Property Flashcards
Joint Tenancy With Right of Survivorship/Tenancy By Entireties/Tenancy In Common
Joint tenants must make their interests:
T: At the same time;
T: By the same title (same deed,will, or other document of title);
I: With identical, equal interests; and
P: With rights to possess the whole.
Must also state “survivorship or “survivors”
Severance: A joint tenancy can be severed in one of four ways (mnemonic=G SAM):
1. By giving it away during life
2. By signing a contract for sale,
3. By an actual judicial sale by a judgment lien creditor, or
4. By granting a mortgage in a title theory state
Severance and Partition: There are three types of partition:
By voluntary agreement: An allowable and peaceful way to end agreement
By judicial action called partition in kind: An action for a physical division of the property, if in the best interest of all parties.
By judicial action called a forced sale: An action when, in the best interests of all parties, the land is sold and the sale proceeds are divided up proportionately
Mortgages: Under the majority view(lien theory), a mortgage is a lien on title and does not sever a joint tenancy. Severance occurs only if the mortgage is foreclosed and the property is sold.
Minority view(title theory): The execution of a mortgage in title theory states, however, does sever a joint tenancy because giving a creditor a lien on ones share is the equivalent of transferring title to that creditor under the minority view
Tenancy By The Entireties
Creation: In states that recognize the tenancy by the entirety, it arises presumptively in any conveyance to married partners unless the language of the grant clearly indicates otherwise.
Severance: A tenancy by the entirety may only be severed by:
1. Death
2. Divorce
3. Mutual agreement; or
4. Execution by a joint creditor of both the spouses.
On divorce the tenancy by the entirety becomes a tenancy in common.
Tenancy in Common: A tenancy in common is a concurrent estate with no right of survivorship
There are two important features of tenancy in common:
1. Each co-tenant owns an individual part, and each has a right to possess the whole.
2. Each interest is devisable, descendible, and alienable.
Leases
Term for years lease: A term for years lease specifies both a beginning date and an end date.
Termination: A tenancy for years ends automatically at its termination date.
Breach of Lease Covenant: In most leases, the landlord reserves a right of entry, which allows them to terminate the lease if the tenant breaches any of the leases covenants.
Periodic tenancy: A periodic tenancy has no fixed end date (e.g., month-to-month lease = periodic
tenancy). It simply repeats until one party gives valid notice to the other.
It can be created by an express agreement, implication (where the lease contains no end date), or operation of law (e.g., an oral lease that violates the Statute of Frauds because the term is more than one year).
Valid notice (i.e., notice equal to the rent payment term) is required to terminate a periodic tenancy.
Tenancy at Will: This is a tenancy of no fixed period of duration- its terminable at will of either the landlord or the tenant.
Creation: Generally, a tenancy at will must be created by an express agreement that the lease can be terminated at any time.
Termination: In theory a tenancy at will can be terminated by either party at any time. But today, in most states, notice and reasonable time to quit(vacate) are required to terminate a tenancy at will.
Tenancy at Sufferance: A tenancy at sufferance is created when a tenant wrongfully holds over, meaning they remain in possession past the expiration of the lease.
Termination: the tenancy at sufferance lasts only until the landlord either evicts the tenant or elects to hold the tenant to a new tenancy.
Assignment: If the lease does not prohibit an assignment or sublease, a tenant can assign or sublease her interest in the lease.
An assignee stands in the shoes of the original tenant in a direct relationship with the landlord
Thus, the assignee and the land lord are “privity of estate” and each is liable to the other on all original covenants in the lease that “run with the land”
Original Tenant and Landlord: After assignment, the original tenant is no longer in privity of estate with the landlord, but their lease contract remains in effect and enforceable.
Thus, the original tenant remains liable on the original contractual obligations such as to pay rent(privity of contract)
Sublessee: The tenant of the original lessee and usually pay rent to the original lessee, who then pays the landlord.
When A Sublease Arise: A sublease arises when T1, the original tenant, transfers less than her entire interest to T2.
Result: The result of a sublease is that the landlord and sublessee are in neither privity of estate nor privity of contract.
Thus, a sublessee is not personally liable to the landlord for rent or for the performance of any of the covenants in the main lease unless the sublessee expressly assumes the covenants.
The Fair Housing Act: This act disallows discrimination in housing sales or rentals on the basis of race, color, religion, sex, familial status, or national origin (but not occupation). This does not apply if the owner occupies one of the units in a multiple-unit dwelling containing no more than four units occupied by persons “living independently of each other.” However, an owner may not place a discriminatory advertisement. If such advertisement is made, the owner and publisher will have violated the act.
Tenants Duties
A tenant has two primary duties:
1. A Duty to Repair
2. A Duty to Pay Rent
Duty to Repair:
A tenant need only to maintain the premises
Thus a tenant only needs to make a routine repair, not a repair occasioned by ordinary wear and tear
Waste: A tenant cannot damage(meaning commit waste) the leased premises.
There are 3 types of waste:
1. Voluntary(affirmative) Waste: Results when the defendants overt conduct damages the premises
2. Permissive Waste: It occurs when the tenant fails to take reasonable steps to protect the premises from damages from the elements.
If the duty to maintain the premises is shifted to the landlord, the tenant has a duty to reort deficiencies promptly.
3. Ameliorative Waste: It occurs when the tenant unilaterally alters the leased property, thereby increasing its value.
Tenants Duty To Pay Rent:
On The Premies: If a tenant is on the premises and fails to pay rent, the landlord can:
1. Evict through the courts or
2. Continue the relationship and sue for rent due.
If the landlord moves do evict they are still entitled to rent until the tenant vacates.
Off the premises: If the tenant wrongfully vacates with time left in a term of years lease the land lord may:
1. Surrender: The landlord could choose to treat the tenants abandonment as an implicit offer of surrender, which the landlord accepts, thereby ending the lease.
2. Ignore the abandonment(do nothing) and hold the tenants responsible for the unpaid rent until the natural end of the lease, just as if the tenant were still there.
3. Re-let the premises on the wrongdoer-tenants behalf, and hold the wrongdoer-tenant liable for any deficiency.
Under the majority rule, the landlord must at least try to re-let.
Landlords Duties
Duty to Deliver Possession
Rule: The majority rule requires that the landlord put the tenant in actual physical possession of the premises at the beginning of the lease-hold term.
Thus if at the start of the tenants lease, a prior holdover tenant is still in possession, the tenant may sue for damages.
Implied Covenant of Quiet Enjoyment: It provides that a tenant has a right to quiet use and enjoyment on the premises, without interference from the landlord or a paramount title holder.
Breach By Wrongful Eviction: A landlord may breach this covenant by wrongful eviction
Actual conviction: Occurs when the landlord, a paramount title holder, or a hold-over tenant excludes the tenant from the entire leased premises.
This terminates the tenants obligation to pay rent
Partial eviction by the landlord relieves the tenant of the obligation to pay rent for the entire premises, even though the tenant continues in possession of the remainder.
Breach By Constructive Eviction: A tenant can sue for constructive eviction (commercial or residential) if the tenant can prove that:
1. The landlord breached a duty to the tenant (e.g., the duty to repair) and
2. This breach caused a loss of substantial use and enjoyment of the premises, and
3. The tenant vacated the premises within a reasonable time after giving the landlord adequate notice.
The Implied Warranty of Habitability: Provides that the premises must be fit for basic human habitation.
Only applies to residential leases not commercial
Breach: If the implied warranty of habitability is breached, the tenants options are:
1. Move out and terminate the lease
2. Repair and deduct(the tenant may make reasonable repairs and deduct their cost from future rent)
3. Reduce rent or withhold all rent until court determines fair rental value(typically, the tenant must place rent in an escrow account to show good faith)
4. Remain in possession, pay full rent, and affirmatively seek money damages.
Caveat Lessses”: Let the tenant beware. In tort, a landlord’s under no duty to make the premises safe.
There are 5 exceptions to caveat lessee(CLAPS):
1. Common areas: Duty of reasonable care In maintaining all common areas
2. Latent defects: Landlord must warn of hidden defects(meaning, a dangerous condition that the tenant couldn’t discover by reasonable inspection) of which the landlord has knowledge or reason to know.
3. Assumption of repairs: Landlord under no duty to make repairs, once repairs are undertaken, the landlord must complete them with reasonable care
4. Public use rule: A landlord who leases a public space, and who should know because the significant nature of the defect and the short length of the lease, that a tenant will not repair, is liable for any defects on the premises that cause injuries to members of the public.
5. Short-term lease of furnished dwelling: A landlord who rents a fully furnished premises for a short period of time is under a stricter duty and are responsible for any defective condition which proximately injures a tenant. (Whether or not they knew)
Easements
An easement is a grant of nonpossessory property interest that entitles its holders to some form of use or enjoyment of another’s land.
Affirmative Easements: An affirmative easement is the right to go onto and do something on servient land
Negative Easements: The negative easement entitles its holder to prevent the servient landowner from doing something that would otherwise be permissible.
Negative easement are generally recognized in only four categories(LASS):
1. Light
2. Air
3. Support
4. Stream water from an artificial flow
Creation of Negative Easement: Can only be created expressly, by a writing signed by the grantor.
Easement in Appurtenant: An easement is in appurtenant when it benefits its holder In his physical use or enjoyment of his own land.
Two parcels of land must be involved for an easement appurtenant:
1. A dominant tenement, which derives the benefit
2. A servient tenement which bears the burden
The easement appurtenant passes automatically with transfer of the dominant tenement, regardless of whether it is even mentioned in their conveyance.
The burden of the easement appurtenant also passes automatically with the servient estate, unless the new owner is a bona fide purchaser without notice of the easement.
Example: A grants B a right of way across A’ land, so B can more easily reach his land. B’s land is benefited by the easement. In easement parlance, it is the dominant tenement. A’s land is serving B’s easement. It is the servient tenement.
Easement In Gross: An easement is in gross if it confers upon its holders only some personal or pecuniary advantage that is not related to their use or enjoyment of their land.
Easement In Gross: An easement in gross is not transferable unless it is for commercial purposes.
Examples: The right to place a billboard on another lot, The right to swim in another pond, The utility companies right to lay power lines on another lot
Creation: Easements can be created by(PING):
1.Prescription- Adverse Possession(COAH) Use need not be exclusive
- Implication:
Quasi-Easment(Pre-existing use):
A. The previous use on the servient part was apparent and continuous; and
B. The parties expect that the use would survive division because it is reasonably necessary
Easement Implied Without Any Existing Use: In two limited situations, easements may be implied without preexisting use:
A. Subdivision Plat: When lots are sold in subdivision with reference to a record plat that shows streets leading to the lots, buyers of the lots have an implied easement to use the streets to access their lots.
B. Profit a Prendre: The holder of a profit a prendre has an implied easement to pass over the surface of a servient land and to use it as reasonably necessary to extract from the servient property its minerals or some product as specified by the terms of the profit - Necessity - The owner of the servient parcel has the right to locate the easement.
- Grant- Any easements must be memorialized in writing and signed by the holder of the servient tenement unless its duration is brief enough to be outside the coverage of a particular state’s Statue of Frauds.
There are eight ways to end an easement(END CRAMP):
1. Estoppel: Servient owner materially changes position in reliance on the easement holder assurances or representation that the easement will no longer be enforced. Oral expression of intent generally wont terminate an easement unless through estoppel.
2. Necessity: Expire as soon as necessity ends, unless easement was reduced to express writing
3. Destruction: Destruction of the servient land will terminate the lease. (Unless by willful conduct by servient owner)
4. Condemnation: Condemnation by governmental eminent domain will terminate the lease
5. Release: By holder to servient land owner. Must be in writing.
6. Abandonment: Requires physical action by the easement holder that manifests an intention to permanently abandon
7. Merger: Easement is extinguished if easement and servient land are owned by the same person
8. Prescription: Servient owner may extinguish easement by interfering with it in accordance with the elements of adverse possession.
License and Profits
License: The license is the mere privilege to enter another land for some delineated purpose.
Unlike an easement, a license is not an interest in land; its merely a privilege, revocable at the will of the licensor.
Creation: A writing is not needed to create a license
Reasoning: This is because a failed attempt to create an easement results in a license.
Thus, if a grantor orally grants an easement for more than one year it is unenforceable and becomes a license.
Revocation: Licenses are freely revocable at the will of the licensor, unless estoppel applies to bar revocation.
Estoppel: Estoppel will apply to bar revocation only when the licensee has invested substantial money or labor or both in reasonable reliance on the licensee’s continuation.
The license becomes an easement by estoppel; which lasts until the holder receives sufficient benefit to reimburse him for his expenditures.
Profit: The profit entitles the holder to enter the servient land and take from it some resources such as the soil, some substances from the soil such as minerals or oil, or some product of the property such as fish or game.
Rules for creating and terminating profits: All of the rules governing creation, alienation, and termination of easements are applicable to profits.
Restrictive Covenants
Covenant: The covenant is a written promise to do or not to do something related to land.
It is a contractual limitation or promise regarding land.
Negative Covenant(Restrictive Covenant): A promise to refrain from doing something related to land.
Affirmative Covenants: A promise to do something related to land.
In covenant parlance, one tract is burdened by the promise and another is benefited.
Requirements for Burden to Run:
1. Writing: The original promise between A and B must have been in writing
2. Intent: The original covenanting parties A and B must have intended that the covenant would run (meaning they intended that successors to the originally promising parties would be bound by the covenant).
3. Touch and concern: The promise must affect the parties legal relations as landowners and not simply as members of the community at large.
4. Horizontal Privity: Requires that the nexus between the original promising parties(A and B) be in succession of estate, meaning that they were in a grantor-grantee, or landlord-tenant, or mortgagor-mortgageee relationship when the covenant was created.
5. Vertical Privity: It simply requires some non-hostile nexus, such as contract, devise or descent.
Vertical privity will be absent only when the successor acquired their interest through adverse possession.
6. Notice: The successor must have had notice of the promise when she took
Requirements For Benefit To Run:
1. Writing: The original promise(between A and B) must have been in writing
2. Intent: The originally convening parties (A and B) must have intended that the benefit would run, meaning they intended that successors in the interest to the promise would be able to enforce the covenant.
3. Touch and Concern: The benefit of a covenant touches and concerns the land if the promised performance benefits the promisee and her successors in their use and enjoyment of the benefited land. In other words, the promise must affect the parties as landowners.
4. Vertical Privity: No adverse possession
Covenant vs Equitable Servitude: If the plaintiff wants money damages, you must construe the promise as a covenant.
If the plaintiff want an injunction you must construe the promise as an equitable servitude.
Equitable Servitudes
Equitable Servitudes: Created by promises contained in writing that satisfies the Statue of Frauds.
To create an equitable servitude that will bind successors remember WITNES:
1. Writing: Generally but not always, the original promise was in writing(common scheme exception)
2. Intent: The original parties intended that the promise would be enforcebale by and against successors
3. Touch and Concern: The promise affects the parties as landowners
4. Notice: Subsequent purchaser of land burdened by the covenant had actual, inquiry, or record notice of the covenant when they aquired the land.
- No privity of estate is required for equitable servitudes.
Implied Equitable Servitudes(Common Scheme Doctrine)
Rule: Under the common scheme doctrine the court will imply an equitable servitude to hold the unrestricted lot holder to the promise. (Reciprocal negative servitude means an implied equitable servitude)
The two elements of the general or common scheme doctrine:
1. When the sale began, the subdivider had a general scheme of residential development which included the defendants lot.
-The scheme may be evidenced by: A recorded plat, a general pattern of restrictions, or oral representations to early buyers
- The defendant lot-holder had notice of the promise contained in those prior deeds when it took.
- Three forms of notice:
a. Actual Notice: Defendant had literal knowledge of the promises contained in the prior deeds
b. Inquiry Notice: Meaning the neighborhood seemed to conform to the common restriction(its the “lay of the land”)
c. Record Notice: Meaning the form of notice sometimes imputed to buyers on the basis of the publicly recorded documents(so, theres a prior deed with the covenant in grantee;;s chain of title)
Equitable Defense To Enforcement: A court will not enforce an equitable servitude if:
1. The neighborhood conditions have changed so significantly that enforcement would be inequitable.
The changed circumstances alleged by the party seeking release from the terms of an equitable servitude must be so pervasive that the entire area or subdivision has changed.
2. Unclean Hands: The person seeking enforcement is violating a similar restriction on his own land(
3. Laches: The benefited party fails to bring suit against the violator in a reasonable time(laches)
4. The benefited party acted in such a way that a reasonable person would believe that the covenant was abandoned or waived
Adverse Possession
Requirements for adverse possession include possession that’s
1. Continuous - An adverse claimants possession must be continuous throughout the statutory period
Constant use by the claimant is not required as long as possession is of a type that the usual owner would make
2. Open and notorious - The adverse possessors occupation must be sufficiently apparent to put the true owner on notice that a trespass is occurring
3. Actual and exclusive -The possessor is not sharing with the true owner or the public. Two or more people acting together could succeed in obtaining title by adverse possession they would take title as tenants in common.
4. Hostile - The hostility requirement is satisfied If the possessor enters without the owners permission
Tacking: One adverse possessor may tack on to his time with the land his predecessors time, so long as there is privity between the possessors
Privity is satisfied by any non-hostile nexus, such as contract, deed or will
Failure to record an interest acquired by adverse possession: The adverse possessor will prevail over a subsequent bona fide purchaser who complies with the recording act because there is no document that the interest holder could record
Disabilities
Rule: The statue of limitations will not run against a true owner who is afflicted by a disability at the inception of adverse possession.
Future Interests
The statue of limitations does not run against a holder of a future interest until the interest becomes possessory.
Land Sale Contracts
Conveyancing is a 2-step process:
1. Land Sales Contract(conveys equitable title)
2. Closing(deed passes legal title)
Rule: Because the real estate contract involves an interest in land, the Statue of frauds requires a writing signed by the party against whom enforcement is sought.
In addition to that signature, the writing must:
1. Identify the parties
2. Describe the property; and
3. Include the price(the consideration) or a means of determining the price(such as the fair market value as determined by an appraisal)
Part Performance: An equitable doctrine allowing a buyer to enforce an oral real estate contract by specific performance if:
1. The oral contract is certain and clear
2. The acts of partial performance clearly prove the existence of a contract.:
The second element is usually satisfied if the buyer can prove 2/3 of the following actions:
A. Buyer has taken possession of the property
B. Buyer has paid a significant portion of the purchase price
C. Buyer has made substantial improvements to the premises
Equitable Conversion: Under the doctrine of equitable conversion once the contract is signed, equity regards the buyer as the owner of the real property and the buyer is conveyed equitable title
Equitable Title: Risk of loss
Closing: By contrast, at closing, the deed conveys legal title to the buyer
Legal Title: Right to Possess.
Marketable Title: Every contract contains an implied covenant that the seller will provide marketable title at closing. Sellers implied promise to provide title reasonably free from doubt and the threat of litigation
The common defects that render title unmarketable are:
1. Defects in record chain of title
Most common adverse possession: Even if a portion of the title rests on adverse possession, it is unmarketable.
2. Encumbrance’s(mortgages, liens, easements, restrictive covenants)
3. Zoning violations
When Must Title Be Marketable? On the day of closing, the seller has until then to clear up whatever defect is making title unmarketable.
Remedy: the buyer must notify the seller that tile is unmarketable and give the seller reasonable time to cure the defect.
Material Fact: The seller also makes an implied promise that they will not make any false statements of material fact.
- The seller may be held liable to the purchaser after closing for defects if they knowingly made a false statement of material fact that the buyer relied on, actively concealed a defect, or failed to disclose known defects in the property
Latent Defects: Seller is also liable for failure to disclose material latent defects
Test: To be liable for failure to disclose:
1. The seller must know or have reason to know of the defect;
2. The seller must realize that the buyer is unlikely to discover the defect; and
3. The defect must be serious enough that the buyer would probably reconsider the purchase.
Disclaimers of Liability: Seller cannot avoid liability for fraud or failure to disclose by including general disclaimers such as “property sold as is” or “with all faults”
Exception: If the disclaimer identifies specific types of defects it will likely be upheld.
Caveat Emptor: “Buyer Beware”: There is no implied warranties of fitness or habitability in land sales contract.
New Home Construction Exceptions: There is a warranty of fitness or quality in the sale of a new home by the builder
Presumption: Presumption: Courts presume that time is NOT of the essence in real estate contracts.
A party late in tendering their own performance can still enforce the contract if they tender within a reasonable time after the closing date.
Time is of the essence if:
1. The contract so states
2. The circumstances indicate that was the parties intent; or
3. One party gives the other notice that time is of the essence.
A title insurance policy insures that a good record title of the property exists as of the policy’s date and promises to defend the record title if litigated.
Owners policy: An owners policy protects only the person who owns the policy, and does not run with the land to subsequent purchasers.
Lenders policy: A lenders policy follows the assignment of the mortgage loan.
Deeds
Merger: On the closing date, the contract for sale merges into the deed, so at that point, the buyer can only sue on the deed.
To pass legal title from grantor to grantee the deed must be “LEAD”: Lawfully Executed And Delivered
Executing a valid deed requires the following:
1. A writing signed by the grantor
2. Identification of the parties by name or description
3. Words of intent to transfer such as “grant”
4. An unambiguous description of the land
Delivery of a Deed: A deed isn’t effective to transfer an interest in reality unless it has been delivered.
Test: Delivery turns to the grantors intent that title pass immediately, even if possession is postponed.
The standard for delivery is a legal standard and is a test solely of present intent.
Rejection: Rejection defeats delivery.
Acceptance is presumed, but if a grantee expressly rejects the deed, the deed is ineffective to pass title.
Oral Conditions: If a deed, absolute on its face, is transferred to the grantee with an oral condition, the oral condition drops out(void) and delivery is done.
Delivery To Third Party: A delivery to third party with instructions to deliver the deed to the intended grantee is considered valid delivery.
Test: Whether a delivery to a third party without instructions is a valid delivery often hinges on whether that third party is an agent of the grantor or grantee. Example: delivery to grantor’s lawyer if probably not delivery, while delivery to grantees lawyer likely is delivery.
Two Types of Deeds:
Quitclaim deed: The grantor gives no covenants (promises nothing) and the grantee gets whatever the grantor has.
The grantee takes the land subject to a defect in the title, an undisclosed easement, or other problem, and has no recourse.
Warranty deed: The grantor gives six covenants—three present covenants and three future
covenants. The 3 present covenants(The covenant is breached at the time the deed is delivered) include:
1. The covenant of seisin- Grantor owns estate
2. Covenant of the right to convey, (both of these essentially meaning that the seller guarantees he owns the land he is selling), and
3. The covenant against encumbrances (“no encumbrances”—i.e., there are no existing easements, liens, or encumbrances that are not stated in the deed). Future covenants include (mnemonic=FEW):
3 Future Covenants (Not breached until the grantee is disturbed in possession):
1. The Covenant for Quiet Enjoyment: Grantor promises that grantee will not be disturbed in possession by a third party’s lawful claim of title
2. The Covenant of Warranty: Grantor promises to defend against reasonable claims of title by a third party and to compensate the grantee for any loss sustained by the claim of superior title
3. The Covenant for Further Assurances: Grantor promises to do whatever is needed to perfect grantee’s title if it later turns out to be imperfect
Breach of the implied warranty of fitness and habitability: A builder of new homes impliedly warrants to the buyer that the home is habitable and fit for its intended purposes. This warranty applies to defects that are discovered within a reasonable time and are due to the builder’s negligence or failure to do work in a workmanlike manner.
Recording Acts
Bonafide Purchaser:
1. Be a purchaser(or a mortgage lender), not one who received the property by gift, will, or inheritance
2. Pay valuable consideration
3. Take without notice(actual, constructive, or inquiry) of the prior conveyance
Under common law, a grantor can convey only those rights that the grantor had at the time of the conveyance. Thus, common law follows the first-in-time first-in-right principle. All states have recording statutes that change the results of the common law principle.
There are three kinds of recording statutes:
1. Pure race statutes protect subsequent purchasers who are first to record.
2. Notice statutes protect subsequent bona fide purchasers for value who take without notice of
the earlier transaction.
3. Race-notice statutes protect subsequent bona fide purchasers for value who take without notice and are the first to record.
There are three types of notice (mnemonic=AIR):
1. Actual notice: The grantee actually knows about the conveyance.
2. Inquiry notice: Examination of the land or reference in an instrument would lead a reasonable
person to inquire.
3. Record notice: The interest is recorded in the chain of title. Deeds that are recorded too late or too early are wild deeds. Wild deeds do not give notice.
Chain of Title: The chain of title is the sequence of recorded documents capable of giving record notice to subsequent takers.
There are 3 discrete chain of title problems
1. The Shelter Rule(Transferees from BFP): Anyone who take from a BFP will prevail against any interest the BFP would have prevailed against
In other words, the transferee “takes shelter” in the status of her transferor, and thereby “steps into the shoes” of the BFP even though she otherwise fails to meet the requirements of BFP status.
This is true even if the grantee had actual notice of a prior unrecorded conveyance
- Wild Deed: If a deed, entered on the records (A to B) has a grantor unconnected to the chain of title(O to A) the deed is wild and is incapable of giving record notice of its existence.
Typical wild deed fact pattern: O sells Blackacre to A, who does not record. Then, A sells to B. B record the A-to-B deed. A-B deed is not connected to chain of title and is a wild deed. - Estoppel By Deed: One who conveys realty in which he has no interest, is estopped from denying the validity of that conveyance if he subsequently acquires the title that he had previously purported to transfer.
- Deed Record Late: A deed recorded after the grantor parts with title through a subsequent deed is not constructive notice in most state(but is in some race-notice jurisdictions)
Mortgages
Mortgagor: The borrower
Mortgagee: The lender
The mortgage transaction involves two documents:
1. The promissory note
The note is the mortgagors personal obligation. Thus means that the mortgagee is not limited to the land when seeking a remedy for default
If the mortgagor stops paying, in addition to foreclosure, the mortgagee has the option to sue the mortgagor personally for payment of the note.
2. The mortgage
The mortgage is the agreement that says if the mortgagor stops paying, the land can be sold to pay the mortgagee
A mortgage is the union of two elements:
1. Debt(note)
2. Voluntary Transfer of a lien in debtors land to secure debt(mortgage)
Writing Requirement: The mortgage typically must be in writing to satisfy the Statue of Frauds. This is the legal mortgage.
Be aware of who is liable on a mortgage when title to the property is transferred.
General rule: A mortgagor (homeowner) can transfer title to the property. However, the mortgage will remain on the property and the mortgagor is still personally liable on the note.
Generally, a new transferee who takes the land “subject to” the mortgage is not personally liable.
However, if the transferee “assumes” the mortgage, he is personally liable along with the original mortgagor.
If the grantee signs an assumption agreement, they become primarily liable to the lender, while the original mortgagor is secondarily liable as a surety.
However, the mortgagee may to to sue either the grantee or the original mortgagor on the debt.
Due-on-Sale Clause: Allows the lender to demand full payment of the loan if the mortgagor transfers any interest in the property, without the lenders consent.
Foreclosure: The mortgagee must foreclose by proper judicial proceeding
Deed in Lieu of Foreclosure: The mortgagor may tender to the mortgage a deed in lieu of foreclosure, which permits the mortgagee to take immediate possession without a foreclosure sale.
First in Line Rule: The default rule is that the priority of a mortgage depends on when it was place on the property. First in time, first in right.
Foreclosure terminates interests junior to the mortgage being foreclosed but does not affect senior interests.
Junior lienholder should be able to proceed for a deficiency judgement.
Purchase Money Mortgage: A purchase money mortgagor who properly records has first priority over the parcel it financed
What parties are necessary to the foreclosure action? All junior lien holders and the debtor.
Equitable Redemption: Debtor can redeem land prior to foreclosure sale by paying
Cut off by foreclosure sale
Has to pay back all missed payments plus accrued interest
Acceleration Clause: Permits the mortgagee to declare the full balance due in the event of default
If creditor enforces the acceleration clause the debtor then has to pay full mortgage price plus accrued interest.
No Clogging The Equity Of Redemption: Debtor cannot waive right to redeem in mortgage itself
Statutory Right of Redemption: Many states give the mortgagor a statutory right to redeem for a fixed period after the foreclosure sale has occurred(usually six months to one year)
The amount to be paid is usually the foreclosure sale price, rather than the amount of the original debt
Zoning/HOA
Zoning: Pursuant to its police powers, the government may enact statues to reasonably control land use for the protection of the health, safety, morals and welfare its citizens.
Two Types of Zoning Ordinances:
1. Cumulative
A cumulative zoning ordinance creates a hierarchy of uses of land, where a single family home Is the highest use followed by a two-family home(a lesser use), followed by an apartment building(even lesser use), and then a strip mall(even lesser use), and thena factory(even lesser).
Under a cumulative zoning ordinace, land that is zoned for a particular use may be used for the stated purpose and any higher use
- Noncumulative
Under a noncumulative zoning ordinance land may only be used for the purpose for which it is zoned.
Nonconforming Use: Previously allowed use cannot be eliminated all at once unless just compensation is paid.
Variance: Grants the landowner permission to depart from the literal restriction of a zoning ordinance
What must they show? Show undue hardship + no diminution of neighboring property values.
Condominium: In a condominium, each owner owns the interior of their individual unit plus an undivided interest in the exterior and common elements
Membership: The owner of each condominium is a member of the homeowners association.
The members vote to elect a board, which manages the property.
The association is usually a legal entity, such as a corporation or LLC.
Fees: Each condominium owner must pay regular(monthly) dues to the HOA which are used by the association to maintain the common elements.
Present Possessory Estates
Present Possessory Estate: An interest that gives the holder the right to present possession
There are three main types of present possessory freehold estates:
1. Fee Simple Absolute
2. Defeasible Fee(3 types)
3. Life Estate
Fee Simple Absolute: “To A” or “To A and his heirs”
Duration: Absolute ownership for potentially limitless duration
A fee simple absolute is freely transferable, devisable by will, and descendible through intestacy
Exam Tip: A living person has no heirs, only apparent heirs that are powerless
Defeasible Fees:These are fee simple estates with a condition attached.
3 Types:
1. Fee Simple Determinable: “To A for so long as…” “To A during…” “To A until…
- Grantors Interest: Reverter: The estate automatically reverts back to the grantor upon the happening of the state event. That reversionary future interest in the grantor is called the possibility of reverter
- Fee Simple Subject to Condition Subsequent: Two main elements: (1) the use of conditional words such as “upon condition that” “provided that” “but if” “If it happens that” and (2) an explicit statement of the grantors right to re-enter
Grantors Interest: Right of enter/Power of termination - Fee Simple Subject to an Executory Interest: “To A but if X event occurs, then to B”
Third party, not grantor, takes if condition is betrayed
Third Parties Interest: Shifting executory interest
Rules Of Construction: Words of mere desire, hope aspiration, expectation or motivation are insufficient to render an estate a defeasible estate.
Example: “To A for the purpose of constructing a day care center” Fee simple absolute NOT defeasible estate.
Example 2: “To A with the expectation that the premises will be used as a hardware store” Fee simple absolute NOT defeasible estate
Life Estate: Measured in lifetime years not in term of years
Creation: “To A for life” (A = life tenant)
Life Estate Pur Autre Vie(Life of another): A life estate pur autre vie is measure by a life other than the grantee’s
Example: “O convey To A for the life of B”
If O holds the future interest it is called a reversion
If future interest is help by a third party is is called a remainder
