PROPERTY

Question 1

What is a fee simple determinable?

Answer 1

An estate that will end automatically when the stated event or condition occurs. The interest then reverts to the grantor or the heirs of the grantor.

‘To A as long as the property is used for a park’

‘To A for so long as/during/while/ until…’
Clear durational language
If condition is violated, forfeiture is automatic

Question 2

Does a possibility of reverter follow a fee simple determinable? what about one subject to an executory interest?

Answer 2

Yes, normally it does. BUT it does NOT follow a fee simple determinable subject to an executory interest.

Question 3

What is a fee simple subject to a condition subsequent?

Answer 3

Grantor uses clear conditional/durational language and carves out the right to reenter.
‘but if’, ‘upon condition that’

G intends to convey a fee simple absolute but has attached a condition to the grant so that if a specified future event happens the grantor will get its fee simple absolute back, provided the grantor exercises his right of entry (or power of termination).

Question 4

How is a fee simple subject to condition subsequent different to a fee simple determinable?

Answer 4

A fee simple subject to condition subsequent does not end automatically upon the happening of the condition. The future interest is a called a ‘right of reentry’/’right of entry’ and property ONLY reverts to original grantor if he exercises this right.

When a grantor creates a FSD or FSSCS there is no natural end to the estate - either the estate continues indefinitely (the condition imposed never occurs) or the estate is interrupted upon the happening of the event.

Question 5

In the conveyance of property, does the use of language: ‘for the purpose that’ have an effect on title?

Answer 5

No, it is not a FSSCS or a FSD.

“for the purpose that’ has no effect of the title and so the property will be held in fee simple absolute.

Question 6

What elements must be satisfied for a covenant to run with the land? (mnemonic)

Answer 6

WITHN
Writing
Intent
Touch and concern
Horizontal and Vertical Privity
Notice

Question 7

How can intent be inferred for the ‘intent’ requirement of a covenant running with land? (WITHN)

Answer 7

Intent can be inferred from circumstances surrounding the creation of the covenant or the actual language in the conveyance itself.

Question 8

How does a covenant ‘touch and concern land’? (WITHN)

Answer 8

The covenant must have an effect that makes the land itself more useful or valuable to the benefitted party. Performance of the burden must diminish the rights, privileges or powers of the landowner in order to run.

As long is a covenant is about the use of the property, it will always run with the land. This is if it doesn’t matter about who is enforcing it (i.e. is is just about the land rather than being personal). If you grant a friend a right to come and use your jacuzzi, that will NOT run with the land - it is a personal covenant BUT if you have a covenant requiring that no one comes within 10 feet of your rose bushes - that will run, it is about the LAND, it is not personal.

SO personal is about when it is just about a person and so you don’t want to give it to anyone else.

Anything with a contract, e.g. a lease - that is personal and will NOT run with the land.

Question 9

Who can enforce a covenant?

Answer 9

The person who owns the land benefitted by the covenant.
Covenants ‘run with the land’ so subsequent owners of property can enforce them or be burdened by them.

Question 10

When does horizontal privity exist?

Answer 10

When, at the time the promisor entered into the covenant with the promisee, the two shared an interest in land independent of the covenant (i.e. when A made the promise, she was purchasing her now-burdened lot from B).

Question 11

When does vertical privity exist?

Answer 11

non hostile nexus % successor in interest and originally covenanting party, e.g. deed, will, contract.

Question 12

Does a zoning ordinance prrempt a restrictive covenant?

Answer 12

No, both RCs and ZOs may affect legally permissible uses of land. Both must be complied with and neither provide an excuse for violating the other BUT they are enforced differently. Covenants are enforced by property owners at law or in equity. Zoning is not subject to enforcement by private suit - they can only be enforced by local govt officials.

Question 13

What is the Rule Against Perpetuities

Answer 13

It invalidates any interest in property if there is any chance that the interest may vest more than 21 years after some life in being at the creation of the interest.

Question 14

A TiC can bring an action to partition the property. What is the difference % partition in kind and partition by sale?

Answer 14

Partition in kind - there is a physical division of the common property (preferred). Each co-tenant receives the ownership ratio (the land is physically divided).

Partition by sale (forced sale) - allowed when a fair and equitable physical division of the property is impossible. Each co-T receives the ownership ratio in the proceeds of the sale.

Question 15

In a CID (common interest development - condo/co-op/retirement community/timeshare etc), governed by an association (e.g. HoA), how is the fairness of regulations adopted by the HoA (i.e. those governing the community not the rules contained in deeds/declaration of CID) determined?

Answer 15

According to a ‘reasonableness’ standard. Balance the utility of the purpose served by the restraint against the harm that is likely to flow from its enforcement.

For rules not contained in governing documents, they will typically be considered reasonable if their purpose is to protect common property.

Question 16

What is a fixture?

Answer 16

A chattel that has become so affixed to land that it has ceased being personal property and has become part of the realty.

Question 17

What is the difference between common and divided ownership?

Answer 17

Common ownership = when a person owns both the land and the fixtures affixed to it.

Divided ownership = when a landlord owns the property but someone else affixes the chattel to the land.

Question 18

How can you tell whether something the tenant installs is a fixture? (and so must stay with the land as fixtures pass with the ownership of the land).

Answer 18

Any agreement % LL and T is controlling on whether chattel is a fixture.

IF no agreement, a T is deemed to lack the intent to permanently improve the property and so may remove his chattels if their removal does not substantially damage the premises or destroy the chattel.

Removal must come before end of lease term and T has duty to repair damages resulting from removal.

Question 19

What is an easement?

Answer 19

A grant of a nonpossessory property interest that entitles its holder to some form of use or enjoyment of another’s land.

Most easements are affirmative but some can be negative (LASS).

Question 20

What are the ways in which an easement can be created?

Answer 20

PING:
1. Prescription - COAH (actual need NOT be exclusive unlike AP)
2. Implication - by operation of law (exception to SoF!) - preexisting use, subdivision plot, profit a prendre
3. Necessity - no way out
4. Grant - in writing

Question 21

What are the two types of easement?

Answer 21

An easement appurtenant and an easement in gross.

Appurtenant = benefits its holder in his physical use or enjoyment of his own land. It always involves a dominant and servient tenement.

Gross = ONLY the holder of the land gets some personal/pecuniary advantage that is not related to their enjoyment of their land.

Question 22

What are the characteristics of an easement appurtenant?

Answer 22

It benefits the dominant estate and ‘runs with the land’ - transfers automatically when the dominant estate is transferred even if not mentioned in conveyance. After being recorded for the first time, it does not need to be re-identified in any deeds accompanying later conveyances.

Burden also passes automatically w/servient tenement unless new owner is a BF purchaser w/o notice.

Question 23

What are the characteristics of an easement in gross?

Answer 23

It benefits an individual or a legal entity, rather than a dominant estate. It can be used for personal use or commercial. Not transferable unless for commercial purposes.

Question 24

How is an easement created? (mnemonic)

Answer 24

P = prescription (COAH)
I = implication
N = necessity
G = grant

Question 25

An easement by implication is created by operation of law rather than a written instrument. What are the 3 types of easement by implication?

Answer 25

1. An intended easement based on a use that existed when the dominant and servient estates were severed
2. an easement implied from a recorded subdivision plan
3. an easement by necessity

Question 26

What are seller required to disclose re defects on a property?

Answer 26

They must disclose all known defects that will not be open and obvious to a buyer. They are prohibited from concealing such defects in any way.

Generally, sellers are responsible for disclosing only information within their personal knowledge.

Question 27

When does an implied warranty of habitability or fitness for particular purpose apply?

Answer 27

ONLY to a new construction being sold by a builder or a developer

Question 28

What is a warranty deed?

Answer 28

A type of deed where the seller guarantees that he/she holds clear title to a piece of real estate and has a right to sell it to the buyer.

Contrast to a quitclaim deed where the seller does NOT guarantee that he/she holds title to a piece of real estate.

Question 29

What does a general warranty deed protect the grantee against?

Answer 29

Title defects arising at any point in time, extending back to the property’s origins.
(i.e. warrants against all defects in title, including those attributable to the grantor’s predecessors).

Question 30

What is the difference between a general warranty deed and a special warranty deed?

Answer 30

A special warranty deed contains the same covenants as the general warranty deed but here the grantor makes those promises only on behalf of HIMSELF (he makes not representations on behalf of his predecessors in interest) - so only protects the grantee against title defects arising from the actions or omissions of the grantor.

Question 31

When in the closing process is a seller required to provide marketable title?

Answer 31

In general - on the closing date.

BUT where the sale contract does NOT indicate that ‘time if of the essence’, the seller can provide marketable title within a reasonable time after the scheduled closing date.

Where contract states time is of the essence - whichever party fails to perform by scheduled closing date loses their right to enforce the contract.

Question 32

What is a mortgage?

Answer 32

A security interest in real property held by a lender as a security for a debt, usually a loan of money.

Mortgage in itself = NOT a debt, but it is the lender’s security for a debt. It is the transfer of a interest in land from the owner to the mortgage lender on the condition that this interest will be returned to the owner when the terms of the mortgage have been satisfied or performed.

Question 33

What is a purchase-money mortgage?

Answer 33

A mortgage issued to the borrower by a seller of a home, a third party, or both as party of the purchase transaction.

Mortgage = purchase money mortgage where:
(i) the proceeds are applied to the purchase price; and
(ii) the deed and mortgage are executed as part of the same transaction

= seller or owner financing. Usually done when a buyer cannot qualify for a mortgage through traditional lending channels. Done when the buyer is assuming the seller’s mortgage and the difference between the balance on the assumed mortgage and the sale price of the property is made up of seller financing.

Question 34

What happens when there is a purchase money mortgage in terms of payment and why?

Answer 34

A PMM executed simultaneously with the purchase of encumbered real property takes precedence over all claims or liens (incl. previously-filed judgment lien).

In PMM, the deed and the mortgage are executed as part of the same transaction so the purchaser does not obtain title to property and THEN grant mortgage - he is deemed to take the title already charged with the encumbrance. So there is no moment where any other liens can attach to the property before the mortgage of one who advances purchase money.

Question 35

What is the liability of a land owner if their excavation causes adjacent land to subside (slip/cave in)?

Answer 35

Strictly liable! Ownership of land includes the right to have the land supported in its natural state by adjoining land.

BUT this is different if the land is IMPROVED with buildings - in this case, if an adjacent landowner’s excavation causes the improved land to cave in, the excavator will be liable only if NEGLIGENT as there is no evidence that the land would have collapsed in its natural state.

Strict liability only applies when the excavation directly causes the adjacent land to subside.

Question 36

What right does a landowner have as regards the lateral (side) support of it?

Answer 36

A landowner has the right to lateral (side) support of his land from all neighboring parcels of land. BUT this right only extends to the LAND itself, NOT the structures built on it.

SO if a landowner excavates his own land and then neighboring land and a structure built on it collapses, the excavating landowner is ONLY liable if the neighboring land would have collapsed even without the weight of the structure.

Question 37

How must a landlord keep a security deposit? Can he earn interest on it?

Answer 37

LLs are often required to receive deposits in an escrow account and in the majority of states, the interest earned on the account belongs to the tenant, not the LL.

Question 38

What happens if a contract of sale is silent as to quality of title?

Answer 38

The court will imply a marketable title. Title is to be marketable at the time of closing. Once closing occurs and deed changes hands, seller is no longer liable on implied contractual covenant - seller is then liable for express promises made in the deed.

A quitclaim deed does not affect the implied covenant to provide marketable title - so having a quitclaim deed does not let the seller off the hook for title defects!

Question 39

Who is the requirement of marketable title designed to benefit? Can it be waived?

Answer 39

The buyer! And the buyer may waive the right to have marketable title.

Question 40

What should a buyer do if, prior to closing, he discovers a defect that makes title objectionable?

Answer 40

He must notify the seller and allow the seller a reasonable time to cure the defect.

Question 41

How is adverse possession established? (mnemonic)

Answer 41

C - continuous use for the statutory period (degree of occupancy and use that the average owner would make of the property)
O - Open and notorious use/possession
A - Actual [entry] and exclusive use
H - hostile [possession] - without the property owner’s possession (majority view = objective approach) (some states = bad/good faith)

Question 42

What is a license?

Answer 42

A license gives the holder a contractual right to use some portion of the issuer’s property for a fixed period of time, but it does not afford that holder any interest in the property, e.g. a ticket holder to a hockey match.

License can be revoked by issuer and issuer will be liable for damages if it revokes wrongfully.

Question 43

What happens to junior interests in a foreclosure?

Answer 43

All interests junior to the mortgage will be wiped out (junior mortgages, liens, leases easements etc) but does not affect senior interests. SO junior lien holders are paid in descending order with proceeds from the sale, assuming funds are left after full satisfaction of superior claims.

Question 44

What happens to senior interests in a foreclosure?

Answer 44

Foreclosure does NOT affect any interest senior to the mortgage being foreclosed. The buyer at the sale takes subject to such interest, she does not become personally liable on them but she will be forced to pay them in order to prevent their foreclosure in the future.

Question 45

Who are necessary parties to a foreclosure action? What happens if a necessary party is not joined?

Answer 45

The debtor-mortgagor = a necessary party and must be joined, especially if the creditor wishes to proceed against him for a personal deficiency judgment.

Failure to join a necessary party results in preservation of that party’s claim, despite the foreclosure and sale SO if a necessary party is not joined, their mortgage will remain on the land.

Question 46

What information should a deed contain?

Answer 46

1. An indication that it is a deed
2. A description of the property involved (important - so that deed can be recorded accurately)
3. The signature of the individual or entity that is transferring the property
4. Data regarding who is taking title to the property

Can also contain additional information such as the conditions and assurances that go along with the transfer

Question 47

To whom must a deed be delivered?

Answer 47

Must be valudly delivered to the individual taking ownership of the property. In most situations, it should be filed with the appropriate authority.

Question 48

Where and why is it important that a deed is not ambiguous

Answer 48

When identifying the land and the parties to transfer title - need to adequately identify the intended grantees.
‘to the leaders of all the Protestant Churches in York Country’ = too broad and vague to adequately identify the intended grantees.

Question 49

What does the valid delivery’ of a deed entail?

Answer 49

A deed is NOT effective to transfer an interest in realty unless it has been delivered.

Valid delivery = INTENT of GRANTOR to TRANSFER the INTEREST, it is NOT a physical delivery - physical transfer is not necessary.

Delivery is presumed if deed = recorded.

Question 50

What is a class gift

Answer 50

A gift that is distributed to a group of beneficiaries rather than individually. The members may change by the time the property is distributed - some may have been born into the group and some may have died.
e.g. ‘to my grandchildren in fee simple’ = a class gift (grandchildren is the class)

Question 51

When does a class gift automatically include descendants of any pre-deceased members of the class?

Answer 51

When the description of the class includes: to ‘issue’, ‘descendants’, ‘heirs of the boy’, ‘heirs’, ‘next of kin’, ‘relatives’, ‘family’ - any other similar descriptions.

Question 52

What happens if members of a class die before a gift is distributed?

Answer 52

Members living at the time of the distribution have a right of survivorship SO if members die, their portion is distributed equally among the surviving members.

SO unless otherwise provided in the will, the descendants of deceased members of the group do NOT share the class gift.

Question 53

What is the common law doctrine of lapse? What is the generally accepted approach to it now?

Answer 53

= if a B named in a will predeceases the Testator, the bequest fails, rather than goes to the beneficiary’s next of kin. The property intended for the pre-deceased B becomes part of the T’s residuary estate.

Most states now have ‘anti-lapse’ statutes. General effect = abolishing the lapse doctrine and allowing the dead B’s heirs to take the share of the bequest.

Question 54

ZONING AND FORECLOSURE SALE

Question 55

What happens if a necessary party does not attend a foreclosure sale?

Question 56

What are the 4 types of non freehold estates that involve a landlord-tenant rship?

Answer 56

1. The tenancy for years;
2. The periodic tenancy;
3. The tenancy at will; and
4. The tenancy at sufferance.

Question 57

What is an option to purchase in a lease? Is it subject to the RAP?

Answer 57

An option to purchase real property is a separate contract
supported by consideration that is a continuing offer to sell the land at a specified price. As long as the option is contained within the lease itself, the consideration for the lease supports the option.

RAP does NOT apply to an option to purchase land when it is contained w/in a lease of that property and may only be exercised during the term of the lease. (remedy for enforcement = specific performance or damages)

Question 58

What is the doctrine of equitable conversion?

Answer 58

Once a contract is signed and each party is entitled to specific performance equity regards the purchaser as the owner of the real property.

Seller’s interest = right to the proceeds of the sale = personal property.

Question 59

How does the doctrine of equitable conversion affect the passage of title when a party to a contract dies BEFORE the contract has been completed? Who gets what?

Answer 59

Generally, it holds that a deceased seller’s interest passes as personal property and a deceased’s buyer’s interest as real property.

If contract contains no contingencies, the doctrine of equitable conversion applies as of the fate of contract signing and determines who is entitled to the proceeds.

When seller dies, bare legal title passes to the takers of his real property BUT they must give up the title to the buyer when the contract closes. AND when purchase price is paid, the money passes as personal property to them.

IF buyer dies - taker of his real property can demand a conveyance of land at the closing of the contract. Majority rule = takers of the real property will take it subject to the vendor’s lien for the purchase price. SO takers will have to pay the price UNLESS testator specifically provided to the contrary.

Question 60

What is an acceleration clause? (Mortgages)

Answer 60

Valid contract provision that a lender may use to require a borrower to repay an entire loan debt if certain requirements are NOT met.

Typically = triggered by nonpayment of mortgage debt BUT can also be triggered by mortgagor’s failure to satisfy other conditions in the mortgage, e.g. timely payment of insurance premiums.

SO right to accelerate depends on whether a contractual term of the mortgage has been breached,

Question 61

What happens when property is conveyred (deed is executed and signed) but the grantee dies BEFORE the transfer, unbeknownst the the grantor?

Answer 61

The deed is NOT valid. Property CANNOT be conveyed to a grantee that does not exist. A deceased grantee is void. Here, the grantee was deceased at the time of transfer and so the deed is void.

Question 62

What happens at the end of a life estate? (i.e. to X during the term of her natural life)

Answer 62

X has the land for their natural life ONLY and so it reverts back to the owner upon her death.

Question 63

What if A has conveyed land to B as a life estate (to B, for life) but then A dies and the same plot of land is devised in his will to his C, who gets what?

Answer 63

B and C have a life estate. B has the land for the duration of her life, when she dies, the land goes back to A. BUT A is dead so the land goes to A’s estate. HOWEVER A devised a life estate to C in his will SO on A’s death, the land goes to C for the rest of her life.

A life estate is measured on the grantee’s life, not on the grantor’s.

Question 64

If a future interest is held by someone other than the grantor, what are the 3 types of interest is could be?

Answer 64

1. contingent remainder
2. vested remainder
3. executory interest

Question 65

What are the three types of vested remainder?

Answer 65

1. indefeasibly vested remainder (no conditions - holder is certain to acquire an estate in the future)
   ‘A for life, remainder to B’
2. vested remainder subject to complete defeasance/total divestment
   (right to possession could be cut short by a condition subsequent)
   ‘A for life, remainder to B, provided B does X’
3. vested remainder subject to open (vested in group of takers, at least 1 us qualified to take possession - certain to become possessory but subject to diminishing)
   ‘A for life, then to B’s children’
   3 = SUBJECT TO RAP

Question 66

For a restrictive covenant to pass, WITHN must be established. Explain the Notice element. Explain the 3 types of notice.

Answer 66

To be bound by a covenant, a subsequent purchaser must have had actual, inquiry, or record notice of the covenant at the time of purchase.

Actual notice: D has literal knowledge of the promises contained in prior deeds

Inquiry notice: meaning the neighborhood seems to conform to the common restriction

Record notice: imputed to buyers on basis of publicly recorded documents (e.g. prior deed with covenant in grantee’s chain of title).

Question 67

What is a deed in lieu of foreclosure?

Answer 67

It is a legal agreement between a homeowner and a lender that allows the homeowner to transfer the ownership of their property to the lender in exchange for the cancellation of their mortgage debt. (Usually used by homeowner’s who are at risk of losing their home and want to avoid foreclosure process).

It does NOT extinguish subsequent mortgages on the property. A mortgagor’s later-executed mortgage can generally be extinguished ONLY by foreclosure.

Question 68

In cases involving real property, where there is a conflict as to which state’s law should be applied to resolve the issue, what is the general rule?

Answer 68

= the federal court should apply the choice of law rules of the situs (the site where the land is located). Usually, choice of law rules of situs would direct forum court to apply its own local law.

BUT depends on what issue is at the heart of dispute - e.g. if you are attacking a validity of a fraudulent conveyance = the situs, BUT if case is about damages for the fraudulent conveyance, this is a fraud issue based on damages, not the validity of a real property conveyance. SO the state where the fraud was allegedly perpetrated has a superior interest in the outcome of the case so the law of the more interested place will govern. (i.e. where the fraud was perpetrated, where the plaintiff is etc)

Question 69

A owns a fee simple, with a remainder to C. A purports to convey the fee simple to B. C then transfers the remainder to A. What happens to the remainder interest?

Answer 69

The doctrine of ‘estoppel by deed’ (or ‘after-acquired property’) - the portion of the title that A did not own (i.e. the remainder interest), automatically passes through to B (the purchaser) when it was acquired by A from C. SO B then has a fee simple absolute in the land.

SO usually, when a fee simple subject to remainder interest is sold, the buyer would take ownership of the property subject to the remainder interest.

Question 70

What is a life estate ‘pur autre vie’?

Question 71

How is priority of mortgages determined in the foreclosure process?

Answer 71

It is based on the order in which mortgages were recorded.

Question 72

Explain absolute restraints on alienation

Answer 72

Where there is an absolute ban on the power to SELL or TRANSFER that is not linked to any reasonable time-limited purpose = VOID!

E.g. ‘O conveys to A so long as she never attempts to sell’ - NOT valid

BUT

‘O conveys to A so long as she does not attempt to sell until 2011, where clouds on the title will be resolved’ = VALID, linked to a reasonable, time-limited, purpose.

Question 73

How long can the parties postpone the closing date?

Answer 73

A reasonable time. UNLESS = ‘time of the essence’ clause

Question 74

When you are selling a property that seems like it has a condition, e.g. selling a church to the ‘grantee and its successors forever, so long as the premises are used for church purposes’ BUT there is NO language of right to reenter, it is not a fee simple subject to a condition subsequent, it is a fee simple determinable (an estate that terminates automatically on the happening of an event and automatically reverts to grantor). SO if there is a question where this FSD is being sold, what do you need to look at? Consider marketability.

Answer 74

Remember, this is a FSD, it means that when the ‘condition’ has not been met, the estate ends automatically and automatically reverts to the grantor. The future interest becomes possessory immediately upon the occurrence of the limitation - the title is forfeited automatically to the grantor.

A title is unmarketable when a reasonable person would NOT purchase it. SO if a property is subject to a FSD and it is sold and the purpose is not adhered to, it is going to go automatically back to the grantor and so the title to the property will NOT be marketable.

Question 75

What is the difference between a notice and race-notice jurisdiction?

Answer 75

Notice: a subsequent BFP (person who gives valuable consideration and has no notice of prior instrument) prevails over a prior grantee who fails to record. Subsequent purchaser has no actual/constructive notice at the time of the conveyance.

Race-notice: a subsequent BFP = protected only if she records before the prior grantee.

(pure race statute = whoever records first wins, actual notice is irrelevant).

Question 76

How can you recognize a race-notice statute - what are the key words?

Answer 76

Key words = ‘without notice’ and ‘first recorded’

Question 77

What is a judgment lien?

Answer 77

A plaintiff who obtains a money judgment can place a
judgment lien on the defendant’s real property by filing the
judgment in the appropriate county office.

Question 78

Does a quitclaim deed affect the implied covenant of marketability?

Answer 78

No, even though it does not contain any covenants for title, a quitclaim deed does not affect the implied covenant to provide marketable titled (unless so provided in the contract).

Question 79

What does a title insurance policy ensure?

Answer 79

It ensures good record title of the property exists as of the policy’s date and promises to defend the record title if litigated.

The insurance can be taken out by wither the owner of the property or the mortgage lender.

Question 80

Who does an OWNER’S title insurance policy protect?

Answer 80

It protects ONLY the person who owns the policy (usually either the owner of property or the mortgage lender). It does NOT run with the land to subsequent purchasers.

So it only protects who is a named insured on the title insurance policy.

Question 81

Who does a LENDER’S title insurance policy work?

Answer 81

It follows any assignment of the mortgage loan.

Question 82

The SoF requires any contract for the sale of land to be in writing. What must the writing state?

Answer 82

(1) the name of each party to the contract
(2) the land to be conveyed
(3) the essential terms and conditions of the deal

The signature of the party to be charged must appear on the memorandum.

Question 83

There is a requirement that a contract in writing may be altered and modified ONLY by a subsequent writing. Does this apply to the abandonment or rescission of a contract?

Answer 83

If the subject matter of the contract falls within the SoF then the rescission should generally be in WRITING but an oral rescission may still be enforceable if it is executed or promissory estoppel is present (i.e. the conduct of orally agreeing to rescind the K, foreseeably induced a party to change their position, e.g. to sell the land to another buyer, in reliance on that oral agreement).

(generally, a K may only be altered/modified by subsequent writing - an abandonment/rescission is not a modification and so would not need to be in writing BUT SoF exception - see above).

Question 84

How long can the escrow period be? (i.e. the period between signing and closing)

Answer 84

In absence of a ‘time is of the essence’ clause (i.e. where one party is required to fulfill his/her obligations within a certain time frame), the parties are entitled to a ‘reasonable’ postponement of the closing.

Merely inserting a closing date in a real estate contract does NOT ensure that the date will be ‘of the essence’.

Question 85

When there is a broke owner and the bank is claiming on their mortgage and a VENDOR is attempting to claim back something in the property that the seller has given them a security interest in, because the owner is now broke but the bank is trying to enjoin the vendor from repossession of the item, what do you need to look at?

Answer 85

This is a question re FIXTURES. A mortgage is a transfer of an INTEREST IN LAND.

A FIXTURE is a chattel that has been SO affixed to land that it has CEASED being personal property and has become part of the realty. It passes with the ownership of land and MUST stay put.

Fixtures are typically a permanent part of realty, such that damage would occur if they were removed. A court will consider the degree to which the item is attached, whether there will be damage to the structure if the item is removed and whether general custom dictates that such an item stays with the property or goes with the seller.

SO we need to determine if the object purchased by the owner, from the vendor, is in fact a fixture or a fitting because a fixture is part of the land (so the bank is entitled to it) and a chattel is not.

Question 86

How can a memorandum fulfil the writing requirement of the SoF for a sale of an interest in land?

Answer 86

It must state with reasonable certainty the following:
(i) the name of each party to the contract;
(ii) the land to be conveyed; and
(iii) the essential terms and conditions of the deal
The signature of party to be charged must appear on the memorandum or contract.

Question 87

Under the SoF, what must a contract for the sale of land contain?

Answer 87

1. A description of the land;
2. Evidence of an intent to buy and sell;
3. Usually recite a price term;
4. Any conditions;
5. Be signed by the party against whom enforcement is sought.

Does NOT have to be written up by lawyers.

Courts are liberal regarding the nature of a signature - it only needs to reflect an intent to authenticate the writing, e.g. their names being places below the word ‘signed’ adequately reflects their desire to be bound.

Question 88

Would an exchange of emails satisfy the Statute of Frauds for the purpose of a contract of sale?

Answer 88

YES - if the writings identified the parties and property, expressed an intent to buy and sell, and contained a price term and adequate signatures.

Question 89

What is a judgment lien?

Answer 89

It is a court ruling that gives a creditor the right to take possession of a debtor’s real property if the debtor fails to fulfill his or her contractual obligations. A judgment lien may be made against an individual or business and allow the creditor to access the debtor’s business, personal property and real estate, among other assets, to pay the judgment.

Question 90

What does SoF require each deed to contain? What must happen to the deed?

Answer 90

1. Identification of grantor and grantee
2. legal description of the property being conveyed;
3. words indicating that the deed is a conveyance (rather than some other type of instrument); AND
4. Signature of the party to be bound (i.e. the person or entity conveying the property).

The deed must be validly delivered to the individual taking ownership of the property (and filed with the appropriate authority).

Question 91

Is a judgment creditor protected by any recorded acts made from a prior unrecorded conveyance made by the D?

Answer 91

NO - the recording act of the state cannot protect a judgement creditor because they are NOT a BFP (they did NOT pay money for their judgment).

Question 92

Can a creditor be a BFP? Can a creditor be protected by recorded acts for unrecorded property made by the party they are suing for $$?

Answer 92

NO - a plaintiff who obtains a judgment lien (i.e. a. creditor) is NOT protected by any recording acts from a prior unrecorded conveyance made by the D. This is because the creditor is NOT a BFP because he did not pay value for the judgment, or the judgement attaches only to the property OWNED by the D, and NOT the property the D previously conveyed away - EVEN if that conveyance was not recorded.

Question 93

What is the Equal Dignities Rule

Answer 93

A legal doctrine requiring an agent to perform all acts authorized by a principal. An agent can perform those acts ONLY if the agent’s authority is set forth in writing.

SO when the act performed by an agent is required by law to be in writing, the agent’s authority must also be in writing.

E.g. deed = subject to SoF - must be in writing to be valid SO an agent signing a deed on behalf of a principal must have his/her authority to sign the deed in writing (orally is not enough).

Agent’s authority would be valid if he signs in the presence of grantor (or whomever he is signing on behalf of) BUT if the agent signs outside the presence of the party then the SoF applies.

Question 94

What is X leaves her house to Y and the residue of her estate to Z. X then sells her house and uses the proceeds to buy a new house. When she dies, both Y and Z are seeking ownership of the new home. Who is the owner?

Answer 94

Z because she is the residuary legatee.
Doctrine of ademption - X didn’t own the house and so the gift to Y fails. X’s will left the residue of her estate to Z (which would include the new home), Z gets the home.

Question 94

What is the doctrine of ademption? What happens to property under it?

Answer 94

Common law doctrine used in the law of wills - determines what happens when property bequeathed under a will is NO longer in the testator’s estate at the time of the testator’s death.

For a devise of a specific item of property (a specific gift), such property is considered adeemed and the gift fails. SO if the T does not own the property at the time of dearth (i.e. they sold it),t he gift would be adeemed and the B would not receive the gift.

Question 95

When is an acceleration clause under a mortgage triggered?

Answer 95

Can be triggered by nonpayment of the mortgage BUT also may be triggered by the breach of other condition in the mortgage, even if the borrower is current on payments, e.g. not paying taxes, waste, destruction of the property etc.

E.g. breaching a condition not to commit waste on the property when the property owner tears down a building without the bank’s permission.

Question 96

When you have a life tenant and raomindermen - what must the life tenant do? i.e. when the life estate and the future interest are split, what must happen?

Answer 96

Fee simple owner owns both present possessory interest AND the future interest.

LIFE tenant - does NOT own future interest - they only own the property for the duration of their life SO they might not be concerned about the value or condition of the land after their death.

IF there are remaindermen - their interests will be hurt if the life tenant wastes the property or allows the property to go to waste. SO = inherent tension whenever the life estate and future interest are split. SO the life estate holder has to pay interest on a mortgage (part of duty NOT to commit passive waste) and the remaindermen must pay the principal due on the mortgage.

IF life T pays interest - remaindermen are no worse off than at the time they received their future interest - the debt owed on the land would remain the same. IF life T pays principal = reducing debt owed by remaindermen and contributing to their principal.

Question 97

What happens if the life tenant doesnt pay the interest on the mortgage? And there are remaindermen and they are not paying the principal of the mortgage.

Answer 97

Life T has obligation to pay interest on mortgage (must not commit passive waste) BUT no duty to pay principal.

Remaindermen CANNOT be held liable for the life T’s failure to pay the interest OR for the collective failures of the remaindermen to make principal payments. BUT they risk losing their share of the property if the mortgage is foreclosed.

Question 98

Life Ts have a duty to not allow voluntary or permissive waste with regard to property during their life tenancy. What is each one?

Answer 98

Voluntary: affirmative act that reduces the value of/otherwise harms the property e.g. cutting down and selling all trees on property.

Permissive: failure to perform obligations related to the land, to keep the property in good repair or maintain its value. A failure to make repairs to buildings on the property, failure to pay taxes on prop as they fall due or failure to pay interest on the mortgage.
Lift T has a duty NOT to sit idly by while permissive waste occurs.

Question 99

In an action of law, what could be pursued against a life tenant who allows waste?

Answer 99

They can be sued for breaching their duty in allowing waste.

For example - if unpaid interest on mortgage - damages for unpaid interest could be recovered.

Question 100

When is partition (in kind or by sale) an appropriate remedy?

Answer 100

When damages are insufficient.

Question 101

Scenario of a person needing to raise money - instead of seeking a mortgage loan, they decide to give someone an absolute deed to their property who will pay cash (tax advantages, safer than mortgage loan to creditor) BUT what might the courts imply here? What factors would they need to imply this?

Answer 101

IF court concludes, by clear and convincing evidence, that the deed was really given for SECURITY purposes. they will treat it as an ‘equitable’ mortgage and require that the creditor foreclose it by judicial action, like any other mortgage (the lender does not have an ownership right and so can’t just evict the borrower).

Factors:
(i) existence of a debt or promise of payment by the deed’s grantor;
(ii) the grantee’s promise to return the land if the debt is paid;
(iii) the fact that the amount advanced to the grantor/debtor was much lower than the value of the property;
(iv) the degree of the grantor’s financial distress; and
(v) the parties’ prior negotiations.

Question 102

What happens when a deed is executed between two parties but one of them dies before the deed can be delivered? The deed has been executed and recorded but yet to be delivered as the other party has died before delivery.

Answer 102

A valid deed must be in writing and signed by the grantor, unambiguously identify the land and adequately identifies the parties and evidence an intention to transfer the property.

If the grantee on the deed is dead BEFORE the deed was delivered, the deed is said to not have identified the parties properly and so is invalid. The transaction was incomplete whilst he was alive.

It foes NOT matter if the grantor knew whether the grantee was dead or not - deeds to dead person are always void, regardless of knowledge.

NB remember - even if an agent acting on behalf of the now deceased party accepted the delivery of the deed - it does not matter - they were acting as an agent and never intended to possess the property so could NOT have accepted delivery of the property.

Question 103

As a purchaser of a property with a mortgage, you can take the property either ‘subject to’ mortgage or by ‘assuming’ the mortgage.

Answer 103

Subject to - the original mortgagor remains personally and primarily liable for the debt. There is still privity between the mortgagor and the bank. If the bank has to foreclose on the property because the mortgagor has failed to make the mortgage payments, the purchaser is NOT personally liable and the bank may not sue them. BUT the bank can sue the mortgagor for a deficiency judgement.

Assumption = an express promise by the grantee to pay the mortgage debt - so the buyer is primarily liable and the seller is secondarily liable.

IF seller wanted to avoid liability under mortgage completely –> NOVATION - an agreement to substitute the new purchaser for the original mortgagor’s own personal liability.

SO it is less beneficial to the seller for a buyer to take a property ‘subject to’ a mortgage because the seller remains liable on the debt after the buyer purchases the property.

Question 104

to help determine if a statute is a race-notice statute, look for the word ‘and’ before the mention of the recording requirement - there are 2 separate requirements in a race notice statute that are often separated by an ‘and’.