Property Flashcards
Future covenants (3)
Quiet enjoyment—grantee not disturbed in possession by third party’s lawful claim
Warranty—grantor will defend grantee against third party’s claim
Further assurances—grantor will do whatever future acts reasonably
necessary to pass title if later determined title is imperfect
Present covenants (3)
Seisin—grantor owns land as described in deed
Right to convey—grantor has right to transfer title
Against encumbrances—no undeclared encumbrances against land (mortgage, lease, easement, or covenant not specified in the deed).
RE encumbrances:
-In most states, a breach occurs even if the grantee is aware of the encumbrance.
-However, some states do not recognize a breach if the grantee had knowledge of the encumbrance, if it was visible, or if it benefitted the land.
-A buyer can recover for breach of the covenant against encumbrances the lesser of the difference in value between title with and without the defect, or the cost of removing the encumbrance.
Doctrine of Merger
Under the doctrine of merger, the obligations contained in the contract of sale merge into the deed.
Warranty of fitness or suitability
A warranty of fitness or suitability is implied in a contract for the sale of a newly constructed residence. Under this type of warranty, the seller warrants that he used adequate materials and good workmanship in working on the residence. The implied warranty generally covers latent construction defects, such as a defective electrical, plumbing, or mechanical system, or a leaky roof or drainage problem that does not manifest itself until after the sale.
Damages are generally based on the cost of repairs to bring the residence into compliance with the warranty.
Fee Simple Determinable &
Fee Simple Subject to Exec Interest/ Limitation
fee simple determinable
- Is limited by **specific durational language **(e.g., “so long as” “until”).
- It **terminates automatically upon the happening of the stated condition. **
- The grantor retains a **possibility of reverter. **
Fee Simple Subject to Exec Interest/ Limitation
1. same reqs as FSD except the future interest is in a third party
- called an executory interest
Fee Simple Subject to Condition Subsequent
A fee simple subject to condition subsequent is** limited in duration by specific conditional language (“provided that” “but if”). **
Upon occurrence of the stated condition, the present fee simple will terminate **only if the grantor affirmatively demonstrates an intent to terminate. **
The grantor must explicitly retain the right to terminate the fee simple subject to condition subsequent in the conveyance.
FS subject to CS v FSD ==> what to do if ambiguos
When the terms of a conveyance are ambiguous, courts typically adopt a preference for a fee simple subject to condition subsequent.
Survival Contingency
**Express: **When a gift is expressly conditioned on survival, the donee must satisfy the condition to take the gift.
==> Gifts that are expressly conditioned on survival include: “To A for life, remainder to his surviving children.” “To A for life, and should he die leaving surviving children, to such children.” “To A for life, and after the death of A, remainder to the children of A then living
Implied: When a gift is to an individual’s heirs, descendants, or issue, it is implied that the donee must survive the individual to take the gift.
Ambiguous: If a survivorship contingency is ambiguously stated in a conveyance…
(A) the majority view is that the contingency applies at the termination of the interest that immediately precedes distribution of the remainder. ** (B) A minority approach interprets a survivorship contingency to require the future interest holder to survive only the grantor **(e.g., testator) and not the holder of the interest that immediately precedes the remainder interest (e.g., life tenant).
Morgate Liability
A mortgage is an interest in real property given to a lender (ie, mortgagee) to secure a debt. The debtor (ie, mortgagor) can freely transfer the mortgaged property to a grantee unless the mortgage states otherwise. After the conveyance, the mortgage remains attached to the property and the debtor remains personally liable for the debt secured by the mortgage. But the grantee’s obligations depend on whether the grantee:
took subject to the mortgage – in which case, the grantee does not agree to pay and is not personally liable for the debt or
assumed the mortgage – in which case, the grantee agrees to pay and becomes primarily liable for the debt, and the debtor becomes secondarily liable as a surety.
Marketable Title
Absent contrary language, every land-sales contract implies that the seller will give marketable title to the buyer at closing.
To meet this standard, the title **must be reasonably free from doubt and under no threat of litigation, **such that a reasonable person would accept and pay for it.
Red flags
1. Covenants
2. Easements
3. Leases
4. Liens
5. Gaps in chain of title
6. Boundary disputes
7. Existing zoning violations
8. Adverse possession
Doctrine of Equitable Conversion
Under the doctrine of equitable conversion, a purchaser receives equitable title to property when he/she enters an enforceable sales contract (eg, by paying the sale price).
Equitable title is a real property interest that gives the purchaser the right to obtain full ownership of the property upon closing (eg, when the seller delivers the deed).
Liquidated Damages
A liquidated damages provision is enforceable if the amount bears a reasonable relation to anticipated damages.
An amount less than 15% of the purchase price is likely reasonable.
==> if they end up finding alt buyer, dont need to return difference UNLESS unenforceable
Constructive Adv Possession
This arises when an adverse possessor
(1) enters the property under color of title—eg, a facially valid deed that describes the entire property—and (2) actually possesses a reasonable portion of the property for the statutory period.
==> aquire title to ENTIRE property (not just portions that are actually possessed)
Mortgage Theories
Lien theory (majority rule) – the mortgagor (borrower) is considered the owner of the mortgaged property, so the lender cannot take possession prior to foreclosure.
==> foreclosure
Title theory – the lender is considered the owner of the mortgaged property until the mortgage has been paid in full, so the lender may take possession at any time.
==> any time
**Intermediate theory **– the mortgagor is considered the owner of the mortgaged property until default, so the lender obtains legal title (ie, the right of ownership and possession) to the property upon default.
==> default
Covenant v Equitable Servitude
A real covenant** is an express promise to do or not do something on land that can be enforced by an action for money damages and binds successors in interest. **
==> can be enforced in money
A real covenant requires the following:
Writing – covenant is in a writing that satisfies the statute of frauds
**Intent to run **– promising parties intended for the covenant to run to their successors in interest (eg, deed says “heirs and assigns”)
**Touch and concern **– covenant relates to the use, enjoyment, or occupation of the benefited and burdened lands
**Horizontal privity **– promising parties simultaneously transferred the land and created the covenant
**Vertical privity **– successor of the benefited estate has a possessory interest (eg, friend owns Lot 2) and successor of the burdened estate has a promising party’s same ownership interest (eg, banker owns Lot 4)
Notice – person to be bound had notice of the covenant (eg, recorded deed was in the title report examined by banker’s lawyer)
An **expressequitable servitude is essentially a real covenant enforced in equity **(often by an injunction).
==> same elements as a real covenant exceptprivity,
==> enforced via equity
