Property Flashcards
1
Q
Present Estates: Defeasible Fees
Medium
A
- 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.”
2
Q
Future Estates: Reverter & Right of Re-Entry
Medium
A
- 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.
3
Q
Restraints on Alienation
Medium
A
- 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.
4
Q
Waste
Low
A
- 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).
5
Q
Joint Tenancy: Formation
High
A
- 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).
6
Q
Joint Tenancy: Severance
High
A
- 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.
7
Q
Co-Tenant’s Entitlement to Rent or Reimbursement
High
A
-
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.
8
Q
Ouster of a Co-Tenant
Medium
A
- 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.
9
Q
Types of Leasehold Interests
High
A
- 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.
10
Q
Right to Terminate Tenancy for Breach of Covenant
Low
A
- 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.
11
Q
Tenant Duties: Duty to Pay Rent
Medium
A
- 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).
12
Q
Landlord Duties: Implied Warranty of Habitability
High
A
- 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.
13
Q
Landlord Duties: Constructive Eviction
High
A
- 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.
14
Q
Landlord Duties: Duty to Repair
Low
A
- 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.
15
Q
Landlord Duties: Duty to Mitigate Damages
Medium
A
- 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.
16
Q
Assignment of a Lease
High
A
- 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.
17
Q
Subleases
Medium
A
- 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.
18
Q
Termination of Leases: Surrender
Low
A
- 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).