Property Flashcards
Present Interests
A fee simple absolute is an estate characterized by absolute ownership of a potentially infinite duration. It is freely devisable, descendible, and alienable.
Fee Tail
An estate that passes directly to the lineal, blood descendants of the grantor
Defeasible Fees
Fee simple determinable, fee simple subject to condition subsequent, fee simple subject to executory limitation, life estates
Fee Simple Determinable
Exists when: (1) when grantor uses clear durational language, (2) states condition is violated, forfeiture is automatic in favor of the grantor, and (3) the grantor retains the possibility of reverter
Example: “For so long as, while, during, or until”
Fee simple subject to condition subsequent
Created when grantor uses: (1) clear durational language, (2) carves out the right to re-enter, and (3) retains the right to re-entry or power of termination.
Example: Upon condition that, provided that, however, but if, if it happens that
Fee Simple subject to executory limitation
An estate characterized by (1) clear durational language, (2) where, if he stated condition occurs, forfeiture is automatic in favor of third party who holds a shifting or springing executory interest and (3) is devisable, descendible, alienable, but (4) always subject to the condition
Life Estates
A life estate is an estate measured by the life of the grantee.
LE pur autre vie is an estate measured by the life of a third party (ie someone other than the grantee)
A life tenant must abide by the Doctrine of Waste
Duty not to commit waste
An estate’s interest holder must not commit waste (ie harm future holder’s interest) and is entitled to all ordinary uses and profits from the land. 3 types of waste
Voluntary or Affirmative Waste
(a) Voluntary or affirmative waste is an overt act that causes a drop in value of the land AND (b) a present interest holder may not consume natural resources (oil, timber, minerals) unless one of exceptions apply:
(1) Prior Use: A present interest holder is limited to consumption of natural resources if the land was previously used in such a manner
(2) Repairs: A present interest holder may consume natural resources for reasonable repairs and maintenance
(3) Grant: A present interest holder may consume natural resources if granted that right.
(4) Exploitation: A present interest holder may exploit land if it is only suitable for exploitation.
Permissive Waste
Permissive Waste occurs when tenant allows the land to fall into disrepair, though she has an obligation to maintain premises in reasonably good repair, and (b) a present interest holder is required to pay: (i) all ordinary taxes on income or profits derived from the land, unless (ii) no income or profits are derived from the land, in which case, the tenant must pay ordinary taxes based on premises’ fair rental value.
Ameliorative Waste
(A) A present interest holder may not unilaterally engage in enhancing property’s value (b) unless all future interest holders are known, and (c) all future interest holders consent.
Future Interests
Holders have a right or possibility of possession of an estate which is a present and legally protected right.
Future interests a grantor may hold include the following:
(1) Possibility of reverter: attached to a fee simple determinable
(2) Right of re-entry or power of termination: attached to a fee simple subject to a condition subsequent
(3) reversion: attached to everything except the fee simple determinable and fee simple subject to a condition subsequent (ie. fee tail, life estate, life estate pur autre vie)
Future interests a transferee may hold (ie third parties other than grantor) include:
Remainders: A remainder is:
(1) a future interest in the grantee
(2) created in the same conveyance as the prior possessory estate,
(3) that is capable of becoming possessory once the prior possessor estate expires
Contingent Remainders are created in:
(a) an unascertained person
(b) subject to condition precedent
**a condition precedent is created when the conditional language is before the grant to the remainder or is woven into the language of the grant to the remainderman
(c) or both
Vested Remainders
Are those that are created in an ascertained person without a condition precedent.
3 Types of Vested Remainders - (1) Indefeasibly Vested Reaminder
Holders are certain to acquire the estate in the future without any attached conditions.
3 Types of Vested Remainders - (2) Vested Remainder Subject to Total Divestment
Holders have an interest that is not subject to any condition precedent but their right to possession could be cut short by a condition subsequent (ie language following the grant of a vested remainder)
Ex: To A for life, then to B, provided however, that if B should die before age 27, to C.
Vested Remainder Subject to Open
Holders are part of a class persons where at least one of the class members is qualified to take but each member’s share is subject to partial diminution because more members may still join.
Ex: To A for life, then to B’s children. B has two children currently.
- The class is open when additional takers can join.
- The class closes when maximum membership is reached or when additional class members cannot join.
*Rule of Convenience: The class closes when a class member can demand possession
Executory Interests
are future interests held by a third party which take effect either by cutting short some other person’s interest or cutting short the grantor ro heirs’ interest.
Shifting Executory Interest
Cuts off transferee’s interest
Springing Executory Interest
cuts short the interest of the grantor (transferor) or her heirs
Rule of destructibility
At common law, a contingent remainder is destroyed if it is still contingent at the time the prior estate ended. Today, the rule has been abolished, and the grantor holds the estate subject to the grantee’s spring executory interest.
Rule in Shelley’s Case
At common law, if the instrument created a life estate in the grantee and the remainder only to grantee’s heirs, the remainder was not recognized and the grantee would take a fee simple abolute. Today, the rule has been abolished, and only life estate to the grantee is recognized.
Doctrine of worthier title
A remainder in the grantor’s heirs becomes a reversion in the grantor and only applies to inter vivos transfers, not will.
Complete rule for rules against perpetuities (RAP)
No interest is good unless it must vest, if at all, not later than 21 years after the death of some life in being at the creation of the interest.
RAP Step 1
Determine which future interest is created by the transfer
Which future interest does RAP applies to?
Contingent remainders, executory interests, and certain vested remainders subject to open, NOT the grantor’s interest, indefeasibly vested remainders and vested remainders subject to divestment.
RAP Step 2
Identify what conditions need to occur for the future interest holder to take
RAP Step 3
Determine who the measuring life is upon which the condition that needs to occur depends
RAP Step 4
Ask if within 21 years of the measuring life’s death one can determine whether the future interest holder will take.
Fertile octogenarian rule (usually goes with step 4)
states that a person is fertile no matter her age
Result of RAP:
if RAP is violated, the future interest is void but needs to make sense gramatically. If if does not make grammatical sense, then the conditional clause is also stricken which may or may not affect immediate grant.
RAP Charity-to-charity exception
A gift from one charity to another is never void
Reforming RAP: Wait and see approach (majority)
The determination of the status of future interests is made at the end of the measuring life.
Reforming RAP: USRAP Approach (common law codified)
This approach accepts the RAP and provides an additional 90 year period within which the future interest may vest.
Reforming RAP: Cy Pres Doctrine
(ie “as near as possible” to grantor’s intent without violating the RAP)
Restraints on Alientation
are: (1) absolute bans on selling or transferring property and are void, unless (2) they reasonably restrain alienation for a time limited purpose.
Concurrent Estates Types of Tenancies:
Joint Tenancy, Tenancy by the Entirety, Tenancy in Common
Joint Tenancy
created when parties (i) take identical and alienable interests, (ii) at the same time, (iii) by the same title, (iv) with the same right of possession, (v) expressly containing a right of survivorship
JT can be severed by
conveyance, partition, mortgage, lease to a third party
Conveyance
One JT can sell or transfer her interest, and the new tenant is a tenant in common with the remaining tenants who still hold in joint tenancy with one another.
**As soon as a K for sale is entered into, equitable conversion severs the JT as to seller’s interest (even if closing is set for a later date)
Partition
**A voluntary partition is an agreement to end the joint tenancy.
** A partition in kind occurs when the court divides the property.
** A forced sale of the property permits the assets to be divided equally.
Mortgage - Lien Theory (majority)
A lien or mortgage on one joint tenant’s share does not sever the joint tenancy as to that share.
Mortgage - Title Theory (minority)
A lien or mortgage on one joint tenant’s share severs the JT as to that share.
*A Joint tenancy is severed once property is sold at a foreclosure sale. The non-debtor’s interest is not affected.
Lease to a third party
Some states: destroys unity of interest (severance)
Other states: JT is not destroyed but merely suspended temporarily for the length of the lease.
Tenancy by the Entirety
an estate between married people that is akin to a joint tenancy.
It arises presumptively under the common law, in any conveyance to a husband and wife.
A tenancy by entirety may be severed by (i) death, (ii) divorce, (iii) mutual agreement, (iv) but NOT by a unilateral act of one of the co-tenants.
Tenancy in common
is an estate (i) without survivorship rights, (ii) where each tenant owns an individual part of the estate (may be unequal or equal shares), (iii) with a right to possess the whole.
Rights and duties of co-tenants
(1) possession
(2) rent for exclusive possession
(3) rent from a third party
(4) profits
(5) wrongful ouster
(6) liabilities
(7) repairs
(8) Improvements
(9) waste
(10) partition
Rights and duties of co-tenants - Possession
Each tenant has a right to possess the whole
*Wrongful ouster: occurs when a tenant is wrongfully excluded from possession in whole or in part
Rights and duties of co-tenants - Rent for exclusive possession
Absent wrongful ouster, a co-tenant may not demand rent from another if in exclusive possession
Rights and duties of co-tenants - Rent from a Third party
Tenants are entitled to rent from a third party proportionate to the share they own, if they are out of possession
Rights and duties of co-tenants - Profits
In most jdxs, a co-tenant is entitled to profits gained from her use of the property unless there is an agreement to the contrary.
Rights and duties of co-tenants - Wrongful Ouster
Absent wrongful ouster, no tenant can claim ownership of the whole based on adverse possession
Rights and duties of co-tenants - Liabilities
Each tenant is liable for taxes and mortgage payments based on their ownership interest
Rights and duties of co-tenants - Repairs
A tenant may demand reimbursement for (1) reasonable, (2) necessary, and (3) noticed repairs based on each tenant’s ownership interest
Rights and duties of co-tenants - Improvements
A tenant is not entitled to reimbursement for improvements
*At partition, if there is an increase in value, improver tenant is entitled to a credit. However, if there’s a decrease in value, the improver is liable for the decrease.
Rights and duties of co-tenants - Waste
Tenants must not commit waste (discuss all three)
Rights and duties of co-tenants - Partition
JT or tenants in common may bring an action for judicial partition.
Tenancy for years
is characterized by (i) continuing for a fixed period of time, (ii) ending ending automatically at its set termination date, (iii) without notice, (iv) need not be in writing unless it continues for more than one year as required by SOF
Periodic Tenancy
characterized by (i) continuing for successive periods that automatically renew at the end of each period, (ii) until terminated by written notice from either party given one full period in advance of the next, (iii) that arises by express agreement, implication, or operation of the law
*Exception: Notice of at least six months is required for a year-to-year periodic tenancy.
Tenancy at will
characterized by (i) having no fixed duration, (ii) that is terminable at the will of either party, (iii) without written notice, (iv) and is created by an express written agreement
Tenancy at sufferance
created when a tenant holds over (ie holdover tenant) past the expiration of the agreed-upon tenancy
Holdover doctrine (goes with tenancy at sufferance)
A LL may: (i) evict holdover tenant, (ii) bind him to a new tenancy of the same period as previously agreed upon, or (iii ) continue collecting rent.
*Residential Leases - bind the holdover tenant to a month-to-month tenancy
*Commerical leases - Greater than one year: holdover tenant is bound to a year-to-year tenancy
Less than a year: holdover tenant is bound to a term based on the frequency of rent payments
Tenant’s Duties
A tenant generally has 5 duties under every lease: (1) duty to pay rent, (2) a duty to keep the premises in good repair, (3) duty to not commit waste, (4) duty not to use the property for illegal purposes, and (5) duty not to abandon the premises.
Voluntary or affirmative waste
(a) voluntary or affirmative waste is an overt act that causes a drop in value of the land, and (b) a tenant may not consume natural resources (ie oil, timber, minerals) unless one of 4 exceptions apply (PURGE):
Prior Use: A tenant is limited to consumption of natural resources if the land was previously used in such a manner.
*Prior use and open mines doctrine: A tenant may mine land if the land was previously mined but is limited to open mines only.
Repairs: A tenant may consume natural resources for reasonable repairs and maintenance.
Grant: A tenant may consume natural resources if granted that right.
Exploitation: A tenant may exploit land if it is only suitable for exploitation
Permissive Waste
(a) Permissive waste occurs when the tenant allows the land to fall into despair, though she has an obligation to maintain premises in reasonably good repair, and (b) a tenant is required to pay: (i) all ordinary taxes on income or profits derived from the land, unless (ii) no income or profits are derived from the land, in which case, the tenant must pay ordinary taxes based on premises’ fair rental value.
Ameliorative waste
(a) a tenant may not unilaterally engage in enhancing property’s value (b) unless all future interest holders are known, and (c) all future interest holders consent.
Tenant’s Liability to Third Parties
A tenant is liable for keeping the premises in good repair, and even if LL expressly promises to maintain premises, tenant is liable to her invitees should there be a defect in the premises.
Tenant’s duty to repair
A tenant must maintain the premises in good repair
Tenant’s duty to not use premises for illegal purposes
if tenant uses the premises for an illegal purpose, the LL may terminate the lease or obtain damages and injunctive relief
Tenants’ duty to pay rent
- Under Common Law, if tenant failed to pay rent, LL could only sue for damages but not terminate the lease.
- Modernly, if tenant fails to pay rent, LL may (i) allow tenant to stay and sue for rent owed, (ii) initiate eviction proceedings through the courts under the state’s unlawful detainer statute.
*A LL must NOT engage in self-help or will be civilly AND criminally liable.
Raised rent: If a LL gives tenant notice of rent increase before end of lease term, then LL may property demand increased rent when tenant holds over
LL’s remedies if tenant breaches duties and is out of possession: (SIR)
(1) Surrender: A LL may accept abandonment, but if lease term is for longer than one year, the agreement to surrender must be in writing to satisfy the SOF.
(2) Ignore (minority): A LL may act as though the tenant still lives there and hold tenant responsible for unpaid rent.
(3) Re-let (majority): A LL may re-let the property to a new tenant and hold tenant liable for any deficiencies.
*LL’s remedies are always subject to her duty to mitigate.
LL’s Duties
Deliver Possession
Implied Warranty of Habitability
Implied Covenant of Quiet Enjoyment
LL Tort Liability
Duty to Deliver Possession (LL Duty)
Under majority English rule, a LL must give the tenant possession at the start of the term. Under minority American rule, a LL must only give the tenant legal possession.
Implied Warranty of Habitability
Under common law, a LL had no duty to deliver premises in habitable condition. Modernly, the LL is required to provide and maintain premises are reasonably suited for residential use. In the event of a breach by LL, tenant may:
(i) move out and terminate the lease
(2) give notice of need for repair, make reasonable repairs herself, and deduct cost from future rent
(3) reduce rent or withhold rent until court determines the fair rental value, or
(4) remain in possession, pay rent, and sue for damages.
*NOTE: Always discuss implied warranty of habitability before covenant of quiet enjoyment
Implied Covenant of Quiet Enjoyment
A LL will not interfere with tenant’s quiet enjoyment and possession of the premises. A breach of the covenant occurs if the tenant is subject to an (i) actual eviction, (ii) partial eviction, or (iii) constructive eviction.
ICQE - Actual Eviction
occurs when the LL wrongfully evicts tenant or excludes her from entire leased premises.
ICQE - Partial Eviction
occurs when LL excludes tenant from only part of the leased premises. However, the tenant’s duties to pay rent terminates even though she is in possession of the remainder of the premises.
ICQE - Constructive Eviction
occurs when the LL does something that renders the property uninhabitable. In order for tenant to prove she was constructively evicted, she must show:
(I) Substantial Interference with her right to enjoy the leased premises due to the LL’s action
(II) Tenant gave notice to LL but she failed to respond
(III) Tenant must vacate within reasonable time after LL’s failure to respond, and
(IV) Then only may tenant terminate the lease and seek damages.
Retaliatory Eviction
If tenant lawfully reports her LL for housing code violations, the LL may not raise rent, evict tenant, or engage in other reprisals
LL’s Tort Liability
Under common law, a LL is not liable for any defects on the premises and has no duty to make them safe.
Modernly, a LL is liable for (i) common areas, (ii)latent defects, (iii) making repairs, (iv) property that is in public use, and (v) defects in a short-term lease of a furnished dwelling.
LL Tort Liability - Common Areas
A LL is liable for ensuring common areas are safe
LL Tort Liability - Latent Defects
Latent Defects: A LL is liable for any defects she knew or should have known about and has a duty to warn but not necessarily a duty to fix the defect.
LL Tort Liability - Repairs
A LL must use reasonable care when voluntarily making repairs. If LL is negligent in making repairs, she is liable in tort.
LL Tort Liability - Public Use
A LL is liable to keep property in public use safe, (i) depending on nature of defect, (ii) length of lease, and (iii) whether tenant would likely make the repair.
LL Tort Liability - Short-term lease of a furnished dwelling
A LL is liable if there is a short term lease for a furnished dwelling and the tenant would not reasonably expect the defect nor would have any inclination to make the repair
LL Duty to Mitigate
In responding to a tenant’s breach of duties, a LL still has a duty to mitigate her damages (ie must try to re-let premises instead of leaving it abandoned and demanding the tenant pay for the leased premises)
Assignments and Subleases
(1) A LL can prohibit a tenant from assigning or subleasing property without prior written consent, but restriction is strictly construed against the LL. In other words, a covenant prohibiting assignment does not prohibit subleasing and vice versa.
(2) Once LL waives her right to prohibit a sublease or assignment, she has waived the right for the future, unless she expressly reserves the right
Assignment
A complete transfer of the entire remaining leasehold interest by a party
Absent an express restriction in the lease, a tenant may freely assign her interest.
When an assignment occurs, the assignee is in privity of estate with the LL (ie direct relationship)
Thus, the assignee is liable for all implied covenants under the lease and all express covenants that run with the land.
The original tenant remains in privity of contract with the LL and is liable for all express and implied covenants that stem from the lease.