Property Flashcards
Estate
Right to possess property
present estate: immediate right to possess property
future estate: confer a right, or potential right, to possess property in future
fee simple absolute
(1) indefinite duration, (2) indefeasible (can’t be cut off by another estate) (3) right to possess
fee simple determinable
AUTOMATICALLY end if condition specified in conveyance occurs
“Possibility of reverter”: interest the potential party holds who will gain control of the estate if the fee simple determinable condition occurs that automatically ends the conveyance
KEY WORDS: words of duration/time: “until”, “while”, “so long as”, “during”
fee simple subject to condition subsequent
DOESN’T end automatically if condition specified in conveyance occurs
“Right of entry”: grantor has option to enter land and retake property, but if they don’t, estate continues as before
KEY WORDS: conditional language: “but if”, “on condition that”, “unless”, “provided that”
fee simple subject to executory limitation
can be cut short by an executory interest
executory interest (1) depends on future condition, (2) may cut prior estate short before its natural end
“to X, but if Y joins military, to Y”
X has fee simple subject to executory limitation
Y has executory interest
life estate
holder possess property until they die
“remainder” interest by person who gets estate once life estate possessor dies
“vested remainder”: held by (1) living identifiable person and (2) no conditions
“contingent remainder” held by (a) unknown person or (b) subject to some future condition
life tenant duties: (1) reasonably avoid permissive waste (pay taxes), (2) voluntary waste (alter property negatively), (3) ameliorative waste (change character even if increase value)
Rule against perpetuities
Property interest void if there’s any possibility that it could VEST more than 21 years after the end of ALL relevant lives when the interest is created.
“vested remainder”: held by (1) living identifiable person and (2) no conditions
NOTE:
- A possibility of reverter vests immediately, and thus an owner conveying a property and retaining a possibility of reverter cannot violate RAP
-BUT:
- “Wait and see rule:” Preserves property interest that would otherwise violate RAP until it vests or until the 21 year period has run, whichever comes first (wait to see if the interest does vest up until the statute of limitation then it goes away)
- “doctrine of cy pres”: If an interest would violate RAP, court rewrites conveyance to comply with rule following grantor’s intent (ex life estate then to grantee’s child who first turns 25, rewritten to say life estate then to grantee’s child who first turns 21)
Concurrent ownership
2 or more people, called cotenants, own property together
tenancy in common: multiple tenants, don’t need to own equal shares, but each hold undivided possession/non-exclusion interest in property, each possessor can grant their share without permission
Joint tenancy with right of survivorship: multiple tenants, EACH hold equal shares, each hold undivided possession/non-exclusion interest in property, EACH has right of survivorship where they own entire property upon other tenant’s death, each can sell their share without consulting others
- (1) time, (2) title, (3) interest, (4) possession
- (interest vests same time)
- (ownership from same title)
- (equal shares interest in property)
- (possession right equally to entire property)
Severance: joint tenant interest drops out and is no longer subject to survivorship
- other joint tenants remain in joint tenancy, but previous joint tenant interest is now tenant in common (most commonly when someone sells their share in joint tenancy)
Partition: court divides up property among tenants based on their interests (in kind = physically divide) (by sale = monetarily divide)
Easement
property interest that gives right to use someone else’s land for a specific purpose
“dominant tenement”: property benefitted by easement
“servient tenement” property burdened by easement
Transfer: Runs with land and binding on all successive owners who take with notice of the easement
Easement formation
Express grant: writing
Express reservation: grantor conveys land and retains easement
Prescriptive easement: easement acquired by adverse possession
Existing prior use: (1) 1 parcel split into 2 from common ownership, (2) at time, (3) apparent continual use of one parcel for benefit of another that may be expected to continue after severance, (4) easement important or necessary to benefited parcel
Easement by necessity: easement absolutely required for use of dominant tenement
ERPPN
Easement termination
(a) easement’s express terms, (b) formal release, (c) abandonment by words/actions demonstrate intent to give up (d) merger (person owns both dominant and servient tenements) (e) gov eminent domain
Restrictive covenant
agreement to use or limit use of one parcel for the benefit of another
Enforceable against successors if: (1) in writing, (2) intended to run with land, (3) covenant touches/concerns land, (4) servient tenement owner had notice at time of purchase
WITN
Licenses
permission to use land for specified purpose
NOTES:
- not interest in land itself
- can be revoked at any time (UNLESS licensee expended money, property, or labor)
- doesn’t have to be in writing
- doesn’t run with land
Adverse Possession
CHOSE: (1) continuous, (2) hostile, (3) open and notorious, (4) statutory period, (5) exclusive
“tacking”: previous adverse possessor’s time is “tacked” onto the new adverse possessor’s time towards statute of limitations IF PRIVITY (new possessor acquired possession by voluntary transfer)
Mortgage
Lien on real property that secures a debt
Mortgagor: borrower
Mortgagee: lender
(majority) Lien theory: Mortgage gives mortgagee security interest in property, no change in title
Title theory: Mortgage gives mortgagee title to property until debt paid
Due-on-sale clause
If mortgagor sells property, mortgagee may declare entire underlying debt immediately due and payable
Sale of mortgaged property
3 scenarios:
(i) seller pays off mortgage,
(ii) buyer takes property but without assuming underlying debt, then if default, bank forecloses on the house but buyer has no personal liability remains with seller,
(iii) buyer takes over the mortgage, seller still liable unless released by bank
Equity of redemption
common-law right to avoid foreclosure by paying remaining mortgage debt before foreclosure
Statutory redemption
entitled mortgagor to purchase foreclosed property back from foreclosure buyer for specified period of time after the auction
Liens
Liens payed by seniority
First-in-time rule: Seniority based on when the lien was filed
Senior lien: lien with priority over another
Junior lien: lien with lower priority
Purchase-money mortgage: mortgage where the seller provides the money to buyer = highest priority lien on a property
Future-advance mortgage: lender makes initial lump-sum payment followed by periodic disbursements
- if future-advance lender required to make periodic disbursements, then future disbursements have same priority as initial distribution
- if future-advance disbursements are optional then priority depends on initial lenders notice of 2nd mortgage (if no notice = future-advance lendors periodic disbursements have priority) (if notice = all future-advance disbursement are junior to the 2nd mortgage)
General payouts: (1) costs of foreclosure/sale costs/court costs, (2) mortgage being foreclosed, (3) all junior mortgages/other liens, (4) mortgagor if any remains (5) all debt remaining (deficiency)
Landlord and tenant: Abandonment remedies
(a) accept and terminate lease, (b) re-lease and recover difference between new rent and previous rent (c) allow vacancy and sue for rent when due
- some jx: duty to mitigate damages
Landlord: Duty to deliver
(1) legal possession, (2) actual possession
Legal possession: no 3rd party has rights sufficient to evict tenant
actual possession: property unoccupied and physically free to be occupied
Landlord: Warranty of quiet enjoyment
(1) landlord nor anyone with superior title will disturb tenant’s possession, (2) landlord won’t constructively evict tenant (substantially deprive tenant of use/enjoyment of property)
Tenant: Constructive Eviction
(1) notify landlord (2) provide opportunity to cure, (3) landlord fails to cure
(a) terminate or (b) stay and stop paying rent until fixed
Tenant: Assignment
tenant assigns his entire remaining leasehold interest to assignee
- landlord/original tenant remain in privity of contract and responsible for lease terms, unless landlord agrees to “novation” to release original tenant from lease
- landlord/new tenant not in privity of contract, since no lease between them, unless new tenant agrees to assume lease, but they are in privity of estate
Privity of estate:
- covenants in effect: any lease covenants that run with land (1) intended to run, (2) touches/concerns land (benefits/restricts use of land)
- duty to pay rent
Privity of contract:
- Duties that attach: all covenants in the original lease/contract
Tenant: sublease
Prime tenant subleases to subtenant, prime tenant retains part of leasehold interest
Prime lease: Original lease that remains in effect
Sublease: new lease between original tenant and subtenant
Landlord/original tenant remain in privity of contract and estate and prime lease remains in effect
Original tenant/subtenant are in both privity of estate and contract
- Only liable to eachother for covenants in the sublease, not covenants in the prime lease
Landlord/subtenant are not in privity of contract or privity of estate, since no contract and subtenant only controls original tenants leasehold
- subtenant can only enforce lease against original tenant, not against landlord
Generally original tenant free to assign/sublease unless lease says need permission
- (majority) landlord has no duty to act reasonably in deciding to give consent, unless lease says otherwise
- (minority) landlord must act reasonably in deciding to give consent
Fixtures
Item that has (1) been attached/annexed to real property (2) with intent to make item party of property (ex: hot tub)
- annexed = physically incorporated into structure or removing would cause damage
- If qualifies as fixture, then cannot be removed because it is part of the real property
Lanlord tenant:
- common law: tenant annexes become fixtures even if personal expense
- trade fixture: tenant may remove trade fixtures before lease expires
Real property sales
Contract signed — executory period — closing (buyer payers/seller delivers title)
Statute of frauds applies: (1) in writing, (2) signed by party being enforced against, (3) contains essential terms ((i) identities, (ii) intent to buy/sell, (iii) property description, (iv) price)
Implied warranty of marketability: sellers must deliver unencumbered title at closing, unless buyer agrees to accept encumbrances, or contract disclaims warranty of marketability
NOTE for damage during executory period:
- Majority: Buyer bears risk during executory period
- Minority: Seller bears risk during executory period, must convey property and discount price
Risk of loss during executory period
(majority: buyer bears risk of loss during executory period)
(minority: sellers bears risk of loss during executory period)
- if property damaged: convey and give price reduction
- if destroyed: buyer may rescind
Seller’s disclosures
(commercial property sales) buyer beware, no duty
(modern rule) seller disclose (1) known, (2) “material defects”, (3) buyer can’t reasonably discover
Deeds
Transfer deed: (1) grantor delivers (demonstrate intent to immediately transfer) (2) grantee accepts deed
- methods: (a) physically hand it, (b) give deed UNCONDITIONALLY to third party who then transfers
- delivery complete when third party receives deed
- delivery doesn’t occur if grantor reserves right to retrieve deed from the third party
- death escrow: grantors gives deed to third party to give to grantee upon grantor’s death with no other conditions
- NOT VALID if directly give deed to grantor and condition it on grantor’s death, not valid because need to either create will or death escrow
- deed poll: if accept a signed deed but don’t sign yourself you are still bound by the covenants in the unsigned deed
Estoppel by deed applies if a grantor purports to convey property that he does not own to a grantee who lacks notice of this problem. If the grantor later acquires the property, then title immediately and automatically vests in the original grantee.
Types of deeds
Quitclaim: doesn’t include any covenant of title, only conveys whatever interest grantor has
Special: includes all 6 covenants of title, however, only warrants against defects created by grantor (not by previous owners)
General: includes all 6 covenants of title, however, it warrants against defects created by anyone (including previous owners)
Covenants of title
Title: Right in tract of land
6 title covenants: guarantee grantee is receiving a good title that grantor will defend
3 “Present covenants” (only breached the moment deed is conveyed to buyer
- seisin: grantor actually owns property
- right to convey: grantor has legal authority to transfer
- covenant against encumbrances: no encumbrances on property except those in deed (UNLESS open and obvious)
3 “future covenants” (can be breached after conveyance) (BREACH: ONLY IF someone with superior title (1) ACTUALLY interferes by asserting (2) VALID claim, (3) regarding TITLE only (not other types of issues))
- quiet enjoyment: no one with superior titled will interfere with grantor’s possession/enjoyment of property
- warranty: grantor will defend and indemnify grantee against claims by anyone with superior title
- further assurances: reasonable steps to perfect grantee’s title (such as file required documentation)
Doctrine of merger: sales contract merges into the deed upon delivery
Recording
Filing property-related document in appropriate public-records office
- Isn’t necessary to make deed valid, but puts third parties on notice, and can affect priority of competing interests
Title disputes
First-in-time rule: First to gain an interest has superior title
Race statute: First to record title has priority
Notice statute: (1) bona fide purchaser, prevails against any prior interest of which, (2) he lacked notice
Race-Notice statute: (1) bona fide purchaser prevails against any prior interest of which ,(2) he lacked notice, (3) ONLY IF bona fide purchaser records first
NOTE
- Bona fide purchaser: (1) purchases property, (2) for value (money), (3) without notice of prior interest (actual, record, or inquiry)
- Actual = subjective
- record = should know because recorded
- Inquiry = should know based on circumstances
