Property

Question 1

Real Estate Contract

Answer 1

In writing to meet SOF (need price, parties, basic description of the property, signed by parties to be charged)

Exception to SOF – part performance (payments, improvements, or taking possession of land)

Question 2

Equitable Conversion

Answer 2

The day real estate K is signed, grantor transfers equitable title/interest to grantee, but grantor maintains title.

Risk of Loss – shifts to buyer

Legal Title – Grantor does not need legal title until closing

Survives grantor’s death

Question 3

Marketable Title

Answer 3

In every real estate K, there is an implied promise to convey marketable title. Marketable title = free of encumbrances (easements/covenants [unless beneficial, visible, or known]) or liens (mortgage [unless satisfied at closing]) and zoning violations (but zoning restrictions are ok).

Reasonably free from doubt by date of closing and under no threat of litigation

Suspect MT
covenants, easements, leases, liens, gaps in chain of title, boundary disputes/significant encroachments, existing zoning violations, adverse possessions

Only buyers have the right of marketable title. can waive

DOESN’T ruin MT - lack of access to public road

Question 4

Time (during real estate K)

Answer 4

Not of the essence unless made so

Question 5

Encumbrance

Answer 5

Any right or interest that exists in someone other than the owner of real property that restricts or impairs the transfer of the property or lowers its value

Question 6

Merger

Answer 6

Real estate K merges into deed at closing. Provisions of real estate K transfer to deed. To sue after closing for breach of real estate K provision, must sue using deed.

Question 7

Duty to Disclose

Answer 7

Grantor has a duty to disclose known material defects that cannot be seen by buyer (except: defects visible to the buyer)

Question 8

Transferring Title

Answer 8

(1) Real Estate K [transfers equitable title] and (2) Deed [transfers legal title on day of closing aka day you sign deed]

Question 9

Warranty Deed

Answer 9

No defects in title (no one else owns the land and it is free from encumbrances)

Six warranties (3 present, 3 future)

Question 10

Present Warranties

Answer 10

Breached at time of conveyance (day of closing). Cannot be brought by subsequent grantees.

(1) Warrant of Seizin: grantor actually owns property;

(2) Right to Convey - Grantor has the power and authority go make the conveyance;

(3) Covenant Against Encumbrances - no mortgages, liens, easements, or other use restrictions that diminish property owner’s rights.

Question 11

Future Warranties

Answer 11

Continuous + run w the land. Breached upon interference with possession. Can be brought by subsequent grantees.

(1) Quiet Enjoyment: grantee’s possession and enjoyment will not disturbed by future lawful claims against grantee’s title;

(2) Covenant of Warranty of Title: grantor will help defend & compensate against any future lawful claims made against grantee’s title;

(3) Further Assurances – grantor will take any actions reasonably necessary to perfect grantee’s title

LAWFUL - 3rd party wins quiet title suit

Question 12

General Warranty Deed

Answer 12

Promising that all 6 warranties exist/are good since forever (since it was built)

Question 13

Special Warranty Deed

Answer 13

Promising that all 6 warranties exist/are good since grantor owned property

Question 14

Quitclaim Deed

Answer 14

Grantor promises nothing (e.g., family & business partners). Can’t hold grantor accountable even if problems later (exc. marketable title).

Question 15

Closing

Answer 15

Deed is (1) in writing; (2) Delivery; (3) Acceptance; (4) Merger; (5) Legal description of property in the deed; (6) Identifiable grantees

In Writing – to comply with SOF

Delivery – doesn’t have to be physical. All that matters is grantor’s intent = did the grantor convey unconditional/unequivocable intent to PRESENTLY convey grantee title? If no clear intent, but deed is physically given to grantee no conveyance. Delivery w oral conditions? oral condition thrown out CANNOT RETAIN A RIGHT TO RECOVER THE DEED
deed being recorded = rebuttable presumption of delivery

Acceptance – acceptance is presumed UNLESS the buyer rejects it

Legal Description – Meets & bounds. Description muss be reasonably definitive = someone could reasonably identify the property.

identifiable grantees - if transfers ownership to group of people… must be ascertainable w reasonable certainty (be able to identify specific individuals belonging to that group). extrinsic evidence allowed to clarify ambiguities but if still unclear then deed is void

no consideration needed

Question 16

Transfer of Title by Operation of Will

Answer 16

Can transfer by will. If no will –> transfer by intestate succession.

If will but grantor sells while alive (ademption)–>no transfer.

If will and beneficiary dies (lapse)–> property transfers into residuary estate.

If will but liens/encumbrances –> estate must pay off liens so that beneficiary can get property free and clear

Question 17

Adverse Possession

Answer 17

Stealing legal title by squatting.

(1) Continuous

(2) Actual

(3) Open

(4) Notorious

(5) Hostile

(6) Exclusive

Continuous - must be on property for continuous statutory period of time. Exception: Tacking – intentionally transferring right to someone else for temp period. Handing baton. E.g., you’re there for 4 years, then someone else stays for 2 years, then come back for 1 year in 7-year statutory period

Actual, Open, Notorious – the use is obvious so that a reasonable person would know that you are using land

Hostile – use is without owner’s permission and the use is doing something to make the property your own/taking it over

Exclusive – not sharing the property with the owner

Mineral Estate v. Surface Estate - if surface & mineral estates are owned by the same party, then the adverse possessor will acquire title to both estates (even if only one estate is actually possessed). But if mineral estate has been severed from surface estate (i.e., owned by different parties), AP will only acquire title to the estate it is actually possessed

by 2 or more people = TIC via adverse possession

Question 18

Drafting, Reviewing, & Executing Real Estate Documents

Answer 18

Drafting – can be done by non-attorney (mortgage broker/real estate agent) bc filling in the blanks ≠ practice of law. No legal advice.

Closing – can be done by non-attorney (broker agent)

Executing Documents – An agent for the grantor may sign a deed on behalf of the grantor, but the authority granting the agent the right to do it has to be in writing under SOF. Exception for separate writing:

(1) Officer of corporation w authorization to sign on behalf of corporation;

(2) Agent’s only job is to sign a paper [signing agent];

(3) If no separate writing, grantor is ESTOPPED from using lack of writing as a defense IF grantor did something that made signor believe they had the authority to do the writing

Question 19

Recording Statutes

Answer 19

When a single grantor conveys/mortgages a single property to multiple people

Race Statute
Race-Notice Statute
Notice Statute
Shelter Rule
Wild Deed
After-Acquired Title/Estoppel by Deed

Question 20

Race Statute

Answer 20

First person to record wins. Doesn’t have to be a BFP.

Question 21

Race-Notice Statute

Answer 21

BFP who recorded first. (1) BFP + (2) Recorded first

Question 22

Notice Statute

Answer 22

No conveyance shall be good against a subsequent BFP for value without notice. Last BFP.

Bonafide Purchaser (BFP) – (1) pays value for property & (2) no notice that any other claims exist. Mortgagees are BFPs = people who give you the mortgage. Not BFPs – creditors, gift donees, will beneficiaries, adverse possession

Notice – recording deed

Question 23

Shelter Rule

Answer 23

Trying to protect BFP. E.g., O conveys to A, who does not record. Later, O conveys the same parcel to B, a BFP, who records. B then conveys to C, who is a mere donee with no knowledge of the O-to-A transfer. In the contest of A vs. C, who prevails? C prevails in a notice and race-notice jx bc of the shelter rule. C steps into B’s shoes.

HDC - a person who is not an HDC can still be protected if they took lien from HDC

Question 24

Wild Deed

Answer 24

O sells Blackacre to A, who does not record. Then, A sells to B. B records the A-to-B deed. Is the A-to-B deed connected to the chain of title? NO. A to B deed = a wild deed. O conveys Blackacre to C and C records with no knowledge of O-to-A or A-to-C conveyances. C wins in notice or race-notice jx. If a deed entered on the records (A-B instrument) has a grantor unconnected to the chain of title (O-A missing link), the deed is a wild deed even tho it has been recorded bc not properly recorded. = No record notice.

Question 25

After-Acquired Title/Estoppel by Deed

Answer 25

O doesn’t have legal title on the property. O conveys property w/o title to A on the day of closing. Once O gets title, the title automatically goes thru O –> A and then to whoever A transfers property to.

however, in most jx a prematurely recorded deed falls outside a later buyer’s chain of title and fails to provide record notice

Question 26

Fee Simple Absolute

Answer 26

Grantee’s interest. O owns 100% of Blackacre by himself forever.

Life Estate –-> Reversion

Remainder (Contingent/Vested) –> Reversion

fee tail–> really now fee simple absolute

“to A”
“to A and his heirs”
“for the purpose of” –> only limits purpose, not durational or conditional

Question 27

Life Estate

Answer 27

O conveys Blackacre to A for life. A can do whatever w property that she pleases inc. mortgage property (except: commit any waste). A can convey Blackacre to B, but B can only have it during A’s life. If there’s a mortgage on the property, the life tenant (A) owes interest [not principal] and taxes.

Reversion – Grantor’s interest. When A dies and A had a life estate –> the interest goes back to O.

Duties - pay charges (taxes, mortgage interest), prevent waste, ordinary repairs

Question 28

Remainder

Answer 28

O conveys Blackacre to A for life (life estate) and then to B (remainder). Divisible during remainder’s life, transfer by will or intestate succession

Reversion – Grantor’s interest. Goes back to O.

Contingent – Conveyance contingent on a condition occurring. O –> to A for life & then to B if he’s married at the time. (if ambiguous survivorship “if she survives” must survive immediately preceding estate aka life estate)

Vested – Conveyance occurs auto when life estate recipient (A) dies. O conveys Blackacre to A for life and then to B –> B.

Vested Remainder Subject to Open (Partial Remainder) – Class of people (“subject to open”). As long as one group member is alive, subject to open = vested remainder. E.g., O to A for life and then to B’s kids.

Vested Remainder Subject to Total Divestment – Condition occurs that wipes out total interest. E.g., O to A for life and then to C; but if C has no children, then to D. C’s interest is totally wiped out if doesn’t have kids.

remainders are transferable inter vivos, devisable by will, and descendible by inheritance

Question 29

Fee Simple Determinable

Answer 29

Grantee’s interest. O conveys Blackacre to A “so long as/as long as/during/until” A uses property for x purpose.

Possibility of Reverter – Grantor’s interest. If A doesn’t use Blackacre for x purpose or stops using it for x purpose –> O.

OR

Third party executory interest/ fee simple subject to executory limitation

Question 30

Fee Simple Subject to Condition Subsequent

Answer 30

Grantee’s interest. O conveys Blackacre to A, “but if/provided that/unless x occurs” in the future –> O

Right of Reentry – Grantor’s interest. If that x event occurs, O has to do something to get the property back

OR

Third party executory interest/ fee simple subject to executory limitation

Question 31

Rule Against Perpetuities (RAP)

Answer 31

applies only to contingent future interests (future interests that are held by unknown/unborn persons or subject to a condition precedent)
“herself, her heirs and assigns”

contingent remainder, vested remainder subject to open, executory interest, power of appointment, rights of first refusal, options

interest must vest within 21 years of the life and being

Two Hypos –

(1) Whether interest will vest in the time period?

(2) Subsequent grantee (3rd party interest/executory interest after Fee Simple Determinable) = E.g., O conveys Blackacre to A (gives either a fee simple determinable or condition subsequent) and instead of property going back to O, it goes to someone else. –> violates RAP. But doesn’t break whole conveyance. So, A & O still have interest. A gets fee simple determinable or condition subsequent and O gets reverter.

Right of first refusal will always violate RAP if it doesn’t have a set termination date

Question 32

Joint Tenancy

Answer 32

Right of survivorship. Co-tenants have an undivided interest in the whole property. If O dies, A auto gets whole interest.

Severing Joint Tenancy – O can convey interest to B w/o A’s permission or knowledge = severs joint tenancytenancy in common

RoS trumps Wills – If O conveys Blackacre to B via will and then dies, Blackacre still goes to A bc RoS>will

Personal Debt – One co-tenant’s personal debt (e.g., cc debt) dies with them and goes to their estate. It doesn’t go to other co-tenant

for co-tenant to acquire sole ownership via adverse possession = prevent from using or accessing property (e.g., changing the locks, constructing a fence, physical removal)

Question 33

Joint Tenancy by the Entirety

Answer 33

Spouses. Right of Survivorship. One party cannot convey interest w/o spouse’s permission. Divorce severs.

can only be partitioned by a court if both parties agree

Question 34

Tenancy in Common

Answer 34

No right of survivorship. Co-tenants have an undivided interest in the whole property. Either can convey to whoever. If O dies, O’s heirs get interest in property bc no RoS.

Question 35

Ouster

Answer 35

Each tenant has a right to the whole property unless someone gets kicked off the property

Question 36

Partition

Answer 36

Court generally awards partition of property unless it’s not practical.

Question 37

Mortgage & Taxes

Answer 37

Co-tenant may seek contribution from other co-tenant for taxes and mortgage. However, if O is in sole possession of the property, O can only recover an amount if it exceeds the FMV of the property

Question 38

Rent

Answer 38

An out-of-possession co-tenant (doesn’t live on the property) may share in the rent & profits that the property is generating w another co-tenant. However, an out-of-possession co-tenant cannot demand rent from a co-tenant living on the property.

Question 39

Repair

Answer 39

Co-tenant may not seek contribution from another co-tenant. However, if the repairs were necessary and co-T1 requested it & co-T2 refused, then co-T1 can demand it of co-T2.

Question 40

Improvements

Answer 40

Co-tenants cannot seek contributions for improvements unless they increase the rents or profits

Question 41

Types of Tenancies

Answer 41

Periodic Tenancy – specific start date & goes on for a period of time (e.g., month-to-month/year-to-year). Renewal- generally renews at the end of that term unless a termination ate is set. Termination – notice is required. In month-to-month, 1 month notice. In a year-to-year situation, 6-month notice.

Tenancy for Years – typical start date and particular end date. No notice required bc no start & end date.

Tenancy at Will – no specific term. Keeps going until 1 of the parties terminates. Tenant needs to be given notice w/in reasonable time.

Tenancy at Sufferance – Holdover tenant who stays longer than tenancy term allows. Termination occurs by tenant leaving or eviction by landlord. Rules revert to whatever it was before tenant overstayed.

Question 42

Landlord’s Duties

Answer 42

(1) Give actual/physical possession of the property on 1st day of lease term or lease void;

(2) Basic repairs;

(3) Warranty of Habitability: air conditioning in the summer/heat in the winter, no health/safety code violations. If breach, tenant can refuse to pay rent;

(4) Warranty of Quiet Enjoyment: landlord must stop other tenant’s nuisances from bothering you. Must give landlord notice and it must be a significant nuisance. If breach, tenant can refuse to pay rent.

Question 43

Tenant’s Duties

Answer 43

(1) Pay Rent (except: habitability or quiet enjoyment; property is destroyed);

(2) Cannot commit waste: must give notice of any damage to landlord & give reasonable time for repair. If something tenant can do by themselves–> must do basic

Question 44

Assignments/Subleases

Answer 44

Assignments – Giving rest of term lease away. New tenant is primarily liable on lease. However, landlord can still go after old tenant for new tenant not paying unless landlord & old tenant signed a novation. If there is a new landlord, they must give notice to tenant if they want pay/check sent to new landlord.

Sublease – Giving property to a person for a portion of the lease. OG tenant stays liable unless novation.

Covenant against assignments/subleases – strictly construed

Question 45

Fair Housing Act

Answer 45

Federal law which prohibits discrimination in sale or rental or financing of any property based on race, color, religion, sex, disability, family status (inc. having kids under 18 or being pregnant)

Question 46

Fixture

Answer 46

A piece of chattel that becomes so affixed to the land that removing it would cause damage (e.g., beam in wall/structure of the house)

an item that is (1) attached to property w the intent that it remain attached and (2) used for a larger component or function of the property

Question 47

Conflict of Laws pertaining to Property

Answer 47

If property question and states have conflicting law–>law of state where real property is located trumps.

Exceptions –

(1) deed says which law should apply;

(2) if about collateral matter & not property itself (e.g., mortgage) –>local law governs

Question 48

Mortgage

Answer 48

Loan against a real property given to secure a debt. Can have several mortgages for one property.

Power of sale clause - allows trustees in deed of trust mortgages to do a non-judicial foreclosure on delinquent borrowers

acceleration clause - allows lender to demand full and immediate repayment of the outstanding mortgage balance (+ interest) when a borrower defaults

Question 49

Collateral

Answer 49

What’s used to pay off the loan (the land) if O cannot pay the loan

Question 50

Purchase Money Mortgage

Answer 50

The loan used to buy the property (initial loan). This gets priority and is paid back first when multiple mortgages.

Question 51

Foreclosure Proceedings

Answer 51

If O can’t pay mortgage, mortgagee is going to sell O’s home to pay off debt.

Question 52

Redemption

Answer 52

O tries to get property back from foreclosure proceedings by paying off debt

Equitable Redemption – always have this and this right can never be waived. Period of time from notice of foreclosure until foreclosure sale to redeem property by paying off debt. Pay full amount of debt due + interest to debtor (K balance)

Statutory Redemption – only have if statute exists in the jx. Period of time after the foreclosure sale until whenever statute states, to pay off the debt. It’s an additional period past the equitable redemption period that statute gives to save home. Pay foreclosure sale price to purchasing party

TIC = Brother & Sister (TIC) jointly mortgaged their property to the cousin. When the brother stopped paying his share of the debt, the mortgage went into default. Sister can only have redemption from mortgage and quiet tile if she pays the FULL AMOUNT DUE. She can later seek contribution from the other tenants for their share of the debt.

Question 53

Lien Theory

Answer 53

Bank has lien & buyer has title. Buyer can sell home. Lien doesn’t affect title in joint tenancy.

Mortgage disappears when co-tenant dies

Question 54

Title Theory

Answer 54

Bank has title & buyer has equitable interest in the property. Buyer only gets title once they pay off debt. Buyer cannot sell the house. If O gets mortgage, severs joint tenancy bc O conveyed his interest to bank  tenancy in common (goes to O’s heirs).

Question 55

Assuming the Mortgage

Answer 55

O conveys to A. A gets title and becomes primarily liable to pay mortgage. However, bank can go after O secondarily if A doesn’t pay unless there was a novation between O and bank.

Suretyship Rights - O can get reimbursement

Question 56

Taking Subject to the Mortgage

Answer 56

O conveys to A. A gets title but does not have to pay mortgage. O is still liable. However, bank can foreclose property if O doesn’t pay mortgage.

Question 57

Deed in Liu of Foreclosure

Answer 57

O gives up right to property to the bank (gives deed) instead of going thru foreclosure proceedings

Question 58

Effect on the Foreclosure Sale

Answer 58

when there is a foreclosure sale + multiple mortgages on the property. Any mortgage that came after foreclosure will be wiped out if there is

(1) notice given to other banks that there is a foreclosure and

(2) the other banks joined the suit. Loans taken before the foreclosure stay and are subject to the foreclosure.

Question 59

Deficiency Judgment

Answer 59

If a home sells in foreclosure for less than the mortgage = a deficiency aka a balance remains to be recovered. Bank will get a deficiency judgement that O still owes the bank the remaining balance of the mortgage not recovered from the foreclosure sale.

Question 60

Installment Land Contract

Answer 60

O buys property and pays for property in installments rather than one check. If buyer defaults on one payment, seller can take property back unless there are foreclosure proceeding rules that would supersede it. Seller doesn’t have to give marketable title until last installment is paid.

Question 61

Easements

Answer 61

(+/-); grants right to do something (+) or to prevent (-) something elemental from being blocked on someone else’s land. FOREVER unless terminated.

property right (ownership)

benefit v. burden
in gross v. pertinent
personal v. commercial

Creation: (1) In writing [expansion permitted]; (2) Easement by Prescription [no expansion permitted]; (3) Easement by Implication [expansion permitted]; (4) Easement by Necessary [no expansion permitted]; (5) Irrevocable license

Easement by Prescription – adverse possession but doesn’t give title. It just gives interest/right to do something. (1) Open; (2) Notorious; (3) Actual; (4) Continuous/Hostile; (5) Exclusive Use [not necessary]

Easement by Implication – Implied by Prior Use. E.g., been doing it for last 50 years, should continue for next 50 years.

Easement by Necessary – A must use O’s property bc no other way to get off A’s land (e.g., dead-end streetno way to main road unless cut across O’s yard). Terminated when no longer necessary. (1) necessary (2) common ownership (3) severance

Termination: (1) Agreement; (2) By Time; (3) Merger; (4) Abandonment; (5) Prescription [prevents use for prescriptive period]; (6) Release [writing to meet SOF]

By Time – agreed upon time period of easement ends.

Merger¬ – one owner buys and owns both lands, then cannot have an easement on one’s own property. EXC. Merger does not occur = easement does not terminate if there are any future interests or other outstanding interests in either estates. use of easement is suspended until future-interest holder becomes entitled to possession

Abandonment – (1) to leave and (2) to express an intent not to return [non-use is not enough (e.g., goes to LA for 6 mo.)]

Expansions - in writing & by implication. Easement holder may increase MANNER, FREQUENCY, AND INTENSITY of easement’s use as long as does NOT unreasonably damage or interfere w use or enjoyment of the servient estate

Misuse/Interference = damages, injunction, Self-Help. NO termination/forfeiture

in gross (1 piece of land) v. appurtenant (2 pieces of land)

Irrevocable license - bc of estoppel or coupling w another servitude

estoppel - arises from good-faith, reasonable, detrimental reliance on the servient-estate owner’s permission to make a limited use of his/her land

easement holder has sole duty to repair & maintain & contribute easement to avoid harm to servient estate and to protect servient owner from liability for harm to third parties

Easement always transfers EXCEPT

(1) personal easement in gross = only burden runs

(2) BFP

Question 62

Covenant

Answer 62

(+/-); a written promise to do something on the land (e.g., maintain a fence) or a promise not to do something on the land (e.g., conduct commercial business). FOREVER = “runs with the land.” Looks like a K bc always in writing and governed by K principles.

Promise = K law

CONTROL - to force or to prevent someone else from doing something on their land (except: element)

Elements: (1) a writing; (2) intent between the parties; (3) Notice [person to be bound had notice of the covenant if he/she purchased the property]; (4) Privity [vertical/horizontal]; (4) Covenant touches & concerns the land [=about the use of the property]

Runs with the Land – subsequent owners of the land may enforce or be burdened by the covenant. Exceptions – (1) Personal Covenants – promises purely for the benefit of one having no interest in the land (e.g., letting A use O’s swimming pool, even if O is not there); (2) Contracts (e.g., a lease with covenants)

Breach – injured party can sue for damages.

Question 63

Equitable Servitude

Answer 63

A covenant that runs but seeking an injunction rather than damages for breach.

e.g., implied reciprocal servitude

Question 64

Implied Reciprocal Servitude/ negative reciprocal covenant

Answer 64

Large tract of land divided into 50-100 lots & restrictions against all owners (e.g., gated community; can’t paint mailbox yellow). (1) restrictions against EVERYONE (common scheme) + there’s noticeable = implied reciprocal servitude that is enforceable and lasts forever even if minimal changes to community (doesn’t change character/purpose)

Exception - Changes to the community that change the purpose/character of the community (e.g., residential–>commercial)

Question 65

License

Answer 65

Right to enter the property (e.g., ticket to sporting event/ concert). Revocable at grantor’s will (except: right is coupled with an interest [e.g., future interest]) EXCEPT - estoppel

Can be created orally or another act demonstrating licensor’s intent. Termination = death of either party or conveyance of the servient estate

Question 66

Profit

Answer 66

Right to enter property and take things off of the ground (e.g., plucking fruit, mining, digging)

can be transferred unless contrary to parties’ intent or personal. –> One stock rule = transferees are limited to the amount of material taken by the transferor (transferor’s “stock”), and this quantity is divided up by the transferees taking the profit

Question 67

Taking

Answer 67

G can take private property for public use as long as it gives just compensation [FMV]

taking all or part of a leasehold - generally entitles tenant to a share of the condemnation award [share of FMV + any amount necessary to compensate tenant for any continued obligation to pay rent that may be required under the lease]–> BUT PARTIES CAN EXPRESSLY AGREE TO ALTERNATIVE PROVISIONS (enforceable). lease controls

Question 68

Water Rights

Answer 68

Two Hypos: (1) Lakes, Rivers, Bodies of Water: Owner A can use it in reasonable manner/use of the water body even if it affects owner B; (2) Melted Snow/Rain – owner A can use reasonable means necessary to alter flow of rain/snow even if it could harm owner B a bit

Question 69

Real v. Personal Property

Answer 69

Real Property: plants are naturally on the property (e.g., trees, grass) transfers with title of the property when sold.

Personal Property – man-made/planted something on property (e.g., crop like corn) transfers with title when sold.

Exception – (1) Agreed grantor would keep it; (2) In a tenancy for years [if have right to harvest crops before lease ends, then have the right to keep it]

Question 70

Support Rights

Answer 70

Adjoining pieces of property: A is doing something (e.g., blowing stuff up, excavating) on Greenacre that damages O’s Blackacre. Depends on whether adjoining land (Blackacre) is developed or undeveloped:

Developed - e.g., has a building. Strict liability if damage would have happened no matter what. Otherwise, negligence.

Undeveloped – Strict Liability.

Lateral/Subjacent Rights – digging/doing underneath the ground on A’s property that ultimately damages B’s property  negligence.

Question 71

Private Nuisance

Answer 71

unreasonable interference (e.g., noise, smell) with use & enjoyment of your property. Objective standard (disregards abnormal sensitivity/allergy)

NO RIGHT TO LIGHT unless malice

Question 72

Public Nuisance

Answer 72

often brought by GO bc nuisance is affecting everyone. If brought by private individual must prove special & unique damages

Question 73

Common Interest Owned Community

Answer 73

Development where individually owned lots have a covenant requiring payment of dues to an association [HOA] that provides services [facilities of the common areas] and enforcement of the covenants on the property.

Question 74

Types of CIOC

Answer 74

Property Owners Association, Condominium, Co-Op

Question 75

Property Owners Association

Answer 75

Owners required to belong to an association & pay the dues.

Question 76

Condominium

Answer 76

Creation – File a declaration & plat
* Declaration - sets forth rights/rules/obligations of owners & declares each owner’s % shares, so they know how much it’ll cost for maintenance, taxes, insurance, etc.
* Plat – Describes physical boundaries of the units + common areas.

Ownership – Owners cannot partition ownership of individual condos & common areas.
* Individual condos – each owner owns inside structure [walls, ceilings, etc.). Pays insurance, taxes, maintenance. Can mortgage individual condos.
* Common areas – each owner owns the common areas as tenants in common. Pays a fee to the association for the maintenance and taxes for the common areas.

Question 77

Co-Op

Answer 77

a corp that owns one or a series of buildings, and they lease the individual units/apartments to shareholders. The corp owns the buildings. Tenants own shares of corp. Mortgage on whole property (“blanket mortgage”) [unlike condo]. Each tenant pays a fee for their share of taxes, maintenance, mortgage–> i.e., if a tenant fails to pay their share, whole mortgage could be in default.

Question 78

CIOC Governing Documents

Answer 78

Declaration (given most weight), bylaws & articles of incorporation.

Question 79

CIOC Property Association

Answer 79

manages property & enforce rules.

Question 80

CIOC Board of Directors

Answer 80

Elected by property association members. Often, hires a property manager to run day-to-day business.

Powers – Can do anything reasonably necessary to manage the property or further a legitimate purpose of the association (benefit to all the residents) = was the Board acting reasonably necessary for the property at large? Can levy assessments (tax on all members), fines (penalties for being late) and fees (improving common areas), reasonable inspections, take away privileges to common areas for violations, can litigate in their own name as the association.

Duty – Ordinary care for managing property and financial affairs of the entity: Treat tenants fairly; reasonable access to info re finances/day-to-day; transparency; act in good faith.
* Standard of Care – ordinary director of a CIOC
* Burden – if a member makes an accusation, burden is on the member to show there was a breach by the board.
* No Joint & Several Liability – each board member will only be liable for their %/share of fault

Question 81

Rule in Shelley’s Case (COMMON LAW)

Answer 81

an instrument that grants a life estate to a person and a remainder to that same person’s heirs gives that person both interests. If there is no intervening interest (e.g., another life estate followed by person’s life estate), then the merger rule consolidates those interests into a fee simple absolute

Person holds life estate AND the remainder, so person’s heirs take nothing under the granting instrument

Question 82

Restraints on Alienation

Answer 82

Direct - only valid if (1) reasonable; (2) balance utility of restraint against harm resulting from enforcement

e.g., prohibiting some or all types of transfers; prohibiting transfer w/o consent; prohibiting transfers to particular persons

indirect - valid unless lacking rational justification (e.g., imposing transfer fees, limiting property’s use/reducing its value)

Question 83

Types of Notice

Answer 83

Actual Notice - direct knowledge

Record/Constructive Notice - document showing prior interest is properly recorded & appears in buyer’s chain of title

Inquiry Notice - Buyer knows, or should know, of circumstances that would prompt a reasonable person to investigate (e.g., visible use of property, reference to unrecorded transaction in recorded instrument)

Question 84

Transfer of promissory note & mortgage

Answer 84

Transfer of both documents-both documents are transferred unless expressly prohibited in note/mortgage, forbidden by state or public policy; or increases mortgager’s duties, burdens, risks

transfer of note w/o mortgage - ^^^^^^^^

transfer of mortgage w/o note - transfer is void

recipient acquires the right of foreclosure. however, the transforee can lose this right to a bonafide purchaser

Question 85

Negotiable v. Non-Negotiable Promissory Note

Answer 85

Negotiable - can be transferred by endorsing & delivering the note to the assignee

Non-Negotiable - requires a separate assignment document to transfer ownership

either note can be transferred independent of the mortgage, and the mortgage will automatically transfer with the note (unless otherwise agreed)

Question 86

Liquidated Damages in a Real Estate K

Answer 86

only recoverable if reasonably compensate the injured party (if amount is less than 15% of purchase price) –> cannot amount to a penalty (over 15%)

Question 87

Lien Priority in foreclosure proceedings

Answer 87

Recorded After Foreclosing Lienholders- PMM then descending order of who recorded first

Did not record - Purchase- decending order of when mortgage was created

Question 88

General Lienholder Priority

Answer 88

Recorded Lienholders - PMM then descending order of when they recorded

Not Recorded- descending order of when liens were recorded

Together - stack them together

Question 89

Mortgagee Notice of Foreclosure Sale to other banks

Answer 89

(1) MUST give notice to holders of any junior interests in the property

(2) MAY, but need not, join others who have an interest in the property (senior-mortgage holder) or who are liable on the debt (e.g., guarantor) as proper, but not necessary, parties

Question 90

Tenants in Common + Consent

Answer 90

Consent Required - (1) convey entire co-owned property; (2) obtain exclusive possession over part of the property; (3) bind other contents’ interest in K w a 3rd party

No consent required - (1) sell, lease, or devise personal ownership interest; (2) possess entire co-owned property; (3) extract minerals from co-owned property (unless committing waste)

Question 91

Fee simple subject to an executory limitation

Answer 91

Fee simple subject to a condition subsequent, BUT title passes to a third party

Third party has an executory interest

Two types of executory interest;

(1) shifting - divests the grantee’s estate, such that the estate shifts from the grantee to the executory-interest holder (sis graduated college and bro was 21 so estate shifted to son upon her graduation)

(2) springing - divests the grantor’s estate, such that the estate springs from the grantor to the executory-interest holder (bro not 21, so after sis graduated college… goes to dad who is grantor until son turns 21)

Question 92

Variance

Answer 92

permission to deviate from a zoning requirement

use variance - allows land to be used differently than currently zoned use

area variances – allows structure to look different than structures on rest of the zoned area

Granted if (1) enforcement of a zoning requirement would cause landowner unnecessary hardship regarding the use of the land and (2) a variance would not be contrary to public interest

Question 93

Future Interests + Alienability

Answer 93

Future interests are alienable

Question 94

Mortgage + 3rd party security

Answer 94

A mortgage can be given to secure repayment of a debt owed by someone other than the mortgagor, and the mortgagee can foreclose on the mortgaged property if the debtor defaults

Question 95

Mortgage Documents

Answer 95

Mortgage Deed- A writing that conveys an interest in collateral to secure a debt

Promissory note - a formal “IOU” in which the borrower promises to repay the debt according to the listed terms

Question 96

Landlord’s Remedies for Tenant’s failure to pay

Answer 96

majority rule - cannot recover future rents unless lease contains acceleration clause
minority - anticipatory repudiation doctrine: future rent - reasonable FMV of rent OR actual rent collected on re-rental

Majority rule - must give tenant notice & opportunity to cure before terminating lease or evicting tenant

Question 97

distribution of foreclosure sale proceeds

Answer 97

costs from sale (attorneys fees, court costs) –> mortgage being foreclosed/senior lien–> junior liens (in order of lien priority)–> debtor, if any surplus remains

Question 98

Holder in Due Course

Answer 98

(1) Pays Value

(2) No notice of issues with note

(3) holder of OG promissory note with OG signature by debtor

Question 99

Servitude

Answer 99

To do or to control (prevent or force) + Transferability

-easement
-profit
-license
-covenant = real covenant ($ damages)/ equitable servitude (injunction)

Question 100

Transferability of Covenant

Answer 100

Depends on which party changes

Party w benefit conveys = for covenant to transfer benefit must transfer –> WITV

Party w burden conveys = for covenant to transfer burden must transfer –> WITHVN

Both parties convey = burden & benefit –> WITHVN + WITV

BURDEN of proving convenant can transfer = party who benefits

if can’t transfer as a covenant, can transfer as an equitable servitude

party w benefit = WIT

party w burden = WITN (or general scheme doctrine/implied reciprocal servitude + notice)

Question 101

Transferability of Equitable Servitudes

Answer 101

express = WITN

implied from common scheme = 1. intent to create common scheme, 2. restrictive servitude, 3. notice)

Question 102

Doctrine of Worthier Title

Answer 102

cannot convey property to another during life with a remainder in one’s own heirs (to my daughter, upon her death, to my heirs)

creates a reversion in the grantor

Question 103

Mortgages & Fixtures

Answer 103

A mortgage includes the property and any fixtures added to that property before or after the mortgage was created

Question 104

Remainder with Ambiguous survivorship condition

Answer 104

Majority Rule - the remainderman must survive the owner of the immediately preceding estate (e.g., the life tenant)

minority rule - the remainderman must survive the transferor

Question 105

license v. easement v. profit AND condemnation

Answer 105

license - recovocable privilege

easement - non-possessory interest

profit - non-possessory interest

easements + profits = damages for condemnation bc property interest, but not for licenses

Question 106

Payment of Preexisting Mortgage Obligation

Answer 106

only applies to mortgages secured BEFORE the creation of a life estate

if obligation = payment of interest until the principal amount is due –> life tenant is responsible for future interest payments + future-interest holders are responsible for principal payments due at a later date

if obligation = payment of principal and interest –> obligation is allocated b/w life tenant & the future-interest holder based on the present value of each interest

non-payment
-no liability absent assumption of mortgage
-failure to pay allocation may result in loss of property interest

Question 107

Doctrine of Merger as to Mortgages

Answer 107

when the same person acquires both:

1. a mortgagee’s (lender’s) interest in real property

and

2. the mortgagor’s (borrower’s) interest in the same property

When this occurs, the mortgage merges into the fee estate and is extinguished

Question 108

Prepayment of Mortgage

Answer 108

Common law - Prepayment barred unless mortgage documents provide otherwise

Majority Rule - Prepayment allowed unless mortgage document provide otherwise

Prepayment prohibitions or penalties in a mortgage are generally valid and enforceable

Question 109

Landlord’s duty to repair leased premises

Answer 109

Residential (CL) - No duty to repair unless statute or contract requires

Residential (Majority) - Duty to repair substantial defects under implied warranty of habitability

Commercial - No duty to make ordinary repairs unless statute or contract requires EXCEPT. repair is so substantial that it would not ordinarily fall within the tenant’s common-law duty to repair or the repair would primarily benefit the value of the landlord’s property

Question 110

Joint Tenancy Creation and Continuation

Answer 110

P- Tenants share an equal right to possess or use the property

I - Tenants each have an equal interest in the property

T - property interests simultaneous vest in all tenants

T - property interests received in the same instrument of conveyance

judgment lien doesn’t affect joint tenancy… dies when joint tenant dies

Question 111

seller’s duty to disclose

Answer 111

common law - caveat emptor = no duty to disclose property defects unless otherwise provided

modern rule
1. commercial property –> caveat emptor

2. residential property –> must disclose known material defects that buyer could not reasonably discover (except: “as is” clause or specific disclaimers w/o seller’s fraud

Question 112

a landlord and tenant have a legal relationship based on both

Answer 112

1. Privity of Contract - their shared interest in the lease agreement AND
2. Privity of Estate - the landlord’s successive right to possess the property (i.e., the tenant’s current right of possession is immediately followed by the landlord’s future right of possession)

Question 113

Nonjudicial foreclosure

Answer 113

allowed in most states if the mortgage or deed of trust contains a power of sale clause

court can overturn if the auction or sales violates due process or the purchase price was grossly inadequate

Question 114

Equitable Vendor’s Lien

Answer 114

Implied by law when a seller transfers title to a buyer and any portion of the purchase price remains unpaid (often w a promissory note but no mortgage)

Question 115

Types of Option Ks

Answer 115

1. Option to Purchase - gives exclusive right to purchase property at specified price, usually within a specified time
2. Right of First Refusal - Gives First Opportunity to purchase property if it ever goes up for sale

Majority Rule - An option is an integral part of the lease agreement that cannot be assigned separately from the lease

Question 116

Zoning - Nonconforming Use

Answer 116

Existing Nonconformance when New or Modified Zoning Ordinance- nonconformance is grandfathered in (aka allowed to continue) until use is enlarged, changed, or abandoned, or if provided by zoning laq, amortization period passes

Planned Nonconformance - Planned nonconforming use if right to use has vested. Vested right exists if, at time zoning law or modification takes effect, property owner has: (1) secured any necessary permits in good faith AND (2) made substantial progress toward achieving use

Question 117

equitable interest v. subsequent judgment lien

Answer 117

a recorded equitable interest has priority over a subsequent judgment lien

Question 118

Fiduciary relationship & co-tenants

Answer 118

co-tenants share a fiduciary relationship IF they become co-tenants at the SAME TIME. but this fiduciary relationship exists only with respect to transactions that occur during the tenancy

Question 119

Effect of Modifying senior mortgage

Answer 119

a modified senior mortgage will retain its priority against junior interests so long as the modification does not materially prejudice the junior interest holders. It is strongly presumed that a time extension is not materially prejudicial

Question 120

Subrogation re Mortgages

Answer 120

Subrogation allows a third party to take a senior mortgage’s priority when the third party (1) fully pays off the senior mortgage and (2) has no actual knowledge of junior interests

Question 121

Prematurely recorded deed

Answer 121

a deed recorded by a buyer before the seller owns the property – falls outside a later buyer’s chain of title and fails to provide record notice

Question 122

Horizontal Privity

Answer 122

The relationship between the original parties to a covenant or equitable servitude. To establish horizontal privity, the promisor and promisee must share an interest in the real property independent of the covenant or equitable servitude at the time the promise is made, such as in connection with the conveyance of an interest in the property. This requirement is satisfied when the promisor and promisee are:

• A landlord and tenant, with the promise made in the lease.
• A grantor and grantee, with the promise made in a deed.
  -A mortgagor and mortgagee, with the promise made in a mortgage.

Conversely, if two adjacent landowners simply agree to be bound by a promise for their mutual benefit, no horizontal privity exists and subsequent owners of the land are not bound.

Question 123

Riparian Doctrine

Answer 123

In dealing with water rights, the riparian doctrine states that water belongs to the person whose land borders a body of water. Riparian owners are permitted to make reasonable use of this water provided it does not unreasonably interfere with the reasonable use of this water by others with riparian rights.

Question 124

Acceleration clause

Answer 124

allows creditor to demand entire loan due & payable if debtor defaults

Question 125

Due-on-Sale Clause

Answer 125

Allows creditor to demand entire loan due & payable if debtor sells mortgaged property without permission

applies to installment land contracts –> method used to transfer the mortgaged property has no effect on due-on-sale clause

Question 126

Due-on-Encumbrance Clause

Answer 126

Allows creditor to accelerate mortgage obligation if debtor obtains second mortgage or otherwise encumbers property

Question 127

Defeasance Clause

Answer 127

Requires creditor to give debtor legal title to property & release mortgage lien once all payments are made