Property Flashcards
definition of mortgage
when may foreclose
lien on real property used to secure debt.
may foreclose when default on debt
what happens to other mortgages on real property when one forecloses
A foreclosure terminates any interest in the foreclosed property that is junior (lower in priority) to the interest being foreclosed but does not affect any senior interest (higher in priority). When no recording act is provided (as seen here), the “first in time, first in right” rule is used to prioritize interests.
What rights does landowner have to support under ground when leases drilling rights?
A landowner has the right to have the land physically supported in its natural state. The right to subjacent support—i.e., support from beneath the surface of the land—arises when the landowner conveys to a third party (here, the company) the right to access and remove oil, gas, or minerals from beneath the land.
Then the owner of the rights is strictly liable—i.e., liable without proof of fault—for any failure to support the land and buildings that existed on the land when the mining rights were conveyed, provided that the damage would have occurred in the land’s natural state.(meaning the bu=ilding did not contribute to the subsidence)
define novation
A novation is the substitution of a new contract for an old one when a party to the original contract agrees to release the other party and substitute a new one.
are crops etc. on a property part of a land inheritance or a property inheritance?
Wild, uncultivated crops (i.e., fructus naturales) are considered part of the real property on which they grow, so they pass automatically with the land. Crops that are purposely planted and cultivated (i.e., fructus industriales) are considered the landowner’s personal property and, similarly, are generally conveyed with the land. However, the prior owner has the right to reenter to remove these crops if they were:
–harvested and therefore severed from the land
ripe (i.e., mature) and therefore deemed constructively severed from the land (in some courts) or
-planted by a tenant with a lease of uncertain duration or an adverse possessor under a claim of right.*
doctrine of lapse re: will
Causes devise to fail if beneficiary predeceases testator
doctrine of ademption (will)
Causes devise to fail by either:
• extinction – specifically devised property not owned by testator (or destroyed or fundamentally changed) at death
• satisfaction – beneficiary received devised property (or other asset intended to satisfy devise) during testator’s life
In either case, the devisee takes nothing unless the will expressly states otherwise. And proceeds from the sale of the specifically devised asset—and any property acquired with those proceeds—become part of the general estate. The general estate will then be distributed in accordance with the remainder of the will.
Dcotrine of Exoneration (in a will)
Allows beneficiary of specifically devised real property to use estate’s remaining assets to pay off any encumbrances on that property
doctrine of abatement (re: will)
Reduces devises that cannot be satisfied by assets remaining after testator’s debts are paid
Residuary devises abated first, followed by general & then specific devises
lien theory state: meaning and possession rights
lien theory (majority rule) – the lender has only a security interest in the mortgaged land In a lien-theory state, the lender cannot take possession of the land prior to foreclosure because the borrower (mortgagor) is considered the owner of the land during the term of the mortgage. And though an acceleration clause makes the full amount of the mortgage obligation due when the borrower defaults, it has no effect on the right to possess the land prior to default
acceleration clause
makes the full amount of the mortgage obligation due when the borrower defaults, (but it has no effect on the right to possess the land prior to default)
what does deed need to effect valid transfer of real property
must be signed by the grantor, identify the grantor and the grantee, contain words of transfer, and identify the land with reasonable certainty—as the farmer’s document does here. A property interest may then be transferred by delivering the deed to the grantee, and acceptance is presumed if the transfer is beneficial to the grantee.
what if an old farmer writes “I now give my farm to my son” signed with names, and gives it to the neighbor, then dies? Does the son get it or the daughter who is in the previous will?
A grantor can deliver the deed to the grantee through an independent third party. But if the third party’s transfer to the grantee is conditioned on the grantor’s death, then the grantor’s delivery of the deed to the third party must evidence the intent to make a present gift to be effective. This typically occurs when the grantor relinquishes the right to take back the deed by placing it beyond the grantor’s control.
a farmer gets a small loan from loan shark, then transfers deed of his farm to shark, with no mention of loan. Shark sells land to third party, never records loan. Farmer to get deed back from 3P, who didn’t know, when he pays off loan.
there are alternative means of establishing a mortgage. For example, an absolute deed—one that transfers title free of all liens and encumbrances—given with the intent to secure a debt is generally enforceable as an equitable mortgage. But competing equities (e.g., good-faith purchaser) take precedence over an equitable mortgage.
A deed must be delivered to make a valid transfer. What ways to make rebuttable presumption of delivery?
- phscially giving it to grantee
- recording it in the land records office
- Giving it without conditions to 3P for delivery to grantee
- Grantee obtains possession by finding it among effects or similar.
how to create a joint tenancy? intent and 4 unities
Must transfer with explicit intent to make right of survivorship, AND
Possession – tenants share an equal right to possess or use the property
Interest – tenants have an equal interest in the property
Time – property interests simultaneously vest in all tenants
Title – property interests received in the same instrument of conveyance
If any of these does not work then you default to a TiC
how to abandon a covenant running with land
or an easement, for that matter
A covenant can be terminated in the same manner as an easement, including by abandonment. Abandonment occurs when an affirmative act—something more than neglect or nonuse—shows a clear intent to relinquish the covenant.
How to make a covenant where burden runs with land
Following elements are met: WITHVN
- Writing – covenant is in a writing that satisfies the statute of frauds (purchasers’ deeds)
- Intent to run – promising parties intend for the covenant to run to their successors in interest (deeds say “the owners, their heirs, and their assigns”)
- Touch and concern – covenant relates to the use, enjoyment, or occupation of the land (maintain the retaining wall)
- Horizontal privity – promising parties simultaneously transfer the land and create the covenant (covenant was created when the man sold the parcels to the purchasers)
- Vertical privity – successors have an unbroken chain of ownership from the original parties (the purchasers’ successors have the same ownership interest)
- Notice – person to be bound had notice of the covenant (deeds containing the covenant were recorded)
order of mortgage/lien payoff on foreclosure
- PMSI (aka purchase money mortgages)
- first recorded items
- other recorded items
- unrecorded liens
Absolute deed
Debtor gives deed to creditor with intent to secure loan (ie, equitable mortgage)
Deed of trust
Debtor gives deed of trust to third-party trustee as collateral for debt, & creditor can instruct trustee to foreclose upon default
Installment land contract
Debtor agrees to buy land through installment payments & gets immediate possession, but seller keeps legal title until paid in full
Sale-leaseback
Seller leases property from buyer immediately after sale, & seller’s rental payments function as repayments on loan
Equitable vendor’s lien
Seller finances buyer’s purchase with equitable vendor’s lien when seller transfers title to buyer but purchase price not fully paid
when a buyer misses 3 payments on installment land K (rent to own-ish)
An installment land contract (i.e., contract for deed) is a contract under which the seller retains title to the property until the buyer makes the final payment under an installment plan. Traditionally, a buyer who missed a single payment was deemed to have defaulted on the contract, and the seller could keep all prior installment payments and take back the property. Today, states handle a buyer’s failure to pay in one of three ways:
- Allow the seller to retain ownership of the property but require some form of restitution to the buyer
- Offer the buyer an equitable right of redemption—i.e., the buyer can keep the property by paying the full balance of the installment contract at any time prior to the foreclosure sale (this must happen if an acceleration clause)
- Treat the installment land contract as a mortgage, so the seller must foreclose to gain title to the property and the buyer has an equitable right of redemption and other protections
buyer’s rights when foreclose on mortgage
This gives the buyer the right to redeem the property after she failed to timely make required installment payments (on insltamment K that state treats like mortgage). The buyer tendered only the three missed payments—not the full balance (three years of payments) due under the acceleration clause. However, she may still tender the full balance prior to foreclosure. And since there has not been a foreclosure sale, the court should not award the owner possession of the house.
if joint tenant petitions unilaterally for partition of a a big flat field, what happens
- bank will do unilaterally (only tenancy by entirety can’t)
- will avoid selling at auction if field can be split fairly
- will partition property physically and each JT gets half
what happens when someone buys a mortgaged property?
Mortgaged property can be transferred (unless mortgagee/lender said otherwise in K). After transfer, mortgage remained attached and debtor REMAINS liable personally!
Options for buyer:
1. took property subject to the mortgage – in which case the buyer does not agree to pay and is not personally liable for the debt or
- assumed the mortgage – in which case the buyer expressly agrees to pay and becomes primarily liable for the debt, while the debtor becomes secondarily liable as a surety.
Buyer who assumes mortgage as part of purchase price cannot assert the defenses to K that the debtor would have. That would be unjust enrichment, because he pad a lower price on assumption that he would pay mortgage.
Rule of Convenience
When class gift. closes class membership once any member of the class is entitled to immediate possession of a share in the class gift. Ex: Sons of A are to inherit house when B's life estate ends. When B dies, the sons alive then can take possession, so that closes the class. If another son is born, he doesn't get anything. This applies to close a RAP-affected class even if it would pass the RAP.
Shelter Rule
a donee who receives property from a grantor protected by a recording act will receive the same protection as the grantor under the recording act.
What type of purchaser has their property ownerships protected by any type of recording act (like what is the most bomber)
A purchaser for value who (1) recorded first and (2) acquired the property without notice of the prior competing interest is protected by any kind of recording act
