Property Flashcards
1, Parties identities, 2. Words, indicating parties intent to buy or sell, 3. Adequate description of property and 4. Purchase price.
Essential Terms
- Parties identifies, 2. Words, indicating intent to sell or buy, 3. Adequate description of property 4. Purchase price.
Warranty
Seller’s promise to deliver marketable title at the closing.
Equitable conversion
Buyer is equitable owner of property during executory period before closing.
Equitable conversion: Seller
gets the equitable right to be paid the purchase price.
Majority: Buyer bears
Risk of loss during the executory period. if the property is damages; the buyer must complete the purchase and pay full price at closing.
CL
Caveat emptor. Let the buyer be aware
Modern: Disclosing material defects
requires seller of residential property to disclose known any material defects that buyer cannot reasonably discover.
Deed
The most common transfer.
Deliver and accept the deed.
Words, actions that demonstrate a present intent to immediately transfer the property.
Ex. Physically hands it, or relinquishing control.
Deed- The 3rd party receives the deed
Grantor has relinquished control of the deed to make an immediate transfer.
Delivery doesn’t occur:
Grantor still retains control over the deed.
Grantor reserves right to retrieve the deed from the 3rd party.
Death Escrow:
Oral death conditions usually invalid as an attempt to circumvent the requirements for a will.
Doctrine of Merger
Sales contract merges into the deed upon delivery.
Any contractual guarantees about title disappears. + Buyer’s remedies for title problems are limited to the covenants of title contained in deed.
Recording
Filing a property in the public record office. It does not make a deed valid between grantor and grantee. Once transferred, deed is valid regardless of recording it.
Recording
puts 3rd parties on notice of the relevant property interest.
First in Time Rule
a Given property interest has priority over those that arise later.
Bona Fide Purchasers for value
Innocent purchasers who buy property without sufficient notice of preexisting interest.
Race statutes
a recorded interest prevails over any interest recorded later. Extinct.
Notice Statutes
A bona fide purchaser prevails against any prior interest of which he lacked notice, regardless of when or whether the BFP records.
Race notice Statute
a bona fide purchaser prevails against any prior interest of which he lacked notice, but only if the bona fide purchaser records first.
Legal theories about the nature of mortgage
Lien theory, title theory
Lien theory
mortgage gives mortgagee a security interest in the property with no change in title.
Title theory
mortgage gives the mortgagee title to the property until the debt is paid.
unless mortgage agreement provides otherwise,
the mortgagor (beggar) is free to sell the property.
the sale of the house does neither automatically
remove the mortgage, nor satisfy the underlying debt.
Due on sale clause:
if the mortgagor beggar sells the mortgaged property, the mortgagee (bank) may declare the entire underlying debt to the immediately due and payable.
Mortgage: seller defaults:
the bank can take the property from the one who purchased the property. Foreclosure: taking the house from the buyer even if the buyer did not assume the debt.
If the seller has defaults on debts, and the buyer did not assume the debts,
the seller is the only person responsible for deficiency.
If the seller has defaults with remaining debts, and the buyer subject to mortgage & agreed to assume the underlying debts upon purchase,
The buyer is personally, and primarily liable for the debt.
The seller is secondarily liable on the debt unless released.
Foreclosure
The mortgagee may seize and sell the property if the mortgagor defaults.
Equity of redemption
Mortgagor’s (beggar) in Common law, equitable right to avoid foreclosure by paying remaining mortgage debt before the foreclosing sale.
Statutory Redemption
Entitles mortgagor (beggar) to purchase property from foreclosure buyer specified period of time. e.g., auction.
Foreclosed sale is distributed to
lien holder priority order.
Purchase money mortgage
provides money to buy the property.
PMM is priorized to any preexisting liens.
Future advance mortgages
The lender (beggar) makes an initial lump sum payment followed by periodic disbursements.
If the future advance lender is required to make the periodic disbursement,
all disbursements 1,2,3,4,,, has the same priority as the initial distribution.
If the disbursement is optional, then, the priority….
the Priority depends on the initial notice of the second mortgage.
If there is no notice,
priority is to the entire loan.
If notice about the 2nd mortgage,
All the other disbursements are junior to the second mortgage.
- Cost of foreclosure and sale: court cost, lawyer cost;
- mortgage being foreclosed;
- all junior liens and mortgages in priority order and
- Beggar if anything left.
Mortgagor can sue the mortgagee for deficiency.
liens left.
Liens senior to the foreclosing mortgage
unaffected by the foreclosure.
Liens junior junior lienholder is joined or properly notified then
The foreclosure extinguishes the junior lien. the foreclosure does not automatically eliminate the underlying junior debt.
If the junior lienholder is not joined, not noticed;
The junior lien survives and will encumber the property after the foreclosure sale.
Defeasible Estates
Fee simple determinable, Fee simple subject to a condition subsequent.
Fee simple determinable can
- Immediate right of possession; 2. No definite ending date, 3. Is defeasible; because it can be cut short by another estate.
If the condition occurs in Fee Simple Determinable,
Fee simple will end automatically; and property will return, revert to grantor. The future interest: is the banker’s interest of possibility of reverter.
Fee simple determinable
“so long as no one smokes on the property”; once smoking, fee simple determinable ends, and the property revert to the banker in fee simple.
Fee simple subject to a condition subsequent:
Doesn’t end automatically when condition occurs. Grantor must take step of reentering the property and retaking possession; Banker has right of entry.
Right of reentry
Someone smokes: & Grantor wanted to reclaim the land; then, must affirmatively enter the land and retake possession.
Life estate
determinable.
Remainder
future interest that typically follows the life estate.
Fee simple subject to a condition subsequent: Conditional language
But if, on condition that, unless, provided that
Life Tenant (farmer) has a duty to
preserve property by avoiding several types of waste.
Duty to avoid permissible waste
life tenant to take reasonable steps to maintain the premises. (EX. Tax)–> if farmer did not pay, the daughter can pay, and daughter can be reimbursed from the life tenant.
Life tenant’s obligation
limited to amount of income that could be derived from the land whether that is property’s rental value or value of other resources.
Life tenant must avoid voluntary waste;
Life tenant must not alter the property in ways that materially decreases its value.
Life Tenant may not engage in
ameliorative waste; which constists of altering the property in ways that change its character, even if those changes increase the propery’s value.
The farmer, LT, cannot change it into residential subdivision, even if it will increase the value of the land.
because it changes the character of property and can create the ameliorative waste.
Remainder:
may not cut the life estate short; becomes possessory only on natural conclusion of the preceding life estate (death). immediately upon termination of the preceding estate.
Executory interest
can cut off a fee simple estate. can become possessory after some gap in time between it and the prior estate.
Fee simple subject to an executory limitation
defeasible interest
Transferability of future interests
gift, sale, will, intestate distribution.
TiC
50%, 30%, 20%… Cotenant’s interest don’t have to be equal; each holds undivided interest.
TiC
Each cotenant is entitled to possess the entire property simultaneously. Each may not exclude each other from the property; each may transfer his share without consulting the others.
TiC Son can sell
his 20% to a complete stranger; a Stranger becomes cotenant with Son A and B.
TIC Son B 30% can lease
to lessee who would have the same right of possession during the leasehold; the lessee’s right the same as Son A and Son C.
Most states, TiC presume
conveyance to multiple grantees creates a TiC unless the words specify otherwise.
Joint Tenancy with the right of survivorship 4 unities:
Possession, Interest, Time, and Title. (PITT).
Unity of Time
Requires that JT interest must vest simultaneously
Unity of Title
requires the JT must drive their ownership from the same deed or other instrument.
Unity of Interest
Requires that joint tenants must hold the property in equal shares.
Unity of Possession
requires that each joint tenant must have the right to use the entire property.
Most states: require clear language to create a joint tenancy
Jointly with a right of survivorship
Courts infer JT from words such as
share and share alike; especially if the 4 unities are present.
Right of survivorship
if one joint tenant dies, then, his share ceases to exist and the shares of the remaining joint tenants increase proportionately.
Right of survivorship: if Son A sells to James Choi (1/3): the sale cause :
Severance.
Severence
One joint tenants interest drops out and is no longer subject to survivorship.
Severed interest (1/3 of James Choi) becomes held as a TiC, while
the remaining interest continue in joint tenancy.
so if Son B dies, Son C gets
2/3. Because of Son B’s death.
The most common method of severance
Sale or other conveyance of one joint tenant’s share.
Minority Jurisdictions;
if joint tenant leases his interest
What if Son A mortgaged his interest?- Lien theory states;
A mortgage creates a lien against the property but doesn’t transfer ownership.
Most states: mortgage does not sever the joint tenancy.
Title Theory States
Mortgage transfers title to the mortgagee (bank) until the debt is paid. In this case; a mortgage severs the joint tenancy because it destroys the unity of title.
Equitable conversion
severs the joint tenancy. because it destroys the unity of title (not C, as C sold it to Z. Z has conferred equitable ownership of C’s share.
Sale contract of C –> Z brings about severance
even before the sale is finalized.
What if A executes the will? If A dies,
A’s interest vanishes upon A’s death; Will left nothing; but B (1/2), and C (1/2).
Carrying costs
Expenses that affect the entire property; cotenants are responsible for carrying costs in proportion to their ownership %.
Partition;
judicial proceeding in which the court will end the cotenancy and divide the property among the cotenants.
Partition in kind
Property is physically divided in proportion to each cotenant’s interest.
If physical partition is not available; (house or undivivable.)
Property is sold and the proceeds divided in proportion to each cotenant’s interest.
Tenancy for years
lasts for a specified time, which could be more or less than a full year.
Periodic Tenancy:
lasts for a specified time period with automatic renewal for same period unless terminated; notice must usually equal one lease period.
Tenancy at will
last for an unspecified period and can be terminated by either party at any time.
Holdover tenants
stays after the lease terminates
if holdover tenants pays the rents & the Landlord accepts it;
creates periodic tenancy. Period equals to frequency of rent payments.
Tenant’s duties
- Pay rent, 2. Avoid waste, 3. Refrain from abandoning the premises.
LL’s duties
- deliver the premises 2. Honor the implied warrant of quiet enjoyment.
Legal possession:
no 3rd party has rights in the property sufficient to evict the tenant.
- Neither the LL nor someone holding through the LL has possession when the lease begins.
- exclusive right to possess the property.
Actual possession
The property is free from any holdover tenants or other wrongful occupiers when the lease begins.
Optometrist was a trespasser with no legal right of possession.
if the applicable law only requires legal possession, then, the dentist (2.1.-) can sue optometris (ended 1.1) for trespass; but she has no claim against the ll…. The LL failed to deliver the actual possession.
If the law requires actual possession;
LL had a duty to remove optometrist before dentist took possession; then, 1. Dentist can sue optometrist for trespass & sud LL for damages.
Warranty of quiet enjoyment
neither LL nor anyone with superior title will disturb tenant’s possession.
Constructive Eviction
if the LL creates or fails to resolve a probelm, or breaches some duty to tenants, so as to substantially deprive tenant of the sue and enjoyment of the property.
First, in Constructive Eviction;
the tenant should notify LL of problem and provides opportunity to cure.
If LL fails to cure; then,
tenant can vacate, terminate lease, and seek damages.
Some states;
tenant to stay on the premises and stop paying the rent until problem is fixed.
E.g., Dentist and optometrists disagree who removes the garbage. The dentist just left leaving the keys to the landlord What are Ob & Rights? Dentist had to prove LL had a duty to remove garbge + would have had to prove other elements of constructive eviction were met;
Dentist would justifiably vacate the premises and could have properly terminated the lease.
LL would have argued that dentist improperly abandoned the premises
Abandonment;
- 1. LL may accep the T’s surrender of the premises and terminate the lease.
Acceptance of tenant’s surrender:
- Express agreement, 2. Releaseing the premises to a new tenant at the same or a higher rate, 3. Substantially reconfiguring the premises so as to change their character.
- LL may release the premises on the abandoning tenant’s behalf
and then may recover the difference between the new tenant and that owed by the abandoning tenant.
- LL may allow the premises
to remain vacant and sue the tenant for rent as it becomes due.
CL: LL faced with an abandoning tenant
has no duty to mitigate damages.
Doctrine of Retaliatory Eviction
prevents a LL from evicting or otherwise acting against a tenant in retaliation for the tenant’s protected activity.
Protected Activity:
complaining about defects, asserting that LL failed to keep the premises in a habitable condition.
Condemnation does not breach
Covenant of Quiet Enjoyment.
Condemination;
entire property lease is terminated
If only a part of the Condemnation:
lease continues; on the part of the property; and tenant must still pay rent. Tenant can be entitled to a reduction ;or abatement to reflect diminished value of property.
Who gets $ upon condemnation
depends on Lease. If absent, tenant may be entitled to share of condemnation award in proportion to value of leasehold interest as compared to value of the property taken.
Assignment
occurs when a tenant, as assignor, assigns his entire remaining leashold interest to an assignee.
Privity of K between LL and Assignor extinguishes when
LL novation–> substitution to Assigneee
Privity of K
All covenants alive
Privity of estate: (David Schimmer is occupying)
Landlord and Assignee are liable to one another for any lease covenants that run with the land.
-1. Original parties intend it to do so; and;
-2. Touches and concersn the land: if it burdens or restricts the use or the enjoyment of th eland.
Covenant runs with the land
if the covenant makes the leasehold more valuable.
Because butcher, assignee has only privity of estate,
- the jeweler (assignor) is a party in all covenants of lease,
- the butcher (assignee) is a party with the covenants that run with the land.
- So, who is liable to pay the rent?
Pay rent: the obligation runs with the land.
Both the assignee, and the assignor but the assignee (butcher) is primarily liable, and the assignor (jeweler) is secondarily liable. LL can collect either one.
Fixing heating: (lease includes ll cov)
Covenant run with the land:
- Butcher (assignee) is affected to use and enjoy .
Under the privity of estate: the butcher is entitled to the benefit of the covenant. And she may require the repair of the heating system.
20% discount on the lamb meat: (written in the lease)
it does not touch and concern the land; it does not relate to anyone’s use or enjoyment of the premises. it is personal between the jeweler and the landlord. Butcher (assignee) is not privity of contract with the landlord; covenant that is all but not rusn with the land, only Tenant
Sublease
the prime tenant still holds the leasehold interest; sublease is separate from the prime lease.
Privity of K & privity of estate:
The prime tenant and subtenant ar all liable for all covenant int eh sublease, but not liable for thoose in prime lease.
Pay rent: sublease:
Prime tenant is liable for LL.
Subtenant is Liable for Jeweler. Butcher is not liable for LL because there is no privity. This lack of privity makes Butcher : she cannot enforce the LL to fix the heating. the Butcher can still ask jewelr first assuming the prime lease requires the jewelr to make such repairs.
20% discount: sublease
Butcher is not liable because there is no privity.
Easement
A property interest giving someone a limited right to use someone else’s land for a specified purpose.
Dominent tenement
the farmer’s land that is benefited by easement.
Servient Tenement
the Plumer’s land that is burdened by easement.
Easement
runs with the land. It binds on all successive owners of the servient tenement who take with notice of the easement.
Easement formed;
express grant (writing), express reservation, (if grantor conveys the land and retains an easement ofr himself).
Prescriptive easement: e.g.,
for 10 years the farmer openly drove the land, to reach the highway, without the plumer’s permission. SoL was 8 years then, Creates prescriptive easement.
Prescriptive easement elements
- openly, 2. without permission, 3. Continuously for entire time required by statutes.
Open
visible, or notorious, use would be apparent upon a rasonable inspection of property.
Continuous
if AP regularly uses the property as a reasonable owner might. SoL was 8 years for trespass (here, 10).
Lack permission
The farmer lacked plumber’s permission.
Prescriptive easement: needs not be exclusive use to
confer.
Existing prior use IF
1) 2 parcels are severed from Common Ownership.
2) At the time, there was an apparent, continual use of one parcel for the benefit of the other; such the use might be expected to continue after severance.
3) Existing use is important or necessary to the use of the benfitted parcel.
Existing prior use: Necessary or important:
most courts it means, difficult or expansive to change the existing use.
Some courts existing use must be reasonably necessary or conveient for use of the benefitted parcel.
Necessity:
Easement is absolutely required for the use of the dominant parcel. Strict necessity. much higher need than easement of the implied, existing use. The Farmer has no access to a public road without the easement.
Conveying an easement without specifying it precise location or dimensions; can be fixed when
1) use, 2) consent, 3) acquiescence. Then, it cannot be changed unilaterally by either party.
if the farmer just said, “you can use it.” but did not identify where;
the farmer used: for five years: still, farmer cannot change unilaterally by either party.
Easement terminates
1) expires, 2) Estopped, 3) government condemns.
Merger
what if the plumber grants the easement and sold it to the farmer.
the easement expires. One person owns both the servient and dominant tenement. if the farmer sells to someone else in the future the easement will not be revived.
Abandonment
the holder by words or by conducts intendds to give up all rights in the easement. (no use + no intent)
requires no use + evidence of intent to give up the easement.
Deed states
The parties their successor and their assigns agree there will be no shooting on the hunters’ remaining property after 8 pm.
Restrictive Covenant:
agreement to sue to limit the use of one tract of land for the benefit of another tract.
Servient tenement: Burdened by the agreement
The hunter’s land
Dominant tenement: benefited by the agreement
the teachers land because it has reduced noise.
Restrictive covenants
- Real Covenants (money damages), 2. Equitable servitudes (injunctions or sp).
Restrictive Covenant is enforceable by or against the successors (purchasers of the land)
- In writing, 2. Intent, 3. T&C, 4. notice.
Here, deed restricts the farmer not to shoot after 8 pm.
- deed is in writing, 2. Deed is intentional, 3. T&C: because use of the land benefits the nurse 4. Notice: farmer can search public records –>
so the nurse can enforce the farmer the covenant between the hunder and the teacher. It is not subject to RAP.
License - tickets to sports
Formed when property owner gives someone else permission to use land for specified purpose.
License is not
interest in land.
It does not need in writing.
It does not run with the land.
Revocable anytime.
Man’s revocation may be estopped if licensee expends money, property, or labor under licensing agreement.
F25. Revocation of licensing might also be restricted
if the licensee has acquired a license via contract. (tickets purchasers)
Controlling land use
1- 사: Restrictive covenants and licenses.
2- 공: Zoning laws gov.
Variance
Exemption from a zoning law.
Area variances
involve physical requirements
Use variances
allow uses that would otherwise be prohibited.
Most courts grant a variance only if it is
- Consistent with public interest OR
- Necessary to prevent hardship to the property owner.
not because it is convenients the deed restrictions XXXX.
Grantor and grantee cannot use a deed
to control zoning laws application.
Nonconforming use
when zoning law started, baker already using commercially.
Nonconforming use:
the gov may not immediately limit the use. It may allow it to some limit on continuing to use the current bakery.
EX. Nonconforming use
GV : Bakery can make small changes to the use; but may not undertake substantial expansion or other significant changes. So baker can continue to commerce but cannot expand.
Amortization
Requires the owner to gradually phase out nonconforming use over specific reasonable period of time.
Zoning law v. restrictive covenant:
the stricter of two limitations prevails.
Recording
usually, local county’s recording office.
Recorded Document
provides notice of relevant property interest. Any document reflecting interest in land can be recorded. Recording does not invalidate a valid transaction, or a forged document. Recorded documents are indexed to make them accessible.
Grantor grantee index
grantor and grantee names
Records search
enables someone identify all recorded interests in a tract or property by establishing the chain of grantors and grantees
Recording: First in Time Rule
a given property interest has priority over those that arise later.
Bona Fide Purchaser for Value
without notice of the prior interest.
Someone who got as a GIFT is not a BFPV.
Without the notice of a prior interest
Notice is evaluated at the time the purchasers interest arose. Not in some later time. BFP who acquired notice after his purchase, remains the BFP.
- Actual notice
when purchaser subjectively knows about the prior interest
- Record or constructive notice
when an interest is properly recorded in public records; where someone could find it with a reasonable search.
Inquiry notice
notice based on possession; when someone is aware of facts that would lead a reasonable person to investigate a prior interest. e.g., house, powerlines.
Quitclaim deed provides
Inquiry notice because a quitclaim provides no covenants of title and thus is somehow suspicious. (minority cts)
Race notice statute
BFP prevails against any prior intreset of which he lacked notice; but only if the bona fide purchaser records first. Here, the credit union lacked notice of the unrecorded mortgage (bank) ; but the bank (1st mortgagee) recorded first; the credit union is bona fide purchaser and the bank recorded first; the bank has priority.
Estoppel by Deed
Doctrine of After Acquired Title.
Doctrine of After Acquired Title
Applies if a grantor purports to convey property that he doesn’t own (grantor has no title) to a grantee who lacks notice of this problem.–> upon the grantor gets a title later on, the grantee now gets title.
In other words - Doctrine of after acquired title
the grantor is estopped from denying grantee’s title.
Traditionally, estoppel by deed applies only against a grantor
who conveyed the land through a warranty deed; which contains the covenants of title.–> The grantee must assert the same quality of title that the deed purported to convey.
Common grantor
The subsequent grantee (teacher) is required to search for all conveyances by the seller; if she does, she finds seller-DR deed, and she has record notice of building restrictions on the Western Tract.
Common grantor
The subsequent grantee (teacher) is not required to search for all conveyances by the seller; She would not be charged with notice of seller DR deed and would not have record notice.
Wild deeds
Deeds from a seller who is outside a later buyer’s chain of title and which generally don’t provide record notice.
Properly indexed recording system
Someone can trace a chain of title by looking up all successive grantors and grantees.
If the builder searches at County Recorder Grantor Grantee Index,
She can’t find the wild deed because both investor and developer are outside of the chain of the title.
The builder has no record notice;
BFP. Superior Claim.
Shelter rule
BFP’s grantee is protected from prior interest to the same extent as the BFP grantor, even if the grantee is NOT BFP.
Title insurance
protects the policyholder against defects in the legal title to the property.
Owner’s policy
insures the property’s owner against losses from title defects
Lender’s policy
protects a mortgage lender from title related losses.
Title insurance
personal to the insured; does not run with the land.
Each successive buyer or lender
should buy the policy if it wants coverage.
Title Insurance Policy
usually transfer to owners who succeed to the insured by operation of law as opposed to those who succeed by purchase.
EG policyholder sold the property to a buyer
buyer is not covered by title insurance.
EG policyholder died and left the property to her heir (title insurance)
heir covered by title insurance.
Owner’s policy
continues to protect owner against title related liabilities even after owner sells the land.
Both owner’s policy and lender’s policy
insureer defends and indemnifies the insured against covered title defects, paying either the cost of curing the title defect or reduction in market value; up to the policy limit.
Delivery and Acceptance of the deed
- Teacher must deliver the deed.
- The farmer must accept the deed (Giving $$$).
Delivery occurs
words or actions that demonstrate a present intent to immediately transfer the property.
Grantor must lose the control of the deed with intent to immediate transfer. e.g., physical hand off is the clearest example of delivery. eg., taking it from the teacher: accept.
If acceptance is not clear; the law presumes acceptance.
if the grantee is benefitted from transaction.
Grantor may not take back the deed.
Grantee is advised to record the deed.
Deed requires
The identifiable, existing grantee. E.G., Grantee; Farming INC XXXXX (사실 그런 회사가 없는 경우, 죽은 사람도 마찬가지)
Deed is effective to transfer title
regardless of any consideration paid. e.g., GIFT OK. No requirement a deed must refer to consideration paid by the grantee.
Recording: public office: just notice of someone’s title.
nothing to do with transfer of the deed.
Teacher orally says, “don’t record the deed before I die” to the farmer, and died: her will wrote, “everything to my sister.” Who owns the deed?
Farmer. Teacher delivered the deed with intent to transfer the property.
Teacher told her brother to give the deed to the farmer asap.
A week later, Teacher want her brother destroy the deed: doesn’t work. Farmer wins the sue.
No preconditions:
Delivery is complete when the 3rd party - brother- receive the deed.
Delivery
intent to relinquish the control fo the deed & make immediate transfer.
Right reserved
The grantor might expressly reserve the right to retrieve the deed from the 3rd party, so delivery doesn’t occur; because the grantor did not intent to immediately transfer the property.
“I go to Bahama. Pass this deed to the farmer.” “Will you do it asap?”
- No conditions on bro’s transmission of the deed.
- No rights reserved to take the deed back.
- Delivery was complete.
“Here’s the deed for the farmer. Would you give it to him when I die?” “Don’t return to me for any circumstances.”
Lawyer larry received: Death Escrow.
Teacher cannot get it back.
Delivery is complete.
Court finds teacher beyond her control of the deed.
Direct Delivery with Death Condition (Teacher gives the deed to the farmer and says, “I want yo to have the land after I died. Deed won’t be effective until then.”
Doesn’t work.
Teacher’s intent to transfer property upon her death
may use a will or a 3rd party death escrow. No direct giving deed, verbally conditioned on the grantor’s death.
Teacher locked the executed deed in her desk–> even if the farmer steals it, records it, and sells it to his daughter
Daughter has no interest because teacher never delivered the deed.
Forged deed
Someone other than the grantor executes the deed without the grantor’s authorization. VOID.
F25 Fraud in the execution
The grantor is tricked into thinking that she is signing sth other than a deed. VOID.
Fraud in the inducement
The grantor understands that she is signing a deed, but she is deceived into doing so by reliance on a misrepresentation of material fact. VOIDABLE.
Teacher says to the lawyer, “this is a deed for the farmer. Will you give him when I die? and says, “Please keep it handy, just in case I want it back.”
She did not intent to place deed beyond her control & She still reserved the right to retract the deed.
Doesn’t work.
No delivery
Deed poll
a deed that signed by the grantor but not by the grantee.
The farmer NOT signed the deed himself:
Even so, he is bound by the no fencing condition. (Deed poll).
Quitclaim deed
includs no covenants of title; it simply conveys whatever interest the grantor has in the property; if any; with no guarantees.
Special Warranty deed
typically includes all 6 covenants of title: deed only warrants against defects created by the grantor; not defects created by previous owners.
General Warranty deed
includes all 6 covenants, however, it warrants against defects created by anyone, including any previous owner.
Title covenants
Expressly written in a deed or incorporated by law.
State statute:
define a warranty deed to include certain covenants; whether they spell out in the document. The grantor and grantee can negotiate on what kind of deed they can provide.
6 covenants
Seison, The right to convey; the covenant against encumbrances, quiet enjoyment, warranty, further assurances.
Present covenants
Seison, right to convey, and covenant against encumbrances: breached only at the moment when seller conveys to the buyer;
Future covenants
Quiet enjoyment, warranty, and further assurances: can be breached after the conveyance.
Covenant of seisin:
promises that the grantor actually owns the property that the deed purports to convey
Covenant of right to convey
promises the grantor has the legal authority to transfer the property
Covenant of Right to Convey
promises that the grantor has the legal authority to transfer the property.
In modern property;
seisin, and right to convey are functionally identical.
Covenants against encumbrances
promises that there are no encumbrances on the property except those identified in the deed.
Some courts:
open and visible encumbrances don’t breach this covenant, even if they are not in the deed.
Many courts:
a grantee’s mere knowledge of an encumbrance does not waive the covenant.
Future covenant- Covenant of Quiet Enjoyment
promises that no one with superior title will interfere with the grantee’s possession and enjoyment of the property.
Future Covenant: Covenant of Warranty
Promises that the grantor will defend and indemnify the grantee against claims by anyone with superior title.
Future Covenant: Covenant of Quiet Enjoyment and Covenant of Warranty
functionally identical.
Covenant of Further Assurances
promises that the grantor will take any steps that are reasonably necessary to perfect the grantee’s title; e.g., executing an appropriate document.
Future covenant is breached
only if someone with superior title actually interferes with the grantee’s possession or enjoyment by asserting a valid claim to any part of the property.
Grantee
must suffer 1) actual eviction and 2) constructive eviction to argue breach.
Actual eviction
if the grantee is lawfully dispossessed of some or all of the property by someone with superior title.
Constructive eviction
involves some infringement of the grantee’s use and enjoyment short of dispossession. even if the grantee is not wholly dispossessed.
For example, the lady says, “I am suing to enforce the easement,”
The grantee is constructively evicted.
Eviction requirement
a potential claim against the grantee’s title that is never actually asserted does not breach the future covenants.
Future covenants are limited
to valid claims of superior title.
A grantor has
no obligation to defend the grantee against invalid or frivolous claims.
Title covenants apply to matters affecting title;
title covenants don’t apply to every problem that might arise with property. e.x., physical condition of the property; or problems with highway access; are not covered by the title covenants. because those problems are unrelated to the title.
The grantee can ask breach of
ANY covenant in his title. The grantor is liable for damages.
Remote grantees:
grantees who come later in the chain of ownership.
Remote grantees: present covenants:
Most courts don’t allow a remote grantee to sue a remote grantor for breach of present covenant.
Future covenants runs with the land.
most courts, remote grantees can enforce them against any grantors in the chain of title who were bound by the future covenants.
Damages for breach fo title covenant
limited to the purchase price that the grantee paid (with interest).
Brokers
can fill out the standard, form based contracts.
Broker is seller’s agent
there is a fiduciary duties towards the seller. E.g., brother must work diligently and must deliver the best interest. Avoid CoI.
Broker that failed to disclose CoI
liable for damages, and/or forfeit her commission.
Seller & Broker
listing agreement.
Listing agreement
specified length of broker’s engagement (listing period) plus broker’s commission.
3 types:
- Exclusive right to sell agreements, 2. Exclusive agency agreement, 3. Open listing agreements.
Exclusive right to sell agreements:
The broker earns commission if property sells during listing period (no matter who finds it).
Exclusive agent agreements
provide the broker will be the seller’s only agent for the sale. Broker earns commission if anyone except seller finds buyer during listing period.
Open listing agreement gives
the broker non exclusive right to sell the property. Broker earns commission only if broker finds buyer during isting period.
If the broker is procuring the cause of the sale:
the broker found the buyer.
Procuring cause:
sale that would not have occurred without broker’s involvement.
When a broker has earned the commission?
The seller and the broker entered the agreement regarding the listing of the house.
If listing agreement does not specify when the commission owed:
The broker found the buyer and the seller entered K; but the buyer changed her mind: doesn’t matter. Broker gets commission. YES.
Broker’s commission:
entitled to producing buyer who is ready, willing, and able to buy. Either on the terms in the listing agreement; or On other terms acceptable to the seller.
Broker is deemed to produce the buyer;
when the buyer and the seller entered sales contract: even if the buyer backed out in closing: the broker it entitled to commission.
The seller said, $300,000. The buyer offers $295,000. The seller accepted. They entered the sale contract.
Broker gets commission. because it is acceptable to the seller.
What if the buyer offered $1 less than the listing price? Can the seller say no?
The seller can say no. because the seller is not required to explain to broker why he rejected such an offer. If seller acts arbitrarily or in bad faith the seller liable for commission if he rejects a ready, willing, and able buyer who can meet seller’s terms.
Fair Housing Act:
prohibits discrimination in the sale or rental of any dwelling based on race, color, religion, sex, familial status, national origin, or disability.
The FHA prohibits,
refusing to sell, or rent to someone upon receiving bona fide offer; discriminating in terms, conditions, services, or privileges of sale or rental; adveertising any preference or limitation regarding renters or purchasers, misrepresenting availability of any dwelling for inspection, rental, or purchase, refusing to permit reasonable accommodations for occupatns’ disability, e.g., allowing modificatin of dwelling at occupatn’s expense.
Mrs. Murphys’ rule:
FHA Exemption:
Sale or rental of single family home by private owner; without broker (그러나 그러한 광고는 안 되는 것으로)
FHA Exemption
LL who own no more than 3 single family dwelling, LL of owner occupies apartment buildings with 4 or fewer units., religious groups. (이러한 경우도 광고는 안 되는 것으로)
Violation of Act
Engaging in disparate treatment, actions that produce disparate impact.
Disparate treatment (이질적인 부분들 사람들로 이루어진)
Intentionally discriminating against members of a protected class.
E.g., If landlord says, “I only rent to US citizens,” –> disparate treatment based on national origin.
Disparate impact
occurs if a facially nondiscriminatory practice has the effect of disadvantaging member of a protected class more than others; even if not intended.
e.g., LL, “only for English Speaking Tenants.” XXX
This policy does not facially discriminatory but its effect of disadvantaging non English speakers more than others: effect based on national origin. –> Disparate impact.
Waiver of Fair housing protections
- knowling, 2. voluntary. –> The person does not waive fair housing rights merely by signing it that includes the discriminatory provision.
Sales Contract
- Must be in writing, 2. Must be signed by the party against whom enforcement is sought, 3. Must contain the agreement’s essential terms.
Essential terms of enforceable real estate sales contract:
- Parties identifies, 2. Words indicating parties intent to buy or sell, 3. Adequate description of property, and 4. Purchase price.
Real Estate Sales contract: Signature requirement,
anything that reflects a party’s intent to authenticate the writing; e.g., monograph signature, or name typed email.
Property description:
must be specific enough to distinguish the land being conveyed from any other real property.
Purchase price;
it may be stated as a total amount or as a per acre price.
Anything that lacks any element: (in writing, 2. must be signed by the party against whom enforcement is sought, 3. must contain the agreements essential terms;
Unenforceable.
Executory period
Between K formation & Closing (buyer pays the seller and the seller delivers the deed.)
Real Estate Sales Contract
may or may not specify the closing date.
If Contract does not specify closing date but still;;;;;;
unless contract specify otherwise, time is not of essence and parties have reasonable time to perform or enforce.
One exception to the SoF: is Part Performance
enforces a verbal sales agreement if the buyer takes certain steps explanable only by a contract rather than another type of relationship.
Part performance (SoF exception)
enforces a verbal sales agreement if the buyer takes certain steps explanable only by a contract rather than another type of relationship.
Has the buyer done at least two of the following (Part performance)
- Taken possession of the property; 2. Paid all of the purchase price, 3. Made substantial improvements to the property. –> unless, they are just sales contract.
Part performance:
they did not write, just orally agreed, but if parties: say, “We agree;” and “Fully performed,” then, ok, SoF exception
Remedies for breach (sales contract)
- Specific performance, 2. Rescission and restitution, or 3. Damages.
Liquidated Damages Clause
The seller is allowed to retain the buyer’s deposit as liquidated damages.
Liquidated damages clause enforceable
if the liquidated amount is reasonable given the transaction and actual losses.
Liquidated damages clause unenforceable
if it appears to be a penalty instead of reasonable compensation.
Options to buy
might appear as part of a deed. Contract in which optionor gives optionee exclusive right to buy optioner’s property.
Right of first refusal
might appear as part of a deed.
Option agreement
price + expiration date.
After option agreement, the optionee can exercise his option:
notifying the optionor that he wants to buy on terms in option agreement –> Sales Contract. If the optionee offers different terms, then, this is a counter offer, not an option exercise,
Right of first refusal
Contract that gives the holder of the right to buy the property at a specified price if the owner decides to sell within a certain time period.
Preemptive right: allows the holder to preemptive sale to the 3rd party.
Right of First Refusal Agreement- PRICE
Fair market value at time of purchase.
Price seller is willing to accept from 3rd party;
May be enforceable in court.
Both option to buy & right of first refusal
Subject to Rule against Perpetuities.
Sales or Property Contracts
Seller might have a duty to make certain disclosures about the property’s physical condition.
CL: Caveat emptor (let the buyer beware)
a seller - in arms’ length transaction - has no duty to disclose known defects if buyer had opportunity to inspect.
- Governs most sale of commercial property.
Modern: Disclosing material defects
requires seller of residential property to disclose known material defects that buyer can’t reasonably discover.
-Some states requires seller to disclose all known defects.
Duty of disclosure exists
-applies only to defects known to the seller;
-doesn’t apply to those defects of which seller is unaware.
“The house is being “AS IS.”
Disclaimer: must be clear, and specific; to be effective.
Implied Warranty of Quality and Workmanship on the sale of new houses
by Builders, developers, and anyone else in the business of selling new construction;
Implied warranty of fitness or of habitability
- seller guarantees that house was built in careful, workmanlike manner and is fit for habitation.
- Is breached by any substantial defect buyer couldn’t reasonably have discovered before sale.
Implied warranty of habitability -
also in Landlord Tenant Law.
A few courts have held that
only the original buyer may invoke this implied warranty; but most allow subsequent purchasers to bring warranty claims for a reasonable time after the original sale.
Doctrine of Merger
When seller delivers deed to buyer, sales contract merges into deed.
Any contractual guarantees about title disappear once merger.
Buyers’ remedies for title problems are limited to the covenants of title contained in deed.
Merger
only applies to matters affecting title; it does not apply to other matters like property’s physical condition.
Mortgagor a grocer is free to sell
the Mortgaged property unless the mortgage agreement provides otherwise.
Mortgage prohibits a sale
Mortgagor a grocer sells anyway, mortgagor’s violation has no effect on buyer’s ownership. But the bank might have a claim against mortgagor for breach of contract.
Due on Sale
Acceleration Clause
Acceleration clause
If mortgagor sells or otherwise transfers mortgaged property, mortgagee may declare entire underlying debt to be due and payable. Alternatively, mortgagee may choose not to invoke the clause.
Due on Sale
Any transfer of the property will trigger acceleration.
1. Conveyance by deed,
2. Sale under an installment contract.
Sale or other transfer of mortgaged property
does not automatically remove mortgage nor does not automatically satisfy underlying debt.If property
is subject to mortage at time of sale;
- Seller pays off the mortgage in connection with sale using buyer’s purchase money.
- Buyer takes the property subject to the mortgage,
- Buyer agrees to assume the debt underlying the mortgage.
Payoff by seller
- required if mortgagee invoked due on sale clause.
- needed to deliver marketable title to buyer because mortage is encumbrance that makes title unmarketable.
A mortgage or other lien that’s satisfied from the sale proceeds does not affect marketablility
because it will not encumber the buyer’s ownership.
The buyer agrees to take the property subject to the mortgage but without assuming underlying debt.
The seller must continue to make the mortgage payments, mortgage will remain in effect even though the buyer now owns the land. So if the seller defaults on the debt, mortgagee may foreclose on the property. Then, it is buyer’s responsibility on the house. The seller ‘s responsibility is deficiency the seller alone.
If the buyer assumes the underlying debt
- Mortgage remains on the proeprty and buyer becomes personally and primarily liable for the debt.
- Seller remains secondarily liable on the debt unless mortgage agrees novation. Which releases the seller and places all personal liability to a buyer.
Assumption of the debt
requires buyer’s express agreement; contained in a stand alone document or accepting a deed that includes provisions about assuming the debt.
Buyer might implicitly assume the debt
if the purchase price is discounted to the mortgage balance. –> would receive a windfall if he could both get a discount and avoid the debt.
If the builder (buyer) missed 3 payments, and the farmer (grocer, seller) made the missings, then,
The farmer can recover payments from the builder. The farmer in this situation acted as a surety for the debt. Having made several payments as surity, the farmer can recover those payments from the debtor.
Equity of redemption
after default.
Mortgagor’s common law, equitable right to avoid foreclosure by paying remaining mortage debt before the foreclosure sale.
Concurrently Owned Property
cotenant might mortgage only her own property interest.
Cotenant
can redeem her interest by paying the mortage balance.
If a mortgage attaches to all cotenant’s interest
cotenant can’t redeem her own interest separately from the others. There is no such thing as partial redemption. To redeem the property, one or more tenants have to pay the entire debt.
Statutory redemption
Mortagor can regain the property after foreclosure sale
Statutory redemption
gives the mortaggor a period of time after the foreclosure sale to redeem the property (auction)
Statutory right, not CL right.
To redeem, the mortgagor must pay foreclosure sale price, plus, interest and costs, to the foreclosure buyer.
Most mortgagor remains in possession until redemption period expires.
After foreclosure sale,
proceeds to satisfy: foreclosed mortgages, and other liens too… then, what is the priority?
First in time rule
a given lien has priority over an liens that arise later.
If recording act applies, then, time of recording might determine priority instead.
- PMM:, 2. Future advance mortgages: mandatory disbursements take priority over intervening liens.
- Optional disbursements; junior to any intervening liens only if the future advance lender made the disbursements with notice of those liens.
Liens that are senior to the foreclosing mortgage are
unaffected by foreclosure.
foreclosure buyer will take the property
subject to all senior interests.
Effect of foreclosure on a junior lien
whether it made a part of the foreclosure process.
If the junior lienholder is joined in the foreclosure case, or notified of the sale; then,
the junior lien is extinguished, but not the underlying debt. because junior lien has opportunity to beat at the foreclosure sale or act to protect its interest.
Once a junior lien is extinguished, it can’t be reinstated
even if the defaulting mortgagor later repurchases the property.
If the junior lienholder is not notified or joined,
the junior lien survives and will continue to encumber property.
Once sales are complete, and appropriate liens are extinguished,
the proceeds are distributed in priority.
Senior lien paid in full
before junior lien paid.
- Cost of foreclosure sale,
- Mortgage being foreclosed,
- All junior mortgages or other liens,
- Beggar…. Still, if the debt remains, it is “Deficiency.”
Mortgagee can sue the mortgagor for
deficiency judgment for this debt.
EX. 1 Mortgage to bank: $200K. 2. Credit union: $75K.
The bank foreclosed, and join the credit union as a party; then, both mortgages were extinguished. allowing the buyer to take free of encumbrances. –> Proceeds?
- $5000 Fees and Court cost, 2. $200K bank mortgage
- $45K credit union, although the 2nd mortgage extinguished, the underlying debt remained.
- Farmer still owed the credit union $30 K.
no money
Rule of Marshalling can affect foreclosure… Mortgagor has 2 properties.
1st: house: mortgaged to a bank.
2nd: house: first mortage in bank’s favor; second mortgage in credit union’s favor. then,
all three mortgages are in default.
2 funds rule of marshalling says,
If the senior creditor can foreclose on 2 properties of same debtor, and junior creditor can foreclose on only one of the properties, then a court in equity may order senior creditor to proceed first against the property to which the junior creditor lacks access.
The bank first, could have been foreclosed the first property
Before foreclosing on the second. this rule protects the junior credit to require the senior creditor to exhaust other assets before proceeding properties.
Lease agreement says, The farmer can repurchase the farm for $1 if he makes all 36 monthly payments on time.
The businesswoman tried to evict him because farmer missed one payment. Can the farmer claim the foreclosure protection? YES.
Equitable mortage
if a transaction involving real property is intended to secure a debt.
Mortgage debtor entitled to foreclosure procedures and other debtor protections.
Identifying an equitable mortgage;
- whether debtor keeps possession of property;
- whether debtor acutely needs money at the time
- Whether the transaction allows debtor to reclaim or repurchase property after making some payment.
- Relationship btw amounts paid to and repaid by debtor,
- Whether debtor sells property for less than its FMV.
Sale and leaseback arrangement
equitable mortgage
-Farmer needed money to equipment.
- he sold the farm for only 1/3 of MV.
he received 30K (principal)+ 6K (interest)
-The farmer can repurchase the farm for $1 if he makes all 36 monthly payments on time.
CT says, Transaciton is a $300 K loan to secure the farm. … Less than a FMV.
Deed of trust
security deed.
Debtor executes a deed conveying property to 3rd party trustee, who holds property in trust for creditor to secure repayment.
Deed of trust: debtor keeps possession of property, if debtor defaults,
Trustee can sell property to satisfy debt.
Absolute conveyance
without trustee. Resembles deeds of trusts.
Absolute conveyance
debtor gives creditor a deed to the property.
Deed of Trust
Creditor agrees to sell property back when debt is paid. If debtor defaults, creditor keeps property.
Installment land contracts
contracts for deed.
Installment land contracts
buyer takes possession and remits purchase price in a series of installments.
Installment land contract
Seller retains title until the price is fully paid.
Contract later specifies that late or missed payments are a breach fo the contracts.
Historically, if buyer breached, seller could rescind contract, evict buyer, and retake without foreclosure.
CL allowed seller to keep all of buyer’s previous payments even if the buyer paid most of the price.
Installment land contracts
mortages.
If buyer breaches, seller may keep payments only to extend reasonably related to sellers’ damages.
Any payments beyond that amount must be refunded to the buyer.
Deed in lieu of foreclosure
does not impact mortgage,
affect mortgage enforcement.
a mortgagor facing default or foreclosrue is allowed but not required to tender a deed to the mortgagee.
Ct considers deed in lieu of foreclosure is not
coercion or taking advantages of mortgagor.
OR
If property is a way more worth; than the remaining debt.
Mortgage is evidence
that secures debt. Debt is evidenced by the promissory note.
Mortgagee is free to
transfer or assign its rights under the note and the mortage.
Mortgage assignment rules 2
- Mortgage follows the debt. If the mortagee assigns the note alone, then the mortgage is automatically assigned along with it.
Mortgage assignment rules 2
- The mortage has no validity apart from the debt. Assignment without the note is void.
E.G. Businesswoman can transfer the note; and the mortgage lien follows
not permistted: is that, the business woman cannot tranfer only the lien, while, keeping the note, for herslef.
Easement implied use of (MEE)
- Servient tenement is reasonably necessary to enjoy dominant parcel
- 2 Parties intention to use continues after division of property.
Easement appurtenant
2 parcels of the land - Dominant, and Servient.
Implied use of the easement: Reasonably necessary: degree:
Court thinks difficulty of using the alternatives.
Adverse Possession
transfers title of property under certain conditions. 1. Possessor must physically enter the property
2. Possessor must use it as a reasonable owner would.
Continuous use
occurs without substantial interruption, or if the advers possessor uses the property consistently.
Hostile possession under a claim of right
AP uses the land without owner’s permission.
AP must be
deliberately hostile to the owner’s right or must sincerely believe that the advers possessor owns the land.
The farmer acted without the teachers’ permission
Hostile possession: AP uses the land without owner’s permission.
Open and notorious
The adverse use must be visible upon reasonable inspection.
Exclusive
AP need not be the only person on the land, but he must use it in a way that’s incompatible with the owner’s rights.
Fulfillment of AP:
couldn’t return the point to the teacher apologizing, would have to formally transfer the property by deed.
Tacking
add previous user’s possession time if the users are in privity. (Farmer 8 years + Sister 2 years = 10 ok.
AP
takes only whatever title original owner had. e.g., drainage easement: subject to drainage easement.
AP
applies only o whatever portion of someone’s property the adverse possessor uses
Under color of title:
AP: adverse claim can extend to the entire tract described in the purported title.
Multiple AP acts in concert:
1/4, 1/4, 1/4, and 1/4. Title: equal shares. Tenancy in Common.A
Asserting authority to lease property
“your rent is due.” –> AP gets the rent. by acting like the owner. yes,
Equitable conversion
buyer gets equitable title, seller has equitable right to receive purchase money.
Seller’s right is deemed to be personal property. not real property.
After sister died, the personal representative (sister)
inherited her personal property, so sis was entitle to the sale proceeds.
Teacher out of 52, left the will: 50 to bro, 2 to my sister.
Teacher sold 50 to the 3rd party for 1 million.
Specific devise:
arises when testator leaves particular, identified parcel of real property to a specified beneficiary; if that property isn’t in testator’s estate upon her death, then that gift is adeemed.
Adeemed, ademption
to revoke or to satisfy it by some other gift. 유증철회.
Teacher’s brother (50 ) –> sold it before she died.
Gift was adeemed and bro takes nothing.
Teacher’s sister: left all
left all real and personal property. (2 acre tract, and $)
Eg 2. Teacher’s will, “I leave all my property to my nieces and nephews.”
CL: if a devisee predeceases the testator, then the gift to that devisee lapses.
That class closed upon teacher’s death because the gift to the nephew has been lapsed.The only remaining class members are 2 nieces. Nephew’s 2 children gets nothing.
Antilapse statute
prevents lapses unless the will states otherwise.
Preserve gifts to beneficiaries who have a specified familial relationship to the testator;
Gift passes to the beneficiary’s lineal descendants.
–> nephews children.
Assume State A: teacher left will, State B: teacher died, State C: property exists.: If disputes, which state laws applies?
Situs Rule
Situs rule
State C. The property is located in State C.
Implied warranty of marketability
the seller’s promise to deliver the marketable title at the closing. Every sale contract, unless explicitly states otherwise.
Marketable title:
one that reasonably prudent buyer would accept or one reasonably free from doubt, and free of encumbrances that might interfere with possession.
- No 3rd party interest that might interfere the buyer’s right of possession.
Encumbrances
any interests or claims in the property; held by anyone other than the buyer that affect the property’s use or value.
E.g.,
-Mortgages,
-easements,
-restrictive covenants, and
-uncertainties about the quality of title (defective deeds or gaps in title history.)
- Future interests
-Zoning violations, but not zoning laws itself.
- risks of title related litigation.
Marketable title
doesn’t have to be perfect.
- trivial defects, or remote possibilities of litigation: are ok.
Buyers may agree to accept title subject to specific encumbrances.
If the buyer does so, those encumbrances won’t count against marketability.
Written encumbrances in K: Buyer expressly agrees to buy subject to those encumbrances.
Open, obvious easements:
Powerline, highways –> don’t affect marketability.
If a seller fails to deliver marketable title, the buyer holds seller in breach; or buyer accepts title anyway–>
if Buyer accepts anyhow, then, no breach occurred.
Time to deliver marketable title
-Seller must deliver marketable title at the closing (not before closing).
-Buyer who discovers encumbrances must give seller chance to remove it by closing unless it appears unlikely or impossible.
Buyer agreed the sale contract without agreeing to accept any encumbrances;
before closing the buyer discovered tax lien on the property. Seller was not aware.
Then, buyer has to notify the seller of the lien.
and allow him the reasonable time to remove it before closing.
Installment contract
The buyer agrees to make a series of payments to the seller before the closing takes place and title passes.
In installment contract; if the buyer discloses the seller a problem of title, then,
the buyer should give a reasonable time to correct the problem before closing.
Seller can sign a valid sale contract even if they don’t yet own the property
if they acquire property within reasonable time.–> Enforceable K.
Equitable conversion = executory period
- Buyer is equitable owner of proeprty during executory period. (Interest in real property).
- Seller is equitable right to be paid the purchase price, secured by equitable lien. (Personal property)
Effect on Title
Buyer is equitable owner, but hasn’t paid yet.
Seller retains bare legal title.
Seller holds bare legal title in trust to be delivered at closing.
Buyer exchanges payment and adds legal title to equitable ownership.
Risk of loss: distribute? during executory period
Unless Contract, law steps in.
- Buyer (majority): even if the property is damaged or destroyed before purchase, the buyer must pay the full price.
If the seller receives an insurance payment for the damage,
the buyer is entitled to a credit in that amount.
Abatement (seller bears the risk of loss)
Minority states.
Uniform Vendor and Purchaser Act (UVPA)
places the risk of loss on whatever party possesses the property during the executory period.
During the executory period:
the house was struck by lightening, $100K damage:
- Major: Buyer pays.
- Minor: Seller pays. allow buyer to rescind the contract, or abatement (and convey the property).
Equitable conversion:
insurable interest: but no affirmative duty to insure property during executory period.
House
to secure the loan: Mortgage.
Debt
is evidenced by promissory note.
- Whoever signs the note is personally liable for the debt.
Debtor and mortgagor
are usually the same person; but they don’t have to be.
Sister mortgaged her house to secure her bro’s debt.
The sister has no personal liability for the debt because she did not sign the note.
But if the grocer defaults, the bank can foreclose the sister’s house.
Any debt remaining is the grocer’s personal responbility.
Technically,
Promissory note + Mortgage lien = mortgage.
Installment contract
can be mortgages (monthly payments). Buyer pays the seller over time.
Prepayment
can deprive the mortgagee of future interest payments. The mortgagor has no right to prepay unless the mortgage says otherwise.
Mortgage clauses prepayment forbidden:
enforceable.
Financial prepayment penalty (reasonable)
Enforceable.
Lien theory
a mortgage confers a security interest in the property with no change in title.
Title theory
a mortgage gives the mortgagee title to the property until the debt is paid.
Priority: installment contract
- Senior lien (lien with priority over another)
- Junior lien (lien with lower priority).
First in time rule:
a given lien is senior to liens that arise later and junior to liens that arose earlier.
Judgement lien has priority because
judgement lien arose first.
PMM
provides the money to buy the proeprty and has priority over any preexisting liens that arise through the mortgagor.
here, the house was PMM.
Mortgage of a house has a priority over the judgment lien.
Future advance mortgage
Initial distribution + per month * 5 months = 1 million. (mandatory)
if the grocer took out the second mortgage, credit union, after two disbursement from the bank,
whether it is mandatory disbursements.
First in time rule + Future advance mortgages
if the future advance lender is required to make the periodic disbursements (mandatory), then, the disbursements have the same priority as the initial distribution. = Bank has priority even though notice.
What if optional disbursement?
the priority depends on whether the bank had notice about the credit union. X
no notice of intervening lien
the future advance lender has priority as to the entire loan, just as if the disbursements were mandatory.
if there were notice of intervening lien,
all disbursements made after intervening lien are junior to that lien. Most juris require the future advance lender to have actual notice of intervening lien (no constructive, record notice)
Recording act can also affect
mortgage priority.
Grocer: 1. Bank, 2. Seller (defaulted) who has the priority?
Bank. because Bank secured the house as a mortgage, seller did not.
Secured debt has a priority over unsecured debt.
RAP
No interest in property is valid unless it must vest; or forever fail to vest; within 21 years after the end of some life in being when the interest is created.
Property interest VOID
When there is any possibility that it could vest longer than 21 years after all relevant lives in being when the interest is created.
RAP
does not apply to vested interests, no interest in property is valid unless it must vest.
“to the builder in fee simple, but to my daughter if she gets married.”
Daughter: executory interest. Daughter’s life: measuring life; by the time of her death; for sure; it is sure that the property interest is vested or not.
–> RAP OK.
“the banker, plus his heir and assigns, gran the builder, plus his heirs an dassigns, a right of first refusal to buy the land if the banker, his heirs, or his assigns, ever sell it.”
Right of first refusal: becomes vested. It is because right could be vested more than 21 years after any conceivable measuring life.
When his heirs, assigns, and builders, has assigned to sell it–> then, it can happen 200 years later.
Wait and see rule
preserves an interest that would otherwise violate the rule either until it vests or until the perpetuities period expires; whichever comes first.
Cy pres
as near as possible.
If interest would violate the rule, Ct rewrites the conveyance to comply with the rule while capturing the grantor’s intent as closely as possible.
“Conveyance to a grantee for life, then to the 1st of the grantee’s children to turn 25.”
The court will approximating to 21. to approximate grantor’s intent.
Cy pres
can preserve charitable trust. if the trusts’s specified charitable purposes can no longer be fulfilled.
1. Settlor has expressed general charitable intent; then, the court may use cy pres to determine another charitable use.
2. Settlor’s intent is specific. “to benefit the particular charity,” then, cy pres wont apply.
Fixture
an item of personal property that has been attached or annexed to real property with the intent to make the chattel part of the property.
Annexed
physically incorporate into a structure; removing it would damage the realty.
The party who annexes chattel must
intend to make a permanent accession to realty or to another fixture on realty.
Evaluating intent:
the court must consider all cir.
1. nature, use of chattel,
2. relationship between the use of the chattel and the use of the realty,
3. relation to the annexing party to the realty.
–> intent.
If the life tenant intend to make hot tub permanent part;
the hot tub becomes a part of the property;
personal representative may not remove it.
tenant lacked intent to make hot tub a permanent part of the house;
personal rep may remove it.
fixtures in LL & T
Trade fixture.
Tenant annexes to the realty during the lease term.
A chattle annexed to the land by T to carry on a trade or a business.
The tenant can remove trade fixtures;
LL succeeds to ownership of all trade fixtures that tenant fails to remove by the lease’s end.
Tenants in Common can transfer their interest with
Deed of conveyance
TiC
can Mortgage, sell, licensee access, etc.
Ouster
when you kick someone out who is entitled to be in possession of the property.
Eviction
someone who has not entitled to possession.
Limit right of partition
restraint on alienation.
Joint Tenancy terminated by
SPM: Sale, Partition, and Mortgage.
Tenancy in Common terminated by
Mortgage, Ouster, Death, and Partition (MODP)
Tenancy for years
specified time; A leases to B from April 20th to April 21st OK.
Tenancy that is uncertain duration, and greater than one year
Statute of Fraud; should be in writing.
Periodic Tenancy
for a fixed period of time which then repeats unless a party terminates the lease by giving notice. usually, written notice; equal one lease period.
Periodic tenancy is created by
implication.
3 situation Periodic Tenancy by Implication
- tenant just starts to pay the rent month to month.
3 situation Periodic Tenancy by Implication
- If there is term of years; and it violates the statute of frauds;
3 situation Periodic Tenancy by Implication
- Holdover tenant + niceguy landlord –> if a tenant stays in their rental unit beyond the stated lease date; they are holdover tenant; if landlord allows them to stay on, the new rent is measured by the way they are now doing it.
Periodic tenancies are automatically renewed
until there is notice of termination.
Notice of termination in periodic tenancy
AT LEAST one period in advance; or you have to continue to pay the rent.
Tenancy at will last
as long as the landlord and tenant will that it lasts. It has no fixed duration.
Either party can terminate the lease at any time
by giving notice to the other party. (Tenancy at will). Notice of termination immediately effective upon receipt unless it states a future termination.
Payment of regular rent
will give rise to an implied periodic tenancy.
Tenancy at sufference
holdover tenant.
Causing the landlord to suffer.
Implied covenant of quiet enjoyment (between LL and T).
both residential & commercial.
LL violates when 1) actual wrongful eviction; 2) breach by constructive eviction.
Breach by constructive eviction (LL)
- failure to make necessary repairs,
- Harass tenant, making threats, entering the premises without permission
- Interference with essential services like water, laundry, and parking.
Constructive eviction; Tenant must prove SING
- Substantial, 2. Interference (action or failure to act) 3. Notice must be within reasonable time, 4. Goodbye (Tenant must vacate) - If tenant stays for 6 months; it is a waiver of their consturctive eviction rights.
LL is not liable for the act of the 3rd party.
Also, LL is not liable for the acts of other tenants. LL has duty not to allow nuisance (gambling etc) and also duty to control the common areas.
Implied warranty of habitability
only residential. Minimal living requirements must be met in all residential leases. Plumbing, running water, heat in the winter, etc. Nonwaivable.
Breach of implied warranty of habitability remedies:
- Move out and terminate the lease.
- Repair and deduct.
- Reduce their rent or withhold all of the rent until Ct decides Fair Rental Value.
- Remain possession and pay rent then affirmatively sue for cash money damages.
Protected activities against retaliatory eviction
1 complaining about defects
2 asserting that the ll failed to keep the premises in a habitable condition.
LL is barred from penalizing the tenant by either
- Ending the lease.
- Raising their rent,
- Harassing the,
- Or just fucking with them.
Eviction is retaliatory if
it happens within 6 months of tenant brining a claim for a non habitable lease or a withholding of rent by the tenant for a legit reason. BOP is on the landlord to show eviction was not retaliatory.
Privity of estate
someone who has the reversionary interest if you fuck up your rent obligations.
Nonpayment of rent:
landlord can sue assignee under privity of estate. If the assignee stops payment, the property will REVERT back to ll since The assignor (T1 ) signed off his whole interest in it.
Assignment LL to Assignee
they are liable to each other for all covenants in the original lease, that runs with the land; promise to pay rent, pay taxes, promise to repair or paint the premises.
There is no privity of contract between LL and Assignee unless
Assignee assumes the contract of the Assignor.
There is no privity of estate but privity of contract between LL and Assignor
They signed a contract, but Assignor no longer has any interest in the land and Assignor will not get the land kicked back to him if Assignee doesn’t pay the rent .
Sublease
giving only part of their interest to a new tenant; some time left over under the lease.
Vertical privity
Wholesale Costco
Horizontal Privity
- Instantaneously when a land transfer includes convenant or
- When we have a promise related to a simultaneous interest of 2 landowners; e.g., easements that run across 2 parcels, a promise to paint the fence.
Horizontal privity
Only burden. It either exists or doesn’t exist the moment the covenant is entered into.
Horizontal privity
The covenant is in the deed.
Instantaneous horizontal privity
“here is a covenant in the deed: you promise me you will not go in the bottom play area.”
Instantaneous transfer.
Horizontal privity
- Simultaneous interest in land and make a little promise related to that simultaneous interest.
e.g., “easement: with a fence.” “you will repair and maintain the easement and fix up the common fence on the easement.”
Horizontal privity
no random neighbor rule.
Inquiry notice
when you look at the land and you see that it is burdened by a covenant.
Most Cts would say that someone should infer that if you saw SHITS you should reason that the lots were restricted. E.G. “Could you infer that it was not allowed to have satellite TV dishes.” “you didn’t see any motorcycles in the garages.”–> Would this allow you to infer that motorcycles were not allowed? How you can infer from absence?
Covenants can be terminated by
- Merger.
- Abandonment or Estoppel
- Eminent domain.
Horizontal Privity
WITH-N (Burden)
Vertical Privity
WIT- V. (Benefit)
Equitable servitude
WIT-N.
Equitable servitude can be terminated by
- Release by a party
- Abandonment or estoppel
- Merger,
- Purpose of the servitude no longer existing.
- Condemnation by Uncle Sam.
Implied equitable servitude
common plan subdivision
If the developer subdivides land and SOME of the deeds contain negative covenants, while others do not, the negative covenants are then binding on ALL of the plots of LAND.
Even the ones where the deed did not say shit about a negative covenant.
Common Scheme
Covenants are in the original sub plot deeds.
Defense:
- Change 2024.
- Unclean hands: when the person seeking enforcement of a covenant is violating a similar restriction on their own land. “Don’t paint your house blue, but they are indeed painting their house robins egg blue.”
Creation of Easement
PING Pong.
Prescription, Implication, Necessity, Grant.
Easement by Grant
Statute of Fraud applies. Writing .
Express easement, we expressly grants it by words.
EG Grant
Owner 1 and 2 writes up “driveway” so he can get his car out. Writing in a deed. Include legal description of the servient land in it. To satisfy SoF, just write in the servient land.
Easement implied by prior use
ACR. Always Carry Raincoats.
Apparent, Continuous, Reasonable.
Emanuel:
1. Land severed from common ownership.
2. The use of the easement existed prior to this severance.
3. The easement was reasonably necessary to enjoyment of Lot 2.
Easement by necessity
- Common ownership before severance.
- at the time of severance, Landlocked.
- Strict necessity (no other access).
Prescriptive easement
unlike express easement or implied prior use easement, it doesn’t have K.
Prescriptive easement
OCAN.
1. Open and notorious.
2. Continuous. (not constant)
3. Actual. (not like I intent to use)
4. Non permissive. (from the owner).
Difference between Prescriptive Easement and AP
Prescriptive Easement: USE of the land.
AP: Possess the land.
License
personal privilege
Equity and fairness
prevent revoking license.
MEE Fixture
Annexation, Adaptation, and Intention. (AAI).
Intention
without intention, it is not fixture. Intention: the person did not intent to it to be fixture XXX
Tenant installation qualifies fixture?
If it is in K, it controls.
If K is silent, Substantial harm test: tenant can remove chattel as long as removal does not cause substnatial harm to the property.
Commercial tenant can remove
trade fixture. even if the lease does not allow to do so. as long as tenant materially does not damage the property.
Rule 2: trade fixture
- Before the lease terminates, tenant removes.
- Commercial tenant must restore to original condition.
Zoning
comprehensive master plan.
Zoning
different land uses should not be next to each other.
CTs are outright hostile to
spot zoning attempts.
Spot zoning (장점)
Beneficial public purpose.
Challenge zoning
no rational basis.
Conditional use permits
owners wants to use their landin a way that is not otherwise permitted within the zoning district.
Zoning board can impose
conditions (exactions) on the property owner that are designed to benefit the community; so long as these exactions are substantially related to a specific need or burden that the proeprty owner is creating with their building.
Conditional use permits
you can use your property for this even if it is not normally allowed.
Variances
you can build your property this way even if it is not normally allowed.
Variances
allow to vary from the zoning ordinances.
Show,
-1. Undue hardship essentially no effective use of the property can be made if the variance is denied; more than inconveniences.
(hardship: cannot be self inflicted; nor created).
-2. Hardship must be unique.
Prior Non conforming use
Grandfathered in. so it is allowed.
1. You can’t intensify the use.
2. If your McDonalds burns down, you can’t build new.
3. Nonconforming use can run with the land : (e.g., inheritance, etc.)
4. Continue to use as is.
Amortization
Cities can reasonably amortize the no conforming use to force it to stop at some point.
Gradual reduction.
Eventual shut down.
- Schedule:
1. Amount of your investment,
2. Degree of offensiveness of your use.
3. Balancing public interest v. Private and cost.
4. Nature of use.
Amortization
Substantial hardship. 4 points.
Deed of estoppel
after acquired title.
Mortgage
voluntary transfer of security interest in your land to secure a debt.
Mortgage
SHOULD BE in WRITING.
Should not require consideration. (underlying obligation is enough).
Right of redemption
mortgagor, grocer has the right to pay off the full mortgage at any time during the mortgage and own property free and clear.
It also gives the grocer the right to use and enjoy the property so long as the mortgagee obligations are met.
Can you mortgage your own land to secure the debt of another?
Yes
Purchase money mortgage (PMM)
funds are used directly to buy a home.
Recorded PMM have priority over
NON PMM, even for ones that were recorded before the PMM.
Any judgment properly filed shall be a lien on the real property
then owned or subsequently acquired by any person against whom the judgement is rendered.
Future Advance mortgage: mandatory
Mandatory payments with the mandatory triggering condition e.g., property being 50% done.
OK.
Then, all the new payments have the same priority as the original mortgage. (MEE essay 답과 같음)
When payments are mandatory,
the junior lien is junior to both the initial payment and future advance payment down the line.
Optional future advance
The junior lien lender has priority over amounts tranferred later on after the lien.
Installment contract
the sale of land where the buyer buys the land by making payments in installments over time and the seller keeps title until the last payment is made.
If the buyer fails to make an installment payment,
CL:buyer loses all past payments and have to fuck off.
now, Forfeiture clause. Time is of the essence,
Modern: seller is only allowed to keep the reasonable value of the rental value at the time the buyer lived there.
Installment K: if the buyer defaults;
Seller can sue for breach of contract, restitution, foreclosure, quiet title, or try to rescind K.
The seller can also Self help.
If seller defaults; buyer can sue
Absolute deed as security
equitable mortgage
Instead of mortgage on land,
Security interest
Rainbow asks for the deed itself with a writing,”after the loan is paid back, Goat can get the deed back for Gym.”
“You give me the deed and I will give you $200,000. /You pay rent to me. Once you pay the full $200,000 back, I will give you the option to buy the deed back.” “lease and option.”
Selling he deed adn leasing it.
- Disguised mortgage.
Deed of trust
when the title is given to a 3rd party a trustee, to hold as security for a loan between a borrower and a lender. Upon default, trustee can sell it to satisfy debt.
Title theory (minority)
mortgage granted by one joint tenant severs the joint tenancy and it turns to Tenancy in Common.
Lien theory (majority)
if one joint tenant takes out a mortgage, it is only considered a lien and will not sever the joint tenancy.
Does not break up the unities. JT survives
Acceleration clauses
triggered by nonpayment of the mortgage but they are also triggered by failing to pay insurance premiums on the house. Your mortgage payments can be accelerated by failure to pay insurance if this is what the acceleration says.
Due on sale
creditor to demand full payment of a loan if the mortgagor transfers any interest in the property without the lender’s consent.
Due on sale clauses
both valid and enforceable and they are not a restraint on alienation.
Deed in lieu of foreclosure
- Transaction must be fair and equitable.
- Deed must be effective immediately.
- Junior lienholders are not cutoff, only the main mortgage. The borrower is still liable to junior lienholders after giving over the deed.
Special warranty deed (goat)
- Grantor promises that they have the right to convey; (only to grantee) &
- The property is free from encumbrances that arose when the grantor had a land or that were created by the grantor.
- The grantor will not defend title if the encumbrance or claim is about some shilt the old owner did before them.
Grantor says, “I own this, I can give it to you and when I was living there I did not do any weird shit to it like put an easement mortgage or lien on it.”
Deed is void
forged, not delivered or fraud in the factum.
Deed is voidable
- They were made by minors or incapacitated people.
- Made through mistake.
- Made through undue influence or
- Fraud in the inducement makes it voidable.
Owner’s policy covers heir and retroactive claims that arises later on with the 28101st buyer. BUT
they do not run with the land and cover friends and random subsequent buyers.
Present covenants
when the land is conveyed you can only sue the person who actually sold you the land at present covenants. NOT run with the land so people later on can’t use.
Future covenants
protect the grantee from random shit that could happen in the future.
Run with the land. so a present owner can sue the person before the grantor if the earlier person causes the covenant to be broken.
Cov of seisin
promise that you are in possession of the land that you are sell.
Cov of Right to convey
a promise that you have a legal right to sell the land; if you are in possession you have a right to sell. if you are trustee, you don’t own it but you have a right to sell.
Cov against encumbrances
there are no rights on the land held by third parties.
Easements cov, servitudes, mortages lients.C
Cov quiet enjoyment
breached by 1. Eviction by grantor 2. Someone screwing up with superior title.
Cov of Warranty
grantor will pay your legal costs if someone shows up with better title than you. Defend against them and shit.
Cov further assurances
a promise to make sure the title is always good. If defect, grantor will give you a new one. he will take care o flater discovered liens that spring up from 3rd parties.
Rule of Convenience: Class Gift
Unless a grant shows a contrary intent, a class closes when, any class member becomes eligible to receive a distribution.
Only persons who are actual class members at that time may participate in the class.
Persons who are not yet eligible to join the clas may not join it after that point and will not receive a share of the class gift. (Life ESTATER가 죽은 그 포인트에 살아 있던 자들만 받음)- 후에 태어나거나 그 포인트에 죽은 사람은 아님. 1명만 받으면 그 때 닫힘.
