• describe the land, and
• be supported by consideration.
Size of Land Recited in Contract Is More than Its Actual Size
hypo: B enters into a contract to purchase a farm. The contract recites that the farm is 100 acres. When B has a survey done, B learns that the farm is actually 98 acres. What is B’s remedy? -> specific performance with a pro rata reduction in price
Exception to Statute of Frauds—The Doctrine of Part Performance
If, on your facts, you have two of the following three, the doctrine is satisfied and equity will decree specific performance of an oral contract for the sale of land:
• B takes possession
• B pays all or a SIGNIFICANT part of price
• B makes substantial improvements
- THE PROBLEM OF RISK OF LOSS
Apply the doctrine of equitable conversion: -> equity regards as done that which ought to be done
In equity, who owns the land once the contract is
signed? -> in equity, the buyer
One important result flows from this: Destruction. If, in the interim between contract and closing, Blackacre is destroyed through no fault of either party, who bears the risk of loss? -> Buyer, because they have equitable title (unless contract says otherwise
- TWO IMPLIED PROMISES IN EVERY LAND CONTRACT
The First Implied Promise: Seller Will Provide Marketable Title
Seller promises to provide marketable title at the clos- ing. What is marketable title? -> free from reasonable doubt (free from lawsuit)
There are three circumstances that will render title unmarketable:
• Adverse possession: If even a portion of the title rests on adverse possession, it is unmarketable. In other words, for title to be marketable, Seller must be able to provide what kind of title? -> good record title
• Encumbrances: Marketable title means an unencumbered fee simple. What does this mean? ->
Servitudes and mortgages render title unmarketable unless the buyer has waived them.
Note: Seller has the right to satisfy an outstanding mortgage or lien at the closing, with the proceeds of the sale. Thus, buyer cannot claim title is unmarketable because it is subject to a mortgage prior to closing, so long as the parties understand that the closing will result in the mortgage being satisfied or discharged.
• Zoning violations:
if violating zoning violations then there is a real threat of a lawsuit.
The Second Implied Promise: Seller Will Not Make False Statements of Material Fact
Seller promises not to make any false statements of material fact. The majority of states now also hold seller liable for failing to disclose latent material defects.
Can the seller avoid liability for fraud or failure to dis- close by including in the contract a general disclaimer of liability (for example, “property sold as is” or “with all faults”)? -> No
- NO IMPLIED WARRANTIES OF FITNESS OR HABITABILITY
The land contract contains no implied warranties of fitness or habitability. What is the common law norm? -> caveat emptor (buyer beware)
Exception
One important exception: The implied warranty of fitness and workmanlike construction applies to the sale of a new home by a builder-vendor.
from questions:
Under the doctrine of merger, the contract merges into the deed, and the terms of the contract are meaningless. Even though the contract specified a “good and marketable title,” it is the deed that controls, and the deed contained no covenants of title. A deed does not incorporate the title terms of a contract.
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The Closing
The controlling document now is the deed. What does the deed do? -> pass legal title from seller to buyer
Remember: to pass legal title from seller to buyer the deed must be “LEAD”: Lawfully Executed And Delivered.
- LAWFUL EXECUTION OF A DEED
Must the deed be in writing? -> yes
Note: The deed need not recite consideration, nor must consideration pass to make a deed valid.
Description of Land
Does the description of the land have to be perfect? -> No, but it must be unambiguous and provide a good lead as to what it is that has been transfered
hypo: The deed recites that O conveys “all of O’s land,” or “all of O’s land in Essex County.” Would such descriptions suffice? -> Yes
O conveys “some of my land in Sussex County.” Does such a description satisfy the standard? -> No
- THE DELIVERY REQUIREMENT**
• The delivery requirement could be satisfied when the grantor physically or manually transfers the deed to the grantee.
It is permissible here to use the mail or agent or messenger.
• However, delivery does not necessarily require actual physical transfer of the instrument itself.
The standard for delivery is a legal standard*, and is a test solely of present intent. Ask: Did grantor have the present intent to be bound, irrespective of whether or not the deed was literally handed over to the grantee.
• But what if the recipient expressly rejects the deed? -> rejection defeats delivery
• If a deed, absolute on its face, is transferred to the grantee with an oral condition, what result? -> the oral condition drops out and delivery is done.
• Is delivery by escrow permitted? -> Yes
Grantor may deliver an executed deed to a third party, known as an escrow agent, with instructions that the deed be delivered to grantee once certain conditions are met. What happens once the conditions are met? -> title passes to grantee
What happens if the grantor dies or becomes incompetent or is otherwise unavailable before the express conditions are met? -> Title will still pass from the escrow agent to the grantee once the conditions are met.
- COVENANTS FOR TITLE AND THE THREE TYPES OF DEED
The Quitclaim
A quitclaim deed releases whatever interest a grantor might have in the property and contains no covenants for title.
Which covenants does a quitclaim deed contain? -> None
Grantor isn’t even promising that he has title to convey. This is the worst deed a buyer could hope for.
The General Warranty Deed
The best deed a buyer could hope for. Why? -> It warrants against all defects in title, including those attributable to grantor’s predecessors.
The general warranty deed typically contains all six of the following covenants. The first three are present covenants, meaning: a present covenant is breached, if ever, at the time the deed is delivered.
When does the statute of limitations for breach of a present covenant begin to run? -> at delivery
The three present covenants:
• The covenant of seisin: grantor promises she owns land
• The covenant of the right to convey: grantor has power to transfer
• The covenant against encumbrances: no servitudes or leans on the land
The next three covenants are future covenants, mean- ing: a future covenant is not breached, if ever, until grantee is disturbed in possession.
When does the statute of limitations for breach of a future covenant begin to run? -> when grantee is disturbed in possession
The three future covenants:
• The covenant for quiet enjoyment: Grantor promises that grantee will not be disturbed in possession by a third party’s lawful claim of title.
• The covenant of warranty: Grantor promises to defend grantee should there by any superior claims of title asserted by others.
• The covenant for further assurances: Grantor promises to do what’s needed to perfect grantee’s title if it later turns out to be imperfect.
The Special Warranty Deed
This deed contains the same covenants as the gener- al warranty deed, but here the grantor makes those promises only on behalf of itself. (Note: Grantor makes no representations on behalf of its predecessors in interest.)
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The Recording System
Our model: The case of the double dealer.
O conveys Blackacre to A. Later, O conveys Black- acre, the same parcel, to B. O, our double dealer, has skipped town. In the battle of A vs. B, who wins? ->
Remember two brightline rules:
1) If B is a BONA FIDE PURCHASER, and we are in a NOTICE jurisdiction, B wins, regardless of whether or not she records before A does.
2) If B is a BONA FIDE PURCHASER and we are in a RACE-NOTICE jurisdiction, B wins if she records properly before A does.
Who do the recording acts protect? -> Bonafide purchasers and mortgagees
- BONA FIDE PURCHASER
A bona fide purchaser is one who:
• buys for value
• without notice that someone else got there first
Value
Two routine value questions:
• The bargain basement sale: as long as there is substantial pecuniary interest then its "for value". does not matter how good the sale was
• The case of the doomed donee: recording statutes do not protect donees, heirs, or devisees unless the shelter rule applies.
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Notice
The three forms of notice that a buyer may potentially be charged with are:
A I R:
A: actual notice
I: inquiry notice
R: record notice
```
Actual Notice
What does actual notice mean? -> prior to B's closing, B learns of A
Inquiry Notice
Whether he examines Blackacre prior to closing or not, B is on inquiry notice of whatever an examination of Blackacre would have revealed.
The buyer of real estate has a duty to inspect the premises before transfer of title, to see, for example, whether anyone else is in possession.
If another is in possession, B is charged with inquiry notice of that fact, regardless of whether B actually bothered to inspect or not.
Thus, in our model of the double dealer, if A had taken possession, B would be on inquiry notice of that fact, thereby defeating B’s status as a bona fide purchaser.
Inquiry notice also means that if a recorded instru- ment makes reference to an unrecorded transaction, grantee is on inquiry notice of whatever a reasonable follow-up would have revealed.
Record Notice
B is on record notice of A’s deed if at the time B takes, A’s deed was properly recorded within the chain of title.
In our model, what if A has not recorded, or has not recorded properly at the time B takes? Assume that B is a bona fide purchaser. Does B win? -> It depends on the recording statute
- THE RECORDING STATUTES
The Notice Statute
“A conveyance of an interest in land shall not be valid against any subsequent purchaser for value, without notice thereof, unless the conveyance is recorded.”
If, at the time B takes, he is a bona fide purchaser, he wins. It won’t matter that A may ultimately record first, before B does. It won’t matter, in the A vs. B contest, that B never records.
The Race-Notice Statute
“A conveyance of an interest in land shall not be valid against any subsequent purchaser for value, without notice thereof, whose conveyance is first recorded.”
What must B do to prevail? -> must be a BFP and win race to record
- CHAIN OF TITLE
Back to our original model, note that in either a notice or race-notice jurisdiction, B’s status as a subsequent bona fide purchaser will be defeated if A had promptly and properly recorded before B takes. In other words, A’s proper recordation: -> puts later buyers on record notice thereby defeating the possibilities of BFPs
To give record notice to subsequent takers, the deed must be recorded properly, within the chain of title.
The chain of title is the sequence of recorded documents capable of giving record notice to subsequent takers.
How is the chain of title established in most states? -> title search of grantor grantee index (?)
Note three discrete chain of title problems:
The Shelter Rule
One who takes from a BFP will prevail against any entity that the transferor-BFP would have prevailed against. In other words, the transferee “takes shelter” in the status of her transferor, and thereby “steps into the shoes” of the BFP even though she otherwise fails to meet the requirements of BFP status.
The Problem of the Wild Deed
O sells Blackacre to A, who does not record. Then, A sells to B. B records the A-to-B deed.
Is the A-to-B deed connected to the chain of title?
The A-to-B deed, therefore, is a wild deed.
The rule of the wild deed: If a deed, entered on the records (A to B), has a grantor unconnected to the chain of title (O to A), the deed is a wild deed. It is incapable of giving record notice of its existence.
Estoppel By Deed
In 1950, O owns Blackacre. He is thinking about sell- ing it to X, but for now decides against it. In 1950, X, who does not own Blackacre, sells it anyway, to A. A records.
In 1960, O finally sells Blackacre to X. X records.
In 1970, X, a double dealer, sells Blackacre to B. B records.
• As between X and A, who owned Blackacre from 1960-1969? -> A
The rule: One who conveys realty in which he has no interest (here, X back in 1950), is estopped from denying the validity of that conveyance if he subsequently acquires the title that he had previously purported to transfer (here, the 1960 O to X sale).
• Who owns Blackacre in 1970? -> B
• Why does B win in a notice state? -> last BFP
• Why does B win in a race-notice state? -> BFP who wins race to record
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Mortgages
- CREATION
A mortgage is the conveyance of a security interest in land, intended by the parties to be collateral for the repayment of a monetary obligation. In other words, the owner of real estate gives the lender a lien in that real estate to secure or backup the loan that the lender makes.
A mortgage is the union of two elements:
(1) a debt
(2) voluntary transfer of security interest (a lien) in debtors land to secure the debt
Vocabulary
When speaking of a mortgage, what are the debtor and creditor called? -> debtor is mortgager and creditor is mortgagee
Purchase-Money v. Non-Purchase-Money Mortgage
There are two primary ways to mortgage Blackacre:
the purchase-money mortgage and the non-purchase-money mortgage. The purchase-money mortgage is an extension of value by a lender who takes as collateral a security interest in the very real estate that its loan enables the debtor to acquire.
Writing
The mortgage typically must be in writing to satisfy the Statute of Frauds. This is the legal mortgage.
- TRANSFER OF INTERESTS
All parties to a mortgage can transfer their interests. (recording statute protects both sides of this transaction)
Transfer by Mortgagee
The mortgage automatically follows a properly transferred note.
Transfer by Mortgagor
If O, our debtor-mortgagor, sells Blackacre, which is now mortgaged, what happens to the mortgage?
It remains on the land as long as the mortgage instrument was properly recorded. (Remember: recording statutes protect mortgagees.)
All recording statutes apply to mortgages as well as deeds. Thus, a subsequent buyer takes subject to a properly recorded lien.
In a notice state, a subsequent BFP prevails over a prior grantee or mortgagee who has not yet recorded properly at the time the BFP takes.
Who is personally liable on the debt if O, our debtor- mortgagor, sells Blackacre to B?
If B has “assumed the mortgage” both O and B are personally liable. B is primarily liable, and O remains secondarily liable.
If B takes “subject to the mortgage” B assumes no personal liability. Only O is personally liable. But, if recorded, the mortgage remains on the land. Thus, if O does not pay, the mortgage may be foreclosed.
- FORECLOSURE
How to Proceed
Suppose that our debtor-mortgagor has defaulted on the loan and our mortgagee-creditor must look to the land for satisfaction. How must the mortgagee proceed?
->
The mortgagee must foreclose by proper judicial proceeding. At foreclosure, the land is sold. The sale proceeds go to satisfying the debt.
What if the proceeds from the sale of Blackacre are less than the amount owed? -> creditor brings deficiency action against debtor
By contrast, what if there is a surplus? ->
Junior liens are paid off in order of their priority. Any remaining surplus goes to the debtor.
hypo: Assume that Blackacre has a fair market value
of $50,000 and is subject to three mortgages executed by its owner, Madge. First Bank, with
first priority, is owed $30,000. Second Bank, with second priority, is owed $15,000, and Third Bank, with third priority, is owed $10,000. Assume that First Bank’s mortgage is foreclosed, and that Blackacre is sold for $50,000. How will the funds be distributed?
- Off the top: Attorneys’ fees and expenses of the foreclosure and then any accrued interest on First Bank’s mortgage. (Assume for purposes of this hypothetical that these items are zero.)
- The sale proceeds are then used to pay off the mortgages in the order of their priority. Each claimant is entitled to satisfaction in full before a junior lienholder may take. Thus, First Bank takes $30,000. Then, Second Bank takes $15,000. Third Bank takes $5,000. (Note that Third Bank comes up short. It should proceed against the debtor, Madge, for a deficiency judgment.)
Effect of Foreclosure on Various Interests Junior Interests
Foreclosure will terminate interests junior to the mortgage being foreclosed but will not affect senior interests. (This means that junior lienholders will be paid in descending order with the proceeds from the sale, assuming funds are left over after full satisfaction of superior claims. Junior lienholders should be able to proceed for a deficiency judgment. *But once foreclosure of a superior claim has occurred, with the proceeds distributed appropriately, junior lienholders can no longer look to Blackacre for satisfaction.)
Who are the necessary parties to the foreclosure action? -> junior lien holders
Is the debtor-mortgagor also a necessary party to the foreclosure action?
YES__. The debtor-mortgagor is considered a necessary party and must be joined, particularly if the creditor wishes to proceed against the debtor for a person- al deficiency judgment.
Failure to include a necessary party results in the preservation of that party’s claim, despite the foreclosure and sale. Thus, if a necessary party is not joined, his mortgage will remain on the land.
Senior Interests
Foreclosure does not affect any interest senior to the mortgage being foreclosed. The buyer at the sale takes subject to such interest.
Is the buyer personally liable on the senior debt?
No. But as a practical matter, if the senior mortgage is not paid, sooner or later the senior creditor will foreclose against the land.
* Foreclosure does not affect any interest senior to the mortgage being foreclosed.
[hypo language]
Foreclosure does not affect any interest senior to the mortgage being foreclosed.
Is the foreclosure sale buyer personally liable to First Bank?
No. Only the debtor Madge is personally liable
to First Bank. But, if she cannot repay the debt, First Bank (whose lien was properly recorded)
is entitled to foreclose on Blackacre. What this means is that because First Bank’s mortgage was properly recorded, it sticks with the land. Thus, if debtor Madge cannot pay back First Bank, First Bank can foreclose on the land. With that in mind, the foreclosure sale buyer, albeit buying at Second Bank’s foreclosure sale, nonetheless has a strong incentive to pay off First Bank’s lien. Otherwise, Blackacre is subject to a later foreclosure action brought by First Bank if and when debtor Madge is unable to pay off First Bank’s lien.
Priorities
As a creditor, you must record. Until you record, you have no priority. Once recorded, priority is determined by the norm of first-in-time, first-in-right. What does that mean? -> creditor who records first takes first
Purchase-Money Mortgage
The purchase-money mortgage: A mortgage given to secure a loan that enables the debtor to acquire the encumbered land.
Subordination Agreements
By private agreement, a senior creditor may agree to subordinate its priority to a junior creditor. Subordination agreements are permissible.
~Redemption
Redemption in Equity
Equitable redemption is universally recognized up to the date of sale. What that means is that at any time prior to the foreclosure sale the debtor has the right to redeem the land by freeing it of the mortgage.
Once a valid foreclosure has taken place the right to equitable redemption is cut off.
How is the right of equitable redemption exercised when the note does not contain an acceleration clause? (An acceleration clause permits the mortgagee to declare the full balance due in the event of default.) -> pay off missed payment plus accrued interest and costs
What if the mortgage or note contained an acceleration clause? -> debtor must pay off full balance, plus interest, plus costs.
May a debtor/mortgagor waive the right to redeem in the mortgage itself? -> No (this is called clogging)
statutory redemption is the right of a mortgagor to recover the land after the foreclosure sale has occurred, usually by paying the foreclosure share price
48
Zoning
Defined: Pursuant to its police powers, government may enact statutes to control land use.
- THE VARIANCE
The principal means to achieve flexibility in zoning. The variance grants a landowner permission to depart from a zoning stricture.
What must a proponent of a variance show? -> undue hardship and that the variance won't diminish neighboring property values
The variance is granted or denied by administrative action, typically in the form of a zoning board.
- THE NONCONFORMING USE
A once lawful, existing use is now deemed noncon- forming by a new zoning ordinance. Can the once lawful use be eliminated all at once? -> Not unless just compensation is paid.
- CUMULATIVE ZONING
There are two types of zoning ordinances: cumulative and noncumulative.
Cumulative Zoning Ordinance*
A cumulative zoning ordinance creates a hierarchy of uses of land, where a single-family home is the highest use, followed for example by a two-family home (which is a lesser use), and then an apartment building (an even lesser use), and then a strip mall (even lesser), and then a factory (even lesser). When zoned for a certain level, land can be used for that level and any higher level.
Noncumulative Zoning Ordinance
Under a noncumulative zoning ordinance, land may be used only for the purpose for which it is zoned.
49
Condominiums and homeowners' associations
- CONDOMINIUMS
Each owns the interior of her individual unit plus an undivided interest in the exterior and common elements.
- HOMEOWNERS’ ASSOCIATIONS
(HOA)
The owner of each condominium is a member of the HOA. What does the HOA oversee? -> the common elements
The HOA passes rules (contained in what’s called a
declaration of covenants, conditions, and restrictions (or CC&R)), that prescribe what owners can and cannot do with their property. For example, CC&Rs might prohibit pets or the posting of “for sale” signs or require that balconies be kept free of trash.
Each condominium owner must pay regular dues to the HOA to maintain the common elements.
What if the monthly fees are insufficient to pay necessary expenses (for example, a major roof repair is needed)? -> will pay a special one time fee
50
lien theory of mortgages
Whether a mortgage creates a severance or not depends on whether the state follows the lien theory or the title theory of mortgages. Lien theory means no severance; title theory means severance.
51
If an easement is said to be surcharged, this means:
If an easement is said to be surcharged, this means the easement's legal scope was exceeded. The holder of an easement has the right to use another's land (i.e., the servient tenement), but has no right to possess the land. The scope of an easement is determined by the reasonable intent of the original parties, and when the scope has been specified, these specifics will govern. However, when an easement's scope has been set out only in general language, courts will interpret it to accommodate the holder's present and future reasonable needs. In either event, if the easement holder uses the easement in a way that exceeds its legal scope, the easement is surcharged.
52
What happens to easement when servant estate is condemned?
Condemnation of the servient estate will terminate an easement. The easement holder may be entitled to compensation for the value lost.
53
The hostility element of adverse possession requires that the possessor:
Lack the true owner's permission to be on the land
54
O conveys a life estate to A, with a remainder to B.
If during A's lifetime, X enters into actual, exclusive possession that is open and notorious and hostile for the statutory period, will X obtain title to the land?
No, but X will acquire A's life estate
55
If an adverse possessor uses land in violation of a recorded real covenant for the limitations period, she: (what happens to covenant?)
Takes title free of the real covenant
56
what is the order of priority for allocating mortgage foreclosure sale proceeds, from first to last?
1. Expenses of the sale, including attorneys' fees, and court costs; 2. The principal and accrued interest on the foreclosing party's loan; 3. Any junior lienors in the order of their priority; and then 4. The mortgagor.
57
What happens when to priority of lenders when a mortgage is modified?
Generally, the priority of a mortgage is determined by the time it was placed on the property, and the proceeds of a foreclosure sale will be used to pay off the mortgages in the order of their priority. However, if the landowner enters into a modification agreement with the senior mortgagee, raising its interest rate or otherwise making the agreement more burdensome, the junior mortgage will be given priority over the modification.
58
An elderly grandfather who wanted to ensure that his property would remain in the family after his death included the following clause in his will: "I give my house in the city to my son, but if he ever tries to sell it while he is alive, I want it taken away from him and given to my grandson." The grandfather's will was properly executed.
When the grandfather later died, what interests did the son and grandson take in the property?
The son received a fee simple in the property. The grandfather attempted to give his son a fee simple, but placed a restraint on alienation. Direct restraints on alienation of a fee simple are void. The grant is simply read as if it had been "O to A in fee simple." The grandson gets nothing.
59
Restriction on lots/property in a development generally. how can they be removed?
Restrictive covenants on all lots in a subdivision such as this can be voided if changed conditions have made the property unusable for the specified use, and this means that the entire subdivision must have changed so significantly that enforcement of the restriction would be inequitable. If some houses in the center of the subdivision are not affected by the pollution, then none of the restrictions can be voided; if all lots are affected, then all restrictions are voided.
60
Seller's implied right to clear title using proceeds of sale
The seller had an implied right to use the proceeds to clear title. It is true that the seller is obligated to transfer a title free of encumbrances, and a mortgage qualifies as an encumbrance. It is also true, however, that a seller may use proceeds paid by the buyer at closing to pay off mortgages, and thus deliver clear title to the buyer. As long as the amount due from the buyer is enough to pay off the note, the seller has an implied right to do this, and the existence of the note under these circumstances does not breach the contract sale.
61
Marketable title and adverse possession
Even if all elements of adverse possession have been met, the seller has to go to court to quiet title before it can be considered "marketable"
62
Damages to neighboring property during land development/renovation -- how do we prove right to damages?
must show either that his land would have been damaged without the storage shed or that the contractor was negligent. A landowner has a right to have his land supported in its natural state by adjoining land. If, however, the land has buildings on it, an excavating adjacent landowner is strictly liable for damage to the buildings caused by the excavation only if the excavation would have caused the land to subside even in its natural state (i.e., without buildings). Even if the land would not have subsided in its natural state, the excavating landowner is liable for the damages if she was negligent.
63
How does partial condemnation affect a landlord-tenant situation?
In partial condemnation cases, the landlord-tenant relationship continues, as does the tenant’s obligation to pay the entire rent for the remaining period of the lease. The tenant is, however, entitled to share in the condemnation award to the extent that the condemnation affected the tenant’s rights under the lease.
64
Covenants of warranty and further assurances
- Under the covenant of warranty, the grantor agrees to defend, on behalf of the grantee, any lawful or reasonable claims of title by a third party, and to compensate the grantee for any loss sustained by the claim of superior title.
- The covenant for further assurances is a covenant to perform whatever acts are reasonably necessary to perfect the title conveyed if it turns out to be imperfect. These covenants are “continuous” (run with the land) and require the grantor to assist the grantee in establishing title.
The covenants of seisin and encumbrances do not require such assistance. A covenant of seisin is a covenant that the grantor has the estate or interest that she purports to convey. Both title and possession at the time of the grant are necessary to satisfy this covenant. The covenant against encumbrances is a covenant assuring that there are neither visible encumbrances (easements, profits, etc.) nor invisible encumbrances (mortgages, etc.) against the title or interest conveyed.
65
A father executed a deed to his art gallery “to my daughter for her life, and on my daughter’s death to her children; provided, however, that if my daughter stops painting, to my brother.” The daughter has two children and is still painting.
At the time of the grant, what is the best description of the interest of the daughter’s two children?
The daughter’s two children have a vested remainder subject to open and subject to complete divestment. A remainder is a future interest created in a transferee that is capable of taking in possession on the natural termination of the preceding estate. A remainder is vested if the beneficiaries are ascertainable and their taking in possession is not subject to a condition precedent. A vested remainder created in a class of persons that is certain to take but is subject to diminution by reason of others becoming entitled to take is a vested remainder subject to open. Vested remainders may be subject to total divestment if possession is subject to being defeated by the happening of a condition subsequent. Here, the daughter’s two children have a remainder because, on the expiration of the daughter’s life estate, they will be entitled to possession of the property. The remainder is not subject to a condition precedent and the beneficiaries are in existence and ascertained, so the remainder is vested, not contingent. The remainder is subject to open because the daughter may have more children. Finally, the remainder is subject to total divestment because the daughter’s children’s right to possession is subject to being defeated by the daughter’s ceasing to paint.
66
When is a signed deed effective?
A deed is not effective to transfer an interest in realty unless it has been delivered, and there must be acceptance by the grantee to complete the conveyance.
67
RAP violation review
The Rule Against Perpetuities provides that no interest in property is valid unless it must vest, if at all, not later than 21 years after one or more lives in being at the creation of the interest. It applies to executory interests created in third persons but not to reversionary interests of the grantor. Like any other gift, a gift for charitable purposes is void for remoteness if it is contingent on the happening of an event that may not occur within the perpetuities period. The only exception is when there is a gift to one charity followed by a gift over to another charity upon a possibly remote event (the charity-to-charity exception).
68
Right of first refusal and RAP
Rights of first refusal / rights to purchase land are subject to RAP analysis
- no RAP violation if the right of first refusal is only exercisable by 1 ascertainable person
- if its granted to "sister and heir or assigns" then tis held by unascertainable people and there is a RAP violation
69
What happens to a joint tenancy when one person sells all or party of the joint tenancy?
the joint tenancy is terminated and a tenancy in common results.
70
holdover tenant basics
- if residential, holdover tenant goes to a month-to-month lease
- if commercial, holdover tenant mirrors term of previous written lease, however, periodic tenancy cannot exceed 1 year because of SOF (commercial is normally year to year)
How to decide amount of rent? If tenant receives notification of rent increase prior to lease expiring then they pay new amount, otherwise they keep paying what they have been paying
71
What is a profit?
A non-possessory interest in land that allows the profit holder to enter onto servient land to remove substance from land
can be appurtenant or gross
appurtenant -> when it benefits the dominant estate. cannot not independently transfer the profit from the dominant estate
gross -> can be transferred independent of land. this does not exist to benefit a dominant estate
note: a license does not allow you to take resources from land. think of fact pattern of hunting on land... this is not a license this is a profit to hunt and take animals home.
72
Fixtures on land generally
first ask if residential or commercial
~~residential
- look at nature of chattel (heirloom vs. toilet)
- intent of tenant ... stay or go?
- how much damage to real property if chattel removed
~~commercial
- apply trade fixtures doctrine: allow commercial tenant to remove all trade fixtures prior to lease expiring
- HOWEVER, accessions cannot be removed: these are structural additions to real property. (I-beam, new flooring)
73
Equitable Conversion doctrine
Once an agreement is signed for a sale then the buyer becomes equitable owner. specific performance can be demanded. buyer bears risk of loss.
even estates of a buyer that subsequently died can demand SP
74
How are defects handled in a property sale?
generally, if the buyer has ample opportunity to inspect the property before tendering the purchase price then the seller had no duty to disclose defects to him.
However, if buyer deliberately conceals then buyer is on hook for defects.
75
Rule of incompetency in adverse possession
If at BEGINNING of adverse possession period, then the time is tolled.
if the period already begins to run then there is no tolling of the adverse possession statute.
76
If there is an error between the physical description and the quantity description in a deed to land, what controls?
the physical description of the land.
77
General warranty deed basics
contains...
the present covenants enforceable by buyer:
1) covenant of seisin (I own it)
2) covenant of conveyance (I can sell it)
3) covenant against encumbrances (I can sell it without any strings attached)
the future covenants
1) covenant of quiet enjoyment (no one will disturb you)
2) covenant of warranty (if someone disturbs you, ill defend you)
3) covenant of further assurances (after I'm done defending you, I will take necessary steps to ensure it does not happen again)
78
How does an easement affect implied promise of marketability
Absent a provision to the contrary, a contract for the sale of land contains an implied promise by the seller that she will deliver to the buyer a marketable title at the time of closing. This promise imposes on the seller an obligation to deliver a title that is free from reasonable doubt; i.e., free from questions that might present an unreasonable risk of litigation. Title is marketable if a reasonably prudent buyer would accept it in the exercise of ordinary prudence. An easement that reduces the value of the property (e.g., an easement of way for the benefit of a neighbor) generally renders title unmarketable. If the buyer determines, prior to closing, that the seller's title is unmarketable, he must notify the seller and allow a reasonable time to cure the defect. If the seller is unable to acquire title before closing, so that title remains unmarketable, the buyer can rescind, sue for damages caused by the breach, or obtain specific performance with an abatement of the purchase price. However, the buyer cannot rescind prior to closing on grounds that the seller's title is unmarketable. Where an installment land contract is used, the seller's obligation is to furnish marketable title when delivery is to occur, e.g., when the buyer has made his final payment. Thus, a buyer cannot withhold payments or seek other remedies on grounds that the seller's title is unmarketable prior to the date of promised delivery. Here, there is a valid easement on the property (see below), but the seller has four years in which to cure this defect. Thus, the buyer cannot yet rescind on grounds that title is unmarketable.
79
Easement by Necessity basics
When the owner of a tract of land sells a part of the tract and by this division deprives one lot of access to a public road, a right-of-way by absolute necessity is created by implied grant over the lot with access to the public road.
This easement still exists even if the land was merged and then subsequently subdivided.
80
is a judgment lienor protected by recording statutes?
No.
Most courts reason that either (i) a judgment creditor is not a bona fide purchaser because he did not pay contemporaneous value for the judgment, or (ii) the judgment attaches only to property "owned" by the debtor, and not to property previously conveyed away, even if that conveyance was not recorded. Under the statute in the present question, a judgment does not attach until it is recorded.
81
Do we treat a right of first refusal for sale of property (in a lease) as a covenant?
Yes. Therefore it runs with the land and stays even during assignment of lease.
82
An uncle executed a warranty deed granting a parcel of land to his nephew. The uncle placed the deed in his bedroom closet and told his friend to get the deed and give it to the nephew if the nephew survived the uncle. Several years later, the uncle conveyed the land by quitclaim deed to a purchaser for $20,000. The uncle told the purchaser about the earlier deed to the nephew, and he told the purchaser that he planned to tear it up, but the uncle never did so. The purchaser properly recorded her deed.
The uncle died the following year, leaving the nephew as his sole surviving heir. The friend thereupon delivered the uncle's deed to the nephew, which was the first time the nephew knew of the deed. A statute of the jurisdiction in which the land is located provides: "No conveyance or mortgage of real property shall be good against subsequent purchasers for value and without notice whose conveyance is first recorded according to law."
Was the deed from the uncle to the purchaser effective?
The purchaser's deed was effective to convey title from the uncle to the purchaser immediately on delivery. A quitclaim deed transfers whatever right, title, or interest in the property the grantor has. Thus, when the purchaser took by quitclaim deed, she acquired the uncle's interest in the land. Because the deed from the uncle to the nephew was never validly delivered, the conveyance is ineffective and the uncle was the sole owner of the property. If a grantor executes a deed but fails to deliver it during his lifetime, no conveyance of title has occurred. "Delivery" refers to the grantor's intent; it is satisfied by words or conduct showing that the grantor intended that the deed have a present operative effect-i.e., that title pass immediately and irrevocably, even though the right of possessing the land may be postponed until some future time. To make an effective delivery, the grantor must relinquish control. Here, the uncle clearly did not intend to relinquish the land because he executed the deed but retained it, and merely told his friend to deliver it at his death to his nephew, provided that the nephew was still alive. Thus, because the uncle did not intend to relinquish control of the land until his death, there was no valid delivery of the deed. Note that the deed did not convey a future interest to the nephew. To convey a future interest (i.e., a present interest in the property, but where possession is postponed until some future time), there must also be a present intent to convey an interest. Here, the uncle showed no intent to presently convey an interest because he retained the deed. Generally, in cases where the grantor has retained the deed, the condition that title will not pass until the grantor's death must be contained in the language of the deed itself for a future interest to be conveyed. Therefore, the purchaser took full title to the land.
83
What is required for a deed to be valid?
from Q explanation:
A valid deed requires a writing containing a description of the land and parties, words of intent, and the grantor's signature. Here, the signature on the deed was forged. A defective deed may be voidable, which means that it would be set aside only if the property had not been conveyed to a bona fide purchaser, or it could be void, meaning that the deed would be set aside regardless of the property having passed to a bona fide purchaser. Deeds obtained by means of, among other things, duress, undue influence, or mistake are considered voidable. Deeds that were forged, never delivered, or obtained by fraud in the factum are void.
84
Do courts read in to real estate K's that time is of the essence?
n general, courts presume that time is not of the essence in real estate contracts. Thus, the closing date stated in the contract is not absolutely binding in equity, and a party, even though late in tendering his own performance, can still enforce the contract if he tenders within a reasonable time. (One to two months is usually considered reasonable.) Time will be considered of the essence only if: (i) the contract so states, (ii) the circumstances indicate it was the parties' intention, or (iii) one party gives the other notice that he desires to make time of the essence.
85
A landowner conveyed his land to his wife, son, and daughter "as joint tenants with right of survivorship." The daughter then conveyed her interest to a friend. The wife subsequently executed a will devising her interest to the daughter. Then the son mortgaged his interest to a lender, who promptly and properly recorded the mortgage. The wife died, then the daughter's friend died, leaving a will that bequeathed her entire estate to the daughter. The daughter and the son survived.
If the jurisdiction follows the title theory, who owns what interest in the land?
The lender and the daughter own unequal shares as tenants in common. Creation of a joint tenancy requires four unities: (i) time (interests must vest at the same time); (ii) title (interests must be acquired by the same instrument); (iii) interest (interests must be of the same type and duration); and (iv) possession (interests must give identical rights to enjoyment). When property is held in joint tenancy by three or more joint tenants, a conveyance by one of them destroys the joint tenancy only as to the conveyor's interest. The other joint tenants continue to hold in joint tenancy as between themselves, while the grantee holds her interest as a tenant in common with them, because she does not share the unities of time or title with the joint tenants (i.e., her interest vested at a different time and was acquired by a different instrument). Here, the wife, the son, and the daughter owned the property as joint tenants. When the daughter conveyed her interest to the friend, the joint tenancy was severed as to the daughter's interest. At that point, the wife and the son each held one-third interests as joint tenants because, as between themselves, the four unities were preserved. The friend did not share the unities of time or title with the wife and the son. Thus, the friend took a one-third interest as a tenant in common rather than as a joint tenant. Because this jurisdiction follows the title theory, the son's mortgage also severed the joint tenancy. The minority of states following the title theory regard a mortgage as an actual transfer of title to the property. Thus, a mortgage by one joint tenant transfers the legal title of the joint tenant to the mortgagee (the lender). This action destroys the unity of title and severs the joint tenancy. On the other hand, in a lien theory state (majority), a mortgage is considered a lien on title-one joint tenant's execution of a mortgage on his interest does not, by itself, sever a joint tenancy until default and foreclosure proceedings have been completed. Here, when the son executed the mortgage, title was transferred to the lender, severing the joint tenancy again. At that point, the wife, the lender, and the friend each held one-third interests as tenants in common because each interest was acquired at a different time and by a different title. An interest in a tenancy in common is freely alienable by inter vivos and testamentary transfer, is inheritable, and is subject to claims of the tenant's creditors. The only "unity" involved is possession: Each tenant is entitled to possession of the whole estate. Thus, when the wife died, her interest passed under her will to the daughter. Likewise, when the friend died, her interest passed to the daughter. Thus, the lender holds a one-third interest as a tenant in common with the daughter, who holds the remaining two-thirds interest.
86
ending an easement orally by estoppel
Although an oral release is ineffective because it does not comply with the Statute of Frauds, it may become effective by estoppel. For an easement to be extinguished by estoppel, there must be (i) some conduct or assertion by the owner of the easement, (ii) a reasonable reliance by the owner of the servient tenement, coupled with (iii) a change of position.
87
What effect does returning a deed to the grantor have?
returning the deed to the grantor has no effect; it constitutes neither a cancellation nor a reconveyance. A reconveyance requires the execution of a new deed. Thus, the property owner had no interest in the property that he purportedly conveyed to the third party
88
what can an ousted co-tenant recover if there are to co-tenants that each hold an undivided one-half interest in a tract of land?
If one co-tenant wrongfully ousts another co-tenant from possession of the whole or any part of the premises, the ousted co-tenant is entitled to receive her share of the fair rental value of the property for the time she was wrongfully deprived of possession.
89
Does the type of deed conveyed affect who has title in a typical BPF question?
No. The type of deed does not affect who has title. A quitclaim deed has the same effect as a warranty deed in terms of conveying title. The differences among the types of deeds have to do with remedies available against the grantor if title turns out to be defective. A warranty deed gives the grantee contractual promises with respect to title, and the quitclaim deed gives no promises.
90
A credit card company obtained and properly filed a judgment against a man after he failed to pay a $10,000 debt. A statute in the jurisdiction provides as follows: "Any judgment properly filed shall, for 10 years from filing, be a lien on the real property then owned or subsequently acquired by any person against whom the judgment is rendered."
Two years later, the man purchased land for $200,000. He made a down payment of $20,000 and borrowed the remaining $180,000 from a bank. The bank loan was secured by a mortgage on the land. Immediately after the closing, the deed to the man was recorded first, and the bank's mortgage was recorded second.
Five months later, the man defaulted on the mortgage loan and the bank initiated judicial foreclosure proceedings. After receiving notice of the proceedings, the credit card company filed a motion to have its judgment lien declared to be the first lien on the land.
Is the credit card company's motion likely to be granted?
The bank's mortgage is a purchase-money mortgage, meaning that the funds the bank advanced were used to purchase the land. A purchase-money mortgage executed at the same time as the purchase of the real property encumbered takes precedence over any other claim or lien, including a previously filed judgment lien. Therefore, the bank's purchase-money mortgage takes precedence over the credit card company's judgment lien.
91
A seller contracted to sell land to a buyer for $300,000.The contract provided that the closing would be 60 days after the contract was signed and that the seller would convey to the buyer a "marketable title" by a quitclaim deed at closing. The contract contained no other provisions regarding the title to be delivered to the buyer.
A title search revealed that the land was subject to an unsatisfied $50,000 mortgage and a right-of-way easement over a portion of the land.
The buyer now claims that the title is unmarketable and has refused to close.
Is the buyer correct?
Yes, because the right-of-way easement makes the title unmarketable.
An easement that reduces the value of the property, such as an easement of way for the benefit of a neighbor, renders title unmarketable.
NOTE: the fact that a contract calls for a quitclaim deed, which makes no warranties for title, does not affect the implied covenant to provide marketable title. The type of deed affects remedies available after closing, not before.
92
Ten years ago, a couple bought a building and moved into its second-floor apartment with their teenage daughter. The couple operated a shoe store on the first floor of the building for many years. When the couple purchased the building, the area was predominantly rural and was zoned for nonresidential use. The municipality's zoning is cumulative.
Five years ago, the municipality rezoned the area to single-family residential use. The daughter was not aware of this change, since she was away at college.
Recently, the daughter inherited the building from her parents. The daughter immediately moved into the apartment and took over the operation of the shoe store on the first floor. The daughter has learned that a developer is planning to build a large residential community in the area surrounding her building.
The daughter has asked her lawyer for advice regarding her ability to continue operating the shoe store.
Should the lawyer advise the daughter that she can continue to operate her shoe store?
Yes, because the shoe store is a nonconforming use.
A cumulative zoning ordinance creates a hierarchy of uses of land, and land that is zoned for a particular use may be used for the stated purpose or for any higher use. A residential use is higher than a nonresidential use. Here, the building was in an area originally zoned for nonresidential use. The daughter and her parents used the property for a business and their residence. This was appropriate under the cumulative zoning ordinance as the family's uses met or exceeded the zoned use. Later, the area was rezoned for single-family residential use, which is a higher use than the shoe store. However, a use that exists at the time of passage of a zoning ordinance and that does not conform cannot be eliminated at once. Generally, the nonconforming use may continue indefinitely, but any change in the use must comply with the zoning ordinance. Because the shoe store existed at the time of the rezoning, the daughter may continue to operate the shoe store as a nonconforming use.
93
An owner of a parcel of land instructed his lawyer to draw up an instrument deeding the land to his friend's "nieces." The owner acknowledged the deed before a notary and signed it. As directed by the owner, the lawyer recorded the deed and then returned it to the owner. The owner put the deed in the drawer of his desk, intending to present it to the friend's nieces when they came to visit him next month.
The following week, however, the owner died, leaving his daughter as his sole heir at law. The daughter discovered the deed to the land in the owner's desk. She filed an appropriate action to quiet title in the land, naming the friend's only two nieces as defendants. The only evidence presented at the trial was the deed itself, the evidence of recordation, and the lawyer's testimony regarding the owner's intent.
Who should the court rule owns the land?
The nieces, because recordation of a notarized deed is prima facie evidence of delivery.
The nieces own the land because recordation is prima facie evidence of delivery. To be valid, a deed must be "delivered," which means that the grantor must have taken some action (not necessarily a manual handing over of the deed) with the intent that it operate to pass title immediately. Recording a deed that has been acknowledged before a notary is such an action and is presumed to carry with it the requisite intent. Even without the knowledge of the grantee, delivery to the recorder's office will satisfy the delivery requirement. If the grantor intends the recording of the document to be the final act in vesting title in the grantee, then such recording constitutes delivery.
