Property

Question 1

Types of Property Interests (FSA/FSD/FSSCS/FSSEI)

Answer 1

Fee simple/Fee simple absolute (FSA)
- “O conveys Blackacre to A”; “O to A and her heirs”
It lasts forever, so there’s no associated future interest
Defeasible Fees (it could last forever, or could be cut short)

Fee Simple Determinable (FSD) + Possibility of Reverter
- “O conveys Blackacre to A so long as Blackacre is used as a farm”
- Uses durational language (so long as, while, until)
It could last forever (fee simple) so long as the durational period continues (determinable)
- Possibility of Reverter: once the durational period ends, the interest automatically reverts to the grantor.

Fee Simple Subject to Condition Subsequent (FSSCS) + Grantor’s Right of Entry

• “O conveys Blackacre to A, but if the land is not farmed, O may re-enter and re-take the land.”
• Uses conditional language (but if, provided that)
• It could last forever (fee simple), but if the condition subsequent occurs, the grantor can choose to exercise their right to re-take the land.
• Right of Entry: If the condition occurs, the grantor can choose to exercise their right to re-take the land. This is not automatic.

Fee Simple Subject to Executory Interest + Third Party’s Executory Interest

• “O conveys Blackacre to A and her heirs, but if liquor is served on the premises, then to B and his heirs.”
• Uses conditional language, but if the condition subsequent occurs, the interest will automatically vest in a third party (not the grantor). That third party holds an executory interest.
• Springing E.I.: Holder divests the grantor
• Shifting E.I.: Holder divests the grantee

Question 2

Life Estate

Answer 2

TRANSFERABLITY: The grantee of a L.E. can transfer it during life, but it still terminates at the death of the person named in the conveyance. This is why a L.E. cannot be devised/inherited. (“pur autre vie”)

FUTURE INTEREST:

• • Vested remainder: given to an identifiable grantee + no condition precedent in order to vest. Since it’s vested, if the holder dies, it passes to their heirs.
• • Contingent remainder: missing either of the 2 req’s above. If it doesn’t vest before it becomes possessory, the interest reverts back to the grantor.

NOTE: A reversion can be combined with an executory interest. “O conveys Blackacre to A for life, then to B one year after A’s death.” A has a life estate. Grantor O has a reversion for one year after A’s death. B has a springing E.I. that divests grantor after one year following A’s death.

Question 3

Vested Remainder Subject to Open

Answer 3

A class gift in which at least one member is vested into the class, but full class membership is still unknown. (If no members are vested, a class gift is just a contingent remainder -> contingent on someone vesting into the class).

• Class is “closed” once all members of the class are identified.
• “O conveys Blackacre to A for life, then to A’s children who reach 21.” (A currently has three kids: 26 year old B, 18 year old C, and 15 year old D.)
• • B has a VRSTO
• • C and D have contingent remainders. If they make it to 25, they will partially divest B.
• • Class will close 21 years after A dies.

NOTE: Rule of Convenience may operate to close the class once one member would be entitled to immediate possession.

Question 4

Restraint on Alienation

Answer 4

A restraint on alienation is when a grantor attempts to forbid the sale of the land that is being conveyed.

RULE: Generally, a restraint on alienation is void when it purports to prohibit alienation of the estate and render any conveyance by the grantee(s) void. A restraint on alienation may be valid when it is for a limited time and for a reasonable purpose, such as a restriction on alienability for ten years while a cloud on the title is resolved, but normally the right to sell land is one of the rights inherent in property ownership. You need an explanation for why a temporary restraint is necessary. When a restraint on alienation is held void, that portion is struck from the conveyance (as in a RAP violation).

Question 5

RAP

Answer 5

• APPLIES TO: Contingent remainders, vested remainders subject to open, rights of first refusal (unless in lease)

DOES NOT APPLY: RAP does not apply to: present interests (FSA; FSD; FSSCS; FSSEI; or life estates); vested remainders (incl. closed classes); or any grantor future interest (reversions; possibility of reverter; or right of re-entry).

VRSTO: "All or nothing rule" - If the gift to any class member violates RAP, then the entire class gift violates RAP and is invalid (the “all or nothing” rule).
-- BUT: RoC -- close class once entitled to immediate possession.

EFFECT: If RAP is violated, strike the violating interest, and reclassify other interests if necessary.

Question 6

Tenancy in Common

Answer 6

separate but unequal parts; interests can be unequal; no right of survivorship so TIC is devisable

I.e., in a problem about who has what kind of interest, devising an interest in TiC is effective.

Question 7

Joint tenancy

Answer 7

CREATION REQUIREMENTS:

• CREATION: Created by grantor’s clear expression of intent to create a JT, and the deed must contain “survivorship language”
• • w/o expression of intent and survivorship language, what is created is TiC

FOUR UNITIES: (“T.TIP”): joint tenants receive their interests at the same time; they must receive their interests in the same instrument of title; they must each have an equal share/interest; and they must each have an equal right to possess the whole property

SEVERANCE: If any of the 4 unities is severed/destroyed, then the JT is terminated and it turns into a TIC. An inter vivos transfer of the JT interest of one of two JT’s will sever the JT, but the transfer of the JT interest of one of three+ JT’s will not destroy the JT as to the remaining joint tenants.

EFFECT OF MORTGAGE: For most jx, which follow lien theory, a joint tenant that mortgages their interest does not sever the JT. A minority of jx follow title theory (opposite result).

EFFECT OF LEASE: Jx are split as to whether a joint tenant leasing their interest severs the JT.

Question 8

tenancy by the entirety

Answer 8

Tenancy by the entirety: just like a JT but with a 5th unity of marriage. Tenants by the entirety cannot alienate or encumber their interests without the consent of the other spouse.

Question 9

Rights and obligations of concurrent owners

Answer 9

• POSSESSION: Despite the type of co-tenancy, each co-tenant has the right to possess 100% of the property. This means that there is no duty of one co-tenant to pay rent to another co-tenant.
• • But OUSTER: if one co-tenant blocks access to another co-tenant (ouster), then the blocked co-tenant could recover damages for the value of the land’s use (and/or an injunction grant access).

EFFECT OF RENT: When a third party rents the property, the rent received less operating expenses must be divided based on the ownership interests of each co-tenant.

NECESSARY OPERATING EXPENSES: (e.g. taxes or mortgage interest payments) are also based on the ownership interests of each co-tenant. CONTRIBUTIONS: If one co-tenant pays in excess, they can collect contribution from the other co-tenants.

IMPROVEMENTS AND REPAIRS: Improvements and/or necessary repairs made by a co-tenant does not create a right of reimbursement from other co-tenants, but the payor co-tenant can get credit in a partition action.

Question 10

Partition

Answer 10

• APPLICABILITY: Tenants in common and joint tenants have a unilateral right to partition the land (but tenants by the entirety do not).
• PREFERENCE OF COURTS: Courts prefer to physically divide the land instead of a partition by sale (where the sale proceeds are divided based on ownership interests). But a court will order a partition by sale if physical partition is not practical or not fair to all parties.

AGREEMENT: Co-tenants can agree not to partition, which is enforceable if the agreement is clear, and the time limitation is reasonable (not indefinite).

Question 11

Housing Discrimination

Answer 11

Fair Housing Act prohibits discrimination based on protected characteristics (everything except sexual orientation) (inc. family status) in the sale/rental/financing of dwellings.

Examples: refusing to rent/sell/finance; requiring different rents; falsely denying a unit is available; providing different services to the facilities.

Exceptions:

1) single-family house that is sold or rented without a broker;
2) an owner-occupied building with 4 or fewer living units;
3) religious orgs and private clubs.

ADVERTISEMENTS: Fair Housing Act prohibits discriminatory preferences in advertisements for the sale/rental/financing of dwellings.
Only exception is for religious orgs and private clubs.

Question 12

Tenancy for years

Answer 12

MEASUREMENT: measured by any fixed amount of time

CREATION: Agreement that demonstrates intent to create a leasehold.

S/F: If >1 year, S/F applies.

TERMINATION: Automatic, no need for notice.
- OR: By surrender, or material breach (e.g., failing to pay rent)

Question 13

Periodic Tenancy

Answer 13

DURATION: Repetitive, ongoing

CREATION: Express agreement or implied from conduct.

RENEWAL: Automatic, until notice

TERMINATION: WRITTEN notice required before the start of the last term.

Question 14

Tenancy At Will

Answer 14

A lease that can be terminated by one or both parties without notice and at any time, for any reason. It can be created by an express agreement, or implied from conduct. If the agreement only gives the landlord the right to terminate, the tenant also has the right to terminate by implication (but this isn’t true the other way around). Death of either party will terminate a tenancy at will (unlike the other two tenancies above which require proper notice from decedent’s estate).

Question 15

Tenancy at sufferance

Answer 15

A temporary tenancy that is created when a prior tenant holds over after the lease has ended (i.e. refuses to leave). The landlord can choose to evict the prior tenant or to re-rent to them under a periodic tenancy at the old rate. During the tenancy at sufferance, tenant owes landlord the reasonable value of daily use + foreseeable special damages. Tenancy at sufferance is terminated when either the prior tenant leaves, is evicted, or the landlord re-rents to the prior tenant.

Question 16

Tenant’s Duties

Answer 16

A tenant must:

1) pay the rent, and
2) avoid waste (by not destroying the place). Also has a duty of care that extends to invitees, licensees, and foreseeable trespassers.

Question 17

Effect of condemnation on lease

Answer 17

If the entire leased property is condemned by the city/state during the tenancy, then the lease is terminated. But if only part of the leased property is condemned by the city/state during the tenancy, then the tenant must continue to make rent payments but is entitled to compensation for the portion of the property that was condemned or the time that he was dispossessed from the leased property.

Question 18

Suspension of duty to pay rent

Answer 18

1) the premises are destroyed (and the tenant wasn’t at fault), 2) the landlord completely or partially evicts the tenant, or 3) landlord materially breaches the lease

Question 19

Implied Covenant of Quiet Enjoyment

Answer 19

Every lease contains an implied covenant of quiet enjoyment, which is breached when someone (either the landlord, the landlord’s agent, or someone with superior title) disputes the possession of the tenant.

This can occur by actual eviction (the tenant has been removed from the premises) or constructive eviction: if the landlord substantially interferes with the tenant’s use and enjoyment of the leasehold by breaching a duty to the tenant (e.g., fails to repair; fails to provide heat, water or electricity for long periods of time), then the tenant’s obligation to pay rent is excused due to constructive eviction only if the tenant gives notice and vacates within a reasonable amount of time.

Question 20

constructive eviction

Answer 20

REQS:
1.) LL breaches lease for long enough period of time after tenant has given notice of the problem

2.) Tenant vacates w/in reasonable time

Question 21

Implied Warranty of Habitability

Answer 21

(applies to residential property only)

The landlord must maintain the property such that it is reasonably suited for residential use. If the premises conditions threaten the tenant’s health and safety (or fails to comply with the housing code), then the tenant may:

1. ) Refuse to pay rent: in which case the tenant must notify the landlord of the problem and give a reasonable opportunity to cure it.
2. ) Remedy the defect himself and offset the costs against the rent due, or
3. ) Stay on the premises and raise the issue in court as a defense against eviction.

Question 22

Landlord duties

Answer 22

Duty to Repair: The landlord has the duty to repair under a residential lease, even when the lease attempts to place the burden on the tenant, except for damages caused by the tenant.

Duty to Mitigate Damages: if a tenant abandons the property or is evicted, the landlord must make reasonable efforts to re-rent the property to someone else. The landlord is entitled to the difference between the original rent and the replacement rent. Landlord’s failure to look for a new tenant = prior tenant is relieved of the obligation to continue paying rent. (There is a minority rule that for commercial leases only, landlord does not have to mitigate damages.)

Duty to Deliver Possession: Majority rule is that the landlord must deliver actual, physical possession of the premises (standing inside the place, not outside with a holdover barricaded in).

Duty not to Deny Quiet Enjoyment: landlord must control common areas and prevent nuisance from other tenants (but landlord has no control over off-premises third parties).

Duty of Reasonable Care/Tort liability: Landlord is responsible in negligence for latent/hidden defects about which the tenant has not been warned; for faulty repairs that were negligently completed by landlord or landlord’s agent; and for injuries in common areas caused by negligence.

Question 23

Subleases and Assignments

Answer 23

A sublease is when a tenant transfers less than the entire remaining duration of their lease to a third party (sublessee). An assignment is when a tenant transfers the entire remaining duration of their lease to a third party (assignee).

For a sublease: the landlord can collect rent only from the tenant, not the sublessee, because the landlord only has privity of contract and privity of estate with the tenant.

For an assignment: the landlord can collect rent from either the tenant or assignee, because the landlord has privity of contract with the tenant, and the landlord has privity of estate with the assignee.

For either a sublease or assignment: the tenant can collect rent from the sublessee /assignee because of privity of contract.

A lease that is silent as to whether the tenant can sublet or assign means the tenant can sublet or assign freely. A lease that requires the landlord’s permission for the tenant to sublet or assign, but is silent as to the applicable standard, then the majority rule is that a landlord can only deny permission for a commercially reasonable reason (the minority rule is to deny at landlord’s discretion). However, a landlord does not need a tenant’s permission to transfer the landlord’s interest to a third party.

Question 24

Remedies for Tenant’s Breach

Answer 24

Although a landlord can sue a tenant for rent as it becomes due, a landlord cannot sue for future rent due under the lease because the doctrine of anticipatory repudiation does not apply to leases.

Also, the landlord has a duty to mitigate damages, so the landlord can only recover for rent as it becomes due if the landlord is actively seeking to re-rent the premises.

Question 25

Merger Doctrine

Answer 25

If a breach occurs during the contract stage (any time prior to closing/when the deed takes effect), then liability must be based on a provision/obligation in the sales contract. But if the breach occurs during the deed stage (any time after closing/ when the deed takes effect), then liability must be based on a deed warranty.

This is the doctrine of merger: at the time of closing/delivery of the deed, covenants in the contract merge into the deed such that future remedies must flow from the deed. If there was an obligation in the contract that is not in the deed, the cause of action is lost after closing (the deed controls).

Question 26

Land Sale Ks, S/F

Answer 26

Land sale contracts are subject to the statute of frauds, which can be satisfied either with a writing that includes the essential terms (the parties, a description of the property, and price). Or it can be satisfied by part performance: 2 out of 3 of payment, possession, or improvements. Or it can be satisfied by detrimental reliance: a party reasonably relied on an oral agreement to sell the property, and would suffer hardship if the agreement were not enforced.

Question 27

Implied covenant of marketable title

Answer 27

every land sale contract includes an ICMT that title is free from unreasonable risk of litigation (e.g. titled acquired by AP that hasn’t been quieted; private encumbrances such as a covenant, mortgage, or easement; or a violation of zoning ordinance). A defect in title must be cured before closing, because after closing the deed controls. If the seller cannot deliver marketable title, the buyer can rescind the contract.

Question 28

Time is of the essence

Answer 28

We presume that time is NOT of the essence for land sale contracts, so a brief delay is not grounds for rescission.

Question 29

implied warranty of fitness/suitability

Answer 29

New construction comes with an implied warranty of fitness/suitability but the claim must be brought within a reasonable time after discovery of the defect.

Question 30

Duty to disclose defects

Answer 30

most jx impose a duty on the seller to disclose to a buyer all known, physical and material defects (material = substantially affects the value of the home). An “as is” disclaimer will not satisfy the seller’s duty to disclose.

Question 31

Risk of loss

Answer 31

Most jx hold the buyer responsible for any damage to the property during the period between execution of the contract and closing/delivery of the deed (bc the buyer holders equitable title). During this period, the seller has legal title and has the right to possess the property. A minority of jx follow the Uniform Vendor and Purchaser Risk Act which holds that the seller bears the risk of loss during this period b/c the seller has actual possession of the property at this time.

Question 32

Adverse Possession

Answer 32

Continuous during the statutory period/statutory of limitations, but seasonal or infrequent use is OK if consistent with the type of property; an AP’er can tack on the predecessor’s time on the property if they have privity (e.g. a sale of the interest between them); but the statutory period will not begin to run if the true owner has a disability (infancy, insanity, imprisonment) at the time the AP’er entered the property. Clock stops when the true owner ejects the AP’er, even if temporarily.

Actual, Open and Notorious, such that a reasonable true owner would be on notice of the AP’er’s use. The AP use cannot be hidden, but must be as if the AP’er is the true owner.

Hostile, i.e. adverse to the true owner’s interest (the true owner did not give the AP’er permission to stay; But if you invite your friend to stay, then ask them to leave but they refuse, then it’s hostile). Most jx’s ignore the AP’er’s state of mind, but some inquire about state of mind. Some jx follow a good-faith standard and only find hostility if AP’er made good-faith mistake believing the land was unowned or the AP’er was the rightful owner. Some jx follow a bad-faith standard and only find hostility if AP’er if there is an aggressive, knowing trespass.

Solely Possessed (Exclusive), i.e. the AP’er cannot share possession with the true owner. But if two AP’ers possess the property together, they can acquire title by AP as TIC.

Question 33

Other AP rules

Answer 33

AP traces the legal boundaries of the property, and includes sub-surface and air rights unless they belong to a third party. If an AP’er enters the property based on a facially valid deed (which is fraudulent) and occupies only a portion of the property, AP’er will obtain constructive possession of the whole property listed on the fraudulent deed.

Question 34

Deed Delivery

Answer 34

Delivery does not need to be physical delivery, it can be anything (e.g. a phone call) that manifests an intent to irrevocably transfer ownership. Delivery can also be made through an escrow agent, such that delivery is effective when it’s given to the agent with instructions for delivery to the grantee.

Recording a deed only raises a rebuttable presumption that the deed has been “delivered”/made effective. It can be rebutted by facts showing the grantor’s contrary intent – such as if the grantor never told this to the grantee, and the grantor remained on the property, with the intent to keep his options open prior to his death. Upon the grantor’s death, those circumstances would rebut a “delivery.”

Question 35

Deed Acceptance

Answer 35

Acceptance by the buyer is presumed, provided that the transfer was for value. Once the deed is accepted, if the buyer decides they don’t want the property anymore, the buyer must execute a new deed back to the original owner.

Question 36

Brokers in land sale Ks

Answer 36

Brokers can be involved in land sale contracts as long as they don’t practice law. They can prepare a contract for sale, but they cannot draft a legal document like a deed or mortgage. They cannot exercise legal discretion or give legal advice.

Question 37

Deed Reqs and Contents

Answer 37

DELIVERY + ACCEPTANCE

CONTENTS: a valid deed must identify the parties (grantor and grantee), and it must be signed by the grantor per the statute of frauds; it must include words of transfer that evidence a present intent to transfer; and it must include a sufficient description of the property (not necessarily a legal description, could be based on physical attributes).

EXECUTION: Execution of the deed: Although a deed is valid at delivery, first the grantor’s signature is required to execute the deed (the grantee does not need to sign; the deed does not need to be witnessed or notarized; but if the grantor’s signature was forged, the deed is void even as to a bona fide purchaser; the grantor can appoint an agent to sign the deed instead, but the equal dignities rule requires the agency relationship to also be in writing, per the statute of frauds). A deed to a nonexistent grantee is void, but only as to the nonexistent grantee.

Question 38

Recording Rules

Answer 38

Common-law recording rule (“first in time, first in right”): the first grantee to receive a deed wins title (e.g. G sells the same land to 2 people. First to B, then to C. Both are claiming title. CL: B has title because B was “first in time.”

The state recording acts do not apply to grantees who acquire title by gift/intestacy/devise since they made no economic invst. If you see a question about a gifted deed, apply the CL recording rule “first in time, first in right.”

RECORDING ACTS: State recording acts apply to: deeds, mortgages, easements, covenants, servitudes, leases, options, and judgments affecting title. Title by AP is not covered -> it’s operation of law.

NOTICE: “Notice” comprises: actual notice; constructive (record) notice where the prior interest was recorded and so a subsequent purchaser had constructive notice of the prior interest; and inquiry notice where a reasonable investigation would have disclosed the existence of a prior claim (two kinds: dude on the land when someone else was living on or using the land; and mentioned interest where an interest was mentioned in the subsequent purchaser’s deed).

The 3 types of state recording acts:
Race statute: a subsequent purchaser wins title if they are the first to record, even if they had notice of the prior, unrecorded conveyance when they purchased it

Notice statute: a subsequent purchaser wins title if they acquired the property without any type of notice of the prior, unrecorded conveyance (“in good faith”).

Race-notice statute: a subsequent purchaser wins title only if they record first AND they acquired the property without any type of notice of the prior, unrecorded conveyance.

Question 39

“Wild deeds”

Answer 39

if A sells to B and B does not record the deed; then B sells to C and C promptly records the deed (this is the wild deed); then A sells the same property to D and D then records the deed -> D was NOT put on record notice because a “wild deed” may not be searchable to D. This means that in a notice jx, D wins title.

Question 40

Shelter Rule

Answer 40

a person who takes from a BFP purchaser who was protected by a recording act will have the same rights as the BFP purchaser, even if the person taking has actual notice that would violate a notice statute.

Question 41

Estoppel by Deed

Answer 41

if a grantor conveys property the grantor does not own, then subsequently acquires title to that land, the grantor is estopped from trying to repossess on the grounds that he didn’t have title at the time of the conveyance.

Question 42

General warranty deed

Answer 42

3 implied present covenants: (breach occurs at conveyance)

Covenant of seisin: warrants that the deed correctly identifies the land in question;

Covenant of the right to convey: warrants that the grantor has the right to convey the property;

Covenant against encumbrances: warrants that there are no undisclosed encumbrances on the property that could limit its value.

3 implied future covenants: (breach occurs after conveyance, upon interference with possession)

Covenant of quiet enjoyment: grantor promises that the grantee’s possession will not be disturbed by a third-party claim;

Covenant of warranty: grantor promises to defend against future claims of title by a third party;

Covenant of further assurances: grantor promises to fix future title problems

Question 43

Remedy to Deed Breach

Answer 43

E.g. “A” agrees to buy property from B. During closing, a title defect is discovered, but A still wants to buy the property. B wants to rescind the sales contract on this basis. A can obtain specific performance + abatement. A buyer is entitled to specific performance when a seller breaches a contract to sell a real property interest because the buyer’s remedy at law (i.e., damages) is considered inadequate due to the unique nature of land. In addition, when the buyer seeks specific performance with respect to property for which there is a title defect (e.g., an encumbrance), the buyer may also obtain an abatement in the purchase price to compensate the buyer for the defect.

Question 44

Special warranty deed

Answer 44

warrants title ONLY against defects caused by the grantor.
This includes the 6 implied covenants as the general warranty deed, but the covenants only apply to acts or omissions by the grantor.

Question 45

Quitclaim deed

Answer 45

grantor makes NO WARRANTIES as to the health of the title (common in tax sales or family disputes).

Question 46

Mortgage basics

Answer 46

A mortgage is when a lender takes a security interest in the house; if the borrower fails to make payments, the lender can foreclose on their interest and force a sale.

A mortgage has two parts: the note (the borrower’s promise to repay), and the mortgage itself (the instrument showing the security interest). The mortgagor is the borrower; the mortgagee is the lender/bank.

There are purchase money mortgages taken for the purpose of purchasing property; and there are future advance mortgages which are “second mortgages” i.e. a line of credit.

Most states are lien states in which a mortgage is a lien that does not sever a joint tenancy; some states are title states in which a mortgage severs a JT into a TIC.

Question 47

Installment land contract

Answer 47

the seller finances the buyer’s purchase, and the seller retains title until the final payment is made. Traditionally, if the buyer missed a payment, the seller could keep everything. Today, there is some mitigation. Some states treat the K as a mortgage requiring foreclosure by the seller, some give the buyer an equitable right of redemption to stop the foreclosure, and some require restitution back to the defaulting buyer for what’s been paid.

Question 48

Absolute Deed

Answer 48

instead of conveying a security interest to the lender, the borrower conveys the deed in exchange for the loan, with the lender’s promise to re-convey the deed after the loan has been paid. Court are likely to treat this as an “equitable mortgage” and require the lender to foreclose on the property if the borrower defaults, rather than allow the lender to keep the property by simply evicting the borrower.

Question 49

Conditional sale and repurchase

Answer 49

the owner sells the property to the lender, who then leases the property back to the owner in exchange for a loan, and lender gives an option to repurchase after loan is repaid.

Question 50

Transfers of mortgaged property, liability

Answer 50

If the borrower sells/devises the mortgaged property to a third party, the borrower will remain personally liable for the mortgage even after transfer.

ASSUMING: If the third party “assumes” the mortgage from the original borrower, then the third party is primarily liable on the loan, and the original borrower is secondarily liable on the loan (meaning that if the third party defaults, the original borrower must make the mortgage payments, but can also seek reimbursement from the third party).

If the third party “assumed” the mortgage from the original borrower, and the lender then modifies the terms of the mortgage in a way that impairs the original borrower from seeking reimbursement from the third party, in most jx this completely relieves the original borrower of liability on the mortgage. A minority of jx limit this to the amount to original borrower’s right of course has been impaired.

TAKING S/T: If the third party takes the property “subject to” the mortgage, then the third party will not be personally liable upon default, only the original mortgagor. For a deed that is silent on this point, we assume “subject to” treatment -> the third party must opt in to be held personally liable for a mortgage.

RELEASING Mr: After a sale, the lender could also release the original borrower, which will discharge the original borrower’s liability.

Question 51

due-on-sale clause

Answer 51

The lender may have included a due-on-sale clause in which the lender has the option to demand immediate full payment upon transfer of the property

Question 52

due-on-encumbrance clause

Answer 52

due-on-encumbrance clause in which the lender has the option to demand immediate full payment if the borrower obtains a second mortgage.

Question 53

Assigning a mortgage

Answer 53

The mortgagee/lender can assign the mortgage to another party/bank, without needing the consent of the borrower. If they transfer the note but not the mortgage itself, the mortgage is treated as coming too. But if they transfer the mortgage without the note, it may be void for lack of evidence of promise to repay.

Question 54

Foreclosure

Answer 54

TAKING POSSESSION: When can the lender take possession? In a lien theory state, the borrower continues to be the owner until foreclosure, so the lender can only take possession after foreclosure. In a title theory state, the lender holds title and so can take possession at any time. Some jx modify this to say that only at default can the lender take possession.

EQUITY OF REDEMPTION: a CL right that a borrower in default can reclaim title and prevent disclosure if they make a full payment of the debt BEFORE the foreclosure sale. Some lenders may try to “clog” this right by adding provisions that make it harder to exercise, but courts don’t allow it.

DEED IN LIEU OF FORECLOSURE: rather than face the bad credit score of a foreclosure, the borrower can convey the property to the lender in exchange for a release of outstanding debt.

DEFICIENCY AFTER FORECLOSURE: If there is still a deficiency after the foreclosure, the borrower is still responsible for that amount – the court would issue a deficiency judgment against the borrower for the remainder.

Question 55

Multiple mortgages

Answer 55

Senior interests survive the foreclosure (their rights are unaffected by the foreclosure sale). Junior interests are extinguished by the foreclosure sale.
In order to extinguish junior mortgages, the senior mortgagee must provide NOTICE to the junior mortgage about the impending foreclosure sale -> without notice, the junior mortgage continues.

If a junior mortgagee decides to initiate foreclosure on the property, it DOES NOT need to join the senior mortgagee as a party to the action, because the senior mortgagee’s rights are not affected by the junior mortgagee’s foreclosure action.

Although the default rule is chronological order: that a mortgage acquired prior to the mortgage that is being foreclosed is a “senior interest,” and a mortgage acquire after the mortgage that is being foreclosed is a “junior interest,” an applicable state recording act will overrule chronological order. In that case, priority of the mortgages will be determined by the recording statute. (E.g. In a notice jx, if a first mortgage was never recorded, and a later 2nd mortgage was recorded, and the second mortgage had no notice of the first mortgage, then the 2nd mortgage takes priority/is treated as a protected BFP.)

Other exceptions to chronological satisfaction: a purchase-money mortgage will take priority (even if acquired after other interests); a lender can agree to subordinate their senior interest to another lender’s junior interest; a lender who modifies a senior mortgage to make it more burdensome will subordinate that interest (only as to the modification); and a lender of a senior mortgage who releases the mortgage and replaces it with a new one will retain the same priority.

Question 56

Right of statutory redemption

Answer 56

some states allow the borrower to redeem the property, even AFTER a foreclosure sale to someone else, by satisfying a statute’s requirements.

Absent statutory redemption, the purchaser at a foreclosure will take the property free and clear of any junior mortgage, but subject to any senior mortgage.

Question 57

Easements

Answer 57

TYPES: There is the affirmative easement (to do something on the land) and the negative easement (the right to prevent someone from doing something on their own land). There is the easement appurtenant (which is transferable and goes with the land, no matter who the right-holder may be), and the easement in gross (which benefits the holder personally, no matter if they move to somewhere else…traditionally this was non-transferable).

Question 58

Express Easements

Answer 58

Express easements are created by a writing that must satisfy the statute of frauds.

Express easements are subject to state recording statutes.

They can be created by grant, or they can be created by reservation (e.g. grantor conveys land to someone else, but reserves an easement right in that land for the grantor’s use/benefit).

A negative easement must always be express (never implied). The scope of an express easement is determined by its express terms.

Changes in use are OK if they were reasonably foreseeable at the time the express easement was created (e.g. the holder cannot subdivide their parcel so that MANY people will now get the easement too; the holder cannot use an easement to access property acquired after the easement was created).

If the user exceeds the scope of the easement, they are a trespasser.

Question 59

IMPLIED EASEMENTS

Answer 59

arise out of factual circumstances. They are created by operation of law, so they do not need to satisfy the statute of frauds, and they are not subject to recording statutes. They are still transferable.

1. ) Easement by necessity: only if the dominant and servient estates were previously owned in common by one person, and the subsequent severance of the two estates caused the dominant estate to be virtually useless (i.e. landlocked) without an easement over the servient estate, then an easement is implied by that necessity for access. We mean “necessity” strictly, and the easement ends when the necessity ends (e.g. a road is built, giving access to the dominant estate).
2. ) Easement by implication/prior use: if the owner of two parcels of land previously used one parcel to benefit the other (a “quasi-easement”), then the court may find that, upon severance of the two estates, the parties intended the easement to continue, if the prior use was continuous, apparent, and reasonably (not strictly) necessary to the dominant land’s use and enjoyment.

3.) Easement by prescription
easements can be obtained by prescription, similarly to the way land is acquired by AP. The use must be continuous, actual/ open/notorious, and hostile for the statutory period. But unlike AP, the use does not need to be exclusive. The scope of the easement will be limited to the adverse use.

4.) Easement by estoppel: The land-owner gives a license for someone else to use the land. The licensee then detrimentally relies on the promise, reasonably and in good faith (e.g. making improvements to the easement). After which, the land-owner will be estopped from withdrawing that permission, in effect creating an easement.

Question 60

Contributions to repairing an easement

Answer 60

If the easement is shared, the owner who maintains or repairs the easement may seek contribution from the other owners of the easement after adequate notice and an opportunity to participate in repair decisions. The owner of the servient estate also has an obligation to contribute to the repair or maintenance of an easement if the servient estate owner uses the easement.

Question 61

Termination of an easement

Answer 61

Release: the holder can expressly release the easement in writing, satisfying the SoF.

Merger: the holder acquires fee title to the servient estate: we say the easement “merges” into the title.

Abandonment: the holder abandons the easement by non-use PLUS some act demonstrating an intent to abandon the easement (e.g. moving away).

Prescription: the holder is blocked from using the easement, tolling/stalling the statutory period

Sale to a BFP: if an express easement is not recorded, it is not enforceable against a subsequent BFP who didn’t have notice of the easement in a “notice jx”

Estoppel: the holder makes statements that he will abandon the easement, and the servient estate owner detrimentally relies on those statements
End of necessity: an easement by necessity will terminate when the “strict” necessity ends

Question 62

License

Answer 62

a license is a revocable permission to use another’s land, whereas an easement is not revocable (only terminable). Also, a license only binds the licensor, whereas an easement binds successors to the servient estate owner.

Question 63

Real Covenants

Answer 63

A real covenant is a promise concerning the use of the land that binds successors to the parties making the promise. When it binds a successor, it “runs with the land.”

RUNNING (**all):
1.) In writing
2.) Intent of original parties
3.) Touch and concern
4.) Actual or constructive notice
5.) Privity:
To run a burden to a successor (i.e. to hold them liable to follow the promise), the original parties must have horizontal privity (i.e. privity of estate, a transfer in which the covenant is on the deed); AND the successor must have strict vertical privity with their grantor (i.e. they take the entire interest owned by their grantor...if the grantor owned in FSA, then the successor must take the property in FSA).

To run a benefit to a successor (i.e. the right to sue to enforce the promise against the other), no horizontal privity is required; there must only be relaxed vertical privity between the successor and their grantor (i.e. they need to only take some interest that could have been carved out of the grantor’s estate… if the grantor owned in FSA, then the successor could take in FSSCS).

REMEDY: The remedy for a breach of a real covenant is damages.

Question 64

Equitable Servitudes

Answer 64

n equitable servitude operates like a real covenant (you can bind a successor to an original party’s promise), but there’s no privity requirement to run with the land, and the remedy for breach is injunctive relief, not damages (as for breaching a real covenant).

SAME REQS for real covenants minus privity

SAME TERMINATION as real covenants

IMPLIED EQUITABLE SERVITUDES: There is the implied reciprocal servitude which does not need to be in writing. It comes up in planned communities and they are created when a developer intends to create a covenant on all plots in the subdivision, according to a common scheme, and the benefits and burdens apply to each parcel equally, and it’s a negative restriction on each owner’s use. If a successor is at least on inquiry notice about the restriction, then there is an implied reciprocal servitude to which they will be held.

CHANGED CIRCUMSTANCES: An E.S. may not be enforced if the Changed Circumstances Doctrine shows there has been a drastic change inside the community such that the restriction no longer makes sense. But if the restriction still provides some benefit, it’s enforced.

Question 65

Common Interest Comms

Answer 65

Homeowners’ associations (dues are paid to the association/HOA board); condominiums (where the common areas are owned as TIC); and cooperatives (the residents are shareholders in a corporation, which in turn owns the property, which in turn leases the individual units to the shareholders).

These have governing documents that outline covenants and restrictions for the residents.

VALIDITY OF GOVERNING DOCUMENTS: These rules are valid so long as they are not illegal, against public policy, or unconstitutional.

VALIDITY OF NEW RULES: To pass a new rule that is enforceable against current owners, the new rule must be reasonably related to further a legitimate purpose of the association.

Question 66

Fixtures

Answer 66

A fixture is tangible personal property that is attached to the real property in a manner that it is treated as part of the real property. While a fee simple owner is free to make improvements, including fixtures, subject to gov’t land use reg’s, a life tenant is limited by the doctrine of waste. The buyer of real property is generally entitled to the chattel unless the seller reserves the right in the contract to keep the chattel. Life tenants can remove fixtures unless doing so would permanently damage the property. It used to be that trespassers could never remove fixtures or improvements even if they installed them themselves. Today, a trespasser who acted in good faith can remove an improvement or fixture they added.

Question 67

Zoning

Answer 67

The traditional approach (cumulative zoning) is that residential use is permitted everywhere, but commercial use is restricted to only some areas, and industrial use is allowed in the fewest areas. There is also mutually exclusive zoning (one type of use is permitted by zone).

CHANGES: If zoning is changed and a structure no longer satisfies the zone’s requirements, the property owner needs to get the non-conforming use grandfathered in. If the project is in process when the zoning law is changed, the developer needs to have the proper permits by the time the ordinance takes effect. An owner who gets grandfathered in cannot expand the non-conforming use, nor can they switch to another non-conforming use. But of course they can sell the property.

VARIANCES:

• Use variance: the right to use property in a manner not permitted by zoning laws.
• Area variance: property development that violates a zoning area.

To obtain a variance, the applicant must show:
- hardship caused by compliance;
- unique circumstances that created the hardship;
the owner did not create the hardship;
- the variance is in keeping with the overall purpose of the ordinance; AND
- the variance will not cause substantial harm to the general welfare

Question 68

Nuisance Rules

Answer 68

A private nuisance is a substantial and unreasonable interference with another individual’s use or enjoyment of his property. (“Unreasonable” means the injury outweighs the usefulness of defendant’s actions)

A public nuisance is an unreasonable interference with the health, safety, or property rights of the community. The plaintiff must show a different kind of harm than the rest of the community.
The remedies for a nuisance claim are damages, but injunctive relief is available if money damages are inadequate.

Question 69

Water Rights

Answer 69

TWO APPROACHES:

Riparian rights: landowners who border a waterway own the rights to the waterway, and the landowners must share the right to reasonable use of the water (one riparian is liable to another for interference with their use).

Prior appropriation: the first person to put the water to a beneficial/productive use has the rights to the water.

Question 70

Support Rights

Answer 70

If a mineral rights owner excavates so as to cause a cave in (“subsidence”) on the surface, they can be held liable for damages to buildings overhead. Liability turns on when the surface building was constructed, NOT when the mining began.

If the surface building was constructed BEFORE the mineral rights were acquired by the third party, the owner of the mining rights is strictly liable for the failure to provide subjacent support.

If the surface building was constructed AFTER the rights were acquired by the third party, the owner of mining rights is liable for the failure to provide subjacent support only if the owner failed to exercise reasonable care in removing the minerals.