Property Flashcards
All land-sales contracts have an implied warranty that requires the seller to convey marketable title, which is violated if
there is a future interest that does not agree to the transfer
An easement holder may increase the manner, frequency, or intensity of an easement’s use so long as
that increase does not unreasonably damage or interfere with the use or enjoyment of the servient estate
The doctrine of ademption by extinction causes
a devise of a specific asset to fail if a testator does not own it at the time of death
The doctrine of anticipatory breach does not apply to leases, meaning that while the landlord may sue the tenant for rent as it becomes due, a landlord may not
sue for future rent under the lease
The benefit of enforcing an equitable servitude is held only by
the original parties and their successors in interest
If only one party in an at-will lease is expressly given the right to terminate the leasehold, the lease
may be deemed unconscionable and both parties will have the ability to terminate it (generally used against landlords)
Vertical privity required for the passing of a covenant
Burdensome covenant: transfer of entire interest
Beneficial covenant: Any transfer of interest (includes lease)
A covenant touches and concerns the land when it
Affects the land’s use or value
Exceptions to a due-on-sale-clause include
Devises, descents, transfers to JT upon death; transfers to spouse or child; transfer to ex-spouse during divorce; transfers to borrower’s living trust; granting leasehold interest for less than 3 years without an option to purchase
Under the common law exoneration-of-liens doctrine, the recipient of a specific devise of real property can
use remaining assets in the testator’s estate to pay off ANY encumbrances on that property (NOTE: abolished in most jurisdictions)
Equitable servitudes differ from covenants in that
they are enforceable by injunction (rather than damages), and they do not require any form of privity to be formed
BUT like burdensome covenants, notice is required for burdensome servitudes
A non-recourse loan is
secured by collateral, without the borrower being personally liable
An easement by necessity is created when
(1) the dominant estate is virtually useless (e.g. landlocked) without the benefit of the easement
(2) the two estates were once a single tract of land, and
(3) the necessity arose when the land was severed and the two estates were created
An equitable servitude can be implied from a common scheme if
(1) the owner intended to create a common scheme
(2) the intended servitude was restrictive, and
(3) persons to be bound had notice of the servitude
NOTE: cannot be enforced against lots sold before the common scheme arose
Writing is NOT required
A person who acquires property by adverse possession can only transfer ownership of the property
by deed
Under the doctrine of estoppel by deed, a grantor who conveys an interest in land by warranty deed before owning it
Is estopped from later denying the effectiveness of that deed
For a BENEFICIAL covenant to run with the land there must be
(1) writing, (2) intent, (3) touch & concern, and (4) vertical privity
Due to the doctrine of equitable conversion, a judgement obtained against a seller after the execution of a land-sale contract
is not enforceable against the real property - even if the claim arouse before the contract was executed (e.g. sale closed)
Easements are terminated by
END CRAMPS
Estoppel, Necessity ends, Destruction, Condemnation, Release, Abandonment, Merger, Prescription, State conditions
A life tenant has the obligation to pay ordinary taxes on the real property, but only to the extent that
the life tenant receives financial benefit from the property.
When the life tenant occupies the land, the financial benefit is measured by its fair rental value
Horizontal privity requires
An interest other than the covenant promise (e.g. grantor-grantee)
A deed conveying a mortgage’s interest in the mortgaged property to a mortgagee in lieu of foreclosure allows the mortgagee to
Take immediate possession of the property without the formalities of a foreclosure
(HOWEVER - any junior interests remain attached to the property and the mortgagee’s interest is extinguished unless it was reversed)
Termination may occur before the expiration of the term when the tenant surrenders the leasehold and
the landlord accepts the return of the leasehold
A mortgagor in possession of the mortgaged property has a duty to
Not commit waste that would impair the mortgagee’s security interest in the property
Private nuisance arises when
defendant’s interference with plaintiff’s use and enjoyment of his property is both unreasonable and substantial
A deed purporting to transfer real property to a non-existent co-tenant is
void as to the non-existent co-tenant and creates TIC between grantor and other co-tenant(s) named in the deed
A recorded deed that falls outside the chain of title is
a “wild deed” that fails (cannot be used) to give constructive notice to subsequent purchasers
A third party owner of subsurface rights is strictly liability for any failure to
support the land and buildings that PREDATE the conveyance of those rights, provided that the damage would have occurred in the land’s natural state
Easement by prior use (implication) requires
(1) Common prior ownership
(2) Prior use of the land by the owner consistent with an easement (benefited dominant estate)
(3) Continuous / consistent and apparent use at the time of severance, and
(4) a reasonable necessity to the dominant estate’s use and enjoyment of their portion of the property
For a BURDENSOME covenant to run with the land there must be
(1) writing, (2) intent, (3) touch and concern, (4) Notice, (5) Horizontal privity, and (6) Vertical privity
Courts are reluctant to imply a landlord’s duty to repair commercial leases because
the implied warranty of habitability does not apply to commercial leases
A co-tenant can acquire sole ownership of a co-owned property through adverse possession if
(1) ousts the other co-tenant by preventing them from using or accessing the property, and (2) meets the ECHO requirements for adverse possession
A covenant is terminated by abandonment through
An affirmative act - more than simply neglect or misuse - shows a clear intent to relinquish the covenant
Regarding a FSSCS, a grantor (or successor in interest) can enter and terminate the estate by
Affirmatively demonstrating an intent to terminate (exercise the “right of re-entry”)
The owner of mineral rights is strictly liable for (1) __ and only negligently liable for (2) __
(1) Any failure to support the land and any buildings that predate the conveyance of those rights, provided the damage would have occurred in the land’s natural state
(2) Damage to improvements built after the mineral rights were conveyed
For a judicially supervised foreclosure sale, the foreclosing mortgagee must
Give notice to the holders of any junior interests in the property to eliminate those interests
The recording of a deed
is presumptive of delivery
In order to end a lease before the end of its term by constructive eviction, the landlord must have breached a duty which
(1) Caused the loss of the substantial use and enjoyment of the premises,
and the tenant must
(2) Give the landlord notice of the problem and a reasonable opportunity to cure, and
(3) Vacate the property within a reasonable period of time
Judgement creditors are
Not purchasers for value since the attachment of a judgement lien to a debtor’s property is merely a security for a pre-existing debt (no payment of value - no BFP protection)
If the assumption of the mortgage was part of the buyer’s purchase price
the buyer may not raise defenses that the original debtor could have raised against enforcement of the mortgage obligation
How does a lease affect a joint tenancy?
Some jurisdictions hold that it severs the JT, while others hold that it temporarily suspends the JT which resumes after the end of the lease
What are the rights of co-tenants in a tenancy in common?
each co-tenant holds an undivided interest with unrestricted rights to possess the whole property, regardless of the size of the co-tenant’s interest (extends to leasees of a co-tenant)
Rent distribution among co-tenants
A co-tenant must account to other co-tenants for rent received from third parties, but can deduct operating expenses, including necessary repairs, when calculating net proceeds
If the proceeds from a land sale contract exceed the amount of the outstanding mortgage, then
a title defect will be extinguished and the seller can deliver marketable title to the buyer upon closing
When an easement is shared, the owner who maintains or repairs the easement may seek contribution from
(1) the other owners, and
(2) the servient-estate owner if they use the easement
Upon a partial condemnation, a tenant must
continue to pay rent but is entitled to compensation for the portion of the leased property that was taken
(note: vs. complete condemnation where tenant duties are discharged)
A liquidated damages clause is enforceable so long as the amount of liquidated damages is
reasonable (e.g. no more than 10% of the purchase price).
Note: It may not be enforced if the seller suffered no actual loss
Lien priority is determined by the “first in time, first in right” (the common law) rule unless
A recording act applies
Since recording acts protect purchasers for value, they
offer protection to mortgage interests but not necessarily judgement liens
A purchase-money-mortgage (PMM) will be given priority over
liens that arose PRIOR to the PMM - even if it was not recorded
When mortgaged property is transferred to a donee, the donee may
Assert the donor-mortgagor’s defenses against the mortgagee-lender (which a purchaser who assumed the mortgage may NOT do)
Enforcement of a mortgage is subject to the same defenses as
the obligation for which the mortgage serves as a security (e.g. mistake, duress, lack of capacity, statute of limitations)
A deed is void and unenforceable, even by a bona fide purchaser, if
(1) the grantor’s signature is forged
(2) the deed itself is forged, or
(3) the grantor is deceived about the nature of the executed document
When only a portion of the leased property is condemned
The tenant’s duty to pay rent is not discharged
The implied warranty of marketable title requires that the seller, at the time of closing, deliver title to the buyer that is
free from an unreasonable risk of litigation
To satisfy the statutory period for adverse possession, an adverse possessor may tack on the predecessor’s time if
there is privity between them (satisfied through the possessor taking by non-hostile means e.g. devise, descent, contract, deed)
Future Interests subject to RAP
(1) Contingent remainders
(2) Vested remainders subject to open
(3) Executory interests
(4) Powers of Appointment / Rights of First Refusal / Options
Under the warranty of habitability for residential premises, a tenant must
notify the landlord of a defect and give reasonable time to repair
Tenant CAN: Refuse to pay rent, make reasonable repairs and deduct cost from future rent, or remain in possession, pay rent, and seek damages
Elements of a valid deed
(1) Identification of parties
(2) Grantor’s signature
(3) Words of transfer (present intent)
(4) Reasonably definite property description
An easement which fails to satisfy the SoF creates
a license
A senior mortgagee who enters into an agreement with the mortgagor to modify the mortgage or the obligation it secures
subordinates his interest to a junior mortgagee’s interest to the extent that the modification is materially prejudicial to the junior mortgagee’s interest
Under the doctrine of Marshaling of Assets
The holder of a senior security interest must first proceed against the property on which there are not any junior security interests, and then against the property on which the junior interest was more recently created, before proceeding against property on which the junior interest was more remotely created
Does a judicial lien imposed on a property owned in joint tenancy sever the rights of the joint tenants?
No
A property owner whose nonconforming use predates a zoning ordinance may not
switch to another non-conforming use after an ordinance becomes effective
The hardship for which a variance is sought may not be
created by the owner who seeks the variance
Note: variance can be sought if compliance with zoning regulations would result in undue hardship
In a jurisdiction that has adopted an anti-ademption statute
the devisee of the seller-decedent’s real property is entitled to the sale proceeds from the specific devise no longer in the testator’s possession
An easement cannot be terminated by a merger if
there are any future interests (or other outstanding interests) in the dominant or servant estate.
When there is a future interest, use of the easement is suspended until the future-interest holder becomes entitled to possession
Nonjudicial foreclosures are allowed in most states if the mortgage or deed of trust contains
a power-of-sale clause
The court may overturn a nonjudicial foreclosure if
(1) the auction or sales process violated due process, or
(2) the purchase price was grossly inadequate
May a seller of a residential property disclaim the duty of disclosing material defects?
Yes, so long as the seller has not fraudulently misrepresented or concealed the condition to the property
Issues that relate to foreclosure but do not affect an interest in land (e.g. a lender’s right to sue the borrower before foreclosing on the mortgaged property) are determined by
the laws of the state with the most signifiant relationship to the transaction and the parties
While a co-tenant is entitled to whole possession of the property, a co-tenant’s right to the natural resources of the land is
limited to the size of the co-tenant’s interest in the land
A property owner may proceed with plans for non-conforming use after a zoning ordinance change if they have a vested right, which exists if at the time a zoning change takes effect
(1) The property owner has secured necessary permits in good faith, and
(2) The property owner has made substantial progress toward achieving the use
The completion of standard mortgage-loan documents by a lender’s non-attorney employees is
not the practice of law so long as they are not exercising legal discretion in completing the documents it’s OK
Fixtures attached to leased property by tenants must generally be removed before the lease terminates, but they can be removed within a reasonable time thereafter if
(1) the termination was not due to the tenant’s breach and
(2) the tenant could not have foreseen termination early enough to permit removal before the lease terminates
A land seller must disclose unreasonably dangerous conditions if
(1) the condition exists at the time of the sale
(2) the seller knows or has reason to know of the condition and its risk
(3) the buyer does not know or have reason to know of the condition or risk, and
(4) the seller has reason to believe that the buyer would not discover or realize it.
A co-tenant who wishes to purchase their interest in a property back after foreclosure in which another co-tenant purchases back the property must pay
a percentage of the co-tenant’s purchasing price equal to their interest in the property
(e.g. Bought for 100k, 4 co-tenants, each would have to pay $25k)
Modification of a senior mortgage (or the obligation it secures) generally has no impact on the senior mortgagee’s priority over junior mortgages or liens, unless
the modification materially prejudices a junior interest (e.g., increase in interest rate)
Material prejudice will subordinate the senior mortgagee’s interest only as to the modification (mortgagee’s original interest will therefore remain superior to the junior interest)
Unless otherwise stated, an easement appurtenant cannot be used
for the benefit of property other than the dominant estate (e.g. land purchased subsequent to the granting of the easement)
If there’s an increased burden on servient state because of this, damages are awarded.
If there’s no increased burden, an injunction may be granted
A grantee has inquiry notice if
a reasonable investigation would have disclosed the existence of prior claims
Under the implied warranty of fitness or suitability, the builder of a new residence asserts that
he used adequate materials and workmanship for the residence.
The implied warranty generally covers latent construction defects or problems that do not manifest themselves until after the sale
A claim for breach of implied warranty of fitness or suitability may be brought
against builders, developers, and contractors within a reasonable time after discovery of defect by the initial homeowner-purchaser and (in a majority of jurisdictions) subsequent purchasers who did not contract directly with the developer
Damages = Cost of repairs to bring residence into compliance
If a deed is silent or ambiguous as to the buyer’s (transferee’s) liability, then
the buyer takes title to the property subject to the mortgage
A grantee who has actual, inquiry, or record (constructive) notice of a prior claim cannot
assert priority over that claim
A tenancy at will terminates automatically when
the landlord conveys a present interest in the property to a 3rd party
Under the doctrine of emblements
a tenant has the right to re-enter land to remove, harvest, and cultivate crops that the tenant planted before the tenancy terminated if the tenant’s lease was for an uncertain duration (e.g. periodic / at-will) and terminated through no fault of the tenant
When one co-tenant seems indebted to the other (e.g. paid all taxes and failed to share profits), at partition a court
must grant a co-tenant’s request to partition and may require an accounting
When executing a deed in lieu of foreclosure, in the majority of jurisdictions the merger doctrine does not apply meaning
the mortgagee that receives the deed in lieu of foreclosure is treated as having impliedly retained the right to foreclose on its mortgage - unless it has actual knowledge of a junior lien
Under the riparian doctrine, water rights belong to
the owners of the land that borders the watercourse and owners may make any reasonable use of water that does not unreasonably interfere with downstream use
Note: Domestic (natural) use trumps commercial (artificial) use
In order to redeem a property in default, a co-tenant must
pay the outstanding amount owed by all tenants, not just the co-tenants individual share
Easement by prescription may NOT be acquired by
A tenant over the leased premises or other lands owned by their landlord (bc not hostile)
Nonjudicial foreclosures are allowed in most states if the mortgage or deed of trust contains a power-of-sale clause and may be subsequently overturned only if
the action or sales process violated due process or the purchase price was grossly inadequate
A life tenant does not have a duty to pay current charges for land if they are
(1) not in possession of the property and
(2) do not receive rent or other income from it
Absent a statutory or contractual obligation, a commercial landlord has no duty to make repairs unless
(1) the repair is so substantial that it would not ordinarily fall within the tenant’s common law duty to repair, or
(2) the repair would primarily benefit the value of the landlord’s property
(generally reserved for major structural damage)
Statutory right of redemption v. Equitable right of redemption
Equitable right = before foreclosure
Statutory right = after foreclosure
4 unities of Joint Title
(1) Possession
(2) Interest
(3) Time
(4) Title
When the terms of a conveyance of a future interest are ambiguous, courts typically adopt a preference for
a fee simple subject to condition subsequent compared with fee simple determinable
The majority view is that a survivorship contingency applies
at the termination of the interests that precede distribution of the remainder
Example: if you have a remainder following a life tenant, you must survive the life tenant in order to inherit
Minority view = surviving only testator (person who GAVE interest to the life tenant)
An equitable mortgage is created when
a deed to land is granted in exchange for securing a debt
In a priority dispute between a Seller (e.g. prior owner) & Lender (e.g. Bank) who each provide a Purchase Money Mortgage, the
seller generally has priority (unless there is an agreement to subordinate their interest)
The concept of Equal Dignities requires
an agent’s authority be in writing if the act performed on behalf of the principal be required to be in writing
(think sale of land - if agent signs for principal to sell land (not in principal’s presence) agent’s authority must also be in writing)
If a written easement is granted but not recorded against the servient estate, then the easement is not
enforceable against a bona fide purchaser of the servient estate (conversely if it IS granted and recorded, subsequent purchasers have constructive notice and are burdened by it)
The (present) covenant against encumbrances guarantees that the deed contains no undisclosed encumbrances, which may include
an encumbrance by mortgage, lease, easement, or covenant not specified in the deed
Knowledge of an encumbrance may or may not prevent
the present covenant against encumbrances from being enforced depending on the jurisdiction
Majority = knowledge does NOT prevent a suit for failure to provide title free of encumbrances
Minority = knowledge DOES prevent a claim for breach of covenant
3 types of waste relevant to tenants with a life estate
(1) Permissive (neglect)
(2) Voluntarily (affirmative action decreases value - not permitted)
(3) Ameliorative (reasonable use of property, no damage to FMV or future interest holders)
The first in time, first in right rule is generally applied to priority of interests, absent a relevant statute, however there’s an exception for
future advance mortgages (lines of credit) which are optional (at the discretion of the mortgagee / lender)
The exception for future advance mortgages is that
a subsequent mortgage has priority over amounts that are actually loaned after the future-advances mortgagee has notice of the subsequent mortgage
Note: Jurisdictions differ on whether ACTUAL notice is required or whether constructive notice is sufficient
Attornment is the
formal acknowledgement of a new landlord by a tenant (e.g. if original landlord sells building).
Generally implied by paying of rent to new landlord but formal acknowledgment may be required for commercial leases
“Hostile” in terms of Adverse Possession may require
Either objective or subjective intent depending on the jurisdiction (majority = objective)
6 covenants of warranty deeds include
Present
(1) Seisin (grantor owns land)
(2) Right to convey (right to transfer)
(3) Against encumbrances (no undeclared encumbrances)
Future:
(1) Quiet enjoyment (no lawful 3rd party claim)
(2) Warranty (grantor will defend against 3rd party claims)
(3) Further assurances (grantor will do whatever reasonably necessary to pass title if later determined to be imperfect)
Forms of restraint
(1) Disabling restraint (total prohibition), always void
(2) Forfeiture restraint (property is forfeited in attempt of transfer, OK on future interest or LE)
(3) Promissory restraint (promise not to transfer, enforceable by injunction, OK on LE)
A due on encumbrance clause can accelerate a mortgage upon
the creation of a second mortgage
The rule in common law for mortgages is
first in time, first in right (whichever comes first has priority)
There is no right to deficiency in foreclosing on mortgages in some jurisdictions if
(1) mortgagee forecloses via a privately supervised foreclosure sale or
(2) when the mortgage is a PMM
Some states further limit the amount recoverable to be the FMV of the property
Easements in gross transfer
automatically with servient state (the burden transfers automatically)
with intent to any subsequent user (benefit must be intended to transfer)
Profits entitles a holder to
enter servant estate land and take from it soil or substance of soil (creation is similar to that of easements)
BUT
Profits CANNOT be created by necessity
Equitable servitudes must
(1) be in writing
(2) require intent for restriction
(3) touch and concern land
(4) Notice (IF enforced against a purchaser)
Defenses to enforcement of covenants and equitable servitudes
(1) changed circumstances
(2) laches
(3) unclean hands
(4) acquiescence
(5) estoppel
Under Prior Appropriation of Water Rights doctrine, water rights are determined by
priority of beneficial use (subsequent users must not infringe upon rights of prior users)
Water rights MAY be transferred separately from adjoining land
A majority of jurisdictions require a landlord to make reasonable efforts to mitigate damages when
a tenant abandons a lease
Reasonable effort = based on ToC
A joint-tenant with right of survivorship may only grant a mortgage on HIS specific interest absent the consent of the other JT, if such joint-tenant dies then the mortgage
disappears with him and is unenforceable against the non-consenting joint-tenant (unless jurisdiction is a TITLE theory state)
The “one stock” rule applies to
the division of profit
under which the transferees of a prior entity with profit are entitled to the amount taken by the transferor (their “stock”) and the quantity is divided up by the transferees taking the profit
Restraints on alienation are
direct and indirect restrictions on the transferability of real property (may be either some or ALL types of transfers) - valid only if deemed reasonable (total restraint is always unreasonable and therefore void)
The implied warranty of suitability for newly built houses may not
be disclaimed by general disclaimer language
Objections to the marketability of title must be made
prior to the delivery and acceptance of the deed
A profit a prendre aka “Profit” is a non-possessory interest in land that gives
the profit holder the right to enter another’s land to remove specific natural resources
Note: Profit holder IS entitled to compensation if government condemns (regardless of whether profit holder paid value or has exclusive right to remove the resources)
Difference between negotiable and non-negotiable promissory notes
Negotiable: may be assigned simply by endorsing and delivering note to assignee
Nonnegotiable: requires separate assignment document to transfer ownership
While a developer may retain the general power to amend lots owned by a developer, a developer may not
use this power in a way that would materially change the character of the development or the burdens on the existing community members unless the declaration fairly apprises purchasers that the power could be used for the kind of change proposed.
An implied covenant of marketable title (i.e., a title free from defects) is part of a land sales contract, regardless of
the type of deed created
Traditional anti-lapse statutes prevent gifts from lapsing only when those gifts were given to
a family member within a certain statutory degree
A lender has the right to take possession of mortgaged property but is liable to the borrower for
any waste that the lender commits during foreclosure proceedings
While a landlord must typically deliver actual possession of property (removing third party wrongfully possessing) to a tenant, a minority of jurisdictions only require delivery of
legal possession (right to occupy)
Under the covenant of warranty a grantor of a warranty deed must defend and compensate the grantee for
any LAWFUL claims made against the grantee’s title (e.g. when the grantee is DEFEATED in a 3rd party’s quiet title action)
While a majority of jurisdictions have enacted statutes that require sellers of residential property to disclose any KNOWN material defects not reasonably discoverable by the buyer, the common-law rule applied is
caveat emptor (buyer beware) which means a seller has no duty to disclose property defects unless otherwise agreed
Under the doctrine of merger, all obligations concerning
title merge into the deed (NOT physical condition of property)
How does a recording statute affect an easement by prior use (implication)?
(1) In some Jx, an interest acquired by operation of law, such as an implied easement, has no documentation to record, and is therefore not subject to the recording act at all.
(2) Other Jx will consider an unrecorded implied easement as extinguished upon compliance with the recording act unless the easement is reasonably necessary for the enjoyment of the dominant estate
If a transferee defaults on an assumed mortgage (one for which the buyer/transferee is personally liable), and the mortgagor pays that debt, the mortgagor can
seek reimbursement from the transferee under the law of suretyship
(When party assumes mortgage, it becomes primarily liable and original mortgagor is secondarily liable)
The warranty of quiet enjoyment in commercial leases is violated if
either the landlord or a 3rd party with a valid legal claim interfere with the tenant’s right to possess the property (may lead to constructive eviction)
