Property Flashcards
Defeasible Fee
Fee Simple Estate of potentially infinite duration that can be terminated upon the occurrence of some specified event
Requires clear words of intent for the fee to be forfeited (i.e. “Desire, hope, aspire” are insufficient)
3 types:
(1) Fee Simple Determinable
(2) Fee Simple Subject to Condition Subsequent
(3) Fee Simple Subject to an Executory Interest
Fee Simple Determinable
Fee Simple BUT … Property automatically reverts back to the grantor upon the happening of a given event
e.g. “To A for so long as X”
Characteristics:
(1) Automatic Forfeiture upon occurrence
(2) Potential infinite duration
(3) Transferable fee estate (subject to the condition)
Accompanying future interest = possibility of reverter (TO GRANTOR) which is transferable inter vivos and intestate
Fee Simple Subject to Condition Subsequent
Fee Simple BUT … Grantor retains power (i.e. right to take action) to terminate grantee’s estate.
e.g. “To A, but if he X, grantor reserves right to reenter”
Characteristics:
(1) Forfeiture NOT automatic [Main distinguish]
(2) Potentially infinite
(3) Transferable
Accompanying future interest = right of reentry (TO GRANTOR) which is NOT transferable inter vivos but is intestate.
Fee Simple Subject to an Executory Interest
Fee Simple BUT … Property automatically transfers to a third party (i.e. someone other than grantor) upon the happening of a given event.
e.g. “To A, but if X, then to B.”
Characteristics: Same as Fee Simple Determinable BUT transfers to B instead of O.
Accompanying future interest = shifting executory interest (retained by third party) which is fully alienable.
Life Estate
An interest that lasts only for the life of the interest holder. The Life Tenant has all ownership rights but must maintain property, make reasonable repairs and cannot commit waste. Can be defeasible or indefeasible.
e.g. “To A for life”
Accompanying future interest = reversion or remainder.
Reversion (Life Estate)
future interest in grantor when a life estate does not provide for disposition of property to a third party.
e.g. “To A for life.”
Remainder (Life Estate)
future interest following a life estate that identifies a third person.
e.g. “To A for life, then to B”
Categories of remainders:
(1) Vested Remainders: Indefeasible; Subject to total divestment; subject to open
(2) Contingent remainders: condition precedent to the future interest becoming possessory; future interest vests in an unascertained taker
Life Estate Pur Autre Vie
a life estate measured by the life of someone other than Life Tenant.
e.g. “To A for the life of B”
Transferring Life Estate the same (e.g. “A, the LT, transfers to B” which will revert to O when A dies.)
Doctrine of Waste
A Lt cannot commit acts that constitute an unreasonable use of land and/or injure the interests of a future interest holder.
Three types of waste:
(1) Aff mative (voluntary) waste
(2) Permissive Waste
(3) Ameliorative Waste
Voluntary Waste
LT cannot consume or exploit natural resources on the land EXCEPT:
(1) Where necessary for repairs/maintenance of land
(2) When grant expressly give that right
(3) If land was used for exploitation of resources prior to the grant.
Open Mines Doctrine - if exploitation occurred before life estate, LT may only extract from already-open mines.
Permissive Waste
harm to property due to LT neglect.
LT has a duty to repair/maintain property up to the extent of income or profits derived from the land or its rental value.
Includes paying taxes, interest on encumbrances, etc.
Future interest holders who assume LT’s obligations are entitled to reimbursement.
Ameliorative Waste
LT acts that economically benefit the land prohibited under common law, but now usually permitted in most modern jurisdictions
Vested Remainder
a remainder that automatically becomes possessory upon the natural expiration of the preceding estate.
Limitations:
(1) Cannot be subject to any condition precedent; or
(2) Vest in an unknown or unascertained person
Indefeasibly Vested Remainder
becomes possessory immediately upon termination of the prior estate
e.g. To A for Life, then to B
Vested remainder subject to total divestment
subject to some condition subsequent such that the remainderman could be divested after taking possession
e.g. to A for life, remainder to B; but if X, to C”
Vested Remainder subject to open (class gift)
remainder vested in a described class of takers, at least one of whom is capable of taking possession (by virtue of being alive)
e.g. to A for life, remainder to children of B and their heirs
B has one child, who has a vested remainder subject to open because B may have more children
Class remains open UNTIL life tenant dies or whenever any member can call for distribution of her share.
Contingent Remainder
a remainder will be contingent if it is either:
(1) subject to a condition precedent, or
(2) created in favor of an unascertained or unborn person
Contingent Remainder Subject to Condition Precedent
remainder’s taking is contingent on the prior occurrence of some event or condition that, once occurred, will automatically become an indefeasibly vested remainder.
e.g. To a for life, then to b and his heirs when B gets married.
B has a contingent remainder and grantor has a reversion if B is not married when A dies.
Contingent Remainder Subject to Unborn or Unascertained Persons
A remainder created in favor of unborn or unascertained persons that is contingent upon the grantee being born/ascertained.
e.g. “To A for life, then to B’s heirs”
If B has no heirs at the time of A’s death it would revert to Grantor.
Rule of Destructibility
at common law, a contingent remainder is destroyed if it remains contingent when the preceding estate ends.
e.g. “To A for life, then to B once he goes to law school”
If B has not gone to law school when A dies then upon A’s death B gets nothing
The modern rule gives a reversion to grantor/grantor’s estate UNTIL B satisfies the condition
Merger (Shelley’s Rule)
arises when a conveyance attempts to give a life estate to grantee with, a remainder to grantee’s intestate heirs
e.g. “To A for life, then To A’s heirs” and A is alive; at common law, remainder merges and A has a fee simple absolute
Modern Rule - A has a life estate and his heirs have contingent remainders; O has reversion b/c/ A could die without heirs.
Doctrine of worthier title
arises when the grantor creates a life estate in another but creates a future interest in the grantor’s heirs
e.g. “O to A for life, then to O’s heirs”
O’s heir’s contingent remainder is void. O has the reversion.
Executory Interest
a future interest in a third party that takes effect by cutting short some interest.
Includes any future interest that is NOT a remainder.
“but if… then to… for so long as… etc”
Executory Interest holders lack standing to sue for waste.
Fully Transferable, devisbale, descendible.
Shifting Executory Interest
always follows a defeasible fee or vested remainder subject to total divestment. Cuts short someone other than the grantor.
e.g. To A, so long as X, but if X, then to B.
A has a fee simple subject to executory interest
B has a shifting executor interest
Springing Executory Interest
cuts short a present interest held by the grantor or grantor’s estate
e.g. To A, if X.
A has the executor interest
Grantor has a fee simple subject to an executor interest.
Rule Against Perpetuities
No property interest is valid unless it must vest, if at all, no later than 21 years after the death of a life in being at the time thee interest was created.
i.e. a future interest is void if there is any possibility no matter how remote that it will vest more than 21 years after the death of the measuring life.
(1) Determine interest being granted
(2) Apply RAP to any future interest that is a contingent remainder, an open class gift, or an executory interest
(3) If conveyance violated RAP, strike only the violating future interest.
Note that modern reform laws have expanded period beyond 21 years.
Rights of First Refusal & Rap
Contingent interest in property (i.e., options and rights of first refusal) violate RAP if they could possibly be exercised outside the time period allowed by RAP.
Class Gifts & RAP
for class gifts to satisfy RAP, class must be closed with all conditions precedent satisfied for every member
Examples of RAP violations
Age contingency beyond 21 - The conveyance open class is contingent on members reaching an age over 21
Fertile Octogenarian - presumption that any woman is capable of giving birth, regardless of her age or condition
Charity to Charity Expcetion - RAP does not apply
Tenancy In Common
Estate with multiple tenants in which each co-tenant owns a distinct, undivided interest and each has a right to possession of the entire estate.
Characteristics:
(1) Each interest is freely transferable
(2) Each interest can be individually leased for rent (but co-tenants have a right to rents)
(3) No survivorship rights in Co-tenants
(4) Partition can be sought in dispute; if not possible forced liquidation
Joint Tenancy
Four concurrent conditions necessary for the creation:
(1) TIME - JT take interests at the same time
(2) TITLE - JT receive conveyance through the same instrument
(3) INTEREST - JT must take equal and identical interest
(4) POSSESSION - JT must have equal possessory rights
Grantor must expressly intend to create JT.
JT’s possess a right of survivorship (automatic possession at death)
Severance and Transfer of Joint Tenancy Interests
JT is alienable but not advisable or descendible.
Severance by any JT creates a TIC with respect to the severed interest.
Transfer also creates a TIC upon transfer (with any remaining JTs).
Mortgage Lien Theory (MAJORITY) - JT can take a mortgage on her interest without severing (because no title passes)
Mortgage Title Theory (MINORITY) - JT is severed upon any JT taking a mortgage on her interest because title passes to the mortgagee
Tenancy by the Entirety
Marital estate that is similar to a Joint Tenancy.
Created by conveyance to a married couple requiring the same four conditions as a JT. (Presumed)
Characteristics:
(1) Right of survivorship
(2) No right to convey or partition
(3) Protected from creditors to one spouse (not joint creditors)
Severed by death, divorce, foreclosure.
Co-Tenant’s Rights & Duties
(1) Possession of the whole
(2) Share of rents/profits derived from third parties use of land
(3) Protection from Adverse Possession (unless ousted)
(4) Fair apportionment of carrying costs, repairs
(5) Credit for individual improvements that add value; liability for improvements that subtract value
(6) Actions for waste can be brought against co-tenants
(7) Partition/Sale - Partition first, if not, sale
Leasehold Estates
An estate in which the tenant has a present possessor property interest and the landlord has a future interest (reversion)
(1) Tenancy for years
(2) Periodic Tenancy
(3) Tenancy at will
(4) Tenancy at sufferance
Tenancy for Years
It lasts for a fixed period of time, requiring a definitive beginning and end date.
If it lasts longer than one year it must be in writing.
Terminates automatically with no notice requirement.
Periodic Tenancy
A leasehold that is continuous for successive intervals until either party gives notice of termination (e.g. MONTH TO MONTH)
Creation can be express (conveyed), implied (provides for rent intervals) or by operation of law.
Operation of Law
(1) Invalid Lease + Landlord acceptance of Payment
(2) Holdover tenant + Landlord acceptance of Payment
Tenant must be given proper notice upon Termination which requires (1) sufficient time - typically a period and (2) effective date - typically the end of the period
Tenancy at Will
A tenancy with no fixed duration, terminable by either party at any time without notice.
Must be created by express agreement (otherwise implied periodic tenancy)
Termination at will OR by operation of law (death, waste, assignment, transfer of title, lease to 3rd party)
Tenancy at Sufferance
A default tenancy arises when a tenant continues to possess property after the lease expires (i.e. a holdover tenant)
Landlord options:
(1) Sue to evict, or
(2) Impose a new period tenancy (can demand higher rent if notice given prior to lease expiration)
Exception: the new imposed periodic tenancy must be REASONABLE (possession a few hours beyond would be unreasonable, or tenant is not at fault)
Tenant’s Duties at Common Law
Duty to Repair
Duty to pay Rent
Duty to not use property for illegal purposes
Liability to third parties (in tort)
Tenant’s Duty to Repair
Largely modified by lease terms:
(1) Maintain premises
(2) Make ordinary repairs
(3) Do not commit waste
(4) Destruction of Property (Common Law - tenant held liable for any loss, Modern Law - tenant can terminate lease)
Fixtures
Once-movable chattel that is annexed (i.e. affixed) to real property such that it becomes part of the realty
Pass with the ownership of the land unless life tenant’s rep removes annexed chattel within a reasonable time after life tenant’s death
Determining when a Chattel becomes a Fixture
Intent Controls (annexor’s)
Chattel is integrated into a structure (like walls)
Landlord/Tenant Agreements (if exist)
Removing fixtures before lease that tenant installed is OK; but doing so imperssibly = waste.
Landlord Remedies to Tenant Breach
Tenant Retains Possession?
File notice of eviction or continue the lease and sue for rent due.
Tenant Abandons?
Treat as surrender; ignore holding tenant liable for unpaid rent (minority); re-let to new tenants holding breached liable for any losses (majority)
NO SELF HELP!
Return Security Deposit net damages
Retaliatory Evictions to lawful house code reports is unlawful.
Landlord Duties & Warranties
(1) Duty to deliver possession on first day of lease
Majority is ACTUAL possession / Minority is LEGAL possession (i.e. new tenant must evict holdover)
(2) Implied covenant of quiet enjoyment
(3) Implied warranty of habitability
(4) Tort Liability
Implied Covenant of Quiet Enjoyment
A tenant has an implied right to quiet use and enjoyment of the premises, without interference from the landlord
Breach may occur by actual or constructive eviction, by landlord’s wrongful conduct causing loss of the use by tenant
Constructive Eviction
landlord’s actions or inactions render the property uninhabitable or unusable:
Elements:
(1) Breach of duty
(2) Substantial interference (major problems) caused by landlord’s wrongful conduct
(3) Notice to Landlord by tenant + Reasonable opportunity to repair
(4) Vacate by Tenant within reasonable time after failure to repair
Implied Warranty of Habitability
Residential property must be fit for basic human dwelling
Characteristics
(1) Residential only
(2) Absolute duty (cannot be modified by lease terms)
e.g. no heat in winter
Tenants remedies after notice:
(1) Move
(2) Repair + deduct
(3) Withhold Rent
($) Remain + damages
Landlord Tort Liability to Tenant
(1) Common Areas - Duty of Reasonable Care
(2) Latent defects - Duty to Disclose
(3) Assumption of Repairs - negligence standard
(4) Public Use - known defects that tenant is unlikely to repair
(5) Short Term / Seasonal Furnished - all defects that cause harm
Assignment
Unless restricted in terms of lease, the tenant may assign/sublease
Entire leasehold transfers from tenant to assignee.
Assignee is in privity of estate with landlord and the two are bound by all covenants that run with the land
Assignor remains in privity of contract with the landlord
Assignee owes rent directly to landlord but assignor remains liable for unpaid rent unless expressly released via ovation.
Subleases
Unless restricted in terms of lease, the tenant may assign/sublease.
Sublease is a partial leasehold transfer to sublessor to sublessee
Sublessor is in privity of estate and contract with landlord
Sublesses pays rent to sublessor as her tenant and is not liable to landlord for rent and is not bound by any lease covenants unless expressly assumed
Easement
a non-possessory property interest that confers a right to use another’s land
Servient Estate = Burdended land
Dominant Estate = benefited land
Types of Easements:
(1) Easement Appurtenant
(2) Easement In Gross
(3) Affirmative Easement
(4) Negative Easement
Easements maybe created by prescription, implication, necessity, or expressly by grant or reservation.
Easement Appurtenant
Entitles a dominant estate owner to use a servient estate’s land. Attaches to the dominant estate and passes automatically.
Easement in Gross
entitles an individual or entity (not a dominant landowner) to use the servient estate
Attaches only to the servient estate
e.g. right to place a billboard on another’s lot, run utility across a lot, fish in another’s pond, etc.
License that is irrevocable and transferable
Affirmative Easement
entitles its holder to make affirmative use of the servient estate
Negative Easement
entitles its holder to restrict the servient estate from otherwise permissible activities
Scope of Easements
Terms and conditions that created it. courts consider the reasonable intent of original parties
Expansion of Easement cannot be done unilaterally via use or will misuse terminate. (remedy = damages/injunction)
Easement holder has a duty to make repairs if he is the sole user (otherwise apportioned).
Express Easement (by grant or reservation)
Must be in writing and signed by servient estate holder.
Grant - expressly granted by instrument from servient owner to dominant owner
Reservation - grantor conveys title to land but reserves the right to continue using for a designated purpose. Only can be done for oneself not for others.
Easement by Prescription
Acquiring an easement through similar process to adverse possession
COAH (Continuous, Open and Notorious, Actual, Hostile)
Easement by Implication
Legally implied based on prior use by a common grantor on land subsequently divided into multiple plots
Requirements:
(1) Easement exists prior to division of a single tract;
(2) Common grantor’s use is continuous and apparent;
(3) Use is reasonably necessary for enjoyment of the dominant tenement; and
(4) Parties intended the use to continue after division of the land
Exceptions: may be implied WITHOUT PRIOR USE, IF:
(1) subdivision plat - lots sold w/ reference to a plan
(2) Profit a prendre - pass over lands surface as reasonably necessary to extract minerals
Easement by Necessity
arises if access to or from a property is impossible without the easement
Creation usually arises when a landowner sells a portion of her property and the resulting division deprives one lot owner of access to a public road/utility
Expires when necessity ends
Negative Easements
Four categories that may be prevented:
(1) Light
(2) Air
(3) subjacent or lateral support
(4) Stream of water from an artificial flow
Creation - by express grant signed in writing by grantor
Restrictive covenants more common than negative easements
Termination of Easements
(1) Estoppel - servient owner reasonably relies on easement holder’s conduct/representations indicating an intent to abandon
(2) Necessity ends
(3) Destruction of servient tenement (unless results from willful conduct of servient owner)
(4) Release (via deed or release)
(5) Abandonment - Physically demonstrates an intent to permanently abondan
(6) Merger - one person acquires title to both parcels
(7) Prescription - servient owner interferes with easement of prescription using elements of AP
(8) Expiration - set within terms of easement
Licenses
a right to use another person’s land (licensor) which is revocable at the will of the licensor
License is a privilege NOT an interest in land. It is removable and inalienable with not writing requirement.
Profit
a non-possessory property interest entitling its holder to enter a servient estate to remove resources
all rules governing easements apply
A profit may be extinguished through misuse or overuse of the resources
Covenants
a promise to do or refrain from doing something related to land.
Not property interests, contractual obligations.
Runs with the land (subsequent owners may be burdened or may enforce)
Termination can occur by (1) written release; (2) merger; (3) Condemnation of the burdened property
Covenants = money damages
Requirements for Burdens of Covenant to Run with the Land
(1) Writing
(2) Intent to bind successors
(3) Touches and concerns the land (HOA fees - low bar)
(4) Horizontal and Vertical Privity must exist between parties
(5) Notice to successor in interest
Horizontal Privity
relationship between the covenanting parties (landlord/tenant; grantor/grantee; mortgagor/mortgagee)
Vertical Privity
relationship between covenanting parties and their successor in interest (contract, devise, descent)
Requirements for Benefits of Covenant to Run with the Land
(1) Writing
(2) Intent
(3) Touches and Concerns the land
(4) Vertical Privity ONLY
Equitable Servitude
covenants enforced in equity against successors through injunctive relief
successors who have notice
privity is not required to bind successors
Creation of Equitable Servitude
(1) Writing (unless reciprocal negative servitudes that can be implied)
(2) Intent to bind
(3) Touches and concerns the land
($) Notice to successors
Defenses to enforcement of Equitable Servitude
(1) Pervasive changes in the neighborhood
(2) Estoppel
(3) Acquiescence
(4) Unclean Hands
(5) Laches
Reciprocal Negative Servitude
If land is subdivided into parcels under a common development scheme with only some parcels having negative servitudes, the restrictions may be impliedly binding against all subdivided lots
Common Scheme
(1) development evidenced intent to create a negative servitude under a common scheme for all subdvidied parcels
(2) evidenced by a recorded plat, general pattern of restrictions and/or, oral repretations to early buyers
Notice
via restrictions of deeds in other subdivided lots. Can be actual, inquiry (i.e. neighborhood character), or record (chain of title includes prior deed containing negative servitude)
Adverse Possession
A trespasser may acquire title to another’s property without compensation by possessing the property for a specified period in a manner conflicting with the true owner’s rights
COAH
Continuous ordinary possession for the statutory period
Open and notorious i.e. conspicuous (owner need not ACTUALLY know)
Actual and exclusive - exclude owner
Hostile - without permission (leasehold does not count)
AP Statute of Limitation Rules
Diability - SoL does not begin to run if true under was under disability when AP began
Future Interests - SoL does not run against future interest holders until it becomes possessory
AP Restrictive Covenants
will not run with the land if AP’s use of land violated the covenant; but will run if it complied.
AP Color of Title
a claim of title to property not actually own
AP part of the property under color of title is sufficient to acquire title to entire property
AP Govt. Land
cannot be acquired through AP
AP Leasing
AP can lease portion to a third party and still possess
AP Non-Marketable Title
title taken by AP is not marketable unless there has been an action to quiet title first.
AP Tacking
AP can tack together successive periods of AP to satisfy the statutory period but it MUST be successive (no gaps) and they must have been privity (descent, devise, deed conveying title versus No to ouster)
AP Concurrent Owners
co-tenants may not PA each other’s interests unless ouster has occurred
Land Sale Contracts
subject to SoF:
(1) Writing
(2) Signed by parties to be bound;AND
(3) Articulate essential terms (identify grantor/grantee, intent to convey, consideration to be paid, description of land)
Process:
(1) Contract to buy/sell
(2) Escrow Period
(3) Closing - completion to deed delivery
(4) Conveyance at successful deed transfer
Partial Performance Exception to Land Sale
A land sale K outside the SoF is enforceable against seller if buyer does any 2 of the following:
(1) pays all or part of purchase price
(2) take possession; and/or
(3) makes substantial improvements
Equitable Conversion
during escrow (after land sale K but before deed delivery) buyer owns the real property but seller owns the personal property (i.e. the right to proceeds of the sale)
Seller holds legal title in trust for buyer
Any judgment against seller prior to K is converted to interest in the proceeds of sale and is not enforceable against the real property
Risk of Loss
if property is destroyed before closing through no fault of the parties buyer bears the risk of loss in most jx
Can be contracted away
Seller credits insurance proceeds
Death of a Party (Land Sale)
Death before closing
Sellers estate can sue for sale proceeds (personal property)
Byers estate can sue for delivery (Real property)
Implied Promises in Land Sale Contracts
EVERY Land Sale K contains 2 implied promises:
(1) Promise to provide marketable title (free of risk of litigation upon closing).
Defects include:
- acquired by AP
- encumbered by interests
- zoning ordinance violations
(2) Promise to disclose latent material defects & make no material false statements
New property = implied warranty of quality in construction
Breach of implied promises in land sale K
Buyer must give notice and reasonable time to cure
Failure to cure –> Buyer can rescind, file for damages, demand SP, or file suit to quiet title
Failure to notify leads to merger of K into deed making seller not liable for contractual promises
Deeds
A deed passes legal title from seller to buyer
To be effective a deed must be:
(1) lawfully executed (signed by grantor, reasonably identify parties, contain legal description of property); and
(2) be delivered (intent to be bound by conveyance not literal physical transfer) and accepted by grantee (usually presumed)
3 types:
(1) General Warranty
(2) Special Warranty
(3) Quitclaim
General Warranty Deed
6 Covenants of Title
Present Covenants (at time of delivery)
(1) Seisen - the rightful owner of described land
(2) Right to Convey
(3) Against Encumbrances - servitudes, mortgages, etc
Future Covenants (after delivery)
(1) Quiet Enjoyment - against 3rd party claim of title
(2) Warrant - defend against lawful claims by others
(3) Further Assurances - acts necessary to perfect title
Special Warrant Deed
Grantor assures that
(1) he has not conveyed land to another
(2) The land is free of encumbrances attaching while grantor owned the land
Quitclaim Deed
transfers whatever interest grantor purports to have with no covenants; not even promising to convey title.
Bonafide Purchases for Value
a BFP is one who purchases property for value without notice of a prior conveyance
Notice:
(1) Actual (actual knowledge)
(2) Inquiry (reasonable inspection would reveal)
(3) Record (previous conveyance properly recorded in chain of title)
Notice Statutes (Recording)
Subsequent BFP always prevails regardless of whether she recorded first or not
“No conveyance or mortgage of an interest in land shall be valid against any subsequent purchaser for value without notice thereof unless it is recorded”
Race-Notice Statutes (Recording)
First BFP to record prevails
“No conveyance or mortgage of an interest in land shall be valid against any subsequent purchaser for value without notice thereof whose conveyance is first recorded”
Race Statutes (Recording)
First grantee to record prevails regardless of BFP status
“No conveyance or mortgage of an interest in land shall be valid against a subsequent purchaser whose conveyance is first recorded”
Shelter Rule
one who takes from a BFP will prevail against any interest the trasnferor-BFP would have prevailed against, even if the transferee had actual notice of the prior conveyance.
protects donees/heirs/devisees
Wild Deeds
a recorded deed unconnected to the chain of title cannot provide record notice
Estoppel by deed
a grantor who conveys title to land he does not then own is estopped from subsequently acquiring the same land
Title automatically passes to the benefit of the grantee
Real Estate Brokers/Agents
Sellers Agent
(1) fiduciary duty to seller
(2) earns commission from sale of property once the sale closes
(3) Seller’s agent may still earn commission if the sale fails to close due to seller’s fault
Buyers agent
(1) receives portion of listing broker’s commission
(2) Common law said fiduciary duty to seller
(2) Modern Statutes require separate agreement with buyer and fiduciary to buyer
Mortgages
A security interest in land that serves as collateral for the repayment of a loan (aka “mortgage deed” or “note”)
Writing required
Lien Theory (Majority)
mortgagor has title and the right to possession absent foreclosure
Title Theory (Minority)
mortgagee has title to the property during loan term
Intermediate Theory (Minority)
mortgagor has title and right to possession until default occurs per the mortgage
Equitable Mortgage
Debtor give creditor a deed to his land as collateral for debt
Mortgage Transfer
where a mortgagor sells property mortgage remains on the land (i.e. grantee takes subject to the mortgage but is not liable for repayment)
Mortgage remains liable
Versus. Assumption where grantee promises to pay existing mortgage loan and original party becomes surety.
Holding in due course (mortgages)
a holder in due course lender takes a mortgage note free of any personal defenses mortgagor could have raised against original mortagee (e.e lack of consideration, fraudulent inducement)
Still remains subject to real defenses like durress and fraud.
Requirements:
(1) Negotiable Note
(2) Endorsed
(3) Delivered
(4) Good faith and value paid
Foreclosure
upon default, mortgagee can satisfy debt through foreclosure by judicial action
Property is sold to satisfy the debt in whole or in part
Deficiency judgment - if the debt exceeds sale proceed, mortgagee can file suit against mortgagor for debt balance
If proceeds exceed the debt balance, junior liens are paid in order of priority
Redemption in Equity
at any time prior to a judicial foreclosure sale, mortgagor can redeem the property by paying the amount due
Equitable Mortgage - redemption rights apply where a creditor appears to hold legal title to the land via a deed
Statutory right of redemption - some jx allow mortgagor for a certain period to buy back the property after foreclosure sale
Deed in lieu of Foreclosure
to avoid foreclosure, mortgagor can agree to give mortgagee deed to property so long as its fair and reasonable
Mortgagee possession (prior to foreclosure)
Lien Theory - no right
Title Theory - any time upon demand
Intermediate - upon default
Consent/Abandonment - always
Mortgagee in possession assumes risk of rents, property, tort liability, etc.
Priority of Creditors
Interest must be recorded.
Priority in interest recorded.
Purchase Money Mortgages (used to buy property) automatically superior.
Creditors can agree to subordinate priority to junior creditors.
Junior Interests
terminated by foreclosure of a superior claim (i.e. upon foreclosure, jr interest holders cannot look to the land to satisfy debts)
Can seek a deficiency judgment against debtor
Jr creditors are necessary parties and must be included in a senior foreclosure action
Senior interests
unaffected by junior interest foreclosures
buyer of foreclosed property takes it subject to senior interests
buyer is not liable for senior debt but the senior mortgage remains on the land
Lateral Support
Ownership of land includes the right to have land supported in its natural state by adjoining land;
landowners can be liable for excavations that cause damage to adjacent land
Land in Natural State = SL
Buildings on Land = SL but P must show his land would’ve collapsed in its natural state otherwise negligence standard
Subjacent Support
Underground structures must support surface structures existing when the subjacent estate was created (parking garage/tunnels/etc)
SL for failure to support surface land and pre-existing surface structures
Negligence for failure to support subsequently constructed buildings
Water Rights in Watercourses
land bordering watercourses (natural or artificial bodies of water) is governed by either the riparian doctrine or the prior appropriation doctrine
Riparian Water Rights
water belongs to those who own land bordering the watercourse
Reasonable use theory (majority) - riparian owners share rights to reasonable use and are liable to other owners if their use unreasonably interferes with other owners’ use (utility vs. harm)
Natural Flow theory (minority) - riparian owners may be enjoined for any use resulting in a substantial or material reduction in others’ water quantity, quality, or velocity
Natural Uses > Artificial uses
Prior Appropriation Doctrine (Water Rights)
water rights are originally acquired by actual use
priority of beneficial use determines rights to water (e.g. first individual to make a beneficial use of water has superior legal rights to use it)
Groundwater
water beneath the surface not confined to a known channel (e.g. wells)
Reasonable use- eastern states
Prior appropriation - western states
Surface Water
Water from rain, springs, or other runoff that has not yet reached a natural watercourse
landowners can generally use surface water as they please, but may be liable for interrupting its flow in a way that impacts other owners
Depends on theory:
(1) Natural Flow - owners cannot unreasonably alter natural drainage
(2) Common enemy - owners can do anything to change drainage or combat flow unless it causes unnecessary damage to others’ land
(3) reasonable use - utility of use is balanced against gravity of harm from that use (riparian)
Govt Zoning Power
govt. may enact laws to reasonably control land use.
Limited by zoning oridnances that must be reasonably related to public welfare, not too restrictive, and not racially discriminatory
Variance (Zoning)
landowners can get govt. permission to be exempt or vary from literal restrictions of a zoning ordinance
To qualify for a variance, a landowner must show:
(1) undue hardship; and
(2) variance will not be contrary to public welfare
Non-conforming use
a once lawful existing use for property, now deemed nonconforming under new zoning laws
Govt. cannot eliminate a use all at one unless just compensation is paid. (can be amortized)
Special Use Permit
certain property uses require a special use permit even where zoning generally allows the type of use (e.g. hospitals and drive thrus in commercial zoning district)
Exactions
condition for govt. approval of a new development
Condition is usually a payment or gift of property to govt. to offset the development’s demands on public services
e.g. land for bus stop by new housing development
Unconstitutional, unless
Requirements:
(1) Nexus - rational relationship between exaction sought and burden on public facilities
(2) Proportionality - reasonably related in nature and scope to impact of the development
