Property & Future Interest Flashcards
1
Q
Tenancy for Years
A
Leasehold estate where there is a present possessory interest in the leased land and he landlord has a reversion. There is a labeled end date.
2
Q
Tenancy in Common
A
Default result under modern law. No right of survivorship. Can devise and decent property. It is alienable.
3
Q
Joint Tenancy
A
Right of survivorship. Each person owns an undivided share—four Untites: Time (interest at the same time), title (interest acquired by the same instrument), interest (interest of the same type and duration), and possession (interest gives identical rights to enjoyment). At common law, it was held that any conveyance to two or more persons was presumed to create a joint tenancy unless a contrary intention was clearly expressed. Can’t devise in a will.
4
Q
Tenancy by the enitrety
A
Marital. Right of survivorship. Four unities: TIme title, interest, possession plus marraige.
5
Q
Sever of Joint Tenancy
A
- Suit for partition
- Inter vivos transfer
- Execution of Mortgage in Title Theory state (minority)
- When there is only one joint tenant left Transferee takes as tenancy in common.
However, an exception is when the court refuses to relate back an acceptance where it would defeat the rights of intervening third parties like joint tenants. Accepting after death does not sever.
6
Q
Lien Theory for Joint Tenancy
A
The mortgage doesn’t sever the joint tenancy and when the borrower dies, other partners take the land free and clear or mortgage.
7
Q
Every Conveyance of Real Estate Requires
A
- Land Contract that conveys equitable title
- Closing where the deed passes legal title
8
Q
SOF in Land Sale Contract Requirements
A
- Signed by the party being sued
- Identify both parties
- Describe the Property
- The price or a way to determine the price
9
Q
Part Performance Exception to SOF
A
Oral Contract by specific performance when:
1. Contract is certain and clear
2. Acts prove the existence of a contract.
Usually need 2/3: Having possession of the land, making updates, paying a significant portion
10
Q
When is a title unmarketable
A
- Defects in the Record chain of title
- Encumbrances
- Zoning Violations.
An easement that reduces the value of the property, such as an easement of way for the benefit of a neighbor, renders the title unmarketable
11
Q
Types of Deeds
A
- Quitclaim2. General Warranty 3. Special Warranty
12
Q
Types of Recording Statutes
A
- Race 2. Notice3. Race Notice. Usually don’t protect judgment liens.
13
Q
Sublease
A
A transfer of a lease for part of the term, not the entire term. The tenant is not privity of contract or estate with the landlord. The new tenant is in the privity of the estate with the original tenant.
14
Q
Assignment of Lease
A
A transfer for the entire remaining term of the lease. An assignment does not release the tenant from his contractual obligations to the landlord.
15
Q
Tenancy at Will
A
A leasehold estate that is voidable by 1. Either Party dies2. Tennant commits waste3. Tennant attempts to assign to someone else4. Landlord transfers his interest in the property5. Landlord does a lease to a third party
16
Q
Novation
A
Substitutes the original party with a third party at the agreement of both original parties
17
Q
Prescriptive Easement
A
the use must be open and notorious, continuous and uninterrupted for the statutory period, and adverse
18
Q
Easement Surcharge
A
The easement’s legal scope was exceeded. This does not terminate the easement and the servant owner can sue to enjoin its use.
19
Q
Quasi Easement
A
Easement implied by operation of law
20
Q
When can an easement be implied?
A
Prior to the time tract is divided there is a use on the servant part that is reasonably necessary for the dominant part and the court determines that part is necessary.
21
Q
Easement by Necessity
A
The owner of a tract of land sells a tract of land and deprives someone of public roads or utilities. Usually not in writing. The owner of the servient parcel has the right to locate the easement but not to deny it.
22
Q
Easement Appurtenant
A
the right of special use benefits the easement holder in the enjoyment of her land. Need two properties!
23
Q
Joint Tenancy 4 Unitied TTIP
A
TimeTitleIdentical InterestPossession of the whole
24
Q
Severance of a joint tenancy SAP
A
SaleAndPartition
25
Tenant Breaches Lease By Leaving SIR
Landlord can SurrenderIgnore (minority)Re-let (must try this first)
26
Breach By Constructive Eviction SING
Substantial InterferenceNoticeGoodbye
27
Tenants Entitlements when Implied warranty of habitability is breach MR3
MoveRepairReduceRemain
28
Caveat Lessee Exceptions CLAPS
Common AreasLatent DefectsAssumption of Repairs Public use RuleShort term lease of a furnished dwelling
29
Express Creation of Affirmative Easements
An easement with the right to do something on someone else's land. This is created expressly when the parties to the original creation of the use specifically state the location of the easement, its dimensions, and the special use or limits to such use, the courts will honor this expression of specific intent. it will be assumed that the parties intend the easement to meet both present and future reasonable needs of the dominant tenement.
30
What Are Negative Easements? LASS
LightAir SupportStream water
31
Real covenant burden runs to successor when WITHN
Writing Intent Touch & Concern Horizontal and Vertical Privity Notice
32
Real Covenant Benefit runs to successor when WITV
Writing Intent Touch & Concern Vertical Privity
33
Equitable Servitude binds successor when WITN
WritingIntent {for successors be bound}Touch & Concern {Benifits the burdened land}Notice {Record, Actual, or Inquiry}NO NEED FOR HORIZONTAL OR VERTICAL PRIVITY. An enforceable equitable servitude requires that the covenanting parties intended the servitude to be enforceable against successors in interest, the successor in interest must have notice of the covenant, and the covenant must touch and concern the land.
34
Easement By Prescription COAH
Continuous and Uninterrupted use Open and Notorious Actual useHostile Use
35
Termination of Easements END CRAMP
Estoppel
Necessity
Destruction
Condemnation
Release
Abandonment
Merger
Prescription
36
Notice for Common Scheme OR for record AIR
Actual Inquiry Record
37
Adverse Possession OCEANS
Open and Notorious
Continuous
Exclusive
Actual
Non-Permissive
Statutory Period.
The statute of limitations that determines the time period for adverse possession does not run against the holder of a future interest (e.g., a remainder) until that interest becomes possessory, because the holder of the future interest has no right to possession (and thus no cause of action against a wrongful possessor) until the prior present estate terminates.
Two or more people can work together to take title by adverse possession, and if they meet the requirements, they take as tenants in common. Heirs can take interest of the one party.
38
To pass Legal Title from grantor to grantee the deed must LEAD
Lawfully executed And Delivered (acceptance is presumed in most states, this is rebutted when the grantee expressly refuses). Delivery of a deed can't be canceled but it can be rejected.
A deed is not effective to transfer an interest in realty unless it has been delivered. Delivery refers to the grantor's intent. There must be words or conduct showing the grantor intended that the deed have some present operative effect- that title pass immediately and irrevocably, even though the right of possession may be postponed. If the right of possession is to be postponed until the grantor's death, the deed may be held "testamentary" and therefore void (unless executed with testamentary formalities). However, most courts hold that if the grantor executes a deed and gives it to another with instructions to give it to the grantee upon the grantor's death, the grantor's intent was to presently convey a future interest to the grantee (either a remainder, with a life estate reserved in the grantor, or an executory interest), and so the gift is inter vivos, not testamentary. To make an effective delivery, the grantor must relinquish absolute and unconditional control.
39
When does a class close?
When someone in a class has a possessory interest
40
When are landlords liable for latent defects?
Short Term rentals that are furnished. Otherwise, only liable when they knew or should have known of the defects.
41
Holdover Tenant
A tenant who stays beyond the expiration of the lease
42
What type of tenancy does a holdover tenant take & how long does it last?
Periodic Tenancy.
Residential: month to Month
Commercial: Mirror the past lease, usually year to year, can't be longer because SOF
The price can be increased if notice was given prior to end of lease
43
How much does a holdover tenant have to pay in rent?
The previous price unless notified prior to the expiration of the rent increase, then they pay the increase.
44
When can a license be revoked?
At anytime even you pay value for it.
45
When is an easement by necessity in writing?
NEVER
46
Equitable Servitude
An equitable servitude is a covenant that regardless if it runs with the land can be enforced in equity against the successor of the burdened land unless the successor is a BFP (for value w/o notice).
47
Covenant
A promise to do or to do something with the land that when applicable is enforced by monetary damages NOT IN EQUITY.
48
When is equitable servitude allowed to be oral?
when they are negative reciprocal agreements that are for a common scheme for development and the grantee had notice of the covenant (AIR)
49
Common Scheme for Development (for covenants/Equitable servitudes)
plan existing at the time sales of the subdivided parcel began that all parcels be developed within the terms of the negative covenant. These are implied when there is a notice by the grantee. Zoning regulations and restrictive covenants in private deeds are completely separate concepts. Both must be complied with, and neither provides any excuse for violating the other. Thus, a variance from the government regulation does not prevent enforcement of the private covenant.
50
Differences between Equitable Servitude and Real Covenant?
A real covenant is enforced with damages and horizontal privity is needed to enforce the burden. Equitable servitudes are enforced in equity and no horizontal privity is needed.
51
When is an equitable servitude enforceable without notice?
When the new owner is a donee or heir notice is not necessary.
52
General Warranty Deed
Assures six covenants: the right to seisin, the right to convey, a covenant against encumbrances, the covenant of quiet enjoyment, the covenant of further assurances, and a general warranty.
53
Quitclaim Deed
Conveys whatever interest, if any, the grantor has in the property
54
Mutual Right of Endorsement
Each lot owner can enforce against every other lot owner when a subdivision is created with similar covents and there is a common scheme of development and there was notice of the covenant
55
What happens when some deeds contain negative covenants and others don't?
The negative covenant is enforced if there is a common scheme or notice
56
Implied Covenant of Marketability
Implied in every land sale contract, ensures that the seller will provide marketable title at closing.
57
When does a seller have to satisfy a mortgage to leave the title marketable?
After closing is fine because might be using the proceeds from the sale to pay off mortgage. This is allowed when the proceeds are enough to pay off the mortgage and are done through the use of escrows
58
Is a visible/known beneficial easement an encumbrance?
No, but ones that aren't for utility and aren't visible might be.
59
When will an encroachment not affect the marketability of a title?
When it's very slight and does not inconvenience the owner, the encroached upon has indicated he will not sue on it or it has existed for so long that it has become legal by adverse possession.
60
What to do when a title is unmarketable?
The buyer must notify the seller and give reasonable time to cure the defects, you can extend closing date. You can't sue for defects or rescind the contract unless they aren't cured. If this is discovered after closing, you can't sue for the unmarketable title because closing extinguished any contract claims.
61
What happens when a mortgage exists on the property when a real estate contract is signed?
The mortgage remains on the land and encumbers the title, but does not hold the new buyer liable for payments. If the buyer takes subject to the mortgage, the buyer is liable and the original mortgage is also secondarily liable.
62
How to cure a defect as to the quantity of land conveyed?
Pro Rata abatement of the price
63
What result in a remedy of specific performance in a land sale contract?
The seller is ordered to convey the title to the buyer and the buyer must tender the purchase price. If the seller can't bring a marketable title, the price can be taken down to account for defects.
64
Marketable Title
A title that is free from doubt (encumbrances) and with a good record title.
65
What can a joint tenant or TIC compel costs for?
cost of necessary repairs taxes and payments due but not improvements and they do not have to share rental payment by a third party.
66
Ouster
wrongful exclusion by a cotenant. If one co-tenant wrongfully ousts another co-tenant from possession of the whole or any part of the premises, the ousted co-tenant is entitled to receive her share of the fair rental value of the property for the time she was wrongfully deprived of possession.
67
When can a tenant bring a possessory action?
When they have been ousted
68
Can a joint tenant convey his right to survivorship?
NO, when conveyed it becomes a tenancy in common
69
The implied covenant of quiet enjoyment
In every lease, promises that neither the landlord nor a paramount title holder will interfere with the tenant's quiet enjoyment and possession of the premises
70
Total Eviction
when the landlord or paramount title holder exclude the tenant from the lease premises
71
Partial Eviction
the landlord relieves the tenant of the obligation to pay rent from the entire premises, even though the tenant continues in possession of the remainder of the premises. If the partial eviction is by a paramount title holder you can apportion the rent.
72
Implied Warranty of Habitability
Only for residential premises, the landlord promises that the premises are suitable for human residence. Usually follow the housing code.
73
Covenant Against Encumbrances
In a general warranty deed, a covenant promising there are no encumbrances with the title at closing
74
Breach of Covenant of Quiet Enjoyment
Total eviction, partial eviction, or constructive eviction
75
What can a tenant do when premises are unsuitable for occupancy?
1. Vacate the Premises2. Termiante the Lease3. Sue for Damages
76
Breach by Constructive Eviction
ADD
77
Redepmtion
The borrower has an equitable right at any time prior to foreclosure to redeem the land or free it of the mortgage or lien by paying off the amount due, or if an accelerated clause applies the full balance. Some states allow after the foreclosure sale but the price paid at foreclosure is what is due. right to redeem cannot be waived in the agreement establishing the security interest. This would be "clogging the equity of redemption." However, the right can be waived later for consideration.
78
Covenants of Warranty and Further Assurances
In a general warranty deed, Covenants are continuous (run with the land) and require the grantee to help. Under Warranty, the grantor agrees to defend on behalf of the grantee any lawful or reasonable claims of title by a third party and t compensate the grantee for any losses because of a superior title. Under Further Assurances, the grantee must perform whatever acts are reasonably necessary to perfect the title conveyed if it's not perfect.
79
Covenant of Seisin
In a general warranty deed, the grantor has the estate or interest that she purports to convey. Need both title and possession.
80
Doctrine of Merger Land Sale
Under the doctrine of merger, the land contract merges with the deed after closing and no longer hold the implied covenant of marketability.
81
How is an easement terminated by a merger?
An easement is extinguished when the easement is conveyed to the owner of the servient tenement. Whenever the same person acquires all of the existing interests in land, present and future, a merger occurs, and that person then holds a fee simple absolute.
82
Easement
In order for an easement to exist there must be two different owners. An easement is the right to use the land of another for certain purposes it is presumed that it is perpetual unless stated otherwise. Valid over other unrecorded deeds when recorded because notice. The holder of an easement has a right, even a duty, to make repairs.
83
When is acceptance of a deed presumed?
Always if beneficial to the granter. It can be rebutted if there is express denial. In a minority of states if the grantee is unaware of a recording, it is not presumed accepted.
84
Description of Property in Deeds
Must be unambiguous,
85
How to describe property from a designated starting point?
From a designated starting point that can be identified by reference to a government survey or a natural or artificial monument, the boundaries of the property can be described by successive calls of courses (e.g., angles) and distances until returning to the starting point. A course is a statement of direction generally stated as some number of degrees east or west of due north or south. In each call a distance must be stated together with the course.
86
What can a landlord do to a tenant who fails to vacate?
evict or bind to a new periodic tenancy. The terms and conditions apply to the new one as long as it is not longer than a year. Commercial tenancy usually defaults to a year. Residential can be a month.
87
Contract for the sale of land
implied promise, once it is signed but not yet closed, risk of loss is on the buyer. If land is destroyed, specific performance is still due for the full contract price.
88
Installment land contract
A contract where the buyer pays in installments and once finished paying gets a deed to the land. The seller's obligation to furnish a marketable title when delivery occurs is when the buyer has made his final payment.
89
Adverse Possession and disabilities
The statutory period can't run if the owner is under a disability when ti starts; however, if the owner becomes disabled during the AP, the state does run as long as the owner wasn't disabled when they first took the property.
90
the excuse of the condition by hindrance
If a party with a duty of performance that is subject to a condition prevents the condition from occurring, he no longer has the benefit of the condition.
91
Purchase Money Mortgage
PMMs are typically given to a third-party lender, who is lending the funds to allow the buyer to purchase the property. A PMM, whether recorded or not, has priority over mortgages, liens, and other claims against the mortgagor that arise prior to the mortgagor’s acquisition of title. However, PMM priority is subject to being defeated by subsequent mortgages or liens by the operation of the recording acts.
92
Time is of The Essence
Usually presumed not to be of the essence. time will be considered of the essence only if: (i) the contract so states, (ii) the circumstances indicate it was the parties' intention, or (iii) one party gives the other notice that he desires to make time of the essence. The 1-month delay has been reasonable 2 months is questionable.
93
Easement
a liberty, privilege, or advantage that one may hold in the lands of another. The holder of an easement has the right to use a tract of land (called the servient tenement) for a special purpose; e.g., laying utility lines, or for ingress and egress.
94
Bona fide purchaser
take property with considerable value without notice of any prior instrument.
95
Fair Housing Act
prohibits advertisements that indicate any preference, limitation, or discrimination based on race, color, religion, sex, disability, familial status, or national origin. This restriction applies even when the dwelling itself is otherwise exempt from the other provisions of the Act
96
Fee Simple Absolute
To A or To A and his heirs. This lasts forever.Devisable? yesDescendible? yesAlienable {transferrable inter vivos}? yes
97
Life Estate
To A for life or to A for the life of B. This can also be defeasible. Last as long as the measuring life or until the event. Grantor has the right of Reversion.Devisable? NoDescendible? NoAlienable {transferrable inter vivos}? yes
98
Fee Simple Determinable
Must be words limiting the duration of the estate. For so long as; Until; While; During.
If the condition isn't met it automatically reverts to the grantor.
Grantor has the possibility of Reverter
Devisable? yes
Descendible? yes
Alienable {transferrable inter vivos}? yes
99
Fee Simple Subject to condition subsequent
But if; upon condition that; provided that.
If the condition isn't met its subjector to the grantor's right of entry which must be exercised.
Granter has the right of entry (power of termination) and must take action or re-enter the premises. This needs to be expressly stated.
Devisable? yes
Descendible? yes
Alienable {transferrable inter vivos}? Yes (majority of states)
If language is ambiguous courts prefer this over FSD.
100
Fee Simple Subject to Executory Interest
To A for so long as X and if not X to B; To A but if X then to B; divests in favor of the third party. This is when there is a fee simple condition subsequent or determinable that when ended goes to a third party, not the grantor.
101
Reversion
When the grantor transfers a shorter estate than what she actually owns
102
Possibility of Reverter
Used only for fee simple determianble
103
Right of Entry (power of termination)
Used only for fee simple subject to condition subsequent.
104
Frank Sinatra Didn't Prefer Orville Redenbacher
Fee Simple Determinable Possibility of Reverter
105
Executory Interest
cuts short the prior estate RAP MIGHT APPLY
106
Remainders
Mostly follow life estates. Possessory only on the natural termination of the prior estate. These are vested if made in an ascertained person with no condition precedent. RAP MIGHT APPLY.
107
Class gifts
remainders in a class gift are contingent when no one in the class yet exists. It vests when all possible members exist. Vested subject to open if more members might come. An open class closes when any member can demand possession. RAP MIGHT APPLY
108
Interest Retained by the Grantor
1. Reversion2. Possibility of Reverter (for determinables)3. Right of entry (Condition subsequent)
109
Interest Retained by the Grantee
1. Executory Interests2. Remainders3. Class Gifts
110
Where does RAP apply?
1. Contingent Remainders2. Executory Interests3. Vested Remainders subject to open4. Options to Purchase5. RIght of 1st refusal
111
RAP 4 Steps
1. What's the interest?2. How does a future interest holder take?3. Who is the measuring life?4. When will we know if the future interest holder can take it?
112
RAP defined
Any future interest that is not certain to vest or fail within 21 years after the death is void.
113
RAP Examples
1. Executory INterest following a defeasible fee 2. Gift to an open class conditioned on members surviving past 21 years old3. Reamiders to A's children living at his widow's death4. Gift conditions on an administrative contingency 5. Options or rights of first refusal that extend to the holder's heirs and assigns
114
Departures from RAP
1. Wait and See Statutes2. Uniform Statutory Rule Against Perpetuities3. Cy Pres Approach
115
Wait and See Statutes
Validity of interest determined by actual future events
116
Uniform Statutroy RUle against Perpetuties
90 years vesting period, a wait and see approach
117
Cy Pres Approached
Invalid interests are reformed to match the grantor's intent.
118
Fee Tail
To A & the heirs of his body. This lasts until A's family dies out. The grantor has the right of reversion.
119
Life Estate Pur Autre Vie
Measured by a life other than the grantees or when a life tenant conveys their estate to another.
120
Duties of a Life Tenant
1. Reasonable Repairs
2. Pay ordinary Taxes
3. Pay interest on Mortgages
4. Pay special assessments for public improvements of short duration
A life tenant is entitled to all the ordinary uses and profits of the land, which includes encumbering his own interest, but he cannot lawfully do any act that would injure the interests of the remaindermen, such as committing waste or leaving the land encumbered without consent or joinder of the remainderman.
121
Types of Remainders
Types include Contingent, Indefeasibly vested remainder, vested remainder subject to open, vested remainder subject to total divestment
122
Contingent Remainder
There is a contingent remainder when the grant is to an unborn or unascertained person or subject to a condition precedent
123
Indefeasibly Vested Remainder
A person is ascertainable, there is no condition precedent, not subject to divestment or diminution. The holder will acquire with no strings attached. cannot be subject to a condition precedent
124
Vested Remainder Subject to Total Divestment
A person is ascertainable, subject to conditions subsequent. cannot be subject to a condition precedent
125
Vested Remainder Subject to Open
Created in a class of persons that is certain to become possessory but is subject to diminution (Children - can always have more). cannot be subject to a condition precedent
126
Shifting Executory Interest
Follows a defeasible fee and cuts short someone other than the grantor
127
Springing Executory Interest
Cuts short a grantor
128
Types of Executory Interest
1. Shifting 2. Springing
129
When does the RAP period begin on a will?
Testators Death
130
When does the RAP period begin on a Deed?
Date of delivery
131
When does the RAP period begin on an irrevocable trust?
The date its created
132
When does the RAP period begin on a revocable trust?
When it becomes revocable
133
Example of a violation of RAP (class age)
A gift to an open class condition on members surviving beyond age 21
134
Example of a violation of RAP (executory)
Executory interest that follows a defeasible fee with no limit on the time it must vest. To a for so long as no liquor is consumed on the premises, then to B
135
Example of violation RAP (class closing)
If the interest of any class member may vest too remotely the whole class fails
136
Example of violation of RAP (admin)
A gift condition on administrative contingency violated the rule "to my issue surviving at the distribution of my estate"
137
Rights of First Refusal
The seller received 3rd parties offer to purchase the property the right of first refusal gives the holder the right to purchase the property on the same terms. options and rights of first refusal are not subject to the Rule Against Perpetuities when connected to leaseholds
138
Restraints on Alienation Types
Disabling restraints (tx is ineffective)Forfeiture Restraints (tx forfeits the interest)Promissory Restraints (tx breaches covenant)
139
When are restraints of fee simples void?
All absolute restraints are void, partial ones are allowed
140
When are restraints on Life Estates valid?
Forfeiture and promissory restraints on life estates are valid but disabling restraints are void.
141
When are restraints on Futue Interest valid?
Restraints on vested future interest are generally valid.
142
When can a life tenant demolish buildings?
the market value of the future interest is not diminished and either the remainderman does not object or a substantial and permanent change in the neighborhood had deprived the property of its current form of reasonable productivity and usefulness.
143
Elements of a Deed
Writing
Sufficient Description
Identifying Parties
Intent to Convey
Signed by Grantor
144
Notice Jurisdiction
a subsequent bona fide purchaser prevails over a prior grantee who fails to record. The important fact under a notice statute is that the subsequent purchaser had no actual or constructive notice at the time of the conveyance, not at the time of recording.
145
Lease
A lease grants the lessee the exclusive right to possess the premises, and broad rights to use them in any manner, unless specifically restricted.
146
Race Notice Jurisdiction
a subsequent bona fide purchaser (i.e., one who takes for value and without notice) is protected only if she records before the prior grantee. Notice is measured at the time of the conveyance, not at the time of recording
147
Liquidated Damages Clause
When a sales contract provides that a seller may retain the buyer's earnest money as liquidated damages, courts routinely uphold the seller's retention of the money upon breach if the amount appears reasonable in light of the seller's anticipated and actual damages. Many courts uphold the retention of earnest money of up to 10% of the sales price without inquiry into its reasonableness.
148
Fixtures
a chattel that has been annexed to real property is converted from personalty to realty
149
Accession
The manifest intent of the annexor determines whether the chattel becomes a fixture.
The factors for evaluating the annexor's intent are:
(i) the relationship between the annexor and the premises,
(ii) the degree of annexation, and
(iii) the nature and use of the chattel.
Constructive annexation occurs when an article of personal property (an "accession") becomes an integral part of the property, even though it is not physically annexed to the property, in the same sense that a fixture becomes an integral part of the realty.
150
Profit
a nonpossessory interest in land, allowing the grantee to enter the land and remove resources of the land, in this case, fish and game. A profit can be conveyed from the original grantee to a third party. A profit can be terminated in one of several ways, such as by abandonment or misuse.
151
Terminating and Easement by Estoppel
There must be (i) some conduct or assertion by the owner of the easement, (ii) a reasonable reliance by the owner of the servient tenement, coupled with (iii) a change of position.
152
Title Insurance Policy
A title insurance policy insures that a good record title of the property exists as of the policy's date and agrees to defend the record title if litigated. Title insurance can be taken out by either the owner of the property or the mortgage lender.
153
Owner Insruance Policy
protects only the person who owns the policy (usually either the property owner or the mortgage lender) and does not run with the land to subsequent purchasers.
154
Lenders Insurance Policy
follows any assignment of the mortgage loan. However, the policy ends when the mortgage loan is paid off.
155
Reconveyance of Property
When a deed is delivered, the title passes to the grantee upon effective delivery. Therefore, returning the deed to the grantor has no effect; it constitutes neither a cancellation nor a reconveyance. A reconveyance requires the execution of a new deed. Thus, the property owner had no interest in the property that he purportedly conveyed to the third party
156
Shelter Rule
a person who takes from a BFP will prevail against any interest that the transferor-BFP would have prevailed against. This is true even where the transferee had actual knowledge of the prior unrecorded interest.
157
New House Exception
common law held that contracts of sale and deeds of real property carry no implied warranties of quality or fitness for the purpose intended, most courts now find an implied warranty of fitness or quality extends to the sale of any new house by the builder. The warranty implied is that the new house is designed and constructed in a reasonably workmanlike manner and suitable for human habitation. Some courts go further and extend the warranty to a subsequent purchaser.
158
Proceeds of a Foreclosure Sale
The proceeds of the foreclosure sale are used first to pay expenses of the sale, attorneys' fees, and court costs; then to pay the principal and accrued interest on the loan that was foreclosed; next to pay off any junior liens or other junior interests in the order of their priority; and finally, any remaining proceeds are distributed to the mortgagor.
159
Cumulative Zoning
A cumulative zoning ordinance creates a hierarchy of uses of land, and land that is zoned for a particular use may be used for the stated purpose or for any higher use. Residential use is higher than nonresidential use.
If a use exists at the time of passage of a zoning ordinance and that does not conform cannot be eliminated at once. Generally, the nonconforming use may continue indefinitely, but any change in the use must comply with the zoning ordinance.
160
Equitable Mortgage
When a deed is given for security purposes rather than outright transfer of the property. In determining whether an absolute deed is really a mortgage, the court considers the following factors: (i) the existence of a debt or promise of payment by the deed's grantor; (ii) the grantee's promise to return the land if the debt is paid; (iii) the fact that the amount advanced to the grantor/debtor was much lower than the value of the property; (iv) the degree of the grantor's financial distress; and (v) the parties' prior negotiations.
