Property

Question 1

What is a Fee Simple Absolute?

Answer 1

A FSA holder has all possible rights that a person may have in that parcel of land.
 May last forever – FSA is alienable, devisable, and descendible.

Question 2

What is the one way to terminate a Fee Simple Absolute?

Answer 2

Owner dies without a will or heirs, and property escheats to state.

Question 3

What is the difference between a devisee, an heir, and a grantee?

Answer 3

Devisees take by will, heirs take by the law of intestacy in the relevant jurisdiction, and grantees take by inter vivos (literally “between the living”) transfer.

Question 4

What is a defeasible estate?

Answer 4

An estate that may terminate upon some happening or event before its maximum duration (forever in fee) has run.

Question 5

What are the 3 types of defeasible estates?

Answer 5

1. Fee Simple Determinable
2. Fee Simple Subject to a Condition Subsequent
3. Fee Simple Subject to Executory interest?

Question 6

What is a fee simple determinable?

Answer 6

Created by durational language—for so long as, during, until, or while.
EXAMPLE: “O to A for so long as liquor is not served on the premises.”

Question 7

How is a fee simple determinable terminated?

Answer 7

Terminates automatically on happening of a named future event. The estate returns to the grantor.

Question 8

What is a fee simple subject to a condition subsequent?

Answer 8

 Created by conditional language (provided however, however if, but if, on condition that, or in the event that) to occurrence of a condition that will terminate estate.
 Power of termination must be expressly reserved to the grantor.

Question 9

If a defeasible estate’s conveyance language is ambiguous, how do courts interpret?

Answer 9

o If the language is ambiguous, courts interpret the grant as an attempt to create a Fee Simple Subject to a Condition Subsequent (avoid interpreting as fee simple determinable, which inhibits free alienability); though, this often fails and the grant becomes a fee simple absolute for lack of a specific power of termination; thus, avoiding a forfeiture of the fee simple estate.

Question 10

What is a fee simple subject to executory interest?

Answer 10

Created by either durational or conditional language. Termination occurs on the happening of an event that terminates the estate; property then passes to someone other than grantor. (third party involved)

Question 11

What is a fee tail?

Answer 11

 Common law: An estate that descended to grantee’s children only.
EXAMPLE: “A to B and the heirs of his body.”
 Modern law: Fee tails are disfavored and are treated in most jurisdictions as fee simple absolutes.

Question 12

What is a life estate?

Answer 12

 Life estates last for the duration of the grantee’s life.

EXAMPLE: “A to B for life.”

Question 13

What is a life estate pur autrue vie?

Answer 13

The duration of the estate is measured by the life of someone other than the grantee.
EXAMPLE: “A to B for the life of C.” As long as C is alive, B owns the property.

Question 14

Can a life estate be made defeasible?

Answer 14

Yes. Example: “A to B for life, as long as B farms the land.”

Question 15

What is a term estate?

Answer 15

non-freehold
Estate that is limited in duration (basically a landlord-tenant relationship).
EXAMPLE: “A to B for 50 years.”
EXAMPLE: “A to B for 1 year.”

Question 16

What are the 3 types of grantor future interests?

Answer 16

1. Possibility of Reverter
2. Right of Reentry/Power of Termination
3. Reversion

Question 17

What is a possibility of reverter and how is it created?

Answer 17

A future interest in the grantor that follows a determinable estate.
EXAMPLE: “A to B so long as B farms the land” creates a possibility of reverter in the grantor. (so long as = durational language)

 Creation: a fee simple determinable automatically creates a possibility of reverter; no special language needed. (silent reversionary interest) – grantor retains a future interest on operation of law
 Upon the happening of the event, the land automatically reverts back to the grantor.

Question 18

What is the power of termination / right of reentry and how is it created?

Answer 18

A future interest in the grantor when the grantor attempts to create a FSSCS (Fee Simple Subject to a Condition Subsequent) or a defeasible life estate.

 Creation: Not automatic; must be spelled out in the conveyance or it does not exist.
EXAMPLE: “A to B, provided that B uses the premises for residential purposes, but if he does not do so, A may retake and re-enter.” If B ever stops using the premises for residential purposes, A or A’s heirs can enter and retake the property.
 Upon the happening of the event, the property does not automatically revert. The grantor must exercise the right of reentry and take affirmative steps to retake the property.

Question 19

Are grantor future interest subject to the Rule Against Perpetuities?

Answer 19

No, because the grantor’s possibility of a reverter has already vested.

Question 20

Do courts favor Fee Simple Subject to Condition Subsequent or Fee Simple Determinable?

Answer 20

Courts favor a fee simple subject to condition subsequent over a fee simple determinable to avoid an automatic forfeiture.

Question 21

Is the possibility of reverter transferable?

Answer 21

Modern law/Majority: The possibility of reverter created through determinable estate is freely transferable, devisable, and descendible.

Question 22

Is the power of termination / right of reentry transferable?

Answer 22

Modern law/Majority: The power of termination is descendible and devisable. However, the power of termination is not transferable inter vivos.

Question 23

What is a reversionary interest?

Answer 23

Reversion = A future interest retained by the grantor when the grantor transfers less than a fee interest to a third person. – can typically follow a life estate, but can also follow a term estate.

EXAMPLE: “A to B for life, then to B’s oldest child for life.” After the death of B’s oldest child, there will be a reversion back to A, the grantor.

Question 24

What are the two types of grantee future interests?

Answer 24

1. Remainder

2. Executory Interest

Question 25

What is a remainder?

Answer 25

Remainder = A future interest created in a third person that is intended to take effect after the natural termination of the preceding estate.
EXAMPLE: “A to B for life, then to C.” C has a remainder.

Question 26

What are the 2 types of remainders?

Answer 26

a. Contingent remainder (any remainder that is not vested)
EXAMPLE: “A to B for life, then to the oldest child of C then living.” This would be a contingent remainder because we do not know who the oldest child is going to be until B dies. There is a condition precedent to that person taking – they must be alive when B dies.

b. Vested Remainder - is vested at the point that it is:
• 1. Created in an ascertainable person; and
• 2. Is not subject to any condition precedent, other than termination of the preceding estate.

EXAMPLE: “A to B for life, then to C.” C has a vested remainder because C is an ascertainable person and there is no condition precedent to his or her taking other than the termination of the preceding estate (when B dies).

Question 27

What are the 2 types of vested remainders?

Answer 27

A. Vested Remainder Subject to Total Divestment - A remainder that is presently vested but may be terminated on the happening of a future event.
EXAMPLE: “A to B for life, remainder to C, so long as liquor is never served on the premises.” C has a vested remainder but could lose it by serving liquor on the premises. (grantor retains silent reversion)

B. Vested Remainder Subject to Open - A remainder that has been made to a class and has at least one member who is ascertainable who has satisfied any conditions precedent to vesting, but may have other members join the class later.
EXAMPLE: “A to B for life, then to the children of C.” As soon as C has a child, that child is an ascertainable person and there is no condition to their taking other than the termination of the preceding estate (B’s death). Child would have a vested remainder, but it is subject to open because as other children of C are born, they will also share in the gift.

Question 28

What is the one type of vested remainder to which the Rule Against Perpetuities applies and what rule to courts use to deal with it?

Answer 28

-only applies to vested remainder subject to open - the RAP can void this type of future interest. If any member of a class could potentially claim in a way that violates the RAP, the entire class gift fails.

-Rule of Convenience (rule of construction that courts use to try to save a gift that would otherwise violate the RAP): Class closes as soon as one member of the class becomes entitled to immediate possession of the property. (the “too bad” rule)
EXAMPLE: “A to B for life, remainder to the children of C.” When B dies, C has two children living. Those two children would be entitled to take immediate possession of the property. This would close the class. If any other children of C are born after that point, they are shut out of the class. (too bad for them)

Question 29

What is an executory interest?

Answer 29

A future interest in a third person that cuts short the previous estate before it would have naturally terminated.

Because a fee estate has the potential to last forever, any interest created in a third party that follows the granting of a fee will always be an executory interest.

Question 30

What are the 2 types of executory interests and what are their definitions?

Answer 30

A. Shifting Executory Interest: The interest passes from one grantee to another—i.e. a grantee to a grantee (most common).
EXAMPLE: “A to B so long as B completes law school by age 30. If B fails to do so, then to C.” Shifts the property from grantee B to grantee C.

B. Springing Executory Interest: The interest transfers from a grantor to a grantee.
EXAMPLE: “A to B for life. Then 20 years after B’s death, to C.” B has a life estate. When B dies, the property reverts back to the grantor, A. 20 years later (the future interest springs out of the grantor), the property transfers to C. A’s reversion would be in fee.

Question 31

What is the doctrine of worthier title?

Answer 31

It is worthier to take by descent than by devise, meaning a grantor cannot create a remainder in his or her heirs (by will).
• This is a rule of construction, not law.
EXAMPLE: “A to B for life, remainder to A’s heirs.” Whether or not A included “remainder to A’s heirs,” the property would have gone to A’s heirs via a reversion. Should pass by descent rather than the devise.

Question 32

What is the doctrine of waste?

Answer 32

Determines what someone who owns land can or cannot do with it.
o Owner of a fee estate can do whatever he or she wants with the property.
o Owner of less than a fee estate (e.g., life tenant, tenant for years) cannot commit waste (e.g., harm the property at the expense of the person who will hold it after them).

Question 33

What are the 3 types of waste and their definitions?

Answer 33

1. Voluntary Waste: A life tenant cannot intentionally or negligently damage property. If they do, they are liable for the damage.
2. Permissive Waste: A life tenant must take reasonable steps to avoid damage. Failure to do so constitutes permissive waste, and the life tenant will be liable.
3. Ameliorative Waste: A life tenant makes improvements to the land.
    Modern law: A life tenant is now allowed to commit ameliorative waste if:
   • Market value of the remainderman’s interest is not impaired; and
   • It is permitted by the remainderman OR a substantial and permanent change in the neighborhood justifies the improvement.

Question 34

What is the Rule Against Perpetuities?

Answer 34

The common law Rule Against Perpetuities provides that “no interest is good unless it must vest, if at all, not later than 21 years after some life in being at the creation of the interest.”

o The rule deals solely with possibilities. If you can look at a future interest in a conveyance and can come up with an interpretation where someone could be claiming more than 21 years after everyone currently alive connected to the grant is dead, it violates the rule.

Question 35

What types of interests does the Rule Against Perpetuities Apply to? And what is the effect of the rule?

Answer 35

Three future interests:
•	Executory interest;
•	Contingent remainder; and 
•	Vested remainder subject to open
Two other interests subject to the rule:
•	Purchase option; and 
•	Right of first refusal

The future interest is wiped out.

Question 36

What types of restraints on alienation (on less than a fee) may be valid if reasonable?

Answer 36

Partial Restraint (both are valid, if reasonable)
1. Purchase Option
EXAMPLE: “A to B and her heirs, but A reserves the right to buy back the property at any time during A’s life.” (doesn’t violate RAP because A is life in being at the time that the interest is created and can be effective during that time)
2. Right of First Refusal
EXAMPLE: “A to B and her heirs, but if B ever attempts to sell during A’s life (life in being at the time of the grant that contains the restraint), B must first offer the property to A at the same price.”

How to determine reasonableness? Courts look to whether a restraint is limited in scope or time, the purpose of the restraint, the legitimate interests of the party, and whether the restraint is supported by consideration in assessing its reasonableness.

Question 37

What law governs all rights in land and other immovables?

Answer 37

The law of the situs (Where is the property situated – that state law)

• Validity and effect of a conveyance (e.g., the form of the deed or the capacity of the grantor) are governed by the law of the situs.
• Mortgages, their creation, validity, and foreclosure are governed by the law of the situs.
• But the underlying contract or note is governed by law of the place of its making.
• Liens (e.g., mechanic’s or laborers’ liens) are governed by the law of the situs.

Question 38

What is a tenancy in common?

Answer 38

Each co-tenant owns an undivided possessory interest in the whole of the property. Unity of possession. No right of survivorship.

Question 39

What is a joint tenancy?

Answer 39

Each co-tenant owns an undivided possessory interest in the whole of the property AND has a right of survivorship.

o Modern Majority: A conveyance to two or more people to jointly own property is presumed to create a tenancy in common, unless specifically stated otherwise.
o You MUST use language to demonstrate that you want the right of survivorship attached to the grant.

Question 40

What is required to create a joint tenancy?

Answer 40

Traditionally, a joint tenancy requires four unities (TTIP):
 Time: Joint tenants must take at the same time;
 Title: Joint tenants must take by the same instrument;
 Interest: Joint tenants must take equal shares of the same type; and
 Possession: Each joint tenant has the right to possess the whole.

Today, most jurisdictions do not require the unities of time and title, only interest and possession.

Question 41

What is a tenancy by the entirety?

Answer 41

Marital estate.

A form of concurrent ownership reserved for married couples, which gives each spouse an undivided interest in the whole of the property and a right of survivorship, unless expressly stated otherwise.
o Can be created by deed or will, but not by descent.
o Not recognized in community property states.

Question 42

How is a tenancy by the entirety severed?

Answer 42

Severance only occurs when:
 The spouses jointly convey to a third party;
 One spouse conveys to the other spouse; or
 The couple divorces.

Question 43

How is a joint tenancy severed?

Answer 43

Done by an inter vivos act of one of the parties.
• Can seek a partition action.
• Joint tenant sells his interest in the property.
• Joint tenant mortgages his/her interest in the property.
o Majority View (Lien Theory Jurisdiction): Mortgage is viewed as a lien on the property, will not sever.
o Minority View (Title Theory Jurisdiction): Mortgage is viewed as a title to the property, will sever.
Giving out a lien on the property will not sever a joint tenancy, but transferring title to the property will sever a joint tenancy.

Question 44

What is the right of a co-tenant who makes repairs?

Answer 44

No direct duty of repair imposed on any co-tenant; however, a co-tenant who makes repairs to the property may be compensated for the amount of the repair by a set-off against any third party rents received or from proceeds in a partition action.

Question 45

What is the right of a co-tenant who makes improvements?

Answer 45

Generally, there is no duty imposed on any co-tenant to improve the property. If one co-tenant chooses to improve the property, they cannot get contribution from the other co-tenants.
• Exception: If the property is sold, any amount attributable to the improvement goes to the tenant who made the improvement.

Question 46

How may a lease be created?

Answer 46

o A lease can be oral or in writing. A writing is required for a lease term longer than one year. (Statute of frauds)
o An implied lease may occur through the conduct of the parties, e.g., where the written lease is never signed, but the tenant pays rent periodically, creating a periodic tenancy.

Question 47

What are the 4 types of leases and their definitions?

Answer 47

1. Term of Years: A lease that has a definite beginning and end (set date, months, or years). Created through express agreement. Terminate automatically at the end of the period; no notice required.
2. Periodic Tenancy: A lease with a set beginning date and continues from period to period (e.g., month to month) without a set termination date, until proper notice is given. Created expressly or by implication with a holdover tenant. Appropriate notice for termination must be in writing if required by statute; and equal to rental period, up to 6 month max.
3. Tenancy At-Will: Has no fixed duration and lasts only as long as the landlord and tenant desire. Generally created by express agreement of parties. Terminates freely as soon as either party decides (no notice req), if either landlord or tenant dies; or if either party attempts to transfer interest.
4. Tenancy at Sufferance: Holdover tenant. Created via holdover. If landlord wants tenant to remain on land (Accepts rent), tenant becomes periodic tenant. If landlord doesn’t want, tenant becomes tenant at sufferance until landlord can get tenant off property.

Question 48

How much rent can a landlord sue for in a tenancy for years?

Answer 48

The tenant is liable for all unpaid rent in the lease.

Question 49

How much rent can a landlord sue for in a tenancy at sufferance?

Answer 49

The tenant is liable for the reasonable rental value of the property.

Question 50

What are a tenant’s potential defense to rent payment?

Answer 50

1. Failure to deliver possession
2. Tenant has been evicted - partial, actual eviction means tenant is excused from paying all rent. partial constructive eviction means reduction in rent only.
3. Tenant surrenders premises to landlord (landlord must surrender and retake possession)
4. Destruction
5. Failure to comply with the warranty of habitability.
6. Other contract defenses: impossibility, impracticability, frustration of purpose, violation of quiet use and enjoyment of the property.

Question 51

When can a tenant commit ameliorative waste?

Answer 51

The tenant can make improvements (no liability) if expressly authorized, or if there is a change in circumstances that warrants the improvements to be made (provided that the improvement does not depreciate the value of the property).

Question 52

What type of breach is always material and allows a landlord to retake the property?

Answer 52

Nonpayment of rent

Question 53

When might a tenant be able to remove a fixture after the expiration of a lease?

Answer 53

Some jurisdictions will give tenants a reasonable amount of time after the expiration of the lease, if the tenant has no way of knowing when the tenancy will terminate, e.g., a tenancy at-will.

EXAMPLE: Life Tenant owns the land for the duration of Life Tenant’s life. Life Tenant does not know when their tenancy ends; thus, the estate will be given a reasonable amount of time to remove fixtures upon the death of Life Tenant.

Question 54

What are the privity relationship and their effects when a tenant transfers their interests via assignment?

Answer 54

o The assignee comes into privity of estate with the landlord, while the tenant remains in privity of contract with the landlord.
o Assignee is liable to the landlord for rent, unless he or she re-assigns to a new assignee who takes over privity of estate.
o The tenant is liable to the landlord for rent, even after assignment, unless there is a contract novation.

Question 55

What are the privity relationships and their effect if a tenant assigns their interests via a sublease?

Answer 55

The sublessee comes into privity of estate and privity of contract with the tenant, owing the tenant rent. The tenant continues to owe rent to the landlord.

Because the new tenant (sublessee) lacks privity of estate with the landlord, the landlord cannot enforce the covenant to pay rent against the new tenant/sublessee. However, if the landlord is not receiving rent, this is a material breach of the lease and the landlord can have an assignee or a sublessee evicted.

Question 56

What is a silent consent clause in a lease and what is its effect?

Answer 56

A consent clause in a lease that does not state a standard or condition for giving or withholding consent to an assignment or sublease is commonly known as a “silent” consent clause.
o Traditional/Majority Rule: A silent consent clause gives the landlord the right to withhold consent for any reason, or for no reason at all, even if withholding consent is arbitrary and unreasonable.
o Minority Rule: Requires the landlord to be reasonable in withholding consent for an assignment.

Question 57

What is the Rule in Dumper’s Case?

Answer 57

If there is an express prohibition against an assignment in a lease, and the landlord either expressly or impliedly waives that restriction, once waived it is deemed waived for the remainder of the lease except if specifically stated otherwise.

Question 58

What are the requirements for a covenant to run with the land? (and thus bind successors-in-interest)

Answer 58

PINT

• Privity (horizontal privity between original parties and vertical privity between successors and original parties)
• Intent (writing (statute of frauds applies) must include language that shows parties’ intend to run with land and bind successors in interest)
• Notice (requirement on servient side only: actual, constructive (recordation), or inquiry)
• Touch and Concern (for servient estate, the restrict must reduce use and enjoyment. for dominant estate, restriction must increase use and enjoyment)

Question 59

What is horizontal privity (in terms of covenants)?

Answer 59

The relationship between the original covenantor and covenantee.
o Requires privity of contract in connection with the land.
 Landlord/tenant
 Grantor/grantee
 Mortgagor/mortgagee

Question 60

What is the remedy for breach of a covenant?

Answer 60

Damages (it’s a contract)

Question 61

What is the remedy for breach of an equitable servitude?

Answer 61

an equitable remedy, such as an injunction

Question 62

What is an implied reciprocal servitude?

Answer 62

where one owner sells lots with restrictions that benefit the land retained by that owner, after which the owner cannot violate the same restriction. The restriction becomes mutual, benefits that owner’s land, and the land sold.

Question 63

What is vertical privity? (in terms of covenants)

Answer 63

The relationship between an original party to a running covenant and the successor in interest to the original party.
o In order for the burden to run, privity of estate will only exist when the holder of the servient estate transfers all of his interest in the servient estate to the new owner.
EXAMPLE: B sells all that B owns to D; privity of estate exists between B and D.
EXAMPLE: B owns property and just leases it to D for 5 years; there is no vertical privity.

Question 64

What are the 3 elements of an equitable servitude?

Answer 64

TIN (no privity requirement)
-Touch and Concern the Land:
• The burden must run with the servient estate;
• The benefit must run with the dominant estate.
-Intent: The writing (Statute of Frauds applies) must include language that shows the parties’ intent for the restriction to run with the land and bind successors in interest.
NOTE: If the plaintiff cannot show intent in a writing for the covenant to run, he may nevertheless establish intent by showing a common scheme.
-Notice: The current owner of the servient estate took with notice (actual, constructive, or inquiry).

Can be enforced in equity through an injunction; damages are not available.

Question 65

How is an implied reciprocal servitude created?

Answer 65

• look for a filed declaration containing the restrictions (called CC&R’s – covenants, conditions, and restrictions).
• Statute of Frauds does not apply. No req of writing because it can be implied.
• Works for negative restrictions only.
• One way to impose a reciprocal servitude is by showing a common scheme or plan.

 Restriction must be part of a common scheme or plan for development of the area and the current owner takes with notice of the restriction.
• An implied reciprocal servitude is imposed on any lot that does not contain the restriction if a common scheme was evident at the time of the conveyance of those lots.
• Factors to show a “common scheme”:
o A large percentage of lots expressly burdened;
o Oral representations to buyers;
o Statements in advertisements to buyers; or
o Recorded plat maps or other declarations.

Question 66

What are the ways that a covenant or equitable servitude can be terminated?

Answer 66

o	Written release; 
o	Merger of the dominant and servient estates; 
o	Abandonment; 
o	Estoppel (e.g., reasonably relied on waiver); or 
o	Changed circumstances so that the reason behind the restriction is no longer valid.

Question 67

What is an easement appurtenant?

Answer 67

Benefits a parcel of land; the dominant estate.

Question 68

What is an easement in gross?

Answer 68

Benefits a person or entity rather than a piece of land (no dominant estate).

Question 69

How can easements be created?

Answer 69

expressly (writing must satisfy Statute of Frauds), by implication, or by prescription

Question 70

What are the 3 types of easement by implication and their requirements?

Answer 70

Easement Implied by Prior Use (four requirements)
• 1. Severance of title to land held in common ownership;
• 2. The use giving rise to the easement was in existence at the time of the severance;
• 3. The use was apparent and could be discovered upon a reasonable inspection; and
• 4. At the time of severance, the easement was necessary for the proper and reasonable enjoyment of the dominant tract.

Easement by Necessity (two requirements)
• 1. Common ownership of the dominant and the servient estate, then severance; and
• 2. Strict necessity for the easement at the time of severance.

Easement by Plat: A buyer in a platted subdivision acquires an implied easement to use streets, alleys, and parks in the subdivision.

Question 71

What is an easement by prescription / how is it created?

Answer 71

Adverse possession: If someone actually, openly, notoriously, and exclusively uses land with hostile intent for the statutory period.

Question 72

What does it mean to “surcharge an easement” and what is the effect?

Answer 72

Going beyond what is a reasonable use of an easement.

• This does not terminate the easement; however, the holder of the servient estate can sue for an injunction or damages.

Question 73

How can an easement be terminated?

Answer 73

1. Destruction of the Servient Estate:
    Generally, destruction of the servient estate will terminate an easement unless the owner of the servient estate intentionally caused the destruction.
2. Termination Based on the Actions of the Easement Holder:
    A. Merger of Title: Occurs when the owner of the dominant estate also acquires the servient estate.
    B. Written Release: Expressly terminates the owner’s rights in the easement (must satisfy the Statute of Frauds).
    C. Abandonment: Requires proof of intent to abandon and an affirmative act in furtherance of the intent.
    D. Estoppel: The owner of the servient estate foreseeably and detrimentally relies on the easement holder’s action/abandonment.
    E. Severance: The owner of the dominant estate tries to sever the easement from the dominant estate (only arises with easements appurtenant).
3. Termination Based on Actions of the Owner of the Servient Estate
    A. Prescription: The owner of the servient estate interferes with the use of the easement for the statutory period.
    B. The Servient Estate is Sold to a Bona Fide Purchaser: Pays value and takes without notice.
    C. End of Necessity: For an easement created by necessity, the easement ends when the necessity ends.

Question 74

What is a profit in land?

Answer 74

A profit is a nonpossessory interest in land. The holder of the profit has the right to go on someone else’s land and take something off of it.
EXAMPLE: Permission to log trees of a certain size on the owner’s land.
• Creation: Can only be created expressly or by prescription (adverse possession) (analysis is otherwise the same as easements).
• Profits are transferable.
• Termination: Same as easements.

Question 75

What is a license in land?

Answer 75

• A license is a privilege, usually to do something on someone else’s property—i.e. go on the land. This is a personal right, not an interest in the land. (smallest type of right that can be had in land)
• Can be oral (no Statute of Frauds analysis).
• Licenses are freely revocable at any time, for any reason.
EXAMPLE: Buying a ticket to watch your local sports team play. The ticket states on the back that this is a license which is freely revocable.

Question 76

In what situations is a license in land irrevocable?

Answer 76

1. License Coupled with an Interest;
   • The licensee purchases personal property that is located on the licensor’s property and is given permission to come onto the land to claim that property.
2. Executed License
   • The licensee expends money or labor in reliance on the license; license is irrevocable until the person gets value out of the expenditure.

Question 77

When may a zoning ordinance be subject to a First Amendment challenge?

Answer 77

If it regulates billboards or aesthetics.

Question 78

When is a land-use regulation a taking?

Answer 78

If it denies an owner all reasonable, economically beneficial uses of his or her land [Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992)].

To analyze regulations that merely decrease economic value, the court uses a balancing test to determine if there is a taking, which happens rarely, considering the following factors:
• The economic impact of the regulation on the claimant; (dimunition in value)
• The extent to which the regulation has interfered with distinct investment-backed expectations; and
• The character of the governmental action.

Question 79

What is a nonconforming use? (in terms of zoning)

Answer 79

A nonconforming use is a use permitted by zoning statutes or ordinances to continue, notwithstanding the fact that similar uses are not generally permitted in the area. (typically a long-standing use)
 A nonconforming use may not be expanded or rebuilt after substantial destruction.
 Local ordinances often prohibit the enlargement, alteration, or extension of a nonconforming use.
 Some local ordinances require certain nonconforming uses to be amortized (reduced) over a specified period, at the end of which they must be terminated.

Question 80

What is a variance (in terms of zoning) and what must a petitioner show in order to have one granted?

Answer 80

A variance is the permission by the local zoning authorities to use property in a manner forbidden by the zoning ordinances in order to alleviate conditions peculiar to a particular parcel of property.

 If a variance is sought from an area restriction, the petitioner must show that there are practical difficulties in meeting the requirements of the zoning code or that the requirements are unreasonable or create an undue hardship.
 If the variance is sought from a use restriction, the petitioner must show undue hardship, meaning that, without a use variance, there is no viable use of the property.

Question 81

What is a special use permit? (in terms of zoning)

Answer 81

A special use permit is required for uses in an area not zoned for those uses, but which would be beneficial to the public welfare and compatible with the area.

Question 82

What is a conditional use permit? (in terms of zoning)

Answer 82

A conditional use permit is required for uses in an area not zoned for those uses, but which would be beneficial to the public welfare, and compatible with the area if certain conditions are met.
 Granted only if the applicant agrees to meet the additional conditions.

Question 83

What is spot zoning?

Answer 83

 A parcel, or small area, may be zoned for a use or structure that is inconsistent with the rationale of the overall plan or ordinance. This is called spot zoning.
 Spot zoning is illegal when the zoning ordinance is designed solely to serve the private interests of one or more landowners. (Vs. the public welfare)

Question 84

What is an exaction?

Answer 84

An exaction is an approval of use in exchange for money or a dedication of land.

Permissible only if:
o The local government can demonstrate that the increased public need is causally related (i.e., has an essential nexus) to the owner’s use; and
o The amount of the exaction is approximately equal to the additional public cost imposed by the use (i.e., has a rough proportionality to the use).

EXAMPLE: The owner of a plumbing and electrical supply store applied for a permit to expand her store and pave the parking lot. The city was not allowed to insist that the owner also dedicate land to a greenway and develop a pedestrian and bicycle pathway by the store [Dolan v. City of Tigard, 512 U.S. 374 (1994)].

Question 85

What is lateral support and the general rule re: liability?

Answer 85

Lateral Support = Right of a landowner to physical support of his or her land in its natural state by adjoining land.
o General Rule: A landowner has an absolute right to lateral support; therefore, if the adjoining landowner fails to provide lateral support, the adjoining landowner will be strictly liable for any damages suffered.
o If the land has been improved, you should ask yourself the following question: Would the property have subsided anyway, or was it the weight of the improvement that caused the land to subside?
 If the land would have subsided anyway (due to its natural state)—remains strictly liable.
 If the weight of the improvement caused the land to subside, the adjoining landowner is liable only if there was negligence in depriving the neighboring property of lateral support.

Question 86

What does the right of subjacent support extend to?

Answer 86

General Rule: The right of support extends to:
 Land in its natural state; and
 Buildings existing on the date when the subjacent estate was severed from the surface.
 However, the underground landowner is liable for damages to subsequently erected buildings only if he or she is negligent.

Question 87

What is the riparian (majority) view on water use rights?

Answer 87

Anyone who is within the watershed (touches the lake or stream) has a right to make reasonable use of the water. This is the rule for many Eastern states.

EXAMPLE: Someone upstream is taking water and someone downstream objects. No cause of action, so long as the upstream riparian user is taking a reasonable amount. If the amount is unreasonable, the person downstream can sue for an injunction or damages.

Question 88

What is the prior appropriation/use view (minority) on water use rights?

Answer 88

Awards the right to use the water to the first person to take the water for beneficial purposes. This is the rule for many Western states.

Question 89

What are the views on diffuse surface water?

Answer 89

o Common Enemy Rule (Eastern states): Floodwater can be diverted by any method onto another’s land.
o Civil Law Rule (Western states): No interference with any surface water is allowed.
o Reasonable Use Rule: Surface water can be diverted onto another’s land if using reasonable means to do so.

Question 90

What does the Statute of Frauds require for the transfer of an interest in real property?

Answer 90

The writing must be signed by the party to be charged (the person you’re gonna sue better sign the deed) and must include:
 Description of the property;
 Description of the parties;
 Price; and
 Any conditions of price or payment, if agreed on.

EXAMPLE: A common condition included in modern real estate contracts is that the buyer is not obligated to go through with the transaction unless he or she can obtain a mortgage or other financing on reasonable terms.

Question 91

What are the exceptions to the statute of frauds and their definitions?

Answer 91

1. Doctrine of Part Performance: May be used to enforce an otherwise invalid oral contract of sale, provided the acts of part performance unequivocally prove the existence of the contract. A showing of at least two of the following three facts must be made:
   • Payment of all or part of the purchase price;
   • Taking of possession; or
   • Making substantial improvements.
2. Equitable and, under the modern trend, promissory estoppel may be used to prove an oral contract for the sale of land.
   • Equitable estoppel is based on an act or a representation.
   • Promissory estoppel is based on a promise.

Question 92

What is equitable conversion?

Answer 92

When a land-sale contract is formed, at that point there is a bifurcation of title.
o Equitable title passes to the buyer.
o Legal title remains with the seller until the deal closes.

Majority Rule: The risk of loss is deemed to follow equitable title; therefore, the risk of loss is on the buyer.

Uniform Vendor and Purchaser Act (Minority Rule): The risk of loss remains with the seller until the legal title or possession of the property passes to the buyer.

Question 93

What is the implied covenant of marketable title and how may it be violated?

Answer 93

Every land sale contract, unless expressly stated otherwise, contains an implied covenant of marketable title. This means that the seller must deliver a title at closing that is reasonably free from defects in both fact and law (not perfect title).

Defects may include:
 Unpaid mortgage or lien;
 Covenant or easement that restricts use of the land;
 Title acquired by adverse possession until the adverse possessor quiets title; or
 Existing condition on the land that violates a zoning ordinance.

This covenant only manifests itself at the date of closing. – until the closing occurs, the seller has the ability to take care of the issues affecting the title.
 Majority Rule: A seller may use the proceeds of the sale to remove a cloud on the title and make it marketable.

Question 94

What is the merger doctrine?

Answer 94

Because the covenant of marketable title is implied in the contract, and the contract merges into the deed, the buyer cannot assert it and must sue on any covenants now contained in the deed.

Question 95

What are a buyer’s rights to sue under a Quitclaim Deed?

Answer 95

The buyer cannot sue because this is an “as-is” deed (no warranties/covenants), and the seller conveys whatever interest he or she has.

Question 96

What are a buyer’s right to sue under a warranty deed?

Answer 96

The buyer can sue on the deed through one of the covenants of title contained in the warranty deed. (warranting that no cloud on title)

Question 97

What are the types of warranty deeds and their definitions?

Answer 97

General Warranty Deed: Contains all six covenants of title, which covers the period prior to the sale. The seller warrants there are no defects in the chain of title.

Special Warranty Deed: May contain some, or all, of the covenants and typically limits liability only to the period of the seller’s ownership of the land. The seller warrants that no defects have occurred during his or her ownership.

Question 98

What are the present covenants contained in a general warranty deed?

Answer 98

A. Present Covenants: Do not run with the land and can be breached only at the time of closing. The buyer’s successors in interest are unable to sue on these covenants.
 1. Seisin: The grantor promises he or she owns the property.
 2. Right to Convey: The grantor promises he or she has the power to convey the property. (no restraints on alienation)
 3. Covenant against Encumbrances: The grantor promises there are no encumbrances (visible or invisible) on the property.

Question 99

What are the future covenants that are contained in a warranty deed?

Answer 99

Future Covenants: Run with the land (PINT) and breach can be at the time of closing or afterwards
 1. Quiet Enjoyment: The grantor promises that the grantee will not be disturbed by a third party asserting a valid claim to the land.
 2. Warranty: The grantor promises to defend the grantee against any third-party claim.
 3. Further Assurances: The grantor promises to do everything reasonably necessary to perfect the grantee’s title.

Question 100

When can a grantee sue for breach of a future covenant?

Answer 100

The grantee can sue for a breach of a future covenant at any time within the limitations period after the breach occurs.

Question 101

What disclosure duties does the seller of a residential home have?

Answer 101

Duty to disclose material latent defects known to the seller but not readily observable and not known to the buyer.
 Applies to commercial builders and developers of new homes.
 Some states extend the duty to all sellers of homes, new or used.
 If the seller fails to follow through or has an ongoing duty to make sure the premises are habitable or fit, it may lead to tort liability.

Question 102

What is the implied warranty of quality?

Answer 102

o Applies to the sale of new or remodeled homes by builders and developers.
o Does not apply to commercial structures.
o Covers significant latent defects.
o Defects must be discovered (by buyer) within a reasonable time after construction or remodeling.

Question 103

What are the duties of a real estate broker who lists a seller’s real property for sale?

Answer 103

A real estate broker who lists a seller’s real property for sale is the seller’s agent, and as such, owes the seller a fiduciary duty of disclosure.
o Under this duty, the broker must disclose any information obtained that would be beneficial to the seller in negotiating the sale of the property.
• A real estate broker who lists a seller’s real property for sale is also liable to the buyer for any intentional misrepresentations of facts known to the broker.

Question 104

What are the duties of a real estate broker who contracts with a buyer to assist in the purchase of real property?

Answer 104

A real estate broker who contracts with a buyer to assist in the purchase of real property is the buyer’s agent, and as such, owes the buyer fiduciary duties of loyalty and obedience.
o The duty of loyalty requires the broker to give his or her undivided loyalty to the buyer and to put the buyer’s interests before the broker’s own interests
o The duty of obedience requires the broker to follow the buyer’s lawful orders.

Question 105

What is a mortgage?

Answer 105

o An interest in real property that is designed to secure performance of an obligation (usually repayment of a debt).
o Mortgages must be in writing (interest in land) to satisfy the Statute of Frauds.

Question 106

What instruments make up a mortgage and their associated remedies?

Answer 106

Mortgage: Document that represents an interest in the land.
Note: Represents the personal obligation of the debtor to repay the debt.
 Generally, the mortgage is deemed “to follow the note,” meaning that when the note has been transferred, the mortgage securing it automatically follows to the transferee.

Creditor’s remedies - choice to sue:
 In Personam: Sue on the note (go after salary, other assets of mortgagor); or
 In Rem: Foreclosing on the land through the mortgage.

Question 107

What is a mortgagor and what is a mortgagee?

Answer 107

o Mortgagor: Debtor, person borrowing the money—issuing a mortgage to the lender. - Owner / borrower
o Mortgagee: Bank; lender—creditor receiving the mortgage.

Question 108

What is a deed of trust?

Answer 108

 Debtor (settlor) borrows money from the creditor and executes a deed to the property. This deed to the property is given to a third party (the trustee) who holds on to the deed and will not return the deed to the debtor until the debt is paid.

Question 109

What is a purchase-money mortgage? (PMM)

Answer 109

A mortgage that covers part, or all, of the purchase price (e.g., as opposed to a mortgage obtained to remodel a kitchen).

A PMM that is recorded has priority over other types of mortgages.
To maintain the top priority, the PMM has to be recorded to give constructive notice to future mortgages.

Question 110

What is a future-advance mortgage generally and what are the types?

Answer 110

A future-advance mortgage is any line-of-credit (e.g., construction loan) or home-equity loan where money can be borrowed as it is needed.

If the lender has discretion to advance funds depending on mortgagor’s financial situation, it is called an optional future-advance mortgage as opposed to an obligatory future-advance mortgage (no discretion; instead, negotiate a deal where you know you will get the money in the future/when, e.g., on a schedule).

Question 111

When does an obligatory future-advance mortgage attach to a property?

Answer 111

If proper notice is given to future creditors, the mortgage interest attaches on the date that the obligatory future-advance mortgage arrangement is made, not on the date that the funds are actually accessed.

• Split in jurisdictions on what constitutes notice. Majority view—actual notice is required. Minority view—constructive notice is sufficient to protect the creditor.

Question 112

What is the effect of a subsequent lien on the priority of an optional future-advance mortgage?

Answer 112

In an optional future-advance mortgage, if the mortgagee (bank that has advanced mortgage) has notice when it makes the advance that a subsequent creditor has filed, then the future-advanced mortgage loses its priority (e.g., lien gains priority).
• Split in jurisdictions on what constitutes notice. Majority view—actual notice is required. Minority view—constructive notice is sufficient to protect the creditor.

Question 113

What is an installment land-sale contract and what is the effect of a default?

Answer 113

The buyer buys land and agrees to pay off the purchase price in installments. The buyer takes possession today, the seller holds on to the deed until the debt is entirely paid. Typically, these types of contracts contain a “time is of the essence” clause.

If the contract states that time is of the essence, the seller can declare that the buyer breached the contract and the seller keeps the land and all payments to date. Because this is such a harsh result, courts look to avoid this outcome and see if time really is of the essence. If the buyer was previously late and the seller accepted payment, courts will waive the time is of the essence clause.

Question 114

What is an absolute deed / deed absolute?

Answer 114

A debtor borrows money then issues a deed to the property to the creditor that looks absolute on its face. Extrinsic evidence would be required to establish that this was not meant to be an absolute conveyance, rather a disguised mortgage arrangement

Question 115

What does a mortgagee receive under the Lien Theory of security relationships?

Answer 115

Lien Theory: The mortgagee (bank/lender) receives a lien on the property, the mortgagor (owner/borrower) retains the right to possess the property and the rights to rents and profits from the mortgaged property.

Question 116

What does a mortgagee receive under the Title Theory of security relationships?

Answer 116

Title Theory: The mortgagor (owner/renter) retains possession until default, the mortgagee (bank/lender) has the right to rents and profits produced by the mortgaged property.

Question 117

What does a mortgagee receive under the Intermediate Theory of security relationships?

Answer 117

Intermediate Theory: Lien theory deemed to apply until default and then the title theory kicks in. The effect is that prior to default, the mortgagor (owner/bower) retains the right to possession and rents/profits; upon default, the mortgagee (lender/bank) is entitled to possession and rents/ profits.

Question 118

What are the types of sales can a mortgagor (borrower) make of land encumbered by a mortgage?

Answer 118

The buyer takes “subject to the mortgage”—the buyer has no responsibility to pay on it, either before or after foreclosure;

The buyer “assumes the mortgage”—the buyer becomes personally liable for it, along with the original borrower (under theory of privity of contract). Grantee/buyer is primarily liable and the grantor/original borrower is secondarily liable.

The buyer “assumes the mortgage” plus a novation (new contract) with the lender—the buyer alone is personally liable for paying the mortgage.

In each case, the mortgage remains on the land and is available if the mortgagee (lender) needs to foreclose on it.

Question 119

What is the default assumption if the conveyance of land encumbered by a mortgage is ambiguous?

Answer 119

If there is ambiguous language, look to the facts to see if they point you one way or the other. If the facts are silent, default is “subject to.”

Question 120

What do the terms “exoneration” and “subrogation” mean in the context of conveyance of land under which the grantee assumes a mortgage?

Answer 120

Exoneration: If the debt falls into default, the creditor can sue the grantor and the grantor can get an exoneration (court order compelling the grantee to pay the debt paid by the grantor) – to avoid foreclosure.

Subrogation: grantor is secondarily liable. Can pay off debt to debtor, and then be subrogated to mortgage and note (become the new mortgagee – and grantee, who’s become primarily liable, is now required to pay off the mortgage to the grantor/the original mortgagor)

Also, if the grantor makes payments following the transfer, the grantor can sue the grantee for reimbursement. – also to avoid foreclosure

Question 121

What is a due-on-sale clause?

Answer 121

Gives the mortgagee (lender/bank) the option to require that the entire debt be due and payable upon any transfer (enforceable if in the mortgage). – most contemporary mortgages include a due-on-sale clause.

Question 122

Can a mortgage be prepaid?

Answer 122

There is no right to prepay mortgage debt unless the terms of the mortgage expressly authorize payment.

If prepayment is permitted, it is usually accompanied by prepayment fees, which are routinely upheld.

Question 123

What is the effect of a deed in lieu of foreclosure?

Answer 123

The mortgagor (owner/borrower) issues a deed in lieu of foreclosure, which takes subject to all mortgages on the property (basically taking out a new mortgage, which takes priority over all others). Junior lienholders are unaffected.

Question 124

What is a deficiency judgment?

Answer 124

When the foreclosure sale raises less money than the amount of the outstanding debt.

EXAMPLE: A piece of property has five mortgages on it: 1, 2, 3, 4, and 5. Mortgage 1 falls into default and the holder institutes foreclosure proceedings. The holders of mortgages 2, 3, 4, and 5 must be notified of the proceedings so they can participate. The property will be seized and sold at the foreclosure sale. Whoever buys the property at the sale buys it free and clear of any mortgages because all of the mortgages would be discharged through the foreclosure sale. Proceeds pay off the cost of the sale, and if there is money left, we then pay off mortgage 1 in its entirety, then 2, 3, etc. (first in time, first in right) If we run out of mortgages and there is money left over, that money goes back to the original debtor. If we run out of money after first paying off mortgages 1, 2, and 3, mortgages 4 and 5 can obtain a deficiency judgment.

EXAMPLE: A piece of property has five mortgages on it: 1,2 3, 4, and 5. Creditor has a $100,000 mortgage on a piece of property (Mortgage 3). $100,000 Debtor falls into default and Creditor forecloses. $80,000 is raised and paid against the debt. Creditor can get a deficiency judgment for the $20,000 not retired at the foreclosure sale. Mortgages 1 and 2 are deemed to be senior interests. Mortgages 4 and 5 are junior interests. Senior interests are unaffected by a foreclosure sale. Whoever buys the property at the foreclosure sale buys it with mortgages 1 and 2 still attached. Junior interests will be discharged provided that they are properly notified and allowed to participate.

Question 125

What is the effect of an acceleration clause in a mortgage?

Answer 125

Makes the entire debt become due on the happening of an event, such as a default or sale.

Question 126

What is the equitable right of redemption?

Answer 126

Right automatically exists in interest of equity. (Cannot be modified by terms of contract)

Exists any time up until there has been a foreclosure sale. Until that time, the debtor can redeem by paying off the debt or bringing the loan current, if allowed. As soon as the foreclosure sale occurs, there is no more equitable right of redemption.

Question 127

What is the statutory right of redemption? (passed in some jurisdictions)

Answer 127

Debtor will have a limited time (6-12 months) following the foreclosure sale to go to the buyer and force them to sell the property at the foreclosure price.

EXAMPLE: There is a property saddled with a mortgage and the debtor falls into default. Property is seized and sold at a mortgage sale. A buys the property for $500,000. Within the prescribed statutory period, the debtor can go to A and offer $500,000 and A must sell it back to the debtor.

Question 128

What is the effect of an acceleration clause on a debtor’s remedy of redemption?

Answer 128

Acceleration clause means that a debtor cannot avoid foreclosure solely by bringing the defaulted loan current.

Without the acceleration clause, the mortgagor can bring the loan current and avoid foreclosure.

Question 129

What is adverse possession and its 3 major components?

Answer 129

Legally sanctioned stealing of title to land away from the rightful owner (the law favors productive use of land).

Three major components: physical, mental, and time.

Question 130

What is the rule for the physical component of adverse possession?

Answer 130

Adverse possessor actually, openly, notoriously, and exclusively occupies the land in a manner sufficient to put the true owner on reasonable notice of a cause of action (trespass) against the adverse possessor.

 Minority Rule: Requires adverse possessor to also pay taxes on the property.

Question 131

What is the rule for the mental component of adverse possession?

Answer 131

Adverse possessor has to occupy the land with a sufficiently hostile intent.

Hostile: Claiming the land as your own.
Two ways to satisfy this requirement:
1. Claim of right (claiming the land as your own); or
2. Color of title (adverse possessor believes he or she has good title to the property under a deed but does not).

(Express) Permission to be on the land destroys hostile intent. Mere knowledge of the adverse possessor by the true owner does not imply permission.

Question 132

How can one co-tenant adversely possess against another?

Answer 132

It is difficult for one co-tenant to adversely possess against another. The only way it can be done is by one co-tenant ousting the other co-tenant from making any use of the property. (and the co-tenant Knows that they’ve been ousted – e.g., locks on the door)

Question 133

What are the majority and minority rules on whether encroachment (e.g., build a fence / boundary wall on the wrong side of the property line) is hostile intent?

Answer 133

Majority Rule: A mistaken encroachment is sufficient hostile intent.
Minority Rule: Hostile intent exists only if the person who was doing the encroaching intended to encroach.

Question 134

What is the rule for the time component of adverse possession?

Answer 134

Rule: An adverse possessor has to be on the land continuously for the statutory period. Common law is 20 years. Otherwise, it is determined by statute within the jurisdiction.
• “Continuously” is a question of fact based on the nature of the land and the use to which it is being put.

Question 135

What is tacking?

Answer 135

Combines adverse possessors periods of possession in order to meet the statutory requirement. There must be a transfer from one adverse possessor to another in order to allow for tacking.

Question 136

What is the scope of what an adverse possessor obtains?

Answer 136

Generally, once the claim has ripened, the adverse possessor can only claim that portion of the land actually occupied.

Exception: An adverse possessor enters under color of title and occupies a significant portion of the parcel described in the flawed deed. When the adverse possessor completes the statutory period, he or she can claim the entire parcel described in the flawed deed.

An adverse possessor typically gets whatever the true owner has. - e.g., doesn’t get subsurface rights if those had been sold off; cannot obtain future interests until they become presently possessory.

Question 137

What is the effect of disability on adverse possession?

Answer 137

A disability (infancy, incompetence, imprisonment) can suspend or toll the running of the statute of limitations if the disability exists at the time the adverse possession starts.

The adverse possession period begins to run once the disability ends (e.g., the true owner gets out of jail or turns 18).

Question 138

What are the rights of a true owner against an adverse possessor?

Answer 138

Can eject the adverse possessor and collect damages up to the point the statutory period has run

Question 139

What are the rights of an adverse possessor?

Answer 139

When the adverse possession begins, the adverse possessor is considered to be the owner against the entire world except the true owner.

Once the statute of limitations runs, the adverse possessor is the true owner as of the date he or she entered the land.

Question 140

What are the 3 requirements for the valid conveyance by deed?

Answer 140

1. donative intent: The grantor must intend to transfer an interest immediately to the grantee. if the grantor intends the deed to take effect only on the death of the grantor, formalities of a will must be observed.
2. delivery: Delivery exists if the grantor has the mental intent to transfer the property to the grantee.
3. acceptance: Acceptance is presumed if the transfer is beneficial to the grantee. If the grantee refuses to accept, there is no transfer of property.

Question 141

What are the 3 ways to deliver a deed and their effects?

Answer 141

1. Grantor gives the deed to grantee: Rebuttable presumption of delivery that may be rebutted by extrinsic evidence that shows that the grantor did not intend a present transfer. (under majority rule, extrinsic evidence of oral conditions is not allowed)
2. Grantor retains the deed: Rebuttable presumption of no delivery. May be rebutted by extrinsic evidence that shows a delivery was intended.
3. Grantor Gives Deed to a Third Party to Give to Grantee: Doctrine of Relation Back (or relation-back doctrine) applies - Conveyance to the grantee relates back to the date the grantor gave the deed to a third party.

Question 142

How do courts approach a death escrow?

Answer 142

The typical situation occurs when the grantor gives the deed to the third party, and says, “Give this deed to the grantee when I die.”
• Courts will approach this as follows: When the grantor gives the deed to a third party, the grantor is at that point making a present transfer of a life estate to himself and giving a remainder to the grantee.

Question 143

What happens if a grantor expressly retains the right to reclaim a deed from a third party?

Answer 143

Then there is not transfer of title through the escrow.

Question 144

What are the 4 written requirements of a valid deed?

Answer 144

1. Sufficient identification of the parties
2. Words indicating an intent to make a present transfer of the property;
3. Sufficient description of the property; and
4. The grantor’s signature (the grantee does not need to sign the deed).
   (no requirement for recordization or notarization

Question 145

What happens if a seller dies before a closing?

Answer 145

If the seller dies after executing a sales contract, but before closing, the decedent’s personal representative must complete the transaction (obligation to complete the sale). The money received goes to the beneficiary who inherits personal property, not real estate, because money is personal property.

Question 146

What happens if a gift of real estate described specifically in a will is not in the testator’s estate at the time of death?

Answer 146

the gift is adeemed by extinction, and the beneficiary takes nothing.

Question 147

What happens if a gift of real estate was made during the testator’s lifetime, but the specific property is still mentioned in the will?

Answer 147

the gift is adeemed by satisfaction because the beneficiary has already received it.

Question 148

If a gift of real estate was made during the testator’s lifetime, but a general devise is in the will (e.g., “one-third of my estate”), then the real estate already received will not be adeemed by satisfaction unless:

Answer 148

• Will provides for deducting the gift;
• Testator, in writing, declared that the gift was part of the general devise; or
• Devisee, in writing, acknowledged that the gift was part of the general devise.

Question 149

What happens if property is inherited which had outstanding liens and mortgages?

Answer 149

The inherited real property is taken subject to all outstanding liens and mortgages (estate does not pay them off).

Question 150

What are the common law and modern laws views on what happens if a beneficiary predeceases a decedent? (lapse)

Answer 150

Common Law: If a beneficiary predeceases a decedent, any gift to the beneficiary fails.

Modern Law: Many states now have anti-lapse statutes (e.g., beneficiary’s heirs “stand in his shoes” and get the bequest).

Question 151

What are the 3 types of recording statutes?

Answer 151

1. Race Statute: The person who records first prevails.
2. Notice Statute: A bona fide purchaser (BFP) for value who takes without notice of any other claim prevails. BFP must pay value/more than a nominal amount. (mortgagees are BFPs, but judgment creditors, beneficiaries by gift/inherence, and adverse possessors are not). Notice can be actual, constructive, or inquiry.
3. Race-Notice Statute: An unrecorded conveyance is invalid against a subsequent bona fide purchaser who takes without notice and records first.

Question 152

What is a grantor-grantee index?

Answer 152

Majority way of recording conveyances. Two sets of books where the conveyance is recorded: one arranged by name of the grantor, the other by name of the grantee.

Question 153

What is a wild deed?

Answer 153

A deed which exists outside the chain of title.

Example: On May 1, G transfers the land to A, who immediately records. G is the government. On May 15, B transfers the same land to X, who records however, B does not own this land (fraudulent). On June 1, A transfers to B, who then records. On June 15, B transfers to C, who records.
The deed that X records is a WILD DEED, which exists outside the chain of title.
May 1st : G → A records
May 15th : B → X records
June 1st : A → B records
June 15th : B → C records

Suppose C is doing a title search on June 15th:
 Starting in the grantee book, C will see B obtained title to the property from A on June 1st.
 Moving on to the grantor book, there is no conveyance between June 1st and June 15th, so it looks as if B obtained good title to the property.
 Going back to the grantee book, we must find the May 1st conveyance from G to A.
 Go to the grantor book to make sure that A has not conveyed the property to anyone else between May 1st and June 1st.
 C is only charged with looking for A, so there is no way C would ever see the May 15th conveyance from B to X. There is no constructive notice as the May 15th deed from B to X is outside the chain of title.

Question 154

What is estoppel by deed?

Answer 154

Applies to a situation where someone transfers title to property that he or she does not have (wild deed) but then later acquires title to that property.
May 1st : G → A records
May 15th : B → X records
June 1st : A → B records
June 15th : B → C records

Majority Rule: B transferred title to the property; however, B did not own the property at the time B transferred it to X. B then later acquires title to the property. If X goes into court and asserts a claim to the property, B is ESTOPPED from denying it to X. (make B follow through on sale that said had authority to make, but actually didn’t)

Minority Rule: Employ the operation of law theory— title automatically passes by operation of law to X. On June 1st, title automatically passes to X, while C loses in a race jurisdiction or a race-notice jurisdiction.

Question 155

What is the shelter rule (in re: to chain of title)?

Answer 155

Shelter Rule: Provides protection for a subsequent taker who does not satisfy the applicable recording statute. A person who is a successor in interest to a person protected by the recording statute is also protected (“shelters” under the good title of the predecessor).
• Exception: A subsequent person may not take advantage of the shelter rule if that person: Attempts to “wash” the deed by conveying to a third person and then immediately taking a reconveyance of the property; or Commits fraud in respect to the deed.