Property

Question 1

Present Estates: Defeasible Fees

Medium

Answer 1

• A fee simple defeasible is a conveyance of property that has conditions placed on it. It is created when the grantor uses express conditional language to indicate that the
  conveyance will be terminated upon the occurrence (or non-occurrence) of an event or condition. A fee simple defeasible gives the grantee a present possessory interest in the property, BUT reserves a future interest in the property in favor of either the grantor or a third party.
• Fee Simple Determinable: A fee simple determinable is a conditional conveyance that allows the grantor to retain a possibility of reverter. It is created when the grantor uses words of duration (i.e. so long as, during, while, the property shall revert) in the conveyance to indicate that the interest being conveyed will automatically terminate if a specified condition occurs.
• Fee Simple Subject to Condition Subsequent: A fee simple
  subject to a condition subsequent is a conditional conveyance that allows the grantor to retain a right of re-entry. It is created when the conveyance expressly states that the interest being conveyed is subject to the grantor’s right of re-entry if a specified condition occurs. If the condition occurs, the grantee’s present interest in the property will be lost ONLY IF the grantor affirmatively exercises his right of re-entry and re-takes possession of the land.
• Fee Simple Subject to Executory Interest: A fee simple subject to an executory interest is a conditional conveyance of real property, in which a third-party (not the grantor or his heirs) will be entitled to the property upon the occurrence of a specified condition. It is created when the grantor uses words such as “To person X, so long as (or “but if”) … to person Y.”

Question 2

Future Estates: Reverter & Right of Re-Entry

Medium

Answer 2

• Reverter and the right of re-entry is connected to the
  occurrence of a condition for a defeasible fee conveyance.
• A possibility of reverter creates a future interest of
  possession in the grantor if a specified condition occurs. If
  such condition occurs, the present possessory interest in the
  grantee will automatically terminate and vest in the grantor.
• A right of re-entry (also known as a power of termination)
  creates a future interest in the grantor, wherein the grantor
  has the right to re-enter and take the property if a specified
  condition occurs. The present interest in the property is lost ONLY IF the grantor exercises that right (the present possessory interest does not automatically terminate upon the occurrence of the specified condition).
• Possibility of Reverter and Right of Re-entry interests are NOT subject to the Common Law Rule Against Perpetuities because such interests are immediately vested upon their creation. Additionally, such interests are NOT subject to the Uniform Statutory Rule Against Perpetuities.

Question 3

Restraints on Alienation

Medium

Answer 3

• A restraint on alienation occurs when the grantor attempts to restrict the alienability or transferability of the land. Three types of restraints exist: (1) disabling restraints (all transfers are void); (2) forfeiture restraints (land is forfeited if a transfer is attempted); AND (3) promissory restraints (an attempted transfer breaches a covenant).
• Restraints are enforceable based on: (1) the interest
  conveyed; AND (2) **whether the restraint is reasonable **(i.e. the restraint lasts for a specific period of time or concerns the appearance or purpose of the land). All absolute restrictions on alienation or transferability on fee simple estates are void and unenforceable.

Question 4

Waste

Low

Answer 4

• All those with a present possessory interest (i.e. life tenants, tenants under a lease), must NOT damage or commit waste to the property. Three types of waste exist: (1) affirmative waste (damages that are intentional/negligent or the unapproved exploitation of minerals on the property); (2) permissive waste (failure to make required repairs); AND (3) ameliorative waste (a substantial change in the use of the
  property that increases its value).

Question 5

Joint Tenancy: Formation

High

Answer 5

• A conveyance of real property to two or more persons creates a joint tenancy when the four unities are present: (1) unity of time (all interests were received at the same time); (2) unity of title (all interests were acquired by the same instrument); (3) unity of interest (all ownership interests are equal); AND (4) unity of possession (all interests have equal rights of possession).
• There MUST be clear express intent to create a joint
  tenancy, which may be satisfied by including such terms as
  “joint tenants”, “right of survivorship”, “joint tenants with right of survivorship”, or even “jointly” (if intent is proven). A right of survivorship means that when one joint tenant dies his interest in the land is automatically transferred to the other joint tenant(s).

Question 6

Joint Tenancy: Severance

High

Answer 6

• Generally, when one joint tenant unilaterally transfers his ownership interest in the real property, the joint tenancy is severed and the tenants will then hold the property as tenants in common.
• Under the Modern View, a joint tenant MAY transfer her interest in the property (as a joint tenant) to herself
  (as a tenant in common). However, some states still require the use of a “straw man” as an intermediary to transfer the property interest to oneself as a tenant in common.
• When a joint tenant conveys his interest in a joint tenancy to
  a third-party, that party takes the property as a tenant in common. If there are only two joint tenants, the joint tenancy is severed. However, if there are more than two joint tenants, the joint tenancy remains, but only among the other joint tenants.
• When a joint tenant takes out a mortgage on her interest,
  the mortgage’s effect on the joint tenancy will depend on the jurisdiction.
• In a lien theory jurisdiction, the mortgage will NOT sever the joint tenancy. However, in a title theory jurisdiction, the mortgage will sever the joint tenancy, and the tenants will then hold the property as tenants in common.

Question 7

Co-Tenant’s Entitlement to Rent or Reimbursement

High

Answer 7

• Rent from Co-Tenant: An out-of-possession co-tenant DOES NOT have the right to receive rent from the in-possession co-tenant, UNLESS the in-possession co-tenant wrongfully ousted the out-of-possession co-tenant from the property. When one co-tenant voluntarily quits (or simply
  does not use) the property, the other co-tenant is not liable
  for rent for his use of the entire property. Thus, a co-tenant
  CANNOT collect rents from another co-tenant who is in exclusive possession of the premises, unless: (a) there is
  an agreement to the contrary; OR (b) the co-tenant
  seeking rent was wrongfully ousted.
• Rent from a Third-Party: If an in-possession co-tenant rents the property to a third-party, the out-of possession co-tenant is entitled to his fair share of the rent paid by the third-party.
• Reimbursement for Repairs: A co-tenant is NOT entitled to reimbursement for the costs of necessary repairs that the cotenant paid for. At the end of the cotenancy (i.e. a partition or sale of the property), there is a right to credit.
• Reimbursement for Improvements: A co-tenant who makes improvements to the property is NOT entitled to reimbursement from the other co-tenant(s). At the end of the cotenancy (i.e. a partition or sale of the property), there is a right to credit.
• Reimbursement for Mortgage & Tax Payments: All cotenants are responsible for their proportionate share of mortgage, tax payments, or assessments (includes all payments that could result in a lien on the property if
  unpaid). HOWEVER, in most states, a co-tenant that is in
  sole-possession of the property CANNOT recover contribution for such payments unless the payments exceed the reasonable rental value of the property.

Question 8

Ouster of a Co-Tenant

Medium

Answer 8

• All co-tenants have equal rights to possess the entire
  property. An ouster occurs when a co-tenant excludes
  another co-tenant from possessing the property. The party wrongfully excluded from the property may bring an action to recover possession and damages.

Question 9

Types of Leasehold Interests

High

Answer 9

• A lease provides the tenant with a present possessory interest in the real property (subject to any terms and conditions agreed to), and gives the landlord a future interest in the property. In most states, the statute of frauds requires a lease of more than one year to be writing.
• Three types of leaseholds exist: (1) tenancy for years; (2)
  periodic tenancy; AND (3) tenancy at will.
• A Tenancy for Years lasts for a fixed period of time (there is a specified beginning and end date), as agreed by the landlord and tenant. The lease automatically terminates after the fixed period. Normally, a tenant CANNOT terminate a lease prior to the end of the term, unless constructive eviction or another exception applies.
• A Periodic Tenancy lasts for an initial period and then automatically continues for additional equal periods (i.e. weekly, monthly) until it is terminated by the landlord or tenant. A periodic tenancy may be created: (a) expressly by agreement; (b) by implication if rent is paid at specific periods (i.e. every week or month); OR (c) by law when a tenant-for-years remains after termination of the period or when a lease agreement is invalid. A periodic tenancy can only be terminated (1) at the end of a natural lease period, AND (2)
  requires written notice at least a full period in advance. For example, a periodic month-to-month tenancy requires a one-month notice of termination. An exception exists for a periodic year-to-year tenancy, in that only 6-months’ notice is required.
• A Tenancy at Will continues until either party terminates it, and is usually created by an express agreement. In most states termination of a tenancy at will requires giving: (1) notice of termination; AND
  (2) a reasonable time to quit the premises. In a
  minority of states, termination does not require notice to the tenant.

Question 10

Right to Terminate Tenancy for Breach of Covenant

Low

Answer 10

• At common law, covenants between a landlord and tenant were considered independent of each other. Thus, a breach of a covenant gave rise to damages, but NOT the right to terminate the lease.
• Under the modern view, many covenants are considered dependent, and a party may seek damages AND terminate the lease upon breach of a covenant.

Question 11

Tenant Duties: Duty to Pay Rent

Medium

Answer 11

• A tenant has the duty to pay rent during the lease term, and such duty runs with the land. If a tenant remains on the property and does not pay rent, the landlord may: (a) initiate eviction proceedings; OR (b) allow the tenant to remain on the property and sue for damages. If the tenant abandons the property and does not pay rent, the landlord may be required to take reasonable steps to mitigate his losses (depending on the applicable state law).

Question 12

Landlord Duties: Implied Warranty of Habitability

High

Answer 12

• A warranty of habitability is implied in every residential lease. The implied warranty of habitability requires that the landlord provide a place to live (apartment, home) that is habitable - reasonably suited for residential use. A property is deemed habitable if it’s reasonably suitable for human needs (the local housing or public safety code must be considered for specifics – but usually adequate heat, running water, electricity, structurally sound).
• Upon a breach of the warranty of habitability, the tenant may: (a) move out and terminate the lease; (b) withhold or reduce the rent; (c) repair the issue and deduct the cost from the rent; OR (d) remain and sue for damages. Generally, before the tenant can withhold the rent or remedy the defect, he must first notify the landlord of the problem and give her a reasonable opportunity to correct the problem. The tenant is not required to vacate the premises.

Question 13

Landlord Duties: Constructive Eviction

High

Answer 13

• Every lease includes an implied covenant of quiet
  enjoyment, which prevents a landlord from interfering with the tenant’s quiet enjoyment and possession of the property. The landlord is not liable for acts of other tenants, but he has a duty to take action against a tenant’s nuisance-like behavior and to control the common areas. This covenant is breached if the tenant is constructively evicted.
• Constructive eviction occurs when: (1) the landlord breached a duty to the tenant; (2) the landlord’s breach caused a loss of the substantial use and enjoyment of the premises; (3) the tenant gave the landlord notice of the condition; (4) the landlord failed to remedy the condition within a reasonable time after notice was given; AND (5) the tenant vacated the premises.
• Upon being constructively evicted, the tenant may terminate the lease and seek damages. Additionally, a tenant can avoid rent owed during the time-frame she was constructively evicted.

Question 14

Landlord Duties: Duty to Repair

Low

Answer 14

• In residential leases, a tenant has a duty to keep the premises in good order. BUT, a landlord is presumed responsible for repairs and is required to make repairs (except for damage caused by the tenant) and conduct maintenance to keep the rental property in habitable condition (to not violate the Implied Warranty of Habitability). The tenant must notify the landlord and give a reasonable amount of time for the landlord to make the repairs; if the landlord does NOT, then the landlord may be liable in negligence. The landlord also has a duty to repair common areas, and has a duty to warn the tenant of any latent defects that create a risk of serious harm that the landlord knows of (or should know of).
• In commercial leases, landlords generally DO NOT have a duty to repair (unless specified in the lease agreement), but public authorities may require the landlord to do so in certain instances.

Question 15

Landlord Duties: Duty to Mitigate Damages

Medium

Answer 15

• At common law, a landlord had NO duty to mitigate his damages. However, most states now impose a duty on a
  landlord to take reasonable steps to mitigate his losses (i.e. attempting to lease the property to another tenant).
• However, in those states, the mitigation does not need to be successful in order to recover damages (only reasonable steps are required). If a landlord fails to mitigate, some jurisdictions hold that the tenant is not liable for any rent or damages after the date of abandonment.
• If the landlord leases the property to another tenant, the
  landlord would be able to sue for the difference between the original rent payments and the rent payments under the new lease (as well as any incidental damages). Landlord can only sue for what has come due.

Question 16

Assignment of a Lease

High

Answer 16

• A lease may be freely assigned UNLESS a provision in the lease states otherwise. However, an assignment can never be for a longer period of time than the lessor’s remaining lease term.
• An assignment occurs when a tenant (the assignor) transfers
  ALL of his remaining interest in a lease to a third-party (the
  assignee). The assignee is liable to the landlord for rent and all other covenants that run with the land because privity of estate arises between the assignee and the landlord. The assignor also remains liable to the landlord for any rent not paid by the assignee because privity of contract continues to exist with the landlord. Landlord’s maintenance obligation runs with the land (privity of estate) and is enforceable between the landlord and assignee.
• A landlord may be deemed to waive his right to enforce a provision prohibiting assignments if he accepts rent from the assignee.

Question 17

Subleases

Medium

Answer 17

• A lease may be freely sublet UNLESS a provision in the
  lease states otherwise. A sublease occurs when a tenant (the sublessor) transfers only some of his remaining interest in a lease to a third-party (the sublessee). A sublease can never be for a longer lease term than the sublessor has remaining in his lease.
• The sublessee is NOT liable to the landlord for rent or other covenants that run with the land because there is no privity of estate with the landlord. If a lease prohibits subleases, the landlord waives the right to enforce the provision if he accepts rent from the sublessee.
• The sublessee CANNOT enforce covenants made by the landlord under the lease, but can enforce any covenants made by the sublessor.

Question 18

Termination of Leases: Surrender

Low

Answer 18

• A surrender occurs when the tenant returns the premises to the landlord prior to the expiration of the leasehold. Upon surrender, the landlord may accept or reject the surrender. If the landlord accepts the surrender, the tenant’s duty to pay rent after the acceptance ends. If the landlord does not accept the surrender, the tenant is deemed to have abandoned the lease, and is liable for damages. However, the landlord is subject to a duty to mitigate his damages.
• Unless otherwise agreed, an attempt by the tenant to end the lease early DOES NOT constitute a surrender UNLESS the landlord accepts the surrender. A landlord’s acceptance must be clear (solely holding onto keys left by a tenant is not sufficient acceptance without other evidence showing intent to accept the surrender).

Question 19

Real Covenants

High

Answer 19

• A real covenant is a non-possessory interest in land that obligates the holder to either do something or refrain from doing something to the land. It differs from equitable servitudes in that the remedy is damages (rather than injunctive relief).
• To enforce the benefit of a covenant there must be: (1) a writing that satisfies the statute of frauds; (2) intent that the covenant runs with the land; (3) relaxed vertical privity between succeeding parties (exists when the successor holds at least a portion of the interest held by the predecessor); AND (4) the covenant must touch and concern the land (make the land more useful or valuable to the benefitted party).
• To enforce the burden of a covenant there must be : (1) a writing that satisfies the statute of frauds; (2) intent that the covenant runs with the land; (3) strict vertical privity between succeeding parties (exists when the successor holds all of the interest held by the predecessor); (4) the covenant must touch and concern the land (make the land more useful or valuable to the benefitted party); (5) horizontal privity between the original parties (estate and covenant are contained in the same instrument [look for a transfer of property between the original parties to that contains a covenant in it]); AND (6) the new owner must have notice of the covenant. Notice may be: (a) actual; (b) constructive (the covenant is recorded in previous conveyances); OR (c) by inquiry (an inspection of the land would reveal the covenant).

Question 20

Equitable Servitudes

Medium

Answer 20

• Equitable servitudes are covenants (burdens on real property) that equity will enforce if the burdened estate had notice of the covenants (regardless of whether the covenants run with the land at law). It differs from real covenants in that the remedy is injunctive relief (rather than damages).
• To enforce the benefit of an equitable servitude there must be: (1) a writing that satisfies the statute of frauds; (2) intent for the servitude to be enforceable; AND (3) the servitude must touch and concern the land (make the land more useful or valuable to the benefitted party).
• To enforce the burden of an equitable servitude there must be: (1) a writing that satisfies the statute of frauds; (2) intent for the servitude to be enforceable; (3) the servitude must touch and concern the land (make the land more useful or valuable to the benefitted party); AND (4) the new owner must have notice of the servitude. Notice may be: (a) actual; (b) constructive (the servitude is recorded in previous conveyances); OR (c) by inquiry (an inspection of the land would reveal the servitude).

Question 21

Common Scheme or Plan Doctrine (Reciprocal Negative Servitude)

Low

Answer 21

• Under the Common Scheme or Plan Doctrine, a court will imply reciprocal restrictive covenants on parcels of land in a subdivision sold by a developer only if: (1) the developer had a common scheme or plan that all parcels of land would be subject to the restriction at the time the parcel in the
  subdivision was sold; AND (2) the defendant land owner had actual, inquiry, or record notice of the restriction.
  Reciprocal negative servitudes only apply to negative covenants and equitable servitudes.
• In showing the defendant had notice, the proponent of the
  suit must show either: (a) there was a common scheme or plan and that it was obvious from looking at the subdivision that a general pattern of restrictions existed (inquiry notice); (b) the defendant had actual notice of the restriction; OR (c) the defendant land owner had constructive notice through documents publicly recorded (record notice).

Question 22

Easements by Grant, Prescription, Implication & Necessity

High

Answer 22

• An easement is a non-possessory interest in the use of someone else’s land. Easements are either in gross or appurtenant.
• An easement in gross benefits a specific owner’s enjoyment and use of the land and DOES NOT attach to the land (unless the easement is for commercial activity). It DOES NOT pass to subsequent landowners.
• An easement appurtenant benefits any owner’s
  enjoyment and use of the land and DOES attach to the land. It DOES pass to subsequent landowners so long as the new owner has notice. Notice may be: (a) actual; (b) constructive (the easement is recorded in previous conveyances); OR (c) by inquiry (a reasonable person would have inquired about the existence of any easements or interests in land based on the facts or circumstances of the property).
• Any easement may be created by: (1) an express grant; (2) prescription; (3) implication; OR (4) necessity.
• An Easement by Grant is an express agreement by the grantor allowing the easement, and must: (1) be in a writing signed by the grantor that satisfies the statute of frauds (if the duration is more than one
  year); (2) identify the land and parties involved; AND (3) indicate the grantor’s intent to convey the easement.
• An Easement by Prescription is created when the possessor’s use of the land is: (1) open and notorious; (2) continuous; (3) hostile (without permission from the owner of the land); AND (4) for the statutory period.
• An Easement by Implication (also known as a
  implied easement) is established when: (1) a single tract of land is divided by a common owner; (2) a pre-existing use by the grantor that benefits the land is established prior to the division of the land; (3) the use is continuous (intermittent use is sufficient, but mere temporary or casual use is not sufficient) and apparent
  (clearly visible) indicating that the use was meant to be permanent; AND (4) such use is reasonably necessary for the owner’s use and enjoyment of the land conveyed (the benefitted property) – this element is met when the owner of the dominant estate would be forced to spend substantial money or labor to provide a substitute for the easement.
• An Easement by Necessity is created if: (1) a single tract of land is divided by a common owner; and (2) is essential to the use of the property because there is no other ingress or egress available (i.e. no viable road to access property).

Question 23

Scope of an Easement

Low

Answer 23

• The scope of an easement depends on how the easement was created AND on the intent of the original parties.
• An express easement by grant is limited to what was agreed to by the parties.
• An easement implied by prior use is limited in scope to the prior use.
• A prescriptive easement is limited in scope to the actual usage during the period required to create the easement.
• An easement by necessity is limited to remedying the necessity at issue.
• An easement holder CANNOT exceed the scope of the
  easement.
• Reasonable changes in the manner, frequency, or intensity of use are generally PERMITTED. However, the easement holder CANNOT change the scope of the easement so as to impose an unreasonable burden on the servient land.

Question 24

Termination of an Easement

Medium

Answer 24

• Typically, an easement is perpetual. However, an easement may be terminated by: (1) estoppel (when the servient estate owner reasonably relies on, or materially changes his position, due to the easement holder’s assurance that the easement will no longer be enforced); (2) termination of the necessity that created the easement; (3) involuntary destruction of the servient estate; (4) condemnation of the servient estate; (5) written release; (6) abandonment (easement holder demonstrates, through physical actions, an intent to never use the easement again); (7) merger (holder of the easement obtains title to the servient estate); OR (8) prescription.

Question 25

Licenses

Low

Answer 25

• A license is NOT an interest in land, but merely a privilege to use another’s land in a particular way. The licensee must act within the scope of the license.
• A license DOES NOT need to be in writing.
• A license may be revoked at any time by the licensor. However, a licensor may be estopped from revoking a license if the licensee has invested a substantial amount of money and/or labor in reasonable reliance on the continuation of the license.

Question 26

Fixtures

Low

Answer 26

• Under the Common Law, a fixture is (1) personal property, (2) that is attached to land or a building, and (3) regarded as an irremovable part of the real property. A fixture is treated as real property, and passes with the ownership of the land (unless otherwise agreed).
• Whether an item is a fixture is determined by the objective intent of the party who attached the item. An item is typically deemed a fixture, if a reasonable person would conclude that the item was intended by the installer to be a permanent attachment to the real property.
• To determine whether the item is a fixture, courts consider: (1) the nature of the item; (2) the manner in which it is attached; (3) the damage that would result if the item were removed; and (4) the extent to which the item is adapted to the property (i.e. an installed custom window). The more the item is incorporated into the premises, the more likely the court will find the item to be a fixture.
• Under the trade fixture exception, an item that is attached to the property for use in the tenant’s trade or business is NOT a fixture UNLESS its removal would cause substantial damage to the property. An item that is not a fixture may become one if it’s not removed before the end of the lease term.

Question 27

Adverse Possession

Medium

Answer 27

• Adverse possession allows someone in possession of land owned by another to acquire title to that land when the possession of the property is: (1) continuous for the statutory period (usually 10 years) – seasonal use will be deemed continuous if a reasonable owner would use the property that way; (2) open and notorious (to put an owner on notice of the adverse possession upon inspection of the land); (3) exclusive; (4) actual (possess the property as the true owner would); AND (5) hostile and under a claim of right (without the true owner’s consent).
• Aggregation/Tacking: Adverse possessors in privity may aggregate their years spent possessing the property to meet the statutory period. Privity exists when the land is voluntarily transferred to another (i.e. by deed or bequest).

Question 28

Requirements for a Valid Land Sale Contract

Medium

Answer 28

• A valid contract for the sale of land must satisfy the statute of frauds. The contract must: (1) be in a writing; (2) describe the property; (3) identify the parties involved; (4) contain the purchase price; AND (5) be signed by the grantor/grantee (depending on whom the contract is being enforced against).

Question 29

Warranty of Marketable Title

Medium

Answer 29

• A seller has a duty to convey marketable title to a buyer. Marketable title is title that is reasonably free from any cloud or subject to any adverse claim. Title is unmarketable when it contains a substantial defect, such as: (1) in the record chain of title; and/or (2) encumbrances, such as mortgages, liens, restrictive covenants, easements, a claim of adverse possession, and zoning violations. Although zoning violations make title unmarketable, zoning restrictions do not.
• If the seller CANNOT convey marketable title, the buyer may withdraw from the contract without penalty. The requirement to deliver marketable title is a condition that benefits the purchaser (not the seller), and the purchaser may choose to waive the requirement. A seller CANNOT cancel a real estate contract for failure to deliver marketable title if the buyer chooses to waive the requirement.
• Merger Doctrine: While a seller must convey marketable
  title at closing, once a deed to the property is delivered and accepted, the land sale contract merges with the deed and any rights to sue under the contract are extinguished. Thus, after closing the buyer may only sue upon the deed.

Question 30

Revocation of Land Sale Contract

Low

Answer 30

• In a land sale contract, the seller may NOT revoke once the contract is signed. At that point, the buyer is already considered the owner of the property. When land is conveyed through a deed, the seller may only revoke before the deed is effectively delivered. When delivery is conditional, courts are split on whether the grantor may revoke before the occurrence of the condition.

Question 31

Doctrine of Equitable Conversion

Low

Answer 31

• Equitable title passes to buyer: Buyer owns the real property and must pay contract price by closing date. Estate of decedent seller or buyer is entitled to specific performance (heirs must give up title or seek conveyance at closing).
• Legal title remains with seller (and heirs) until close: Seller has personal property interest in proceeds of the purchase.
• Risk of loss follows equitable title: If property destroyed before closing without fault of parties, buyer bears risk. But seller must credit any received insurance proceeds to purchase price. Specific performance may be denied to prevent seller enrichment.

Question 32

Deed Requirements

Medium

Answer 32

• A valid deed must: (1) be in writing; (2) be signed by the grantor; (3) identify the grantor and grantee; (4) describe the property; AND (5) indicate the grantor’s present intent to convey the land.
• Intent to Convey: Any words indicating the grantor’s intent to immediately convey the property are sufficient (i.e. grant, convey, give, transfer).
• Intent will NOT be found if the grantor: (a) expressly reserves the right to revoke the deed; OR (b) gives instructions to only deliver the deed upon the grantor’s death.
• A valid conveyance requires the grantee’s acceptance, which is presumed UNLESS the grantee specifically indicates intent not to accept the conveyance.
• When a deed is unconditional on its face and given to a grantee, additional oral conditions are NOT valid. However, if the same deed is instead given to a third-party (i.e. to be held in escrow), any additional conditions would create a conditional delivery.
• Land may be conveyed without a contract when there is (1) intent by the grantor to convey the property to the grantee; (2) delivery of a valid deed; AND (3) acceptance by the grantee.

Question 33

Deeds: Constructive Conveyance

Low

Answer 33

• Constructive conveyance of a deed results when the grantor gives the deed to a third-party who is an agent of the grantee.

Question 34

General Warranty Deed, Special Warranty Deed & Quitclaim Deed

Medium

Answer 34

• Upon the transfer of land, the seller may execute and deliver
  to the buyer one of the following three types of deeds: (1) general warranty deed; (2) a special warranty deed; or (3) a quitclaim deed. The buyer’s rights under the deed depend on the type.
• A general warranty deed contains six covenants of title; three present and three future.
• The present covenants are the covenants of: (1) seisin (the grantor is the rightful owner); (2) right to convey (the grantor has the right to make the grant); AND (3) against encumbrances (there are no encumbrances against the title). These present covenants can only be breached at the time of conveyance.
• The future covenants are the covenants of: (1) warranty (grantor will defend grantee against any third party claims to title); (2) quiet enjoyment (grantee will not be bothered by a third party’s lawful claim to title); AND (3) further assurances (the grantor will do whatever is reasonable to perfect title if problems arise). These future covenants can be breached at any time upon the interference with the grantee’s possession of the property.
• A special warranty deed only warrants that the seller has not breached the covenants of title during his period of ownership: (1) seller has not previously conveyed the property; and (2) there are no encumbrances against the title made by the seller.
• A quitclaim deed DOES NOT contain any covenants or promises to the buyer. It is an “as is” deed, leaving the buyer with NO rights to sue the seller/grantor for any encumbrances or defects in title.

Question 35

Recording Statutes

High

Answer 35

• First in time, first in right: At common law, if real property is transferred multiple times by the same grantor, whoever rightfully received the property first had valid title against the other transfers.
• Today, every state has enacted a recording statute altering the common law rule.
• In a notice statute jurisdiction, a subsequent bona fide
  purchaser (without notice at time of purchase) will prevail over a prior grantee that failed to record.
• In a race statute jurisdiction, whomever records first
  prevails (notice is irrelevant).
• In a race-notice statute jurisdiction, a subsequent bona fide purchaser (without notice at time of purchase) is protected ONLY IF he records before the prior grantee.

Question 36

Bona Fide Purchasers & The Shelter Rule

Medium

Answer 36

• A bona fide purchaser (BFP) is a person/entity who: (1) takes real property without notice (actual, inquiry, or
  constructive) of a prior conveyance; AND (2) pays valuable
  consideration. A person who receives land by gift (a donee)
  or by bequest (an heir/devisee) is NOT a bona fide purchaser because he did not pay valuable consideration for the property. However, if said person sells the property, the
  subsequent owner may be deemed a bona fide purchaser.
• Notice may be actual, constructive, or on inquiry. A
  person has actual notice of information directly received (i.e. expressly told or language in the deed). A person is on constructive notice of any information that could have been obtained from an inspection of public land records (i.e. search of the grantor-grantee index). A person is on inquiry notice of information that would be revealed upon a reasonable inspection of the land.
• Under the Shelter Rule, a person who purchases from a bona fide purchaser (BFP) receives the same status and rights as the BFP.
• Estoppel by Deed: a grantor who conveys an interest in land by warranty deed before actually owning it is estopped from later denying the effectiveness of that deed.

Question 37

Purchase Money Mortgage

Low

Answer 37

• A purchase money mortgage is used by the buyer (the
  borrower) to purchase real property, and the seller is the lender who secures a mortgage on the property.
• The holder of a purchase money mortgage has priority over: (1) all claims against the mortgagor prior to the purchase of the property; AND (2) all subsequent claims, unless defeated by a recording statute.

Question 38

Deed of Trust

Low

Answer 38

• A deed of trust is similar to a mortgage (as it is a security
  interest in real property intended to be collateral for
  repayment of a loan), BUT it involves three parties: (1) the borrower (the purchaser of the property); (2) the lender; AND (3) a third-party trustee who holds title of the property until the loan is paid off. Once the loan is fully paid, the trustee must transfer title to the purchaser of the land.

Question 39

Mortgages: Foreclosure, Order of Preference, & Deficiency Judgments

Medium

Answer 39

• Foreclosure destroys junior mortgages, in that any mortgage recorded after the mortgage being foreclosed on will be extinguished. However, all prior recorded mortgages are not affected.
• Proceeds from a sale are used to pay off debts in the
  following order: (1) attorney fees and expenses associated with the sale; (2) debts owed to mortgagee; (3) junior interests in order of priority; and (4) any amount left to the mortgagor.
• A mortgagee (the lender) may seek a deficiency judgment against a mortgagor (the debtor) if the proceeds of the foreclosure sale are insufficient to satisfy the mortgage.

Question 40

Lateral Support

Low

Answer 40

• A landowner has the right to have her land supported by adjoining land.
• When excavations cause a loss of support to adjoining land in its natural state or to land that was improved before the rights were conveyed, a landowner is strictly liable for damages.
• However, when excavations cause a loss of support to adjoining land that was improved after the rights were conveyed (i.e. buildings were erected), a landowner is only liable if she was negligent in the excavations.

Question 41

Nuiscane

High

Answer 41

• A public nuisance is (1) an unreasonable interference, (2) with the health, safety, or property rights, (3) of the community. To recover damages, the injured party MUST show actual damages. To constitute a public nuisance, the nuisance must affect a considerable number of people or an entire community or neighborhood. For a private person to sue, their harm must be different from that of public at large.
• A private nuisance is (1) a substantial and unreasonable interference, (2) with a person’s use or enjoyment of her property. The nuisance must be offensive, inconvenient, or annoying to a reasonable person.
• Plaintiff will be entitled to damages or an injunction to prevent the nuisance (if damages are insufficient). The primary defenses to the tort of nuisance are: (1) Coming to the Nuisance – a residential landowner knowingly came into a neighborhood with the nuisance; and (2) Statutory Compliance.

Question 42

Zoning Ordinances: Variances

Low

Answer 42

• A variance is an exception to a zoning ordinance. Two types of variances exist: (i) a use variance; and (ii) an area variance.
• An application for a variance may be granted if: (1) the property owner shows she will suffer hardship because of the ordinance; AND (2) the variance will not damage or harm the public welfare.

Question 43

Zoning Ordinances: Previous Non-Conforming Use

Low

Answer 43

• The doctrine of previous non-conforming use allows a
  landowner to continue to use his land in violation of a later enacted zoning law. Where the prior use of the land was originally legal, the subsequent enactment of a zoning law will NOT bar the continued use of the land as it was legally used before the law’s enactment. A non-conforming use will only be “grandfathered in” if it remains in use. If the use is NOT continuous, it may no longer be protected.
• The non-conforming use doctrine is meant to protect the prior investment in real property. Insubstantial changes and reasonable alterations to repair the property ARE
  PERMITTED. The enlargement, alteration, or extension of a nonconforming use that constitutes a substantial change IS PROHIBITED. When a change is inconsistent with the current zoning law, any doubts are resolved against the change.

Question 44

Discrimination: Fair Housing Act

Low

Answer 44

• The Fair Housing Act (“FHA”) protects people from discrimination when they are renting/leasing/buying a home or apartment, getting a mortgage, seeking housing assistance, or engaging in other housing-related activities.
• Discrimination Categories: Specifically, the FHA prohibits
  discrimination based on a person’s: (a) race or color; (b)
  religion; (c) sex; (d) national origin; (e) disability; AND/OR (f) familial status (prohibits discrimination against families with children, except for facilities designated as “senior housing” for adults 55+ years old).
• FHA Exemptions: The Act DOES NOT apply to: (a) religious organizations; (b) private clubs that limit occupancy to members; (c) owner-occupied buildings with no more than four units occupied by persons living independently of each other; OR (d) single-family houses sold or rented by the owner without the use of an agent as long as the private landlord/owner doesn’t own more than three homes at the time.
• Application & Enforcement: The FHA applies to and can be enforced against direct providers of housing (such as landlords and real estate companies), AND other entities (such as municipalities, banks or other lending institutions, and homeowner insurance companies).
• Discriminatory Advertisements: The Fair Housing Act also
  prohibits the making, printing, and publishing of discriminatory advertisements that indicate a preference, limitation, or discrimination because of race, color, religion, sex, disability, familial status, or national origin. The prohibition applies to: (1) publishers (such as newspapers and directories); and (2) persons/entities who place real estate advertisements in newspapers and on websites. It also applies where the advertisement itself violates the Act, EVEN IF the property being advertised may be exempt from the provisions of the Act.

Question 45

Duty to Deliver Possession

Answer 45

• In most states, a tenant is relieved of the obligation to pay rent if the landlord fails to deliver actual physical possession of the leasehold premises.