Property

Question 1

Real covenants + leases

Answer 1

When a tenant makes a complete transfer of the entire remaining term of his leasehold interest, it constitutes an assignment. The assignee and the landlord are then in privity of estate, and each is liable to the other on all covenants in the lease that run with the land. The covenant runs with the land if the original parties so intend and the covenant “touches and concerns” the leased land, i.e., burdens the landlord and benefits the tenant with respect to their interests in the property.

So, a ROFR runs with land if so intends, and touches and concerns land–not just a contractual thing.

ALSO, RE options: the covenant to convey touches both the leasehold and reversion, and therefore runs with those respective interests in the land.

Question 2

Options/ROFRs and RAP in leaseholds

Answer 2

is incorrect because options and rights of first refusal are not subject to the Rule Against Perpetuities when connected to leaseholds.

Question 3

Easement by necessity

Answer 3

An easement by necessity (a form of easement by implication) will be implied when a landowner conveys a portion of their land with no way out except over some part of the grantor’s remaining land. The owner of the servient parcel (NOT the holder of the easement) has the right to locate the easement, provided the location is reasonably convenient.

Question 4

Title insurance policies

Answer 4

The developer may not obtain reimbursement regardless of the nature of the title insurance policy. A title insurance policy insures that a good record title of the property exists as of the policy’s date and agrees to defend the record title if litigated. Title insurance can be taken out by either the owner of the property or the mortgage lender.

1. An owner’s policy protects only the person who owns the policy (usually either the property owner or the mortgage lender) and does not run with the land to subsequent purchasers.
2. In contrast, a lender’s policy follows any assignment of the mortgage loan. However, the policy ends when the mortgage loan is paid off.
3. 4. 5. 6. Here, if the insurance policy obtained by the buyer was an owner policy, it would not run with the land to the developer as a subsequent purchaser, and if it was a lender policy, there is no longer any mortgage for the policy to follow (the buyer has paid it off), so that policy would have ended. Thus, the developer cannot recover in an action against the buyer’s title insurance policy.

Question 5

Fee simple subject to condition subsequent

Answer 5

An FSSCS is created when the grantor retains the power to terminate the grantee’s estate upon the happening of a specified event

(upon the condition of, provided that, but if, if it happens that)

Usually must be a right of entry within the language

Question 6

Fee simple determinable

Answer 6

Fee simple determinable automatically terminates on the happening of a stated event, and reverts to the grantor

(so long as, during, while, until).

**courts will try to avoid forfeiture, so if can, presumption that will construe as FSSCS.

Question 7

Encumbering remaindermen of a life estate

Answer 7

A life tenant is entitled to all the ordinary uses and profits of the land, which includes encumbering his own interest, but he cannot lawfully do any act that would injure the interests of the remaindermen. Here, because the son did not obtain the consent or joinder of the remainderman when he mortgaged the land, the mortgage attaches only to the life estate. Thus, the remaindermen (the brother and sister) are not liable for the mortgage payments.

Question 8

Continuous

Answer 8

Intermittent periods of occupancy are not sufficient. However, constant use by the claimant is not required as long as possession is of a type that the usual owner would make. Also, there need not be continuous possession by the same person; an adverse possessor can tack her own possession onto the periods of adverse possession of her predecessors (see below).

Question 9

Open and Notorious

Answer 9

The adverse possessor’s occupation must be sufficiently apparent to put the true owner on notice that a trespass is occurring.

Question 10

Actual and Exclusive

Answer 10

An adverse possessor will gain title only to land they actually occupy. In some cases, however, actual possession of the entire parcel claimed is not necessary.

exclusive possession means that the possessor is not sharing with the true owner or the public. Two or more people acting together could succeed in obtaining title by adverse possession; they would take title as tenants in common.

Question 11

Hostility

Answer 11

The hostility requirement is satisfied if the possessor enters without the owner’s permission. Note that the adverse possessor’s state of mind is irrelevant. It doesn’t matter whether the possessor actually thought that they were on their own land or knew that they were encroaching on another’s land. When possession starts permissively (for example, by lease), possession does not become adverse until the possessor makes clear to the true owner the fact that they are claiming “hostilely.”

Question 12

Delivery

Answer 12

• Delivery is the final step to pass title. 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.
• acceptance is presumed.
• delivery presumption can be created by
  
  • handing deed to grantee
  • acknowledged by grantor in front of notary
  • recorded
• HOWEVER, express rejection of the deed is sufficient to rebut any presumption of acceptance, and therefore, delivery.

Question 13

Defective Deeds

Answer 13

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.

Voidable: Deeds obtained by means of, among other things, duress, undue influence, or mistake are considered voidable.

Void: Deeds that were forged, never delivered, or obtained by fraud in the factum are void.

Question 14

Time is of the essence

Answer 14

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

Question 15

Fixtures

Answer 15

Under the concept of fixtures, a chattel that has been annexed to real property is converted from personalty to realty. As an accessory to the land, it passes with ownership of the land rather than with a transfer of the personal property of an estate.

Common ownership cases: person who brought chattel owner of chattel and land

• The manifest intent of the annexor determines whether the chattel becomes a fixture. The factors for evaluating the annexor’s intent are: (i) the relationship between the annexor and the premises, (ii) the degree of annexation, (iii) the nature and use of the chattel, (iv) the amount of damage that would be caused by its removal
• Constructive annexation occurs when an article of personal property (an “accession”) becomes an integral part of the property, even though it is not physically annexed to the property, in the same sense that a fixture becomes an integral part of the realty. The doctrine is fully applicable in this case even though the accession goes with an item of property that is itself converted from personalty to realty, as the organ was here

Divided ownership cases: chattel is owned and brought to the realty by someone other than the landowner (tenant, licensee, trespasser)

• LL-tenant
  
  • agreement as to whether a fixture is controlling
  • if no agreement, tenant lacks intent to permanently improve premises, can remove as long as removal doesn’t substantially damage premises or destroy chattel.
• Life tenant-remainderman
  
  • same rules apply as LL-tenant
• Licensee or Trespasser and Landowner
  
  • licensees treated like tenants
  • trespassers lose their annexations, but one courts will allow a good faith trespasser recovery measured by value aded to land.

Question 16

Easement by Implication

Answer 16

An easement by implication is created by operation of law rather than by written instrument. It is an exception to the Statute of Frauds.

An easement is implied if,

• prior to the time the property is divided, a use exists on the “servient part” that is reasonably necessary for the enjoyment of the “dominant part,”
  
  • Reasonable necessity is determined by many factors, including the
    
    • cost and difficulty of alternatives, and
    • whether the price paid reflects the expected continued use.
• and the parties intended the use to continue after division of the property.
• The use must be continuous and
• apparent at the time the property is divided.

Question 17

RAP MBE set question

Answer 17

To be valid under the Rule, an interest must vest if at all within a life in being at its creation plus 21 years. The son is a life in being. At the son’s death, his children’s interest is certain to vest or fail: If the son had any children, at his death, the children’s interest would become indefeasibly vested (i.e., the class would close and the children’s interest would no longer be subject to open). Note that the children need not come into possession within the perpetuities period; the only requirement is that their interests vest within the period. Likewise, if the son had no children, the gift to them was certain to fail at his death. Thus, the children’s interest does not violate the Rule. Note that the unborn widow aspect of this question is a red herring. The fact would be relevant only if the children’s gift were conditioned on their surviving the widow, in which case the takers would remain unascertained and their interest would remain contingent until that time.

Question 18

Equitable mortgage

Answer 18

If a deed is given for security purposes rather than as an outright transfer of the property, it will be treated as an “equitable” mortgage and the creditor will be required to foreclose it by judicial action like any other mortgage.

In determining whether an absolute deed is really a mortgage, the court considers the following factors:

(i) the existence of a debt or promise of payment by the deed’s grantor;
(ii) the grantee’s promise to return the land if the debt is paid;
(iii) the fact that the amount advanced to the grantor/debtor was much lower than the value of the property;
(iv) the degree of the grantor’s financial distress; and
(v) the parties’ prior negotiations.

Question 19

Actual and Partial Eviction

Answer 19

Actual eviction: landlord or hold-over excludes tenant from ENTIRE leased premises. NO OBLIGATION TO PAY RENT

Partial eviction: tenant physical exclude from only part of premises, but, NO OBLIGATION TO PAY RENT on the entire premises.

• Compare w/
  
  • Constructive eviction:
    
    • SING! Substantial interference, notice, GOODBYE!
  • Entire leasehold taken by eminent domain: tenant’s liability for rent extinguished, because both the leasehold and reversion have merged in the condemner, and there is no longer a leasehold estate. Lessee entitled to compensation
  • Temporary/partial taking of leasehold: tenant is NOT discharged from rent obligation, but is entitled to compensation–that is share, of condemnation award for the taking.

Question 20

Condemnation of Leaseholds

Answer 20

Entire leasehold taken by eminent domain: tenant’s liability for rent extinguished, because both the leasehold and reversion have merged in the condemner, and there is no longer a leasehold estate. Lessee entitled to compensation

Temporary/partial taking: tenant is NOT discharged from rent obligation, but is entitled to compensation–that is share, of condemnation award for the taking.

Question 21

“Testamentary Deeds” + Exceptions

Answer 21

• Generally: A deed is not effective to transfer an interest in realty unless it has been delivered. Delivery refers to the grantor’s intent. There must be words or conduct showing the grantor intended that the deed have some present operative effect- that title pass immediately and irrevocably, even though the right of possession may be postponed.
• Traditional view: If the right of possession is to be postponed until the grantor’s death, the deed may be held “testamentary” and therefore void (unless executed with testamentary formalities).
• Modern (MAJORITY) approach: most courts hold that if the grantor executes a deed and gives it to another with instructions to give it to the grantee upon the grantor’s death, the grantor’s intent was to presently convey a future interest to the grantee (either a remainder, with a life estate reserved in the grantor, or an executory interest), and so the gift is inter vivos, not testamentary.
  
  • To make an effective delivery, the grantor must relinquish absolute and unconditional control.

Question 22

Purchase Money Mortgages (Real Property)

Answer 22

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.

Question 23

Vested remainders are devisable by will

Question 24

Implied Warranty of Habitability in Sales of Real Property (not leaseholds)

Answer 24

Although the common law held that contracts of sale and deeds of real property carry no implied warranties of quality or fitness for the purpose intended, most courts now find an implied warranty of fitness or quality extends to the sale of any new house by the builder. The warranty implied is that the new house is designed and constructed in a reasonably workmanlike manner and suitable for human habitation. Some courts go further and extend the warranty to a subsequent purchaser.

Question 25

Priority in foreclosures

Answer 25

The proceeds of the foreclosure sale are used first to pay

(1) expenses of the sale, attorneys’ fees, and court costs;
(2) then to pay the principal and accrued interest on the loan that was foreclosed;
(3) next to pay off any junior liens or other junior interests in the order of their priority; (4) and finally, any remaining proceeds are distributed to the mortgagor.

Question 26

Zoning: nonconforming uses

Answer 26

• 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.
• If ownership passes, that doesn’t end nonconforming use, as long as use is indefinite

Question 27

Profit

Answer 27

Like an easement, a profit is a nonpossessory interest in land.

The holder of the profit is entitled to enter on the servient tenement and take the soil or the substance of the soil (e.g., minerals, timber, oil, or game).

When an owner grants the sole right to take a resource from her land, the grantee takes an exclusive profit and is solely entitled to the resources, even to the exclusion of the owner of the servient estate.

By contrast, when a profit is nonexclusive, the owner of the servient estate may grant similar rights to others or take the resources herself. Although here the profit is nonexclusive, it is nevertheless an interest in property for which the company is entitled to compensation in any condemnation proceeding.

Question 28

Marketable Title

Answer 28

• 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.
• Ex: An inability to establish a record chain of title will generally render the title unmarketable. If the buyer

Question 29

RAP

Answer 29

Generally:

• only applies to contingent remainders, executory interests, vested remainders subject to open, options to purchase, and rights of first refusal.
• The grantor’s interests (reversions, possibilities of reverter, rights of entry) are safe from the Rule; you don’t need to consider them

Four steps:

1. Determine the interests
2. How does the future interest holder take?
3. Find measuring life
4. When will we know if the future interest holder can take?

Question 30

Shelter Rule

Answer 30

• A person who takes from a bonafide purchaser will prevail against any interest that the transferor-bona fide purchaser would have prevailed against.
• This is true even when the transferee has actual knowledge of the prior unrecorded interest.

Question 31

BFP

Answer 31

purchaser for value with no actual, record, or inquiry notice of the prior _____.

Question 32

Covenant against encumbrances

Answer 32

• Definition: ensure there are neither visible encumbrances nor invisible encumbrances against the title or interest conveyed.
• This is a present covenant and is breached, if at all, at the time of conveyance.
• If a covenant for title can be enforced against the Covenanter by a transferred of the convenantee, it is said to run with the land.
• Majority rule: present covenants do not run with the land and cannot be enforced by remote grantees.
• Minority rule: remote grantee may sue on the covenant against encumbrances unless the grantee had notice of the encumbrance.

Question 33

Acquiescence

Answer 33

acquiescence, which provides that if a benefited party acquiesces in a violation of the servitude by one burdened party, he may be deemed to have abandoned the servitude as to other burdened parties.