Property Flashcards
As between two mortgages, what is the effect on the junior mortgage when the mortgagor accepts an advance of funds from the senior mortgagee?
The Junior Mortgage is given priority over the Advance if the Advance was optional
In most states, the reservation of an annual rent, payable monthly, in a lease with no set termination date creates a:
a year-to-year periodic tenancy . A periodic tenancy is a tenancy that continues from period to period until terminated by proper notice by either the landlord or the tenant.
A fee simple subject to an executory interest is an estate that:
Automatically divests in favor of a 3P on the happening of a stated event
A grantor who conveys a fee simple determinable retains:
A possibility of reverter
If a Grantor executes a deed but fails to deliver it during his lifetime____.
Title does not pass.
A deed is not effective to transfer an interest in realty unless it has been delivered by the grantor and accepted by the grantee. The delivery requirement is satisfied through words or conduct evidencing the grantor’s intent that that title pass immediately and irrevocably. Without adequate delivery, there is no conveyance of title to the intended grantee. Thus, title does NOT pass on the grantor’s death
Against whom may a Grantee invoke the doctrine of Estoppel by Deed?
The original Grantor only.
Under the doctrine of estoppel by deed, if a grantor purports to convey an estate that he does not then own, his subsequent acquisition of title to the property automatically inures to the benefit of that grantee. In other words, the grantor impliedly covenants that he will convey title upon its acquisition and is estopped to deny that he acquired title on the grantee’s behalf. The majority holds that this is a personal estoppel; thus, title inures to the benefit of the grantee only as against the original grantor and NOT any successor to the grantor’s after-acquired title. Consequently, if the original grantor transfers his after-acquired title to a subsequent (“BFP”), the BFP gets good title and the grantee has no rights against the BFP. Note also that in most states, if the original grantee records the deed, a subsequent purchaser will not be charged with record notice (and thus could be a BFP) because the grantor’s earlier deed would be outside the subsequent purchaser’s chain of title.
A grantor hands a deed to a grantee and says, “I want you to hold on to this deed so you can have my land when I die.”
Will a court likely rule that delivery occurred?
NO, because the Grantor’s statement IS admissible to show that the deed was not delivered.
A deed is not effective to transfer an interest in realty unless it has been delivered. This delivery requirement is satisfied through words or conduct evidencing the grantor’s intent that that title pass immediately and irrevocably, even if the right of possession is postponed until some future time. Parol evidence is admissible to prove that the grantor lacked this intent. Here, the grantor merely wanted the grantee to “hold on to this deed” but indicated that title should not pass until the grantor died. The grantor’s statement is NOT admissible to show that delivery of the deed was conditional. Although parol evidence is admissible to show that no delivery was intended, if a deed is unconditional on its face and given directly to the grantee, parol evidence is inadmissible to show that the delivery was in fact subject to a condition. Although delivery is presumed if a deed is handed to the grantee, the presumption may be rebutted by, for example, evidence that the grantor did not intend the deed to have a present operative effect.
If the seller is in breach of a land sale contract at closing, is the buyer entitled to specific performance?
Yes, if he tenders the purchase price.
Yes, if the seller is in breach of a land sale contract at closing, the buyer is entitled to specific performance IF he tenders the purchase price. Although damages are available for breach of a land sale contract, they are not the only remedy. The usual measure of damages for breach of a land sale contract is the difference between the contract price and the market value of the land on the date of the breach, plus any incidental damages. However, if the buyer tenders the purchase price, a court of equity will order the seller to convey title. The remedy at law (i.e., damages) is deemed inadequate because land is unique. Note that if the seller cannot give marketable title, but the buyer wishes to proceed with the transaction, the buyer usually can get specific performance with an abatement of the purchase price in an amount reflecting the title defect. Although courts generally will award the seller specific performance if the buyer is in breach, the buyer also is entitled to this remedy if the seller breaches, as explained above.
If a mortgage exists on property when a real estate contract is signed:
Title may be marketable
If a mortgage exists on property when a real estate contract is signed, title may be marketable. Every land sale contract contains an implied covenant that the seller will furnish marketable title on the date of closing. Generally, encumbrances (i.e., mortgages, liens, easements, and covenants) render title unmarketable. However, a seller has the right to satisfy a mortgage or lien at the closing with sale proceeds. Thus, if the purchase price is sufficient and this is accomplished simultaneously with the transfer of title, the buyer cannot claim that the seller’s title is unmarketable. If a mortgage exists on property when a real estate contract is signed, the mortgage is NOT extinguished. Rather, the mortgage will remain on the land and will encumber the title in the hands of the buyer unless it is satisfied as explained above. If the mortgage is not timely satisfied, the seller will breach the implied covenant of marketability, for which the buyer may pursue several remedies (e.g., rescission, damages, or specific performance with abatement of the purchase price)
What is the usual measure of damages for breach of a real estate contract?
The difference between the contract price and the market value of the land on the date of the breach
If the buyer breaches the land sale contract, the seller may recover:
the seller may recover the difference between the contract price and the market value of the land on the date of breach.
This is the usual measure of damages. Incidental damages (e.g., the buyer’s title examination and moving or storage costs) also can be recovered.
A landowner owned a large parcel of land in a rural area. He built his home on the northern half of the property, and developed a large orchard of fruit trees on the southern portion. A county road ran in front of the northern portion. To service his orchard, the landowner built a driveway directly from the county road across the northern portion of the property to the orchard. To provide electricity to his house, the landowner ran an overhead power line across the orchard property to hook up to the only available electric power pole located on the far southern side of the property.
Subsequently, the landowner conveyed the northern parcel to his brother and the southern parcel to his daughter, who said that she did not mind having the power line on the property. Recently, the brother has begun parking his car on the driveway, thus blocking the daughter’s access to the southern parcel. Finding no recorded document granting an easement for the power line, the daughter has decided to remove it.
If the brother is successful in preventing the daughter from removing the power line, what is the likely reason?
The brother’s alternative access to power is much less convenient and would cost 100 times as much as the current arrangement.
This helps to prove that there was an easement implied by operation of law (“quasi-easement”). An easement may be implied if, prior to the time the tract is divided, a use exists on the “servient part” that is reasonably necessary for the enjoyment of the “dominant part,” and a court determines that the parties intended the use to continue after division of the property. To give rise to an easement, a use must be apparent and continuous at the time the tract is divided. In this case, the landowner used the servient part of his property (the southern parcel) to run an overhead power line to the dominant part of his property (the northern parcel). Overhead wires are clearly visible and would be readily discoverable on reasonable inspection. The lines are, therefore, apparent. The use must also be reasonably necessary. Whether a use is reasonably necessary depends on many factors, including the cost and difficulty of the alternatives. This use was reasonably necessary to the enjoyment of the dominant parcel because electricity is important to the enjoyment of the property, and the cost (100 times as much) and difficulty of the alternatives are excessive. Thus, the fact that the use of the southern parcel is reasonably necessary would bolster the brother’s case.
May a grantee be bound by a covenant that does not appear in his deed or chain of title?
Yes, if there is a common scheme of development and the Grantee had notice of the covenant.
A realty company developed a residential development encompassing single-family dwellings, town houses, and high-rise apartments. Included in the deed to each unit was a covenant under which the grantee and the grantee’s “heirs and assigns” agreed to purchase electrical power only from a plant that the realty company had constructed within the development. The plant did not supply power outside the development. After constructing and selling half of the units, the realty company sold its interest in the development to an investment firm. The investment firm operated the power plant and constructed and sold the remaining units. Each conveyance from the investment firm contained the same covenant relating to electrical power that the realty company had included in the conveyances it had made.
A woman bought a dwelling unit from a man who had purchased it from the realty company. Subsequently, the woman, whose lot was along the boundary of the development, ceased buying electrical power from the investment firm and began purchasing power from a power company that provided such service in the area surrounding the development. The investment firm instituted an appropriate action against the woman to enjoin her from obtaining electrical power from the power company. Both the power company and the investment firm have governmental authorization to provide electrical services to the area.
If judgment is for the woman, what is the most likely reason?
The covenant does not touch and concern the land.
If the woman prevails, it will be because the covenant does not touch and concern the land. The investment firm is seeking to enforce the covenant by means of an equitable remedy. Thus, this question concerns an equitable servitude. An equitable servitude relates to a promise that touches and concerns the land. A covenant touches and concerns the land when it makes the land itself more useful or valuable to the benefited party. Here, an agreement to purchase electrical power only from a specified source probably does not touch and concern the land.
A developer prepared and recorded a subdivision plan, calling for 100 home sites on half-acre lots. There were five different approved plans from which a purchaser could choose the design of the home to be built on his lot. Each deed, which referred to the recorded plan, stated that “no residence shall be erected on any lot that has not been approved by the homeowners’ association.”
A lawyer purchased a lot and built a home based on one of the approved designs. However, many of the lots were purchased by investors who wanted to hold the lots for investment purposes. Two years after the lots went on the market, one such investor sold her lot to an architect by a deed that did not contain any reference to the recorded plan nor the obligation regarding approval by the homeowners’ association. In fact, because very few residences had been built in the subdivision since the lots were first available for purchase, no homeowners’ association meetings had been held in two years.
The architect began building a very modernistic house on her one-half acre. When the lawyer noticed the house being built, he brought an action to enjoin the construction.
For which party will the court rule?
The lawyer, because the recorded subdivision plan, taken with the fact that all of the lots were similarly restricted and the architect had notice of this, gave him the right to enforce the covenant on her property.
The lawyer will likely prevail. When a subdivision is created with similar covenants in all deeds, there is a mutual right of endorsement (each lot owner can enforce against every other lot owner) if two things are satisfied: (i) a common scheme for development existed at the time that sales of parcels in the subdivision began; and (ii) there was notice of the existence of the covenant to the party sued. Here, there was a common scheme evidenced by the recorded plan, and the fact that the covenant was in the architect’s chain of title gave her constructive notice of the restriction. Therefore, not only does the covenant apply to the architect’s land, but the lawyer (or any other lot owner) can enforce it as a reciprocal negative servitude.
