Property Flashcards
1
Q
Real Estate Contract
A
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)
2
Q
Equitable Conversion
A
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
3
Q
Marketable Title
A
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
4
Q
Time (during real estate K)
A
Not of the essence unless made so
5
Q
Encumbrance
A
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
6
Q
Merger
A
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.
7
Q
Duty to Disclose
A
Grantor has a duty to disclose known material defects that cannot be seen by buyer (except: defects visible to the buyer)
8
Q
Transferring Title
A
(1) Real Estate K [transfers equitable title] and (2) Deed [transfers legal title on day of closing aka day you sign deed]
9
Q
Warranty Deed
A
No defects in title (no one else owns the land and it is free from encumbrances)
Six warranties (3 present, 3 future)
10
Q
Present Warranties
A
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.
11
Q
Future Warranties
A
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
12
Q
General Warranty Deed
A
Promising that all 6 warranties exist/are good since forever (since it was built)
13
Q
Special Warranty Deed
A
Promising that all 6 warranties exist/are good since grantor owned property
14
Q
Quitclaim Deed
A
Grantor promises nothing (e.g., family & business partners). Can’t hold grantor accountable even if problems later (exc. marketable title).
15
Q
Closing
A
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
16
Q
Transfer of Title by Operation of Will
A
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
17
Q
Adverse Possession
A
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
18
Q
Drafting, Reviewing, & Executing Real Estate Documents
A
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
19
Q
Recording Statutes
A
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
20
Q
Race Statute
A
First person to record wins. Doesn’t have to be a BFP.
21
Q
Race-Notice Statute
A
BFP who recorded first. (1) BFP + (2) Recorded first
22
Q
Notice Statute
A
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
23
Q
Shelter Rule
A
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
24
Q
Wild Deed
A
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.
25
After-Acquired Title/Estoppel by Deed
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
26
Fee Simple Absolute
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
27
Life Estate
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
28
Remainder
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
29
Fee Simple Determinable
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
30
Fee Simple Subject to Condition Subsequent
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
31
Rule Against Perpetuities (RAP)
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
32
Joint Tenancy
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 tenancytenancy 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)
33
Joint Tenancy by the Entirety
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
34
Tenancy in Common
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.
35
Ouster
Each tenant has a right to the whole property unless someone gets kicked off the property
36
Partition
Court generally awards partition of property unless it’s not practical.
37
Mortgage & Taxes
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
38
Rent
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.
39
Repair
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.
40
Improvements
Co-tenants cannot seek contributions for improvements unless they increase the rents or profits
41
Types of Tenancies
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.
42
Landlord's Duties
(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.
43
Tenant's Duties
(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
44
Assignments/Subleases
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
45
Fair Housing Act
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)
46
Fixture
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
47
Conflict of Laws pertaining to Property
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
48
Mortgage
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
49
Collateral
What’s used to pay off the loan (the land) if O cannot pay the loan
50
Purchase Money Mortgage
The loan used to buy the property (initial loan). This gets priority and is paid back first when multiple mortgages.
51
Foreclosure Proceedings
If O can’t pay mortgage, mortgagee is going to sell O’s home to pay off debt.
52
Redemption
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.
53
Lien Theory
Bank has lien & buyer has title. Buyer can sell home. Lien doesn’t affect title in joint tenancy.
Mortgage disappears when co-tenant dies
54
Title Theory
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).
55
Assuming the Mortgage
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
56
Taking Subject to the Mortgage
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.
57
Deed in Liu of Foreclosure
O gives up right to property to the bank (gives deed) instead of going thru foreclosure proceedings
58
Effect on the Foreclosure Sale
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.
59
Deficiency Judgment
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.
60
Installment Land Contract
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.
61
Easements
(+/-); 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 streetno 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
62
Covenant
(+/-); 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.
63
Equitable Servitude
A covenant that runs but seeking an injunction rather than damages for breach.
e.g., implied reciprocal servitude
64
Implied Reciprocal Servitude/ negative reciprocal covenant
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)
65
License
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
66
Profit
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
67
Taking
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
68
Water Rights
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
69
Real v. Personal Property
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]
70
Support Rights
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.
71
Private Nuisance
unreasonable interference (e.g., noise, smell) with use & enjoyment of your property. Objective standard (disregards abnormal sensitivity/allergy)
NO RIGHT TO LIGHT unless malice
72
Public Nuisance
often brought by GO bc nuisance is affecting everyone. If brought by private individual must prove special & unique damages
73
Common Interest Owned Community
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.
74
Types of CIOC
Property Owners Association, Condominium, Co-Op
75
Property Owners Association
Owners required to belong to an association & pay the dues.
76
Condominium
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.
77
Co-Op
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.
78
CIOC Governing Documents
Declaration (given most weight), bylaws & articles of incorporation.
79
CIOC Property Association
manages property & enforce rules.
80
CIOC Board of Directors
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
81
Rule in Shelley's Case (COMMON LAW)
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
82
Restraints on Alienation
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)
83
Types of Notice
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)
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Transfer of promissory note & mortgage
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
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Negotiable v. Non-Negotiable Promissory Note
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)
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Liquidated Damages in a Real Estate K
only recoverable if reasonably compensate the injured party (if amount is less than 15% of purchase price) --> cannot amount to a penalty (over 15%)
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Lien Priority in foreclosure proceedings
Recorded After Foreclosing Lienholders- PMM then descending order of who recorded first
Did not record - Purchase- decending order of when mortgage was created
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General Lienholder Priority
Recorded Lienholders - PMM then descending order of when they recorded
Not Recorded- descending order of when liens were recorded
Together - stack them together
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Mortgagee Notice of Foreclosure Sale to other banks
(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
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Tenants in Common + Consent
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)
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Fee simple subject to an executory limitation
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)
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Variance
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
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Future Interests + Alienability
Future interests are alienable
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Mortgage + 3rd party security
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
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Mortgage Documents
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
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Landlord's Remedies for Tenant's failure to pay
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
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distribution of foreclosure sale proceeds
costs from sale (attorneys fees, court costs) --> mortgage being foreclosed/senior lien--> junior liens (in order of lien priority)--> debtor, if any surplus remains
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Holder in Due Course
(1) Pays Value
(2) No notice of issues with note
(3) holder of OG promissory note with OG signature by debtor
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Servitude
To do or to control (prevent or force) + Transferability
-easement
-profit
-license
-covenant = real covenant ($ damages)/ equitable servitude (injunction)
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Transferability of Covenant
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)
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Transferability of Equitable Servitudes
express = WITN
implied from common scheme = 1. intent to create common scheme, 2. restrictive servitude, 3. notice)
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Doctrine of Worthier Title
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
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Mortgages & Fixtures
A mortgage includes the property and any fixtures added to that property before or after the mortgage was created
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Remainder with Ambiguous survivorship condition
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
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license v. easement v. profit AND condemnation
license - recovocable privilege
easement - non-possessory interest
profit - non-possessory interest
easements + profits = damages for condemnation bc property interest, but not for licenses
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Payment of Preexisting Mortgage Obligation
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
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Doctrine of Merger as to Mortgages
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
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Prepayment of Mortgage
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
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Landlord's duty to repair leased premises
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
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Joint Tenancy Creation and Continuation
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
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seller's duty to disclose
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
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a landlord and tenant have a legal relationship based on both
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)
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Nonjudicial foreclosure
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
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Equitable Vendor's Lien
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)
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Types of Option Ks
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
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Zoning - Nonconforming Use
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
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equitable interest v. subsequent judgment lien
a recorded equitable interest has priority over a subsequent judgment lien
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Fiduciary relationship & co-tenants
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
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Effect of Modifying senior mortgage
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
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Subrogation re Mortgages
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
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Prematurely recorded deed
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
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Horizontal Privity
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.
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Riparian Doctrine
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.
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Acceleration clause
allows creditor to demand entire loan due & payable if debtor defaults
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Due-on-Sale Clause
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
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Due-on-Encumbrance Clause
Allows creditor to accelerate mortgage obligation if debtor obtains second mortgage or otherwise encumbers property
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Defeasance Clause
Requires creditor to give debtor legal title to property & release mortgage lien once all payments are made
