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.
Sublease
A sublease is a transfer of part of the lease in which the OG tenant retains an interest in the leasehold. The LL and sublessee are not in privity of estate or privity of K. A sublease is invalid if it exceeds the lease term.
A LL owes the same duties to a sublessee as she does to the tenant and may avail herself of the same remedies she may seek against a tenatn.
A sublessee does not have the right to enforce any covenants in the lease but may claim a violation of implied warranty of habitability.
Fixtures
A fixture is a chattel that has been so affixed to the land that is has ceased being personal property and has become part of the realty. A fixture passes with land ownership. The following factors are used to determine whether a chattel is a fixture: (CHIA)
CHIA
(1) Custom: According to general custom, if the chattel is normally the type of thing a tenant takes with them, it is not a fixture.
(2) Harm: If tenant can remove the chattel without a great degree of harm being caused to the realty, the chattel is not a fixture.
(3) Intended: If tenant intended to keep the chattel, it is not a fixture
(4) Attachment: Based on degree of attachment, chattel may remain as such or is a fixture.
Trade fixture
not considered a fixture and may always be removed.
A chattel will be considered a fixture under the concept of constructive annexation if it is so uniquely adapted to that realty and it is not sensible to separate it.
Trespassers lose their annexations and are not permitted to remove fixtures, regardless of whether they acted in good faith. Some courts allow a good faith trespasser to recover the amount of value added to the land.
Easements Approach
(1) Definition
(2) Type of easement: Appurtenant or IN gross
(3) Creation: Express, Implied by Necessity, Prescription
(4) Scope/Excessive Use
(5) termination
Transfer: TO BFP for Value (Actual, Inquiry, or Constructive Notice)
Easement Definition
An easement is a grant of non-possessory property interest. The holder of the interest makes limited use of another’s land for a specific purpose. An easement can either be appurtenant or in gross
Easement Appurtenant
Entitles the holder to use land for her benefit (ie physical use or enjoyment).
There is a dominant tenement which is the parcel that benefits from the easement, and there is servient tenement which is the burdened parcel.
Dominant Tenemant Benefit
The benefit of the easement transfers automatically with a transfer of dominant tenement estate, whether or not mentioned in the deed. The holder (dominant tenement) of the benefitting parcel must make repairs, and must reasonably restore the servient tenement’s land after making such repairs.
Servient Tenement (Burden)
The burden of the easement transfers automatically with a transfer of servient estate, whether or not mentioned in the deed. However, the holder of the burden must have either (actual), inquiry, or record notice of the burden on the land
Actual Notice
exists when a party has literal knowledge of the condition
Inquiry Notice
a party is said to have inquiry notice when observing the parcel clearly shows the development conforms to a restriction
Record notice
exists when public record shows the land is subject to a burden.
Easement in gross
entitles the holder to personal or pecuniary advantage and is not related to physical use or enjoyment of the land. An easement in gross does not automatically pass to the servient tenement because this type of easement is personal to its holder, unless it is for commercial purpose
Creation of an Easement
PING
Prescription
Implication
Necessity
Grant
Prescription:
An easement by prescription is created when it meets the elements of adverse possession except exclusivity is not required
Easement by implication
created by (i) previous use, or (ii) by plat, and may exist in spite of not complying with the SOF
Easement by necessity
created when the land is blocked and a necessity arises (ie a common grantor held one plot which she subdivided into several parts and now the land is blocked off by other parcels and cannot access a road or river)
Easement by grant
An easement by grant is expressly created and must be in writing if the dominant tenement has reserved the right for greater than one year (must comply with SOF_
Scope of an easement
Absent specific limitations, an easement:
(i) exists in perpetuity
(ii) is subject to reasonable development
(iii) can only benefit the dominant tenement, and
(iv) may not be terminated by the servient tenement holder (but she may seek an injunction for excessive use)
Termination of an Easement (My Reggae DANCE Partner)
Merger
Release
Destruction
Abandonment
Necessity
Condemnation
Estoppel
Prescription
Merger
Dominant and servient tenement are merged and owned by one property holder, and if parcels are divided again, the easement is not revived
Release
Dominant tenement gives written release to the servient tenement
Destruction
Easement terminates if it is destroyed by forces other than servient tenement’s willful conduct
Abandonment
Easement terminates when dominant tenement demonstrates by (i) physical action (ii) an intent to permanently abandon the easement. Non-use is not enough.
Necessity
The easement terminates if necessity for it ends. However, if there is an express grant to the easement, then it will persist.
Condemnation
The easement terminates if the servient tenement is taken over by eminent domain (gov taking over property but compensating individuals)
Estoppel
Easement terminates if servient tenement relies on dominant tenement holder’s assurances that the easement will not be used
Prescription
The easement terminates if servient tenement engages in interference by satisfying the elements of adverse possession except exclusivity element.
Transfer to BFP for value
Do notice analysis again (AIR)
actual, inquiry, record
License
Is the privilege to use another’s land for a delineated purpose and is revocable at the will of licensor. However, a license may become irrevocable if:
(1) Estoppel: licensee invests $$ or labor on reliance of license, lasts only until benefit to recoup investment
(2) License coupled with Interest: Irrevocable for so long as interest lasts
Profits
A profit must comply with the rules governing easements and entitles the holder to enter the servient land and take from it (minerals, oils, timber, etc). A profit may be terminated in same ways as an easement is terminated, in addition to being terminated by surcharge
Covenants
**Always cluster a discussion on covenants first with equitable servitudes
A covenant is a written promise to do or not do something related with the land. Covenants are either affirmative (promise to do something with the land) or restrictive (promise to not do something with the land). The enforceability of a covenant on subsequent owners or purchasers of land depends on whether the burden or benefit is being enforced. Requirements are as follows
Covenants - For a burden to run, there must be
(1) writing, (2) intent, (3) touch and concern the land, (4) horizontal privity, (5) vertical privity, and (6) notice.
*Note: first discuss why burden is being enforced by the party
Covenants - Writing
The original covenant (promise) must have been in writing
Covenants - Intent
OG covenanting parties must have intended the covenants to run and for successors to be bound by its terms
Covenants - Touch and Concern the Land
A covenant touches and concerns the land when it directly relates to the use or enjoyment of the property
Covenants - Horizontal Privity
OG covenanting parties must have some shared interest in the land independent of the covenants (ie landlord-tenant, mortgagor-mortgagee, grantor-grantee)
Vertical Privity
OG party must have vertical privity with the subsequent owner, where the subsequent owner holds the entire land the original party held at the time the covenant was made
Transferring the Burden:
successor /T2 must have entire interest that original tenant had (assignment)
Transferring the Benefit
successor/T2 must have some interest that original tenant had (sublease)
Notice
Subsequent purchaser must have had actual, inquiry, or record notice of the covenant at the time of the purchase. If the purchaser did not have notice, she must have been a bona fide purchaser who acted in good faith.
Covenants - For a benefit to run with the land there must be
(1) writing, (2) intent, (3) touch and concern the land, and (4) vertical privity
Note: first discuss why benefit is being enforced
Note; no need to go through same analysis again just make sure to mention requirements for a benefit are met or not met
Termination of covenants
A covenant may be terminated by (1) written release, (2) merger, or (3) condemnation
Remedy if covenant is not enforced
Money Damages
Equitable Servitudes
A promise (covenant) that equity enforces against successors. An equitable servitude is created by (1) writing, (2) intent, (3) touch and concern the land, and (4) notice
Note: No need to go through same analysis as above just mention the requirements are either met or not met
Implied Reciprocal Servitude
can arise by implication and bind all parcels if there was (i) common plan or scheme for development of a residential subdivision, or (ii) the subsequent owners had notice
Implied Reciprocal Servitude - Common plan
Subdivider had a common scheme or plan of development with respect to lots
Implied Reciprocal Servitude - Notice
Burdened owner had notice of burden contained in prior deeds
*NOTE: go through analysis of three types of notice, in addition to constructive notie
Constructive Notice: if developer records with covenant or equitable servitude included, subsequent buyers are on constructive notice
Remedy if equitable servitude is not recognized
injunctive relief
Termination of equitable servitudes
(1) written release, (2) merger, or (3) condemnation
Defenses
A buyer may assert the following defenses if no covenant or equitable servitude is contained in the deed:
(1) lack of noitce
(2) changed neighborhood conditions: circumstances have changed and are so pervasive the entire area is affected (not some lots but ALL)
(3) Later Scheme: If scheme arises after some parcels are sold, there is no implied equitable servitude binding the parcels already sold without an express covenant included in those deeds
Equitable Defenses
Unclean hands, agreement, estoppel, laches
Equitable defenses - unclean hands
the person seeking enforcement is violating a similar restriction on her land
Equitable defenses - agreement
if person seeking enforcement failed to object when a third party, not named in the action and not the predecessor, engaged in the same prohibited action
Estoppel
if person seeking enforcement acted in such a way that a reasonable person would believe the equitable servitude was abandoned, the person has a valid estoppel defense
Laches
If the person seeking enforcement fails to bring suit against the person violating the restriction within a reasonable time, she cannot recover
Land Use - 10th Amendment
(1) Tenth Am reserves power not granted to the federal government, nor prohibited by States, to the States or to the people
(2) A state may enact statutes to reasonably control the use of land for the protection of the health, safety, welfare, and morals of the citizens
(3) A state’s police power is limited by the (i) due process clause, (ii) equal protection clause, and (iii) takings clause
Zoning Ordinances
(1) Zoning ordinances are laws restricting the use of land and are a valid exercise of the state, and their political subdivisions’, police power.
(2) They are generally invalid if they have no reasonable relation to public welfare, are too restrictive, are discriminatory as to a particular parcel, are beyond the grant of authority, or violate the clauses listed above.
Zoning Ordinance - Non-conforming use
a non-conforming use exists at the time the zoning ordinance is enacted that does not comply with the restrictions in the zoning ordinance.
Amortization is the gradual elimination of non-conforming uses of land.
Zoning Ordinance - Special use permit
certain landowners need to obtain special use permits in the event they are building hospitals, funeral homes, drive throughs, etc.
Zoning Ordinance - Variance
A variance is a departure from the literal zoning restriction by administrative action
A denial of a variance is lawful, unless:
(1) it is arbitrary and capricious
(2) in violation of due process clause
(3) in violation of takings clause, or
(4) in violation of the equal protection clause
Due Process Clause
(1) The DPC of the 5th AM applies to the states via the 14th Am
(2) The DPC prohibits gov from taking away a person’s right to property without due process of law
(3) a deprivation of property occurs if a person suffers a loss of entitlement to the property
(4) A fair process (ie notice plus hearing) is required to take away property. To determine if a hearing is required, courts balance the following factors:
(a) whether a fundamental right is denied - deprivation of property
(b) the importance of the interests to the individual
(c) whether procedures would make the hearing more fair and accurate and
(d) what is the gov’s interest in money and/or administrative efficiency
Takings Clause
(1) Takings clause of the 5th AM applies to the states via the 14th AM
(2) Under the takings clause, property cannot be taken for public use without just compensation
**Public Use: the use of the land must benefit the public
**Just Compensation: Compensation is measured by the loss to the owner, not the gain to the government
(3) There must be a determination of whether the taking is an actual taking or a partial taking
**Actual Taking: occurs when the gov’s confiscation of the land physically occupies the land and leaves it economically unviable
**Partial Taking: occurs when the gov initiates some regulatory action that decreases the value of the property
**EXception: IF the ordinance prohibits what would be a nuisance under the common law, then it is permitted even if the land becomes worthless
To determine if there has been an actual or partial taking, courts conisder:
(i) the social goals to be promoted by the taking
(ii) Diminution in value to the owner, and
(iii) owner’s reasonable expectations regarding the property
Remedy for takings
if gov unlawfully takes property in violation of takings clause, the aggrieved party may seek (i) just compensation, or (ii) termination of the regulations and damages
Equal Protection Clause
of 14th is implicated when a law treats a class of persons differently from everyone else
NOTE: go through analysis of discriminatory intent, classification, fundamental right, suspect/quasi-suspect/other classification > levels of scrutiny
Exactions
financial demands from the gov for zoning approval for a project. The gov must prove exaction has an (i) essential nexus to the public’s burden and (ii) is roughly proportional to the proposed development, or the exaction is considered unconstitutional
**Essential Nexus: demand must relate to the burden on public facilities
**Rough proportionality” burden must relate to the proposed development
Remedy for exactions
If gov institutes an unlawful exaction, the aggrieved party may seek (i) just compensation, or (ii) termination of the regulation and damages.
Land Sale Contracts - SOF
(1) To be enforceable, land K must comply with the SOF which requires the K to be (i) in writing, (ii) signed by the party to be charged, and (iii) contain all essential terms
(2) The essential terms required in a land sale K include (i) description of the property, (ii) parties to the K, (iii) the price, and (iv) manner of payment
**Exception: A court may enforce a land sale K despite the lack of the writing if (i) there is part or full payment, (ii) possession, or (iii) improvements to the land (PIP)
Equitable Conversion
Once a land sale K is signed, the buyer is equitable landowner (ie has K rights against the seller) & S retails legal title (ie the right to get paid)
**Risk of Loss: Once signed, but before closing, Buyer bears the risk of loss (ie if S has fire/casualty insurance, then S must credit B for any insurance coverage)
**Death: If S dies: title to S’s heirs, but they must give title to B at closing
If B dies: B’s heirs can demand conveyance of land at closing
Marketable Title
(1) Every land sale K contains an implied warranty that the seller will provide marketable title that a reasonably prudent buyer would accept at closing (ie the buyer is not required to buy a lawsuit)
(2) The seller must provide the buyer with (i) proof of title, (ii) a title free from encumbrances, and (iii) valid legal title, as of the date of closing
**Proof of Title:There must be physical, tangible evidence that the seller has title to the property in question
**Free of Encumbrances: The seller must warrant the land is free from encumbrances, unless she has previously disclosed them to the buyer.
Free of Encumbrances
Can include adverse possession claims, covenants, defects, future interest holders, liens, mortgages, zoning restrictions. A seller does have the right to eliminate such title defects, at closing, with sale proceeds.
Valid Legal Title
Seller must give the buyer valid legal title, as of the date of closing. If the buyer determines the seller’s title is not marketable, the buyer must (i) notify the seller, and (ii) allow the seller a reasonable time to cure defect, even if closing is postponed
**Exception: if K says “time is of essence,” and party refuses to perform at date of closing, the party is in breach. However, contracts without such a clause allow a party to render performance within a reasonable period of time. (usually 2 months)
Seller’s liability for property with defects
common law rule was caveat emptor (buyer beware) and buyer was not entitled to recover, unless seller actively concealed defects in the property. Modernly, sellers have a duty to disclose defects which (i) seller knew of and (ii) are not obvious to the buyer.
*seller is liable for defects under theories of misrepresentation, active concealment, or failure to disclose
*Warranty of fitness or quality: There is an implied warranty of fitness or merchantability that a builder-seller owes to a buyer of new residential housing
Buyer’s remedies if seller does not deliver marketable title
*Rescission: Buyer can cancel K as though it never existed
*Damages: Buyer can recover difference between the K price and value of property at time of breach
*Liquidated Damages: Buyer can recover under a liquidated damages clause, if included in the K, so long as the clause is reasonable (ie usually not more than 10% of the purchase price)
*Specific Performance: SP is available to both the buyer and seller as a remedy because land is unique. The PP may be reduced to reflect the defect caused by either the seller or buyer
Deeds
A deed transfers title to an interest in real property. Once a deed has been accepted at closing, the contract is extinguished, and the seller is relieved of all liability under the contract.
Deed Formalities
A deed passes title if it is properly (i) executed, (ii) delivered, and (iii) accepted.
Execution of deed
A deed must comply with the same requirements of the SOF for land sale contracts (see above).
Deliver of deed
A delivery from the grantor to the grantee evidences the grantor’s intent to pass title to the grantee. Delivery is evidenced by the grantor’s words or conduct showing she had a present intent for the deed to take operative effect. Delivery is presumed when the deed is recorded.
▫ Conditional delivery: conditions must be met
▫ Third party delivery:
* To 3P with instructions to give deed to A: DELIVERY (intent to make deed presently operative)
* To 3P with instructions to give deed to A upon grantor’s later instructions: NO DELIVERY
* To agent of grantee: DELIVERY
* To agent of grantor: NO DELIVERY (grantor retained the power to recall the deed)
Acceptance of deed
The grantee must accept the deed. This element is not satisfied if the grantee expressly refuses to accept the deed.
Types of Deeds - General Warranty Deed
A general warranty deed warrants against all defects created by the seller and all prior titleholders. A general warranty deed includes covenants of (i) seisin, (ii) the right to convey, (iii) freedom from encumbrances, (iv) quiet enjoyment, (v) warranty, and (vi) assurances.
Covenant of seisin
The grantor warrants she owns the land she purports to convey.
Covenant of the right to convey
The grantor warrants she has a right to transfer.
Covenant of freedom from encumbrances
The grantor warrants the property is free from defects (see above).
Covenant for quiet enjoyment
The grantor warrants the grantee will not be disturbed in her possession of the land by a third party’s lawful claim to the title.
Covenant of warranty
The grantor warrants she will defend against claims to the title by third parties and to compensate the grantee for losses sustained by a claim to superior title.
Covenant of further assurance
: The grantor warrants to perform acts reasonably necessary to perfect the title conveyed.
Special warranty deed
A grantor warrants, in a special warranty deed, that (i) she has not conveyed the property to anyone other than the grantee, and (ii) the estate is free from encumbrances.
Quitclaim Deed
A grantor warrants, by quitclaim deed, that she is conveying whatever interest she has and no warranties as to the title are included. However, title must be marketable, at the time of closing.
Estoppel by Deed
If the grantor conveys title to a property she does not own, but subsequently gains title to the property, the property will pass to the grantee despite the gap. However, this principle does not apply if a bona fide purchaser purchases for value.
Wild Deed
A wild deed is not connected to the chain of title, and is thus incapable of giving record notice of its existence.
Equitable Mortgage
If deed given for “security purposes,” it is an “equitable mortgage” and the creditor must foreclose before he can sell.
Recording ats
- At common law, priority was given to the grantee who claimed title to the property first. Modernly, recording acts give priority to the grantee who claims title to the property. Different recording acts apply in different jurisdictions. The different types of statutes are (i) notice, (ii) race, or (iii) race-notice statutes. Recording acts protect bona fide purchasers of property.
Bona fide purchaser BFP
A BFP is a person who (i) buys property, (ii) for value, (iii) without notice(actual, inquiry, or record) of prior claims to the property’s title. Value must be substantial but need not be the actual free market value of the property.
Shelter rule associated with BFP
A grantee, even if not a BFP herself, who takes from a BFP will prevail against any claim made to the property, provided the BFP would have prevailed against the party making that claim.
Notice jdx
A BFP always prevails over prior grantees because she had no notice.
Race jdx
A BFP who records first prevails over prior grantees who did not record.
Race-notice jdx
The person who records first prevails.
Mortgage
- A mortgage is a conveyance of a security interest in land, intended by the parties to be collateral for repayment of a financial obligation.
Equitable mortgage
A court will treat a conveyance of title as a mortgage when a party owned the land and conveyed it to another as a security interest.
Mortgage transfers: Transfers by creditor-mortgagee
A creditor-mortgagee (i.e. bank) can transfer its interest by (i) endorsing and delivering a note to the transferee (i.e. transferee = holder in due course), or (ii) executing an assignment.
Holder in due course
To become a holder in due course, the following requirements must be met:
▫ (i) The note must be negotiable (i.e. made payable to the named transferee)
▫ (ii) The original note must be endorsed and signed by the named transferee
▫ (iii) The original note must be delivered to the transferee
▫ (iv) The transferee must take the note in good faith, and
▫ (v) The transferee must pay value for the note (i.e. amount that is more than nominal).
▫ A holder in due course takes the note free from personal defenses but is subject to real defenses.
Transfor by debtor-mortgagor:
If a debtor-mortgagor sells the property, the mortgage remains on the land if the mortgage was properly recorded. All recording statutes apply to mortgages (see above).
Assumption versus subject to mortgage
▫ If the grantee assumed the mortgage, she is primarily liable to the lender, while the debtor is secondarily liable as the surety.
▫ If the grantee took subject to the mortgage, she has no personal liability, and the debtor is personally liable.
Modification
Once a grantee has assumed a mortgage, any modification of the mortgage obligation between the mortgagor and the mortgagee releases the original mortgagor of all liability.
Due on sale clause
A due-on-sale clause allows the lender to demand full repayment of the loan if the mortgagor transfers any interest in the property without the lender’s consent.
Foreclosure
A mortgagee can foreclose on a mortgage through proper judicial action if a mortgagor defaults on her debt. At a foreclosure sale, the land is sold, and the sale proceeds go toward satisfying the mortgagor’s debt. If the proceeds of the sale are less than the debt, the mortgagee may bring a deficiency action against the mortgagor. If the proceeds of the sale are more than the debt, the remainder goes to the mortgagor.
Foreclosure - distribution of proceeds
The sale proceeds are distributed in the following order: (1) attorneys’ fees (2) foreclosure expenses, (3) interest accrued on foreclosed mortgage, (4) foreclosed mortgage itself, and (5) junior liens in order of priority (i.e. mortgages taken after the original one).
Effect of foreclosure
Foreclosure terminates junior interests to the mortgage being foreclosed but will not affect senior interests (i.e. mortgages taken before the one being foreclosed). The mortgagor must give parties with junior interests notice of the foreclosure action and include them in the foreclosure action. If the junior interests are not included, their mortgages remain on the land.
Priorities of mortgages
Mortgagees must record the mortgage to determine the priority of their claim, should making a claim become necessary. Priorities are determined by “first in time, first in right,” with the exception of the purchase money mortgage which has priority over all.
Purchase money mortgage
: This type of mortgage is given to secure a loan that enables the mortgagor to acquire the property.
After-acquired collateral clause
An “after-acquired collateral” clause makes property later acquired by the mortgagor collateral to the original loan.
Subordination agreement
: A senior mortgagee can make a contract to subordinate her loan in priority to a junior mortgagee.
Modification of senior mortgage
If the mortgagor increases the senior mortgage, the senior mortgagee will lose priority over the junior mortgagees.
Security interest in fixture
A fixture seller who provides a security interest in the chattel must make a UCC Article 9 fixture filing within 20 days after installation of the fixture.
* Timely: If the seller timely makes the filing, the seller may remove the fixture without regard to the priority of other mortgages.
* Untimely: If not made timely, the seller’s interest will be junior to the earlier mortgages on the property.
* Note: No longer tested. See Bar’s recommendation to withdraw from testing UCC Article 9.
Redemption
: In a foreclosure proceeding, the mortgagor has a right to redeem through (i) equity or (ii) statute.
▫ Equitable Right of Redemption: Prior to the foreclosure sale, the mortgagor has a right to redeem the land. To do so, the mortgagor must make all missed payments and pay interest and costs. A mortgagor cannot waive this right.
▫ Statutory Right of Redemption: Some states permit a mortgagor to redeem property for a fixed period of time after the foreclosure sale.
Defenses for foreclosure
see above for lien theory and title theory
Lateral and subajacent support
o A landowner has exclusive right to both lateral (i.e. support from the side) and subjacent support (i.e. support from the bottom) of her land.
A neighbor undergoing excavation of her land is:
(1) (i) Strictly liable if the landowner’s (ii) unimproved land subsides (iii) when it was in its natural state.
▫ Applies to both lateral and subjacent support.
(2) (i) Negligent if the landowner’s (ii) improved land (e.g. land with buildings) subsides.
▫ Applies to both lateral and subjacent support.
(3) Negligent if the excavation itself was done negligently.
NOTE: The fact finder must determine whether the land would have collapsed in its natural state to determine negligence.
Allocation of water rights is determined by 2 doctrines
riparian doctrine and prior appropriation doctrine
Riparian doctrine
Water belongs to those who own the land and order the watercourse, but the landowner is liable for unreasonable use of the water.
Prior appropriation doctrine
“First in time, first in right.” Landowner’s right is determined by priority of beneficial use.
ABsolute ownership doctrine (12 states)
): owner of the land overlying the source basin can take all they want for whatever purpose
REasonable use doctrine (25 states)
must not harm other owners, must be reasonable.
Correlative rights doctrine (CA)
Owners of overlying land own the underground water basin as joint tenants, each allowed reasonable amount for own use
Appropriate rights doctrine
priority of use is determinative
Surface water is water coming from rain, snow, etc., that is not confined to a basin and has not reached a natural watercourse. Three theories govern surface water use:
Natural flow theory: Under the common law, there can be no change in natural drainage. Modernly, reasonable use is permitted.
Common enemy rule: A landowner can change or divert drainage so long as her use does not damage another’s land.
Reasonable use theory: balancing of harms
Adverse possession
- In order to quiet title due to adverse possession, the possessor must have (i) continuous, (ii) open and notorious, (iii) actual and exclusive, (iv) hostile possession of the land, (v) within the statutory period. (CHAOS)
Continuous
Possession must be continuous without any breaks in possession.
▫ Tacking: An adverse possessor may tack her period of possession onto a previous possessor’s period of possession if they were in privity (e.g. contract, descent, devise). However, tacking is not permitted without the “hostility” element being met (see below).
▫ Disabilities: A landowner’s disabilities defeat an adverse possession claim if the disability existed at the start of the adverse possession (e.g. infancy, insanity, imprisonment). Tacking is not permitted with a landowner’s period of disability, even if all of the other elements are met.
Hostile
(ii) Possession must be hostile (i.e. without the landowner’s consent or permission; subjective intent of possessor is irrelevant)
Actual
(iii) Possession must be actual and exclusive (i.e. the possessor must actually occupy the land without sharing the land with the true owner or the public).
▫ Constructive adverse possession: If the adverse possessor occupies a reasonable portion of the parcel, her occupation is under color of title so long as (i) the possessed land is reasonably related to the whole, and (ii) the property must be one single, unified parcel
Open and Notorious
Possession must be open and notorious, where the possessor uses the land as the true owner would.
Statutory Period
Possession must continue for the entire statutory period in order to quiet title.
Future Interest - AP
A successful adverse possessor receives the present possessory interest. The Statute of Limitations (SOL) does not run against a future interest holder until her interest becomes possessory.
Land Possessor RIghts
A landowner has a right to be free from (i) trespass and (ii) nuisance.
Trespass
Trespass is the invasion of land by tangible, physical object. The landowner can bring an action for ejectment to remove the trespasser.
Nuisance
Nuisance is the substantial and unreasonable interference with another’s use and enjoyment of her land. However, a nuisance claim will fail if the landowner is hypersensitive and/or using her land for a specialized purpose.
