Property

Question 1

How may an easement be terminated?

Priority: High

Answer 1

Easements can terminate by written release, prescription, estoppel, condemnation, and abandonment.

Question 2

When can an easement be terinated by abandonment?

Priority: High

Answer 2

An easement can only be terinated based on a theory of abandonment if the owner of the easement acts in an affirmative way that clearly shows intent to relinquish the easement right.

Neither a statement of intent to abandon nor non-use can extinguish an easement absent affirmative conduct.

Question 3

How are priorities assigned absent a recording act?

Priority: Medium

Answer 3

Unless a recording act governs, the common law rule of “first in time, first in right” generally applies to determine priorities.

Question 4

How does a notice statute work?

Priority: Medium

Answer 4

A notice statute tends to protect subsequent bona fide purchasers against interest holders who could have, but failed to record.

Question 5

What is a bona fide purchaser?

Priority: High

Answer 5

A bona fide purchaser is a person/entity who takes property without notice and pays consideration.

Question 6

How can a purchaser obtain notice of a prior conveyance?

Priority: High

Answer 6

Notice may be actual, by inquiry, or instructive.

Question 7

When does a person have actual notice of a prior conveyance?

Priority: High

Answer 7

A person has actual notice of information directly received.

Question 8

When does a person have constructive notice of a prior conveyance?

Priority: High

Answer 8

A purchaser can only have constructive notice of prior conveyances that were properly recorded. (could have been obtained from an inspection of public land records).

Question 9

When does a person have inquiry notice of a prior conveyance?

Priority: High

Answer 9

A grantee has inquiry notice if a reasonable investigation would have disclosed the existence of prior claims.

A purchaser is held to know whatever a reasonable inspection of the property would have disclosed.

Question 10

What is the shelter rule?

Priority: High

Answer 10

Under the shelter rule, a person who purchases from a bona fide purchaser (BFP) receives the same status and rights as the BFP.

Question 11

What is a wild deed, and how does it effect notice?

Priority: High

Answer 11

A recorded deed that is not within the chain of title is a “wild deed.” A wild deed will not put subsequent purchasers on constructive notice.

Question 12

What is the implied warranty of fitness or suitability?

Prioritu: High

Answer 12

A warranty of fitness or suitability is implied in a contract for the sale of a newly constructed residence.

The implied warranty of fitness or suitability protects a purchaser of a newly constructed home.

Under this warranty the seller asserts that he used adequate materials and workmanship for the residence.

Question 13

What is covered by the implied warranty of fitness or suitability?

Priority: High

Answer 13

The warranty generally covers latent construction defects, including any problems that do not manifest themselves until after the sale.

The implied warranty generally covers latent construction defects, such as a defective electrical, plumbing, or mechancial system, or a leaky roof or drainage problem that does not manifest itself until after the sale.

Question 14

What is a buyers duty to inspect a new residence?

Priority: High

Answer 14

The buyer has a duty to reasonably inspect a residence but is not required to employ an expert home inspector.

Question 15

Who may a buyer sue for breaching the implied warranty of fitness or suitability?

Priority: High

Answer 15

Generally, a suit for breach of the implied warranty may be brought against builders, developers , and contractors within a reasonable time after discovery of the defect.

Question 16

Who may sue for a breach of the implied warranty of fitness or suitability?

Priority: High

Answer 16

Most jurisdictions permit both the initial homeowner-purchaser and subsequent purchasers who do not contract directly with the commercial developer to recover damages.

Question 17

How are damages calculated for breach of the implied warranty of fitness or suitability?

Priority: Medium

Answer 17

Damages are generally based on the cost of repairs to bring the residence into compliance with the warranty.

Question 18

Does a mortgagor remain liable for a mortgage after the transfer of the property?

Priority: Medium

Answer 18

Unless the mortgagee (lender) agrees to release the mortgagor (borrower) from liability for the loan, the mortgagor remains personally liable on the loan obligation after the transfer of the mortgaged property.

Question 19

When does a transferee take property subject to the mortgage and what does that mean?

Priority: Medium

Answer 19

If a deed is silent or ambiguous as to the buyer’s liability, then the transferee (buyer) is considered to have taken the property subject to the mortgage and is not personally liable upon default.

(When the buyer assumes the mortgage, they will be personally liable and the seller will be secondarily liable)

Question 20

What does a buyer receive when they take property subject to the mortgage?

Priority: Medium

Answer 20

The buyer takes title, which allows him to possess the land, but the land is still subject to a potential foreclosure action upon default.

Question 21

When a buyer takes property subject to a mortgage who is personally liable for defficiency?

Priority: Medium

Answer 21

If there is a deficiency, only the transferor (seller) remains personally liable for it.

Question 22

When a buyer assumes a mortgage obligation who is liable?

Priority: Medium

Answer 22

If a buyer of property assumes the mortgage obligation, then the buyer and the original mortgagor will be personally liable to the lender.

Question 23

What is necessary for a buyer to assume a mortgage?

Priority: Medium

Answer 23

Most jurisdictions do not require that any agreement to assume the mortgage be in writing, but some form of agreement is necessary.

Question 24

When a buyer assumes liability under a mortgage how is the original mortgagor treated?

Priority: Medium

Answer 24

If a buyer assumes liability under the mortgage, then generally the original mortgagor/seller is treated as a surety who is personally liable for any deficiency not paid by the buyer.

Question 25

When may a mortgage assumption be implied?

Priority: Medium

Answer 25

Some jurisdictions permit the court to imply that an assumption of the mortgage occurred when the buyer of the property pays the seller the difference between what the house was worth, and the outstanding balance on the mortgage obligation.

Question 26

When is a seller liable to a buyer for any encumbrance against the property?

Priority: High

Answer 26

Generally, a seller is liable to a buyer for any claims of encumbrances against the property when the seller warrants that no such encumbrance exists, as with a general warranty deed.

Question 27

What is contained in a quitclaim deed, and what does a grantee receive with this type of deed?

Priority: High

Answer 27

A quitclaim deed contains no covenants of title.

The grantee of a quitclaim deed receives no better title than what the grantor possessed.

Question 28

What are the requirements for a valid deed?

Priority: Medium

Answer 28

In order to be valid, a deed must be written, identify the grantor and the grantee, describe the property, indicate present intent to convey with words of transfer, and be signed by the grantor.

(Any words indicating the grantor’s intent to immediately convey the property are sufficient such as grant, convey, give, or transfer)

Question 29

What is adverse possession?

Priority: High

Answer 29

The doctrine of adverse possession allows title to pass to a person who exercises exclusive physical possession of a piece of property for a certain amount of time.

Question 30

What are the elements of adverse possession?

Priority: High

Answer 30

For adverse possession to occur, possession must be continuous, open and notorious, actual, exclusive, and hostile.

Question 31

When is possession open and notorious?

Priority: High

Answer 31

Possession must be open and notorious such that a reasonable true owner would become aware of the claim.

Question 32

How are adverse possessors treated under recording statutes?

Priority: Medium

Answer 32

Owners of property acquired through adverse possession are protected against recording statutes because they have no documents to record.

(Courts have held that a bona fide purchaser of a later conveyance from the prior record title owner cannot defeat title acquired under adverse possession, even if the land was not occupied at the time of the conveyance.)

Question 33

What is constructive eviction?

Priority: High

Answer 33

When a landlord substantially interferes with the tenant’s use and enjoyment of the property by breaching a duty to the tenant, the tenant’s obligation to pay rent may be excused under the theory of constructive eviction.

Question 34

What is necessary to end a lease by constructive eviction?

Priority: High

Answer 34

In order to end a lease before the end of its term by constructive eviction, (1) the landlord must have breached a duty, which caused the loss of the substanatial use and enjoyment of the premises, (2) the tenant must give the landlord notice of the problem and reasonable opportunity to cure, and (3) the tenant must vacate the property within a reasonable period of time.

Question 35

What is the majority rule on duty to repair in residential leases?

Priority: High

Answer 35

The majority of jurisdictions today enforce an implied duty upon the landlord to repair under a residential lease, even when the lease attempts to place the burden on the tenant, except for damages caused by the tenant.

Question 36

What was the duty to repair under common law?

Priority: Medium

Answer 36

Under the common law, there was no implied duty on the party of the landlord to repair leased premises.

Question 37

What is the duty to repair in commercial leases?

Priority: Medium

Answer 37

Courts are reluctant to imply a landlord’s duty to repair in commercial leases because the implied warranty of habitability does not apply.

Question 38

When is the covenant of quiet enjoyment breached?

Priority: High

Answer 38

The covenant of quiet enjoyment is breached only when the landlord, someone claiming through the landlord, or someone with superior title disrupts the possession of the tenant.

This covenant is breached if the tenant is constructively evicted.

Question 39

When is a lease terminated generally?

Priority: High

Answer 39

Termination of a lease occurs automatically upon the expiration of the term.

Question 40

What happens when a tenant abandons a leasehold?

Priority: Medium

Answer 40

When a tenant abandons the leasehold without justification, the landlord may treat the abandonment as an offer of surrender and could accept the surrender bu retaking the premises.

Question 41

What may a landlord do when a tenant abandons the leasehold?

Priority: Medium

Answer 41

When a tenant abandons the leasehold, the landlord may treat the abandonment as an offer of surrender and accept such surrender, or the landlord may attempt to re-rent the premises on the tenant’s behalf and hold the tenant liable for any deficiency.

Question 42

What is termination by surrender?

Priority: Medium

Answer 42

Termination may occur before the expiration of the term when the tenant surrenders the leasehold, and the landlord accepts the return of the leasehold.

Question 43

Does a landlord have a duty to mitigate when a tenant abandons the lease?

Priority: Medium

Answer 43

The majority of jurisdictions now require a landlord to mitigate damages by attempting to re-rent the premises in the event that the tenant abandons the property and breaches the lease.

The landlord has a responsibility to make a good-faith attempt to re-rent the property

Question 44

When in an easement terminated by merger, and what does it do?

Priority: High

Answer 44

An easement is terminated if the owner of the dominant or servient estate acquires fee title to the other estate. The easement is said to “merge into the title. The merger of property interests results in the extinguishment of the property right.

Question 45

What is an easement by implication?

Priority: High

Answer 45

If the owner of two parcels of land previously used one parcel to benefit the other, then the court may find that, after the transfer of one parcel, the parties intended the use to continue if that use was continuous apparent or known, and reasonably necessary to the dominant land’s use and enjoyment.

(This is one of the most awful rule statements I’ve ever read)

Question 46

What is the priority of mortgages in a foreclosure sale?

Priority: High

Answer 46

When multiple interests must be paid out of the proceeds of a foreclosure sale, generally the earliest mortgage placed on the property has priority over the other interests.

Question 47

When do future payments have priority over earlier interests?

Priority: High

Answer 47

Obligatory payments under a senior future-advances mortgage paid out after a junior lender remits its loan amount and records its lien have priority over amounts loaned by the lender.

Question 48

What is a future advance mortgage?

Priority: High

Answer 48

A future advance mortgage is a loan where the lender may provide future payments.

The lender secures a mortgage on the real property for the entire amount of the loan, including future advances.

Question 49

What are obligatory payments for future advance loans?

Priority: Medium

Answer 49

Payments are obligatory when the lender has a duty to advance the funds regardless of the situation, because there are no discretionary conditions.

Question 50

Will optional advances in a future advance mortgage take priority over earlier junior interests?

Priority: Medium

Answer 50

Optional payments will not take priority if the advance is made after another filed a lien on the propery if the lender had notice of the lien.

Te majority view requires actual notice, while constructive notice is allowed in aminority of jurisdictions.

Question 51

When does a joint tenancy exist?

Priority: Medium

Answer 51

A joint tenancy exists when at least two people own property with the right of survivorship.

Question 52

Other than survivorship what is necessary for a joint tenancy?

Priority: Medium

Answer 52

In addition to the right of survivorship, each joint tenant must have the four unities: (1) the right to possess or use the property and (2) equal interests which were (3) created at the same time and (4) in the same instrument.

Question 53

What happens when a joint tenancy is severred?

Priority: High

Answer 53

The severance of a joint tenancy may occur in several ways and converts it into a tenancy in common.

Question 54

Can a joint tenant grant a mortgage in the interest, and what does that grant do to the joint tenancy?

Priority: High

Answer 54

A joint tenant may grant a mortgage in their joint tenancy interest.

In lien theory states, which is the majority, the granting of a mortgage will not sever the joint tenancy.

In title theory states, which is the minority of states, the granting of a mortgage constitutes a transfer of title and will sever the joint tenancy, converting it into a tenancy in common.

Question 55

What happens to a joint tenancy when one tenant leases their interest?

Priority: High

Answer 55

There is a split among jurisdictions with respect to joint tenancies when one joint tenant leases their interest.

Most jurisdictions hold that the lease destroys the unity of interest and thus severs the joint tenancy.

Some jurisdictions believe that the lease temporarily suspends the joint tenancy, which resumes upon expiration of the lease.

Question 56

When does a tenancy in common exist?

Priority: High

Answer 56

A tenancy in common exists when two or more co-owners have an equal right to possess property, but do not have a right of survivorship.

Question 57

What rights do co-tenants have for possesion?

Priority: High

Answer 57

Each co-tenant holds an undivided interest with unrestricted rights to possess the whole property, regardless of the size of the co-tenant’s interest.

Question 58

Can a co-tenant transfer their interest?

Priority: Medium

Answer 58

Each tenant can unilaterally transfer, devise, mortgage, or lease their interest to a third party, without affecting the interest of the other tenants.

Question 59

How do co-tenants distribute rent from third parties?

Priority: Medium

Answer 59

A co-tenant must account to other co-tenants for rent received from third parties, but can deduct operating expenses, including necessary repairs, when calculating rent proceeds.

Third party rents are divided based on the ownership interest of each tenant.

Question 60

What happens to a joint tenant’s property upon death?

Priority: Medium

Answer 60

At death, a joint tenant’s property passes automatically to the remaining joint tenants due to the right of survivorship.

Question 61

What guarantees are included in the grant of a general warranty deed?

Priority: High

Answer 61

The grantor of a general warranty deed guarantees that they hold six covenants of title, three of which are present covenants.

Question 62

What are the three present covenants in a general warranty deed?

Priority: High

Answer 62

The three present covenants are the covenant of seisin, the covenant of the right to convey, and the covenant against encumbrances.

Question 63

What is the covenant against encumbrances?

Priority: High

Answer 63

The covenant against encumbrances guarantees that the deed contains no undisclosed encumbrances.

Question 64

When is the covenant against encumbrances breached?

Priority: High

Answer 64

A breach of the covenant against encumbrances occurs when a property is ecumbered by a mortgage, lease, easement, or covenant not specified in the deed.

In most states, a breach occurs even if the grantee is aware of the encumbrance. However, some states do not recognize a breach if the grantee had knowledge of the encumbrance, if it was visibile, or if it benefitted the land.

Question 65

What is merger?

Priority: High

Answer 65

Under the doctrine of merger, the obligations contained in the contract of sale merge into the deed.

Question 66

What damages are available for a breach of the covenant against encumbrances?

Priority: Medium

Answer 66

A buyer can recover for breach of the covenant against encumbrances the lesser of the difference in value between title with and without the defect, or the cost of removing the encumbrance.

Question 67

What is an easement in gross?

Priority: High

Answer 67

An easement is in gross if it was granted to benefit a particular person as opposed to the land.

Question 68

What is an easement by grant?

Priority: High

Answer 68

An express easement by grant arises when it is affirmatively created by the parties in a writing that satisfies the requirements for a deed.

Question 69

When does the burden of an easement in gross transfer to be enforceable against a bona fide purchaser?

Priority: High

Answer 69

If a written easement is granted but not recorded against the servient estate, then the easement is not enforceable against a bona fide purchaser. Otherwise, the burden of an easement in gross is transferred automatically with the transfer of the servient estate.

Question 70

What is a fee simple determinable?

Priority: High

Answer 70

A fee simple determinable is limited by specific durational language (e.g., “so long as” “until”).

Question 71

When does a fee simple determinable terminate?

Priority: High

Answer 71

It terminates automatically upon the happening of the stated condition.

Question 72

What future interest is created with a fee simple determinable, and when does it become possessory?

Priority: High

Answer 72

The grantor of a FSD retains a possibility of reverter, which becomes possessory immediately upon happening of the event designated in the deed.

Question 73

What is a fee simple subject to condition subsequent?

Priority: High

Answer 73

A FSSCS is limited in duration by specific conditional language (“provided that” “but if”). The grantor MUST EXPLICITLY RETAIN the right to terminate the FSSCS in the conveyance.

Question 74

When does a fee simple subject to condition subsequent terminate?

Priority: High

Answer 74

Upon occurence of the stated condition, the FSSCS will terminate only if the grantor affirmatively demonstrates an intent to terminate.

The present interest in the property remains until the right of reentry is taken.

Question 75

What is the majority view for a survivorship contingent remainder?

Priority: High

Answer 75

In most jurisdictions, a survivorship contingency applies at the termination of the interests that precede distribution of the remainder.

In most jurisdictions, the person holding the reminader must survive the life tenant that precedes the remainder to be entitled to the interest.

Question 76

What is the minority view for a survivorship contingent remainder?

Priority: High

Answer 76

In the minority of jurisdictions, a survivorship contingency only requires the person holding the remainder to survive the testator and not the life tenant.

Question 77

What constitutes reasonable effort to mitigate damages?

Priority: High

Answer 77

What constitutes a reasonable effort depends on the circumstances, however an owner of multiple vacant apartments is typically required only to treat the premises as one of his vacant stock.

Question 78

What is a tenancy for years?

Priority: Medium

Answer 78

A tenancy for years is an estate measured by a fixed and ascertainable amount of time.

Question 79

Can a tenancy for years terminate prior to the fixed period of time?

Priority: Meidum

Answer 79

Termination of a tenancy for years may occur before the expiration of the term, such as when the tenant surrenders the leasehold.

Question 80

How does a tenant surrender a lease?

Priority: High

Answer 80

A tenant surrenders a lease by transferring the lease back to the landlord with the landlor accepting the return.

If the landlord accepts surrender, the tenant is not obligated for future rent.

Question 81

When can a lease be assigned?

Priority: High

Answer 81

Absent any language to the contrary, a lease can be freely assigned.

When a lease prohibits the tenant from assigning, the tenant may nevertheless assign; however, the landlord can then terminate the lease for breach of one of the lease covenants and recover any damages.

Question 82

Under the minority approach, when may a landlord withhold permission for assignment when no standard is included in the lease?

Priority: Medium

Answer 82

Traditionally, the landlord can withhold permission at his discretion.

Question 83

Under the majority approach, when may a landlord withhold permission for assignment when no standard is included in the lease?

Priority: Medium

Answer 83

When a lease prevents assignment without the permission of the landlord, and the lease is silent as to a standard for exercising that permission, the majority approach imposes a requirement that the landlord may withhold permission only on a reasonable ground in relation to the property being leased, not on a whim or personal prejudice.

Question 84

Can a landlords right to prohibit assignments be waived?

Priority: Medium

Answer 84

A landlord may be deemed to waive his right to enforce a provision prohibiting assignment if he accepts rent from the assignee.

Question 85

When is a nonconforming use under a zoning ordinance protected?

Priority: Medium

Answer 85

When a zoning ordinance is enacted or modified, there are often properties within a zone that do not conform to the requirements for that zone. A zoning ordinance must enerally make provision for property with an existing nonconforming use.

Question 86

What time do courts look at to determine whether a nonconforming use is protected?

Priority: Medium

Answer 86

Unless the ordinance provides otherwise, the time for testing whether the nonconforming use is protected by a grandfather provision is the date that the zoning ordinance takes effect.

Question 87

Can a landowner make changes to nonconforming property that has been grandfathered in?

Priority: Medium

Answer 87

Generally, a property owner whose nonconforming use has been grandfathered is not entitled to subsequently increase the nonconforming use, such as by enlarging a building that houses a nonconforming use or acquiring and developing adjacent property in accord with the nonconforming use.

Question 88

When is a landowner allowed to make changes to nonconforming property that has been grandfathered in?

Priority: Medium

Answer 88

The owner may be permitted to increase the frequency of the nonconforming use to upgrade the means to accomplish the nonconforming use, so long as the nature and character of the use does not constitute a substantial change.

Question 89

What is a mortgage?

Priority: Medium

Answer 89

A mortgage is an interest in real property that serves as security for an obligation.

Question 90

What is a future-advance mortgage?

Priority: High

Answer 90

A future-advances mortgage is a mortgage given by a borrower in exchange for the right to receive money from the lender in the future.

This type of mortgage is also known as a “line of credit.”

Question 91

What are future-advance mortgages often used for, and how are the advances made?

Priority: Low

Answer 91

It is often used for home-equity, construction, business, and commercial loans, and it can provide for obligatory advances or optional advances.

Question 92

Are advances based on “satisfactory progress” conditional?

Priority: Low

Answer 92

Future advances made pursuant to a loan that are conditioned on satisfactory progress of the project are optional, not obligatory.

Question 93

What is the basic rule for priority of interests in property, and does it apply to future advance mortgages?

Priority: Medium

Answer 93

If there is more than one interest in the property, the basic “first in time, first in right” rule is applied to determine the priority of interests. However, this rule is subject to an exception for future-advance mortgages.

Question 94

How is priority determined for optional advances in a future advance mortgage?

Priority: High

Answer 94

If the advances under a future-advance mortgage are optional, then a subsequent mortgage has priority over amounts that are actually loaned after the future-advances mortgagee has notice of the subsequent mortgage or lien.

Question 95

What notice is required for a subsequent interest in property to take priority over an optional advance?

Priority: High

Answer 95

Jurisdictions are split as to whether actual notice is required or whether constructive notice is sufficient.

In a majority of states, the mortgagee must have actual notice of a subsequent interest in order for later loan disbursements to lose priority.

The minority rule requires only constructive notice of a subsequent interest.