Property Law

Question 1

General Warranty Deed

Answer 1

Gives the grantee six covenants of tile: (1) the right to seisin, (2) the right to convey, (3) a covenant against encumbrances, (4) the covenant of quiet enjoyment, (5) the covenant of further assurances, (6) and a general warrant.

Question 2

Attractive Nuisance Doctrine

Answer 2

A landowner has a duty to exercise ordinary care to avoid reasonably foreseeable risk of harm to children, including trespassing children, caused by artificial conditions on his property.

Question 3

Assignment

Answer 3

After an assignment, the original tenant is no longer in privity of estate with the landlord. The assignee stands in the shoes of the original tenant in a direct relationship with the landlord.

However, a tenant may still be held liable on its original contractual obligations to the landlord on privity of contract grounds. (Unless it is otherwise discharged)

Question 4

Lien Theory

Answer 4

A mortgage of the property by one JT does not, by itself, sever a JT until default and foreclosure proceedings have been completed.

-A lender’s rights will be lost if the borrower dies prior to foreclosure.

Question 5

Title Theory

Answer 5

A mortgage is considered to be an actual transfer of title to the property, rather than just a lien on the property. Thus, a mortgage by a JT transfers the legal title of the JT to the mortgagee (the money lender).

This action destroys the unity of title and thus severe the JT.

Question 6

What happens when a tenant fails to vacate the premises after the termination of his right to possession?

Answer 6

The landlord may: (1) treat the hold-over tenant as a trespasser and evict him, or (2) bind the tenant to a new periodic tenancy. The terms and conditions of the expired tenancy apply to the new tenancy.

In commercial leases, the new tenancy will be a year-to-year if the original lease term was for one year or more.

Question 7

Remainder

Answer 7

A remainder is a future interest created in a transferee that is capable of taking in possession on the natural termination of the preceding estate.

–Note that, as a rule of thumb, remainders always follow life estates.

Question 8

Vested Remainder

Answer 8

A remainder is vested if the beneficiaries are ascertainable and their taking in possession is not subject to a condition precedent.

Question 9

Vested Remainder Subject to Open

Answer 9

A vested remainder created in a class of persons that is certain to take but is subject to diminution by reason of others becoming entitled to take is a vested remainder subject to open.

Question 10

Vested Remainder Subject to Total Divestment

Answer 10

Vested remainders may be subject to total divestment if possession is subject to being defeated by the happening of a condition subsequent.

Question 11

What does it mean for a covenant to run with the land?

Answer 11

When a covenant runs with the land, subsequent owners of the land may enforce or be burdened by the covenant.

If all of the requirements for the burden to run are met, the successor in interest to the burdened estate will be bound by the arrangement as effectively as if he had himself expressly agreed to be bound.

Question 12

What are the requirements for the burden of a covenant to run with the land?

Answer 12

To be bound: (i) the parties must have intended that the covenant run with the land; (ii) the original parties must have been in horizontal privity; (iii) the succeeding party must be in vertical privity with the original promisor; (iv) the covenant must touch and concern the land; and (v) generally, the burdened party must have actual or constructive notice of the covenant.

–Even without express language, use of the words “heirs” and “assigns” would show the intent for the covenant to run.

–The original parties are in horizontal privity if, at the time they entered into the covenant, they shared an interest in the land independent of the covenant—e.g., as grantor and grantee.

–Promises to pay money to be used in a way connected with the land are held to touch and concern the property.

Question 13

When can a successor in interest to the original promisee enforce a covenant (enjoy the benefit)?

Answer 13

A successor in interest to the original promisee may enforce the covenant (enjoy the benefit) if there was intent and vertical privity, and the covenant touches and concerns the land.

–Notice is NOT required for the benefit to run.

Question 14

Conveyance of a Deed

Answer 14

A deed is not effective to transfer an interest in realty unless it has been delivered, and there must be acceptance by the grantee to complete the conveyance.

-Delivery of a deed cannot be canceled, and the subsequent destruction of a deed has no effect on the person’s interest.

Question 15

Contingent Remainder

Answer 15

A remainder will be classified as contingent if its taking is subject to a condition precedent, or it is created in favor of unborn or unascertained persons.

Question 16

What promises by the seller does a contract for the sale of land imply?

Answer 16

Absent a provision to the contrary, a contract for the sale of land contains an implied promise by the seller that she will deliver to the buyer a marketable title at the time of closing. This promise imposes on the seller an obligation to deliver a title that is free from reasonable doubt; i.e., free from questions that might present an unreasonable risk of litigation.

Question 17

When is title marketable?

Answer 17

Title is marketable if a reasonably prudent buyer would accept it in the exercise of ordinary prudence.

–An easement that reduces the value of the property (e.g., an easement of way for the benefit of a neighbor) generally renders title unmarketable.

Question 18

Prior to closing, what can a buyer do if he determines that seller’s title is unmarketable?

Answer 18

If the buyer determines, prior to closing, that the seller’s title is unmarketable, he must notify the seller and allow a reasonable time to cure the defect. If the seller is unable to acquire title before closing, so that title remains unmarketable, the buyer can rescind, sue for damages caused by the breach, or obtain specific performance with an abatement of the purchase price.

–However, the buyer cannot rescind prior to closing on grounds that the seller’s title is unmarketable.

Question 19

Regarding the land conveyed, what is a life tenant entitled to (assume there is a remainder to a third party)?

Answer 19

A life tenant is entitled to all ordinary uses and profits of the land, but he cannot lawfully do any act that would injure the interests of the remainderman. A grantor intends that the life tenant have the general use of the land in a reasonable manner, but that the land pass to the owner of the remainder, as nearly as practicable, unimpaired in its nature, character, and improvements.

Question 20

Under what conditions can a life tenant alter the land (assume there is a remainder)?

Answer 20

A life tenant can substantially alter or even demolish existing buildings if:

(i) the market value of the future interests is not diminished; and either
(ii) the remainderman does not object, or
(iii) a substantial and permanent change in the neighborhood conditions has deprived the property in its current form of reasonable productivity or usefulness.

Question 21

Adverse Possession

Answer 21

If an owner of real property fails to take legal action within the statutory period to eject a possessor who claims adversely to the owner, title to the property vests in the possessor, and the owner is barred from suing for ejectment.

To properly take under this claim, possession must be:

(1) Actual and Exclusive (i.e., the possessor is not sharing with the true owner or the public at large);
(2) Open and Notorious (i.e., such as the usual owner would make of the land and sufficiently apparent to put the true owner on notice that a trespass is occurring);
(3) Hostile (i.e., the possessor must occupy the property and enter without the owner’s permission) (but the possessor need not believe that she has a right to possession);
(4) Continuous (i.e., the possession must be continuous throughout the statutory period).

Question 22

When does the statute of limitations for adverse possession begin to run against an owner with a disability?

Answer 22

The statute of limitations for adverse possession does not begin to run if the owner is under a disability to sue at the time his cause of action accrues (when the claimant begins the adverse possession).

–Thus, a adverse possessor can acquire title if the statute of limitations began to run before the neighbor’s disability arose.

Question 23

Implied Easement

Answer 23

Implied easements typically arise when a parcel is divided and (i) there was an existing use prior to the severance, or (ii) the severance deprives one lot of access to a public road or utility line.

Question 24

Easement in Gross

Answer 24

The holder of an easement in gross has a right to use the servient tenement independent of her ownership or possession of another tract of land.

Question 25

Purchase Money Mortgage (“PMM”)

Answer 25

A PMM is a mortgage 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 operation of the recording acts.

Question 26

Delay in Real Estate Contracts

Answer 26

Generally, courts assume that time is not “of the essence” in real estate contracts. This means that the closing date stated in the contract is not absolutely binding in equity, and that a party, even though late in tendering her own performance, can still enforce the contract if she tenders within a reasonable time after the date.

–Contracts for the sale of land do not require the seller to hold title at the time she enters into the contract. She is only required to have marketable title at the date of closing so that she can deliver it to the buyer.

–A delay of one month after the closing date has been deemed acceptable by courts where the buyer has been delayed in obtaining financing or the seller has been delayed in obtaining marketable title. (a court could find that 2 months is also reasonable)

Question 27

After an assignment of a lease, are the assignee and landlord liable to each other for leases that run with the land?

Answer 27

When a tenant makes a complete transfer of the entire remaining term of his leasehold interest, it constitutes an assignment. The assignee and the landlord are then in privity of estate, and each is liable to the other on all covenants in the lease that run with the land. The covenant runs with the land if the original parties so intend and the covenant “touches and concerns” the leased land, i.e., burdens the landlord and benefits the tenant with respect to their interests in the property.

Question 28

Is a right of first refusal a covenant that can run with the land?

Answer 28

Yes. The right of first refusal burdens the owner’s power of alienation over the land. So if there is nothing to indicate that the parties intended the option to be personal to that particular person with the option right, then it is a covenant that runs w/ the land.

Question 29

What is an easement by necessity? Who has the right to locate it?

Answer 29

An easement by necessity (a form of easement by implication) will be implied when a landowner conveys a portion of their land with no way out except over some part of the grantor’s remaining land.

The owner of the servient parcel has the right to locate the easement, provided the location is reasonably convenient.

Question 30

Executory Interest With No Time Limit Violates RAP

Answer 30

An executory interest that follows a defeasible fee, with no limit on the time within which it must vest (e.g., “to A for so long as no liquor is consumed on the premises, then to B”) violates RAP, and the executory interest is stricken.

–Note: An executory interest following a defeasible fee is valid only if the condition is specific to the fee holder or expressly limited to the perpetuities period.

Steps to Follow:

Step 1: What is the future interest?

Step 2: What has to happen for the future interest holder to take?

Step 3: Find a measuring life. Whose life is relevant to what has to happen for the future interest holder to take?

Step 4: Will we know for sure, within 21 years of the measuring life’s death, if the future interest holder can take?

Question 31

What gives a grantor more control over his property a lease or an easement?

Answer 31

A lease would give the grantee more control over the land than an easement, and would be more complicated to create.

–A lease grants the lessee the exclusive right to possess the premises, and broad rights to use them in any manner, unless specifically restricted. Thus, if the grantor leases the land to the city, he would not have access to the land, and if he wanted it used only for recreational purposes, he would have to specifically restrict any undesired uses. Any restriction not included in the lease will be unenforceable.

–An easement, on the other hand, grants only a limited interest in the land – to use it for only those purposes stated in the easement; thus, it would be better than a lease.

Question 32

The covenant of quiet enjoyment

Answer 32

The covenant of quiet enjoyment is breached when the grantee is evicted by a third party with paramount title, i.e., title or ownership of the estate conveyed that is superior to the grantor’s title.

Question 33

When is the covenant of a right to convey breached?

Answer 33

The covenant of right to convey is breached if the grantor lacks title, i.e., ownership of the estate conveyed, at the time of the grant.

Question 34

What language creates a fee simple determinable?

Answer 34

A fee simple determinable is an estate that automatically terminates on the happening of a stated event and goes back (reverts) to the grantor.

–It is created by the use of durational, adverbial language, such as “for so long as,” “while,” “during,” or “until.” (remember these by “SUD W” = So long as; Until; During; While)

–The grantee takes the land subject to the termination of the estate by the happening of the event.

Question 35

What language creates a fee simple subject to a condition subsequent?

Answer 35

A fee simple subject to a condition subsequent is created when the grantor retains the power to terminate the estate of the grantee upon the happening of a specified event.

Upon the happening of the event stated in the conveyance, the estate of the grantee continues until the grantor exercises his power of termination (right of entry) by bringing suit or making reentry. Generally, the grantor must expressly reserve the right of entry; this retained interest does not automatically arise.

–The following words are usually held to create conditions subsequent: “upon condition that,” “provided that,” “but if,” and “if it happens that.” (Remember this by “BOP U” - But if; On condition that; Provided that; Until)

Question 36

What is the presumption where the terms of a conveyance are ambiguous?

Answer 36

The general policy of courts is to avoid forfeiture of estates. Thus, where the terms of a conveyance are ambiguous, there is a presumption in favor of the fee simple subject to a condition subsequent b/c forfeiture is not automatic.

Question 37

Express or Implied Contingency of Survival for Remaindermen

Answer 37

Future interests can pass at death by will or by inheritance unless an interest’s taking is subject to an express or implied contingency of survival.

For example, the words “my surviving children” impose a condition precedent that the remaindermen survive in order to take.

–Note: Sometimes it may be unclear who the remaindermen must survive (for e.g., the transferor or the life tenant?).

–Unless the language or circumstances establish that the transferor had a different intention, the ambiguity is resolved by construing the word “surviving” as referring to the distribution date. (i.e., the life tenant)

Question 38

Holdover by a Residential Tenant

Answer 38

When a tenant continues in possession after termination of her right to possession, the landlord may bind the tenant to a new periodic tenancy. While the terms and conditions of the expired tenancy generally apply to the new tenancy, if the landlord notifies the tenant before termination that occupancy after the termination date will be at an increased rent, the tenant will be held to have acquiesced to the new terms if she does not surrender. This is so even if the tenant objects to the increased rent, as long as the rent increase is reasonable.

Question 39

Holdover from a Commercial Tenant vs Residential Tenant

Answer 39

In commercial leases, where the original lease term was for a year or more, a year-to-year tenancy results from holding over.

In residential leases, however, most courts would rule that the tenant is a month-to-month tenant, irrespective of the term of the original lease.

Question 40

Title Insurance Policies

Answer 40

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.

–An owner’s 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.

–In contrast, a lender’s policy follows any assignment of the mortgage loan. However, the policy ends when the mortgage loan is paid off.

Question 41

If someone grant you a deed, then demands you give them the deed back and rips it up, what is the effect?

Answer 41

When a deed is delivered, 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.

Question 42

Can a life tenant encumber the remaindermen’s interest in the property via mortgage?

Answer 42

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.