PROPERTY Flashcards
Fee simple absolute
Present, infinite possession
Creation:
* “And his heirs”
* “O to A”
* “O to A and his heirs”
* “O to A forever”
No future interest because capable of lasting forever
Fee simple determinable
Present possession which ends after a specified period
Creation: specific duration language
* “So long as”
* “While”
* “During”
* “Until”
Terminates automatically ends after specified period ends
Grantor holds possibility of reverter which vests automatically after specified period ends
Fee simple subject to a condition subsequent
Present possession which grantor may terminate if a condition is met
Creation: specific conditional language
* “But if… O may repossess”
* “Provided that… if not, O may reenter and retake”
* “On the condition that… if not, O may repossess”
Grantor may terminate when condition is met
Grantor holds right of re-entry and must affirmatively act to reclaim
Fee simple subject to executory interest
Present possession which ends when an event occurs and vests in a third party
Creation:
* “But if… to B”
* “Provided that… if not, to B”
* “On the condition that… if not, to B”
Terminates automatically when condition is met
Third party holds executory interest
* Springing executory interest: third party divests grantor
* Shifting executory interest: third party divests grantee
Life estate
Present estate which terminates on the death of the measuring life
Cannot be transferred by will or intestate succession
Creation: “For life”
Automatically terminates when measuring life ends
* If goes back to grantor, grantor holds reversion
* If goes to third party, third party holds remainder
What are the types of remainders?
- Vested remainder: given to an identifiable person and there is no condition which must be satisfied - “to A for life, then to B”
- Vested remainder subject to open: given to a class and** full membership known** and at least one person has vested - “to A for life, then to A’s children who reach 21.” A has three children: one is over 21, two are under
- Contingent remainder: everything else - “to A for life, then to A’s firstborn child” when A has no children
Tenancy in common
- Default
- Separate but undivided interests in the property
- Percentage interests may be equal or unequal
- No right of survivorship
- Co-tenant may freely transfer the property, including by will and intestate succession
Creation of joint tenancy
- Grantor must make clear expression of intent and use survivorship language, e.g. “as joint tenants with a right of survivorship”
- Must possess four unities
What are the four unities?
- Possession: equal right to possess the whole of the property
- Interest: equal shares of the interest
- Time: received interests at same time
- Title: received interests in same instrument
Severance of joint tenancy
- Two joint tenants: transfer severs joint tenancy and becomes tenancy in common
- Three or more joint tenants: transfer severs joint tenancy with respect to transferee, but others remain joint tenants
- Mortgage severs joint tenancy in title theory jurisdiction, but does not in lien theory jurisdiction
Rent and expenses between joint tenants
- Co-tenant out-of-possession cannot collect rent from co-tenant in possession unless co-tenant out-of-possession was wrongfully ousted, or if parties otherwise agreed
- Third party rent is divided proportionately
- Operating expenses (e.g. taxes or mortgage) are divided proportionately; co-tenant may collect contribution for payments in excess of her share
4. ?? No right to reimbursement from co-tenants for repairs or for improvements, although the repairing co-tenant can get credit in a partition action
Leasehold interests
Lease gives the tenant a present possessory interest, and the landlord a future interest
Tenancy for years
- Lasts for a fixed and ascertainable period, e.g. A leases land to B for three months
- If term longer than 1 year, must have written and signed agreement
- Termination: automatically after fixed period, tenant surrenders lease, tenant or landlord commits material breach of lease
- No notice required to terminate
Periodic tenancy
- Default
- Repetitive, ongoing tenancy, e.g. month-to-month
- Creation: express agreement, implication when rent paid at specific periods, lease is invalid, tenant-for-years remains after termination
- Termination: terminating party gives notice before start of the last term, e.g. notice on February 15, then termination effective on March 31
Tenancy at will
- Ongoing lease that continues until either party terminates
- Creation: express agreement, implication when rent paid
- No notice required to terminate
Tenancy at sufferance
- Tenant remains in property after lease ends
- Relationship may continue if landlord accepts rent, creates implied month-to-month periodic tenancy
- Termination: tenant voluntarily leaves, landlord evicts tenant, tenant signs new lease with landlord
Implied warranty of habitability
Applies to all and only residential leases and cannot be waived
Warranty that property is reasonably suitable for human needs, focus on tenant’s health and safety
Remedies: move out, withhold rent, remedy defect and offset costs against rent, remain on property and sue for damages
What must a tenant do to withhold rent for breach of the implied warranty of habitability?
- Notify the landlord of the problem
- Give landlord a reasonable opportunity to fix
Not required to vacate premises
Implied covenant of quiet enjoyment
Covenant in residential and commercial leases that landlord will not act to make the premises wholly or substantially unsuitable for intended purpose, resulting in the tenant being constructively evicted
Elements of constructive eviction:
1. Premises unusable for intended purposes
2. Tenant notified landlord of problem
3. Landlord did not correct problem
4. Tenant vacates the premises after a reasonable time
Remedy: terminate lease and seek damages
Do landlords have a duty to repair?
- Residential leases: duty to repair common areas and warn tenant of latent defects
- Commercial leases: no duty to repair
Landlord’s duty to mitigate damages
If tenant abandons the property or is evicted, landlord has a duty to make reasonable efforts to re-rent the property
* Tenant is not obligated to continue paying rent if landlord fails to do so
* Landlord not obligated to accept an unacceptable replacement tenant
* Landlord is entitled to the difference between original rent and replacement rent
Lease assignment
- Complete transfer of the tenant’s remaining term
- Assignee liable to landlord for all covenants that run with land
- Landlord can collect rent from the tenant (privity of contract) and subsequent tenant (privity of estate)
Can a tenant transfer their lease freely?
Yes, if lease is silent on assignment or sublease
If lease requires permission but is silent on standard of permission:
* Majority: may only deny permission for commercially reasonable reason
* Minority: may deny permission at their discretion
* Landlord waives right to enforce assignment/sublease provision if accepts rent from assignee
Sublease
- Transfer for less than the duration of the lease
- Sublessee not liable to landlord for rent or covenants that run with land
- Landlord can collect rent from the tenant only (privity of contract and estate)
Real covenant
Use if want money damages
Non-possessory interest in land that
obligates the holder to either do something or refrain
from doing something
What are the requirements to enforce the benefit of a real covenant against a successor?
- Writing per statute of frauds
- Original parties intended for covenant to run with land
- Touches and concerns the land
- Original party and successor have relaxed vertical privity, meaning successor only needs to take an interest carved-out of the estate
What are the requirements to enforce the burden of a real covenant against a successor?
- Writing per statute of frauds
- Original parties intended for covenant to run with land
- Touches and concerns the land
- Burdened party has actual, constructive, or inquiry notice
- Original parties had horizontal privity, meaning the estate and covenant were contained in same instrument
- Successor and original party have strict vertical privity, meaning successor takes entire interest
What is constructive and inquiry notice?
- Constructive notice: interest recorded in previous conveyance
- Inquiry notice: reasonable investigation would have revealed the existence of the interest
Equitable servitude
Use in place of real covenant if want injunctive relief
What are the requirements to enforce the burden of a equitable servitude against a successor?
- Writing per statute of frauds
- Original parties intended for covenant to run with land
- Touches and concerns the land
- Burdened party has actual, constructive, or inquiry notice
What are the requirements to enforce the benefit of a real covenant against a successor?
- Writing per statute of frauds
- Original parties intended for covenant to run with land
- Touches and concerns the land
Common interest communities
Development in which individual units are burdened by a covenant to:
* Pay dues to an association which provides services and facilities and/or enforces covenants
* Pay or contribute to maintenance of common property
Declaration and regulations bind all owners and successors
Easement
Non-possessory interest in use of another’s land
Easement in gross
Easement benefits the holder personally
Not enforceable against successors
Easement appurtenant
Easement tied to use of the dominant land
May be enforceable against successors
When is an easement appurtenant enforceable against a successor?
Successor has actual, constructive, or inquiry notice
Inquiry notice: reasonable investigation would have revealed the existence of the easement
Easement by grant
Created by express agreement:
1. In a writing signed by grantor per statute of frauds
2. Identifies land and parties
3. Indicates grantor’s intent to convey easement
Easement by prescription
Created when possessor’s use of subject of easement is:
1. Open and notorious
2. Continuous
3. Hostile
4. Duration of statutory period
Easement by implication
Created when:
1. Original piece of land owned by a common owner is subdivided by the common owner
2. Pre-existing use established by common owner
3. Use apparent and obvious at time of severance
4. Use affects value of land
5. Use is reasonably necessary for subsequent owner’s use and enjoyment of their parcel of land
Easement by necessity
Created when:
1. Original piece of land owned by one owner is subdivided
2. One of the resulting parcels becomes virtually useless without easement
How is an easement terminated?
- Holder gives express written release
- Holder obtains title to servient estate
- Holder abandons property (affirmative act that shows a clear intent to relinquish easement)
- Necessity that created easement terminates
- Holder makes statement that they are abandoning the easement and servient owner reasonably relies on the statement to their detriment (estoppel)
- Servient owner interferes with holder’s ability to use easement and holder fails to prevent this within statutory period (prescription)
- Subject of easement is destroyed and servient owner is not at fault
- Servient estate conveyed to bona-fide purchaser without notice of easement
License
- Privilege to use another’s land
- Revocable at any time unless creates easement by estoppel
- Does not bind successors
Fixtures
Personal property attached to land/dwelling that becomes part of the land
How do you determine if an item is a fixture?
Look at objective intent of party who attached the item
Factors
1. Nature of item
2. Manner in which it was attached
3. Damage that would result from removal
4. Extent to which item is adapted to property
Adverse possession
Trespasser may acquire title to land if use is:
1. Continuous for statutory period
2. Open and notorious (sufficient to put owner on notice)
3. Hostile (done without owner’s consent)
4. Exclusive (not shared with owner
Tacking in adverse possession
- May aggregate time of successive adverse possessors
- Adverse possessors must be in privity (prior possessor somehow ‘conveys’ the property to the current possessor)
What title does an adverse possession obtain?
- Same title as the original owner
- Subject to easements
Constructive adverse possession
If adverse possessor only used part of the land but gained possession ‘under the color of title’ (possessed in reliance on a document, e.g. invalid deed), his possession is deemed to extend to the entire portion of land described in the title
What are the requirements for a valid land sale contract?
Must satisfy the statute of frauds:
1. In writing
2. Describes the property
3. Identifies the parties
4. Contains purchase price
5. Signed by party being sued
What is the doctrine of merger in a land sale contract?
Once the deed is transfered, the original contract is invalid and parties lose all causes of action based on the contract
Warranty of marketable title
Every land sale contains a guarantee by the seller that the title is free from an unreasonable risk of litigation
Remedy: buyer may rescind contract or order specific performance of contract at reduced rate reflecting the defect
Title is unmarketable when contains substantial defect:
* Title acquired by adverse possession that has not been quieted
* Private encumbrances, e.g. mortgage, enforceable covenant or easement
* Zoning ordinance violation (but not existence of zoning ordinances)
What does warranty of marketable title apply to?
- Does not apply to defects disclosed in contract
- Only applies in period before closing
Equitable conversion
- Majority: in period between land contract execution and closing, buyer holds equitable title and seller holds legal title - buyer responsible for damage to property that occurs in that period
- Minority: seller bears the risk of loss until closing/deed delivery
Delays in executive of land sale contracts
- Unless the contract states or the parties give notice, time is not of the essence
- If contains ‘time is of the essence’ clause and buyer fails to perform on closing date, seller entitled to down payment
Specific performance in land sale contracts
Specific performance always available as remedy because real property is considered unique
Exception: property has since been sold to a bona fide purchaser without notice
What are the buyer’s remedies in a breach of land sale contract?
- Specific performance
- Damages: difference between contract price and market value on the date of breach
- Recission: cancel contract and seller must return payments
What are the buyer’s remedies in a breach of land sale contract?
- Specific performance
- Damages: difference between contract price and market price
- Recission: sell the land to someone else
Home builder’s implied warranty
Protects purchaser of a newly constructed home against latent defects and guarantee that the building is safe and fit for human habitation at the time of sale
Action must be brought within a reasonable time after the discovery of the defect
Who may recover damages for breach of home builder’s implied warranty?
- Majority: initial buyer and subsequent purchasers
- Minority: only original buyer
What are the requirements for a valid deed?
- Writing signed by grantor
- Identify land and parties
- Include words evidencing a present intent to transfer
When is intent to convey in a deed present?
Presumed when deed is recorded
Not found when:
* Grantor reserves right to revoke the deed
* Instructions to only deliver deed on the grantor’s death
General warranty deed
- Warrants against all title defects, regardless of who caused it
- Contains all six present and future covenants of title
What are the present covenants of title?
- Covenant of seisin: deed describes the land
- Covenant of right to convey: grantor has the right to convey the property
- Covenant against encumbrances: no undisclosed encumbrances that could limit the land’s value
Note: subsequent, remote purchasers generally do not have a cause of action against the original grantor unless state law says otherwise
What are the future covenants of title?
- Covenant of quiet enjoyment: grantee’s possession will not be disturbed by a third party claim
- Covenant of warranty: grantor will defend against future title claims by a third party
- Covenant of further assurances: grantor will fix future title problems
Special warranty deed
Warrants against title defects caused by the grantor
Same covenants are general warranty, but they are only applicable to defects caused by the grantor
* Seller has not previously conveyed property
* No encumbrances made by seller
Quitclaim deed
“As is” deed
No title warranties
Estoppel by Deed
If a grantor conveys a deed before they own the property, the title automatically vests in the grantee when the grantor acquires title
“Wild” land
- Land that is not recorded properly
- Wild deeds, mortgages, or easements are effective between the original parties
- Does not put subsequent purchasers on constructive notice
Race statute
- Rule: first to record wins, even if the subsequent purchaser had notice of a prior, unrecorded conveyance
- Key language: “first recorded” or “first to record”
Notice statute
- Rule: subsequent purchaser wins if they acquire without notice of a prior unrecorded conveyance
- Key language: “in good faith” or “without notice”
Race-notice statute
- Rule: subsequent purchaser wins if they acquired without notice of a prior unrecorded conveyance and records first
- Key language: “first duly recorded” or “first recorded” with “in good faith” or “without notice”
Bona fide purchaser
Someone who pays valuable consideration and acquires real property without actual, constructive, or inquiry notice of a prior conveyance
Does not include: gift, will, instestate succession
Shelter rule
Person who purchases real property from a bona fide purchaser receives the same protection as the bona fide purchaser
Example: A takes land not subject to an easement because lacked notice, and A conveys land to B. Even if B has notice of the easement, he does not take the land subject to that easement.
Is a bona fide purchaser protected by recording statutes from adverse possessors?
No because no documents to record
Common law ‘first in time’ rule applies, so adverse possessor wins against all subsequent purchasers
How may a deed be signed?
- If grantor is an individual: Grantor or agent authorized by the grantor in writing
- If grantor is an organization: authorized persons
- Does not need to be witnessed or notarized
Purchase money mortgage
- Seller is the lender who secures the mortgage, buyer uses loan to purchase property
- Lender has priority over all prior and subsequent claims and mortgages
What are the requirements for a valid mortgage?
Mortgage must be:
1. In writing
2. Signed by party being sued
3. Reasonably identify the parties and land
What are the steps to determine foreclosure priority?
- Identify the foreclosing lienholder
- Split remaining into lien holders who recorded before the foreclosing lien holder, those who recorded after the foreclosing lien holder, and those created after the foreclosing lien holder who did not record.
- Put the prior recording lien holders in descending order of when they recorded
- Put subsequent recorded lien holders in descending order of when they recorded: foreclosing lien holder is first unless there is a purchase money lien holder, who takes priority
- Put unrecorded lien holders in descending order of when they were created
- Prior recorded lien holders go first, then purchase money lien holder, then foreclosing lien holder, then unrecorded lien holders are below
Note: interests senior to foreclosing lien holder are rarely part of the foreclosure proceedings
How does foreclosure affect interests?
- Interests junior to the foreclosing lien holder/purchase money lien holder are destroyed
- Interests senior to the foreclosing lien holder/purchase money lien holder survive to the new owner
Statutory redemption
Borrower may regain possession of their foreclosed upon property if they pay the full loan within a statutory period
Deed of trust
Operates as a mortgage, but third-party trustee holds title for the lender
What happens to liability if a transferee assumes a mortgage?
- Transferee is personally liable
- Borrower remains personally liable unless lender releases the borrower, or modifies the transferee’s obligation
What happens to liability if a transferee takes ‘subject to’ the mortgage?
- Transferee not personally liable
- Borrower remains personally liable
In what order are debts paid off in a foreclosure sale?
- Attorneys’ fees and expenses
- Lien holder debts
- Borrower
If the proceeds of a foreclosure are insufficient to pay off debt, what happens?
Lender may seek a deficiency judgment against the borrower
Zoning laws
Government may enforce land-use regulations necessary to protect the health, safety, morals, or general welfare of the community
Existing non-conforming uses
Structure that no longer conforms under current regulations may be grandfathered in, so it can continue with its non-conforming use
If a project is in process when new regulations are enacted, developer may continue as planned if:
1. Developed in good faith,
2. Secured proper permits, and
3. Made substantial progress in the project
Post-ordinance nonconforming properties
Owner applies for a variance to change to a non-conforming use
* Use variance: right to use property for nonconforming use
* Area variance: right to develop property in violation of restrictions
What must an applicant show to obtain a variance?
- Compliance would create unnecessary hardship,
- Hardship arises from circumstances unique to property,
- Owner did not create hardship,
- Variance is consistent with overall purpose of ordinance, and
- Variance will not cause substantial harm to general welfare
What changes can be made to prior non-conforming properties?
- Permitted: insubstantial changes and reasonable alterations
- Not permitted: substantial changes
Choice of Law
Controlling law in property cases is based on where the property is located
Exceptions:
1. Instrument designates an applicable jurisdiction
2. Cases involving marriage, in which the parties’ domicile may govern
3. Mortgage cases where repayment must be made in a different state
