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S24 > Property II > Flashcards

Property II Flashcards

1
Q

Fair Housing Act

A

a. Prohibitions
i. Prohibits discrimination based on the following classifications in the sale or rental of a dwelling:
1. Race
2. Ethnicity
3. Religion
4. National origin
5. Sex
6. Familial status
a. Families with minor children
b. Pregnant people
7. National origin
8. Disability
ii. Prohibited conduct includes refusing to:
1. Rent, sell, or negotiate, or
2. Providing different terms, conditions, or privileges based on a protected status
iii. Act also prohibits publishing any advertisement that indicates a preference on prospective tenants or buyers

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2
Q

Exceptions to FHA

A

ii. FHA applies to most dwellings except:
1. Exemption
a. Owner-occupied apartment with up to four units
b. Single-family residences rented or sold without a real estate broker or salesperson
i. Applies only to general provision
2. Exception
a. Shared living units (i.e., roommates)
i. Applies to both general provision and advertisements

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3
Q

Dwelling (FHA)

A

Any building, structure, or portion thereof which is occupied as, or designed or intended for occupancy as, a residence by one or more families

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4
Q

Civil Rights Act

A

a. Generally
i. Prohibits discrimination based on race in the leasing or sale or any type of property; however, it does not cover advertising
ii. Only applies to intentional discrimination

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5
Q

Servitude

A

a. Servitude
i. Non-possessory interest in land
ii. Enable private agreements among owners that regulate either the way property is used by an owner or access to another owner’s property for a specific purpose

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6
Q

Types of servitudes

A

i. Easements
1. Express
2. Implied
ii. Covenants
1. Real covenant
2. Equitable servitude

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7
Q

Easements

A

i. Non-possessory right to use the land of another person
ii. Easement grants less than full possession of the land, instead granting only the right to perform specific acts
iii. Easement may be intended to be permanent or irrevocable for a specified period of time

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8
Q

Express easements

A

i. Creation
1. Voluntarily created in deed, will, or other written instrument
ii. Types of creation
1. Grant
a. Conveys easement to another person
2. Reservation
a. Reserves easement in land when transferring land to another person
iii. Statute of Frauds
1. In writing
2. Signed

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9
Q

Implied easements

A
  1. Without agreement
    a. Easement implied by prior existing use
    b. Easement by necessity
    c. Prescriptive easement
    d. Easement by estoppel (or irrevocable license)
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10
Q

Affirmative easements

A

Allows holder of easement to perform act on land

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11
Q

Negative easements

A

Express easement that entitles the dominant owner to prevent the servient owner from performing an act on servient land

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12
Q

Conservation easements

A
  1. Most common negative easements
  2. Express easement that restricts the development and use of the servient land in order to preserve open space, farmland, historical sites, or wild and undeveloped land
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13
Q

Easement appurtenant

A
  1. Benefits the dominant land
  2. Attached to the land, not the person
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14
Q

Easement in gross

A
  1. Not attached to the land
  2. Benefits the easement holder in personal capacity
  3. Includes commercial uses
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15
Q

Easement implied by prior existing use

A
  1. Claimants must show:
    a. (1) Severance of title to land held in common ownership
    i. Common ownership
  2. When one person held title to the entire land that was severed and transferred part of it to another person
    b. (2) Existing, apparent, and continuous use when severance occurs; and
    i. Existing
  3. Owner use of one parcel to benefit the other parcel
    ii. Apparent
  4. Use was visible or discoverable through reasonable inspection, even if not readily visible
    iii. Continuous
  5. Parties likely expected the use to continue
    c. (3) Reasonable necessity for the use at time of severance
    i. Reasonable
  6. Use was reasonably convenient to the dominant land
    ii. Note: Timing is key
  7. Elements must be satisfied at the time of severance
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16
Q

Easement by necessity

A
  1. Claimants must show:
    a. (1) Severance of title to land held in common ownership
    b. (2) Strict necessity for the easement at the time of severance
    i. Traditional rule
  2. Strict necessity requires the parcel to be landlocked with no other access to public roads or utilities
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17
Q

Prescriptive easement

A
  1. Claimants must show:
    a. (1) Actual use
    i. Use was as a true holder would use the easement
  2. True holder
    a. How do people use X in this community
    b. (2) Open and notorious use
    i. Use was visible and obvious such that a reasonable owner would be aware of the adverse use
    c. (3) Adverse use
    i. Use was without permission from owner of servient estate
    d. (4) Continuous use
    i. Use was continuous as a true holder would continuously use the easement
    e. (5) Statutory period
    i. Elements were satisfied for the statutory period
    ii. Analyze even if not given statutory period
    iii. Upper end of statutory period is 20 years
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18
Q

Easement by estoppel (irrevocable license)

A
  1. Claimants must show:
    a. (1) License (temporary permission, revocable at any time), typically for access purposes
    b. (2) Licensee’s good faith reliance through the expenditure of substantial money or labor
    c. (3) Licensor’s knowledge or reasonable expectation that reliance will occur
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19
Q

Scope of easement

A

i. Intent
1. Scope of an easement depends on the intent of the original parties
ii. Reasonably necessary
1. In general, the scope of an easement permits an easement holder to do anything that is reasonably necessary for the full enjoyment of the easement, unless evidence provides otherwise
iii. Change in manner, frequency, or intensity
1. In general, easement holder may increase the manner, frequency, or intensity of an easement’s use so long as that increase does not unreasonably damage or interfere with the use or enjoyment of the servient estate
a. Change must unreasonably interfere such that the servient landowner is unable to use servient estate
b. Interference must be explicit and more than just “inconvenient”

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20
Q

Specific scenarios related to scope of easements

A
  1. Prescriptive easements
  2. Technological change
  3. Subdivision of dominant land
  4. Third party beneficiaries
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21
Q

Transferring express easements appurtenant

A

i. Servient land transferred
1. Notice required
a. Actual notice
i. Knowledge of prior interest in the real property
b. Record notice
i. Recorded in county records (even if party does not search for it)
c. Inquiry notice
i. Visible/apparent, so purchaser should have asked
ii. Everyone who buys land is expected to inspect the land physically and to review public records
ii. Dominant land transferred
1. Automatically runs with the land

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22
Q

Transferring express easements in gross

A

a. Commercial
1. 1. Transferred freely
2. Unless circumstances show that the parties “should not reasonably have expected” this result
b. Non-commercial
i. Not transferable unless the express easement provides otherwise

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23
Q

Transferring implied easements

A

Implied easements run with the land, unless terminated

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24
Q

Termination of easements

A

i. Terms of easement
1. Parties can include an express limitation on the easement, such as expiration date, term of years, or a condition
ii. Abandonment
1. Abandonment depends on the easement holder’s intent
2. Abandonment of an easement is established if:
a. Holder stops using the easement for a long period (for example, >50 years) and
b. Takes other actions that clearly show intent to relinquish the easement
iii. Merger
1. If one person obtains title to both the easement and the servient land, the easement terminates under the doctrine of merger
2. Easement cannot be terminated by merger if there are any future interests in the dominant or servient estate
3. Instead, use of the easement is suspended until future interest holder becomes entitled to possession
iv. Prescription
1. Servient landowner may terminate an easement by prescription based on the same elements of easement by prescription, except the servient owner must substantially interfere with the holder’s use of the easement
v. Estoppel
1. Easement ends if the servient owner substantially changes his position in reasonable reliance on the holder’s statement that the easement will not be used in the future
a. Substantial change in position
i. Money or labor
vi. Release
1. Easement holder may release the easement to the servient owner by executing and delivering a writing that complies with the statute of frauds

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25
Q

Duty to repair and maintain easements

A

i. Duty to repair and maintain an easement falls on the easement holder, not the servient estate owner (unless the parties agree otherwise)
ii. Servient-estate owner has a duty to contribute to the reasonable costs of repairs and maintenance if they also use the easement

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26
Q

Affirmative covenants

A

Affirmative covenants require the owner of the burdened property to perform some act or to pay money

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27
Q

Negative covenants

A

Negative covenants restrict how the burdened property may be used

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28
Q

Real covenant

A

i. Generally
1. A real covenant is a promise concerning the use of land that benefits and burdens both the original parties to the promise and their successor
ii. Remedy
1. Money damages
iii. Requirements for burden to run with the land
1. Statute of Frauds
2. Intent to bind successors
3. Touch and concern
4. Notice
5. Horizontal privity
6. Vertical privity
iv. Requirements for benefit to run with the land
1. Statute of Frauds
2. Intent to bind successors
3. Touch and concern
4. Vertical privity

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29
Q

Equitable servitude

A

i. Generally
1. An equitable servitude is a promise that, regardless of whether it runs with the land at law, equity will enforce against the successors of the burdened land unless the successor is a bona fide purchaser
ii. Remedy
1. Injunctive relief
iii. Requirements for burden to run with the land
1. Statute of Frauds or common plan
2. Intent to bind successors
3. Touch and concern
4. Notice
iv. Requirements for benefit to run with the land
1. Statute of Frauds or common plan
2. Intent to bind successors
3. Touch and concern

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30
Q

Statute of frauds (covenants)

A

a. Covenant must be in a document that satisfies the Statute of Frauds (signed, in writing)
b. Covenant may appear anywhere in chain of title

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31
Q

Common plan

A

a. Implied from common plan where developer imposed uniform restrictions on a subdivision in which all lots are burdened by restrictions even if they do not appear in the chain of title to every lot
b. Evidenced by:
i. Sales literature
ii. Statements by developer
iii. Percent of deeds with restrictions
c. Once common plan is established, every lot owner may enforce the covenant against every other lot owner
d. Note: only consider circumstances at time of conveyance

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32
Q

Intent (servitudes)

A
  1. Original parties must intend to bind their successors to the land
  2. Intent can either be express in writing or inferred from the circumstances
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33
Q

Touch and concern

A

Covenant must touch and concern the land. It must relate to the enjoyment, occupation, or use of the land.

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34
Q

Notice

A
  1. Actual
  2. Record
  3. Inquiry
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35
Q

Horizontal privity

A
  1. Requires the original parties to the covenant to have shared some interest in the land independent of the covenant
  2. Types of interests
    a. Landlord-tenant
    b. Cotenant
    c. Owner of dominant and servient tracts of an easement
    d. Grantor-grantee
    e. Mortgagor-mortgagee
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36
Q

Phases of residential land transactions

A

i. (1) Negotiate and prepare a purchase and sale contract
ii. (2) Executory period between the purchase and sale contract and closing
iii. (3) Closing and post-closing issues

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36
Q

Vertical privity

A
  1. Burden
    a. Vertical privity requires, for the burden to run, the successor to the land receive the entire estate held by the original promisor
  2. Benefit
    a. Vertical privity requires, for the benefit to run, the successor to the land receive either the entire estate or a smaller estate held by the original promisor
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37
Q

Types of listing agreements

A
  1. Open listing
    a. Seller pays first broker to find a “ready, willing, and able buyer”
  2. Exclusive listing
    a. Broker is the only one authorized to find buyers, but no commission if the seller finds a “ready, willing, and able buyer”
    i. Most common
  3. Exclusive right to sell listing
    a. Broker receives a commission even if anyone finds a “ready, willing, and able buyer”
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38
Q

Requirements for listing agreements

A
  1. Statute of Frauds
    a. Writing
    b. Signed
    c. Essential terms
    i. Identity of parties
    ii. Price
    iii. Description of property
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39
Q

Exceptions to the statute of frauds

A

a. Part performance
b. Estoppel

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40
Q

Marketable title

A
  1. Legal title to real property that is reasonably free from doubt
  2. Implied covenant and implied condition in purchase and sale contract
  3. If title is unmarketable, then buyer can rescind the purchase and sale contract; seller cannot rescind for unmarketable title
  4. Physical defect with land does not raise issue of marketable title; marketable title only applies to title defects
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41
Q

Title unmarketable

A
  1. Problem with title to real property
    a. Less property interest than identified in purchase contract
    b. Subject to encumbrance (even if recorded, unless encumbrance is included in contract)
  2. Risk of litigation due to:
    a. Uncertainty regarding title (e.g., adverse possession)
    b. Violation of law (e.g., violation of zoning code)
    c. Violation of private covenant (e.g., violation of covenant limiting height)
  3. Must be substantial problem; not immaterial defect
    a. Substantial problems effect value of the property
    b. Immaterial defect does not effect value; very minor
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42
Q

Title not unmarketable

A
  1. If parties agree to terms, for example:
    a. Purchase contract says “no promises regarding marketable title”
    b. Purchase contract explicitly lists the encumbrance or potential limitation
    c. Zoning restrictions (unless violated)
    d. Visible easement for roads, power lines, sewer pipes or other utilities
  2. Physical defects
    a. Marketable title concerns “title” to property, not the physical condition
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43
Q

Curing problems with title

A

If Buyer discovers a problem with title during the “executory period” (after the purchase and sale contract is signed but before closing), Seller generally has until closing to fix the problem with title

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44
Q

“Time is of the essence”

A

a. If the purchase and sale contract does not have a “time is of the essence” clause:
i. Seller still has a reasonable time to cure after closing date (often 1-2 months is considered reasonable)
ii. Generally, the longer the problem has been known to Seller, the less time is permitted after closing to cure
b. If the purchase and sale contract does have a “time is of the essence” clause:
i. Seller must provide marketable title at closing
ii. No reasonable time to cure

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45
Q

Duty to disclose defects

A

i. Generally
1. Duty arises before purchase and sale agreement is signed
ii. Seller’s duty
1. General duty to disclose
a. Seller has a duty to disclose defect if:
i. (1) Defect is known to the seller
ii. (2) Defect is not known or not readily discoverable by a buyer exercising due care and
iii. (3) Defect materially impacts the value of the contract

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46
Q

Scenarios that trigger seller’s duty

A
  1. Defect is known to seller
    a. If seller has reasonable suspicion of a defect, they must disclose that defect
  2. Not known or readily discoverable by a buyer exercising due care (latent defects)
    a. Majority
    i. Objective (reasonable person) standard
    b. Minority
    i. Subjective (special knowledge or experience of buyer) standard
  3. Defect materially impacts the value ($$) of the contract
    a. Majority
    i. Reasonable person
    b. Minority
    i. Subjective standard
  4. If seller knows about special circumstance, preference, or condition of buyer and do not disclose the relevant defect, in a minority of jurisdictions, the court would find that the defect materially impacts the value of the contract
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47
Q

“As-is” clauses (contract)

A

i. General
1. Residential
a. Majority
i. General “as-is” clause is not sufficient to overcome seller’s liability for failure to disclose or fraud
b. Minority
i. General “as-is” clause is enforceable
2. Commercial
a. Usually enforceable
ii. Specific
1. If the “as-is” clause identifies and disclaims liability for specific types of defects, it is likely to be upheld

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48
Q

Breach of purchase and sale contract

A

i. Seller or buyer breach
1. Refuse to go through with the transaction
ii. Seller’s breach (justifies buyer’s rescission and other remedies)
1. Failed to deliver marketable title
2. Failed to disclose when obligated to disclose
3. Failed to comply with any conditions included in the purchase contract
iii. Buyer’s breach (justifies seller’s rescission and other remedies)
1. Failed to comply with any conditions included in the purchase contract

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49
Q

Remedies for refusal to perform the purchase and sale contract

A

i. Buyer’s remedy
1. In general, court will order specific performance if money damages are inadequate as a remedy for buyers
2. When a seller refuses to perform the purchase and sale contract, courts presume money damages are inadequate because real property is unique
3. Therefore, courts usually grant a buyer’s request for specific performance
ii. Seller’s remedy
1. In general, although real property is unique, courts will order specific performance if money damages are inadequate as a remedy for sellers

50
Q

Damages for breach of the purchase and sale contract

A

i. Expectation damages
1. Majority
a. Difference between contract price and fair market value on date of breach
2. Minority
a. If good faith (unintentional) breach of warrant of marketable title, expectation damages are not available

51
Q

Equitable conversion

A

i. Generally
1. Purchase contract “converts” the legal right to property from seller to buyer
2. Buyer is the equitable owner of the land until closing unless the contract provides otherwise
ii. Rights
1. Buyer
a. Equitable right to real property (treated as buyer’s real property)
2. Seller
a. Legal right to payment (treated as seller’s personal property)
iii. Risk of loss
1. Majority
a. In general, if the property is destroyed before closing, buyer bears the risk of loss and must pay the contract price
2. Minority
a. Some states have adopted the Uniform Vendor and Purchase Risk Act, which places the risk on the seller unless the buyer has either legal title or possession of the property at the time of loss
iv. Death of seller or buyer
1. If the buyer or seller dies during the executory period before closing, the contract is still valid and is still enforceable by the beneficiaries of either party

52
Q

Requirements for valid deed

A
  1. Statute of Frauds
    a. Writing and signed by grantor (party to be bound)
  2. Exceptions
    a. Part performance
    b. Estoppel
  3. Additional requirements
    a. Grantor and grantee names
    b. Words indicating intent to convey
    c. Description/identification of the property
    d. Subdivisions: lot number and reference to subdivision map in public records
53
Q

Delivery (deed)

A
  1. Generally
    a. Elements
    i. Grantor’s manifest intent to transfer an immediate property interest to the grantee
    ii. Grantee’s acceptance of the deed (usually presumed)
  2. Rebuttable presumptions
    a. Physical delivery
    i. If physical delivery to the grantee, rebuttable presumption that deed delivered
    ii. If no physical delivery to the grantee, rebuttable presumption that deed not delivered
    b. Recorded
    i. If recorded, rebuttable presumption that delivered
  3. Delivery and future interests
    a. Elements
    i. Delivery of future interest is valid if present intent to transfer the future interest
  4. Future interest can be contingent (when G reaches 25)
    ii. Grantee’s acceptance of the deed
  5. Deed given to third party
    a. Delivery to third party is valid if intent to part “with all dominion and control” intending for the deed to take effect at the time of delivery to the third party
    i. Irrevocable, so demonstrates present intent to convey
  6. Will substitutes
    a. Wills are revocable and do not take effect until testator’s death
    b. Additional requirements for valid wills (witnesses)
  7. Statutory exception
    a. Some states have statutes permitting transfer-on-death deeds
    i. Deed does not take effect until grantor dies
    ii. Revocable (will substitute)
    iii. Must be recorded
54
Q

Estoppel by deed

A
  1. If a seller conveys property with a warranty deed before they have title to it, then, when they later obtain the property, they are estopped from claiming title; therefore, grantee gets title
  2. Any issues with marketable title can be addressed by putting them in the purchase and sale agreement
55
Q

Title assurance

A

a. Protections buyers have against potential title defects
i. (1) Title covenants
1. Grantor promises in deed that title is good in deed warranties
ii. (2) Recording system
1. State of title based on searching public land recording
iii. (3) Title insurance
1. Pay for title insurance company policy that insures grantee’s title

56
Q

Merger doctrine

A

a. Warranty of marketable title expires at closing
b. Title promise in purchase contract “merge” into the deed
c. Post-closing, deed warranties (containing title covenants) apply to actual issues that arise (not based on doubt as to risk of litigation as in marketable title)

57
Q

Purchase contract provisions

A

a. Buyer and seller can agree to have specific purchase contract provisions (“collateral agreements”) that do not relate to title remain in effect (seller will paint the house)

58
Q

Types of deeds

A

a. General warranty deed
b. Special warranty deed
c. Quitclaim deed

59
Q

General warranty deed

A

Grantor warrants title against all the facts, whether they arose before or after they obtained title (present and future covenants)

60
Q

Special warranty deed

A

Grantor warrants title against all defects that arose after they obtained title (warranty, quiet enjoyment, further assurances)

61
Q

Quitclaim deed

A

i. Grantor makes no warrantees about title, so the grant he receives, only what the grantor has, if anything
ii. Often used when title acquired by adverse possession, intestate succession, or other uncertainty about ownership

62
Q

Present covenants

A

i. Covenant of seisin
ii. Covenant of right to convey
iii. Covenant against encumbrances

63
Q

Covenant of seisin

A

Promise that the grantor owns the estate he purports to convey

64
Q

Covenant of right to convey

A

Promise that the grantor has the right to convey title

65
Q

Covenant against encumbrances

A

Promise that there are no encumbrances on that title, other than those expressly listed in the deed

66
Q

Future covenants

A

i. Covenant of warranty
ii. Covenant of quiet enjoyment
iii. Covenant of further assurances

67
Q

Covenant of warranty

A

Promise that the grantor will defend the grantee against any claim of superior title

68
Q

Covenant of quiet enjoyment

A

Promise that the grantee’s possession of the property will not be disturbed by anyone holding superior title

69
Q

Covenant of further assurances

A

Promise that the grantor will take all future steps reasonably necessary to cure title defects that existed at closing

70
Q

What is covered under recording acts

A

i. Sales
ii. Transfer by will or intestate succession
iii. Mortgages
iv. Leases
v. Servitudes (easements, covenants)
vi. Judgment liens
vii. Creditor liens

71
Q

Common law for recording acts

A

i. Person whose interest was created first prevails
ii. “First in time” rule

72
Q

Race statute

A

Whoever records first wins

73
Q

Notice statute

A

Subsequent purchaser who gives valuable consideration and has no notice of the prior interest prevails over a prior grantee who failed to record

74
Q

Race-notice statute

A

Subsequent who gives valuable consideration and has no notice of the prior interest is protected only if she records before the prior grantee

75
Q

Bona fide purchaser

A

i. Subsequent purchaser
1. Land buyer
2. Easement holder
ii. For value
1. Cannot be a gift
iii. Who satisfies the requirements of the recording statute in that jurisdiction
1. Race
2. Notice
3. Race-notice

76
Q

“Purchaser”

A

Broad term that includes purchasing interest in land (lease, easement, etc.)

77
Q

Shelter rule

A

i. Grant from a bona fide purchaser protects the grantee against any interest that the transferor-BFP would have been protected against, even if the grantee would not otherwise qualify as a BFP
ii. Applies even where the grantee had actual knowledge of the prior unrecorded interest

78
Q

Title insurance

A

a. Generally
i. Contract of indemnity between the issuing company and the property owner or mortgagee
b. Provisions
i. Include:
1. Exceptions for specific actual or potential title defects
2. Standard exclusions, such as
a. Problems created by the insured party
b. Defects not shown by public records, but known to the insured party; and
c. Impact of any law, ordinance, or regulation relating to the use or occupancy of the land

79
Q

Wild deed

A

a. Prior conveyance from a grantor who is outside the recorded chain of title
b. Does not give record notice to subsequent purchasers

80
Q

Methods of financing real property

A
  1. To purchase property, borrowers borrow money from:
    a. Financial institutions (banks, mortgage lenders)
    b. Sometimes sellers
81
Q

Documentation for financing real property

A
  1. Borrower usually completes two documents:
    a. (1) Promissory note
    b. (2) Mortgage or deed of trust
    i. Document that “secures” the debt and gives lender (mortgagee) the right to sell and obtain proceeds if borrower (mortgagor) does not pay back the debt
    ii. Property is “security” or “collateral” for the loan
82
Q

Promissory note

A
  1. Contract establishing personal liability for loan
  2. Indicates loan amount
  3. Sets interest rate (fixed or adjustable)
  4. Sets timeline (e.g., 30 years)
  5. Sometimes includes prepayment clause
  6. Often includes acceleration clause
83
Q

Mortgage

A
  1. Statute of Frauds
    a. In writing
    b. Signed by party to be bound
  2. Include:
    a. Description of the property
  3. If recorded:
    a. Recorded mortgage means security interest will bind subsequent purchasers and may have priority over other mortgages or interests after foreclosure
    b. Complying with recording statute protects mortgagee from prior unrecorded interests
84
Q

Mortgage with power of sale

A

Mortgage authorizes the lender to sell the property at auction and distribute the proceeds

85
Q

Deed of trust

A

Functionally equivalent to mortgage with power of sale

86
Q

Mortgagor’s duties

A

i. Generally
1. Mortgagor risks foreclosure if fails to abide by obligations
ii. Examples
1. Make government payments (taxes/assessments)
2. Maintain property insurance
3. Defend title to property (e.g., against adverse possession claims)

87
Q

Transfers by mortgagor

A

i. Generally
1. Usually an existing loan is paid off when the property is resold, but the parties might keep the loan in place (and the bank might not enforce a due on sale clause)
2. Original buyer continues to be personally liable based on terms of promissory note unless original lender relieves them of liability
ii. Default rule
1. If deed is silent, the new buyer is not personally liable but still faces risk of foreclosure (unless protected by the recording statute)

88
Q

“Assuming”

A
  1. Assuming the loan
    a. If buyer “assumes” the loan:
    i. Buyer is personally liable and faces risk of foreclosure
89
Q

“Taking subject to”

A
  1. Subject to the loan
    a. If the agreement between seller and buyer provides the buyer is subject to the loan:
    i. Buyer is not personally liable but still faces risk of foreclosure
  2. Default rule
90
Q

Surety

A

Original buyer remains personally liable for the loan based on the original promissory note, unless they are released from the obligation by the mortgagee (e.g., bank)

91
Q

Judicial foreclosure

A

Lender must bring suit and a court oversees foreclosure sale and distribution of proceeds

92
Q

Borrower’s pre-foreclosure rights

A

a. Borrow in default (before lender “accelerates” the loan)
b. Reinstate loan
i. Borrower makes all late payments
c. Post mortgage crisis
i. Some states require lenders to offer loan modification options

93
Q

Deed in lieu of foreclosure

A

a. If borrower and lender agree, borrower gives lender the deed
b. Uncommon because bank takes subject to all liens/interests on the property

94
Q

Pre-foreclosure options prior to sale of property

A

a. Borrower can reinstate loan or lender can modify terms
b. Lender accelerates loan
c. Borrower can redeem equity of redemption (repay entire mortgage plus interest; cut off by sale of property)
d. Lender and borrower can agree to deed in lieu of foreclosure
e. Judicial or non-judicial foreclosure sale
f. Statutory right to redemption

95
Q

Seniority of interests

A

i. Based on time
1. Senior interest
2. Junior interest

96
Q

Complaint in foreclosure proceeding

A

i. Lender files complaint against “necessary” parties:
1. Borrower
2. Junior lienholders
3. All other junior interests (e.g., junior servitude holders)
a. If necessary parties do not have notice, interest not affected by foreclosure

97
Q

Possible defenses in foreclosure proceeding

A

i. No mortgage in the first place
ii. No default; payments are up-to-date
iii. Defense (personal or real) to mortgage formation

98
Q

Sale process in foreclosure proceeding

A

a. Authorization
i. Judge authorizes
b. Notice
i. Lender provides notice of public sale
c. Public auction

99
Q

Non-judicial “power of sale” foreclosure

A

a. Mortgage document must provide for “power of sale”
b. Most states impose statutory requirements like:
i. Advance notice of intent to foreclose to borrower
ii. Notice to all junior interest holders
iii. Public notice of sale
c. Public sale conducted by lender or by trustee (if deed of trust)
d. No direct judicial role

100
Q

Interests after foreclosure proceeding

A

a. Post foreclosure
i. Senior interests are still attached to the property (e.g., senior lien and easement)
ii. Junior interests are eliminated (e.g., junior lien and lease)
iii. Foreclosing lender’s line is eliminated

101
Q

Distributions in foreclosure proceeding

A

a. Order in which the proceeds are distributed (if no special rules apply):
i. Foreclosing lienholder
ii. Junior lienholders
iii. Borrower
b. Senior lienholders do not get anything, but their liens remain on the property

102
Q

Deficiencies in foreclosure proceeding

A

a. If foreclosing lender and other lienholders don’t get amount owed from foreclosure sale (and borrower/debtor isn’t paying), lienholder’s options:
i. Junior lienholder
1. Sue borrower on the promissory note (borrow remains personally liable)
ii. Senior lienholder
1. If lien is still attached to property, foreclosure on the bidder who holds title to the property after foreclosure sale

103
Q

Special rules in foreclosure proceeding

A

a. Junior interest did not get notice of foreclosure
i. If a junior interest holder was not given notice of the foreclosure, the junior interests is not wiped out by the foreclosure sale
b. Senior interest was not recorded
i. Junior mortgagees who are bona fide encumbrancers have priority over earlier unrecorded interests who failed to record under applicable recording statute
c. Purchase Money Mortgage (PMM)
i. PMMs have priority over more senior liens, even if the PMM lender had notice
d. Deed in lieu of foreclosure
i. If borrower provides deed in lieu of foreclosure, then lender takes subject to junior liens

104
Q

Purchase money mortgage

A
  1. Traditional
    a. Mortgage (loan) from seller
  2. Modern
    a. Mortgage (loan) from any lender for loan used to purchase property
105
Q

Zoning

A

i. Zoning is the division of a jurisdiction into districts in which certain uses and developments are permitted or prohibited
ii. Zoning law is public law (rather than private)

106
Q

Nonconforming use

A
  1. Nonconforming use is a use of land that lawfully existed before the zoning ordinance was enacted but that does not comply with the ordinance
  2. Most ordinances prevent the expansion of non-conforming use
  3. Non-conforming use cannot be transformed into a different non-conforming use
  4. Although minor repairs are permitted, major alterations, or structural repairs that will extend the duration of the use are not permitted
107
Q

Terminating a nonconforming use

A
  1. Right to continue a nonconforming use is terminated by:
    a. Abandonment
    i. Abandonment occurs only if:
  2. The owner intends to abandon the use and
  3. The use is discontinued for a substantial period
    b. Destruction
    i. Destruction of a structure containing a nonconforming use terminates the right to continue to use, even if the destruction is accidental
108
Q

Variance

A
  1. Variance is a permitted deviation from strict enforcement of a zoning ordinance in an individual case due to special hardship
  2. Permits a particular parcel of land to be used in a way that would otherwise violate the zoning ordinance
109
Q

Types of variance

A
  1. Area variance
  2. Use variance
110
Q

Standard for granting variance

A
  1. Variance may be granted based upon:
    a. Property owner’s hardship, such that the owner’s property cannot be put to a reasonable use under the existing zoning ordinance due to some special characteristics of the property itself that is not generally shared by other parcels in the district and
    b. Impact of the variance on the neighborhood or zoning district, such that the variance will not alter the essential character of the area
  2. Variance will not be granted if:
    a. Owner created the hardship
    b. Hardship is based on the owner’s personal hardship (personal hardship is irrelevant; hardship must be based on use of property)
111
Q

Area variance

A

Area variance allows modification of height, location, setback, size, or similar requirements for a use that is permitted in the zone

112
Q

Use variance

A

Use variance allows a use that would normally be prohibited in the zone

113
Q

Abandonment (nonconforming use)

A

i. Abandonment occurs only if:
1. The owner intends to abandon the use and
2. The use is discontinued for a substantial period

114
Q

Destruction (nonconforming use)

A

Destruction of a structure containing a nonconforming use terminates the right to continue to use, even if the destruction is accidental

115
Q

Elements of fraud and active concealment (duty to disclose)

A

c. Elements
i. False statement or active concealment of material fact made by the seller to buyer
ii. Known to the seller to be false
iii. Made with intent to induce buyer to purchase
iv. Which the buyer justifiably relies on deciding to sign the contract

116
Q

Fraud (duty to disclose)

A
  1. Fraud consists of:
    a. Misrepresentation
    i. No intentional misrepresentation is permitted either oral or written
    b. Active concealment
    i. No active concealment is permitted, even if no oral or written statement (e.g. no painting over large hole in the wall)
117
Q

Part performance (statute of frauds)

A

i. Oral contract for the sale of real property may be enforced if two of the following are satisfied:
1. Buyer takes possession of real property
2. Buyer makes substantial improvements to the real property
3. Buyer makes payment of some or all the purchase price to the seller

118
Q

Estoppel (statute of frauds)

A

i. Oral contract for sale of real property may be enforced if:
1. Buyer substantially changes their position in reliance on an oral promise by seller and
2. Buyer will be substantially injured if specific performance is not granted

119
Q

Prescriptive easements (scope)

A

Prescriptive easements
a. In general, courts do no permit expansion of a prescriptive easement because it is not based on party intent

120
Q

Technological change (scope)

A

Technological change
a. In general, an easement expands to accommodate technological change, such as the development from wagons to trucks or telephone lines to cable TV lines

121
Q

Subdivision of land held in common ownership (scope)

A

Subdivision of dominant land
a. In general, when the dominant land is subdivided, every lot owner in the subdivision is entitled to use any easement appurtenant to the dominant land
b. However, easement cannot unreasonably burden (substantially interfere with) the servient land

122
Q

Third party beneficiaries (scope)

A

Third-party beneficiaries (other than dominant landowner)
a. In general, easement holder cannot use the easement to benefit any other parcel other than the dominant land

S24 (4 decks)

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