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Property - MBE Flashcards

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1
Q

Property Law Connect…

A

…Present Estate to the applicable Future Interest (except when absolute ownership is conveyed).

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2
Q

**Fee Simple Absolute - Present Interest

A

A conveyance of ABSOLUTE OWNERSHIP of real property (no conditions placed on it).
- It’s freely devisable, descendible, and alienable.

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3
Q

**Fee Tail - Present Interest

A

A conveyance of real property to a PERSON AND THEIR HEIRS.

 - Abolished in most jurisdictions, is treated as fee simple absolute.
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4
Q

**Fee Simple Defeasible - Present Interest

(3 types) - a conveyance of real property WITH CONDITIONS:

A

(1) Fee Simple Determinable,
(2) Fee Simple Subject to Condition Subsequent,
(3) Fee Simple Subject to Executory Interest.

 - Created with express conditional language
 - Ownership may be terminated upon the occurrence/non-occurrence of 
   an event or condition.
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5
Q

**Fee Simple Determinable - Present Interest

A

Reserves a future interest in the grantor (Possibility of Reverter).

  • Created with words of duration (i.e. so long as, during, while).
  • Conveyance is AUTOMATICALLY terminated if the specific condition occurs.
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6
Q

**Fee Simple Subject to a Condition Subsequent - Present Interest

A

Reserves a future interest in the grantor (RIGHT OF RE-ENTERY)

  • Created when a conveyance is subject to grantor’s right of re-entry if a specific condition occurs.
  • Only terminates if grantor AFFIRMATIVELY EXERCISES his right of re-entry.
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7
Q

**Fee Simple Subject to Executory Interest

A

Reserves a future interest in a THIRD-PARTY (not the grantor or his heirs).

  • Example –> “To person X, so long as (or “but if”) …to person Y.”
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8
Q

**Life Estate - Present Interest

A

A conveyance where the life tenant is entitled to POSSESSION DURING THEIR LIFETIME, and upon death the real property transfers to another party (specified by deed).

 - The life-tenant is responsible for ordinary expenses and taxes for the 
   property during their lifetime.
 - Life-tenant CANNOT commit waste (causing the property to decrease 
   in value).
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9
Q

**Statute of Limitations - Present Interest

A
  • Interest in Fee Simple Determinable/Subject to Condition Subsequent lasts through the applicable statute of limitations (SOL) period.
  • An action for possession may be brought ANYTIME within the SOL period (a set number of years after the action accrued).
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10
Q

**Possibility of Reverter - Future Estates

A

If the condition occurs, grantee’s interest is AUTOMATICALLY TERMINATED and vests in the grantor.

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11
Q

**Right of Re-Entry - Future Estates

A

Upon the occurrence of a specified condition, the grantor MAY RE-ENTER and take the property.

 - The grantor MUST exercise the right to terminate the interest.
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12
Q

**Vested Remainder - Future Estates

A

Is a future interest in land given to an IDENTIFIABLE PERSON WITH NO CONDITIONS.

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13
Q

**Contingent Remainder - Future Estates

A

If a future interest in land conditioned upon the occurrence or non-occurrence of a specific event.

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14
Q

**Life Estate (Remainderman) - Future Estates

A

Upon the life-tenant’s death, ownership of the property transfers to a specified person.

 - Remainderman = person(s) who receive the property upon the life- 
   tenant's death.
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15
Q

**Tenancy in Common

A

The default estate created when land is conveyed to TWO OR MORE PEOPLE UNLESS:
a) Express language states that the parties have a survivorship right (creating a JOINT TENANCY);
OR
b) If conveyed “as husband and wife” (creating a TENANCY BY ENTIRETY).

*Some States–> Tenancy by the Entirety is created by default if the conveyance is to a married couple.

Each owner owns an UNDIVIDED INTEREST in the property, and has the right to use and enjoy the ENTIRE property.
- Interest passes by bequest or intestacy.

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16
Q

**Joint Tenancy : Creation

A 
Created when 4 unities area present --> unit of:
(1) Time,
(2) Title (same instrument),
(3) Interest,
AND
(4) Possession.
  • MUST HAVE A CLEAR EXPRESS INTENT TO CREATE A JOINT TENANCY WITH A RIGHT OF SURVIVORSHIP (i.e. deed states “as joint tenants”, “right of survivorship”).
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17
Q

**Joint Tenancy: Severance

A

When one joint tenant UNILATERALLY transfers his ownership interest in the property, the joint tenancy is severed. Tenants then hold the property as tenants in common.

 - If there are more than two joint tenants, the joint tenancy remains, but only among the other joint tenants.
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18
Q

**If a joint tenant TAKES OUT A MORTGAGE on her interest:

A
  • Title Theory Jurisdiction –> severs joint tenancy

- Lien Theory Jurisdiction –> does not sever

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19
Q

**Rent from Co-Tenant

A

An out-of-possession co-tenant DOES NOT have the right to receive rent UNLESS:
a) otherwise agreed;
OR
b) wrongfully ousted.

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20
Q

**Rent from Third-Party (Co-tenant)

A

Co-tenant is entitled to a fair share of rent received from a third-party.

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21
Q

**Repairs - Co-tenant

A

Co-tenant is entitled to reimbursement for the costs of necessary repairs paid for (UNLESS there was a wrongful ouster).

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22
Q

**Improvements - Cot-tenant

A

Co-tenant is NOT entitled to reimbursement for improvements to the property (UNLESS otherwise agreed).

 - BUT, the improving co-tenant is entitled to the downside risk or upside 
   gain when the property is sold.
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23
Q

***Types of Leasehold Interests

A

A lease grants a tenant the PRESENT POSSESSORY INTEREST in real property for a limited period of time.

3 Types:
(1) TENANCY FOR YEARS - lasts for a FIXED PERIOD OF TIME; automatically terminated after the period ends;
(2) PERIODIC TENANCY - continues for a specific period (weekly/monthly) until terminated by proper notice.
- Is created by: (a) EXPRESS AGREEMENT; (b) IMPLICATION if rent is
paid at specific periods; OR (c) law (when a tenant-for-years remains
after termination of the period OR lease is invalid).
- Termination –> written notice at least a full period in advance (if yearly,
6 months’ notice is required.
(3) Tenancy at Will - continues until either party terminates it, usually
created by express agreement.

  • Termination –> Notice + Reasonable time to quit the premises (in some states, no notice is required).
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24
Q

**Tenant’s Duty to Pay Rent

A

Runs with the land.

IF TENANT REMAINS ON LAND + DOES NOT PAY RENT landlord can:
a) Evict the tenant;
OR
b) Allow the tenant to remain on the property and sue for damages.

IF TENANT ABANDONS THE PROPERTY and does not pay rent, landlord may have to take REASONABLE STEPS TO MITIGATE losses (depends on state law).

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25
Q

**Hold-Over Lease

A

If a tenant holds-over (remains in possession after the lease ends), the landlord may:
a) Initiate eviction proceedings;
OR
b) Hold the tenant over.

When a hold-over occurs, an IMPLIED MONTH-TO-MONTH TENANCY is created with IDENTICAL terms to the original lease.

 - If tenant is informed of a higher rent before the end of the lease, the 
   higher rent applies.

Duration:

  • Modern View –> Month-to-month tenancy is created.
  • Common Law –> term is equal to original tenancy period.
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26
Q

**Implied Warranty of Habitability

A

Landlord MUST provide a place to live that is HABITABLE –> REASONABLY SUITABLE FOR HUMAN NEEDS.

 - Implied in every residential lease.
 - Some courts also impose this warrant in commercial leases (in limited 
   circumstances) .
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27
Q

**If Implied Warranty of Habitability is Breached, tenant may:

A

a) move out and terminate the lease;
b) withhold or reduce the rent;
c) repair the issue and deduct the cost;
OR
d) remain on the premises & sue for damages.

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28
Q

**Constructive Eviction

A

Every lease includes an IMPLIED COVENANT OF QUIET ENJOYMENT that prevents a landlord from interfering with the tenant’s quiet enjoyment and possession of the property.

 - This covenant is breached when a tenant is CONSTRUCTIVELY 
   EVICTED.
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29
Q

**Constructive Eviction occurs when:

A

1) LANDLORD BREACHED A DUTY to tenant;
2) The breach caused a LOSS OF THE SUBSTANTIAL USE AND ENJOYMENT of the premises;
3) Tenant gave landlord NOTICE of the condition;
4) Landlord FAILED TO REMEDY THE CONDITION WITHIN A REASONABLE TIME;
AND
5) Tenant VACATED the premises.

  • If Constructive eviction occurs, tenant may terminate the lease and seek damages.
  • Residential Leases –> Landlord has a duty to (1) repair common areas, and (2) warn of latent defects that create a risk of serious harm that the landlord knows of (or should know of).
  • Commercial Leases –> landlord has NO DUTY to repair.
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30
Q

***Landlord’s Duty to Mitigate Damages

A

Common Law –> NO duty to mitigate damages.
Most States –> Impose a duty to take reasonable steps to mitigate losses (i.e. attempting to lease the property to another).

 - The mitigation DOES NOT need to be successful in order to recover 
   damages.
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31
Q

***Assignment of a Lease

A

When a tenant transfers ALL of his remaining lease interest to a third-party.

  • A lease may be freely assigned UNLESS the lease states otherwise.
  • An assignment CANNOT be for a longer period than the remaining lease term.

Liability for Rent/Breach:
Assignee –> Liable to the landlord for rent and all other covenants that run with the land (privity of estate).
- Assignor (Original Tenant) –> also remains liable for rent (privity of contract).

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32
Q

***Landlord’s Consent for Assignment

A

If the lease requires landlord’s consent, consent MUST BE obtained.

 - Landlord WAIVES the right to enforce a provision prohibiting assignment if he accepts rent from the assignee.

If a lease is silent on the Standard of Consent (a silent consent clause):
- Most States –> landlord may withhold consent for any reason.
- Some States –> landlord MUST have a reasonable basis for
withholding consent.

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33
Q

***Subleases

A

When a tenant (sublessor) transfers ONLY SOME of his remaining lease interest.

  • Tenant may freely sublet UNLESS a provision in the lease states otherwise.
  • A sublease CANNOT be for a longer period than the remaining lease term.

Subleasee is NOT LIABLE to the landlord for rent or other covenants (there is no privity of estate).
- Sublessor (original tenant) remains liable to the landlord for rent (privity
of contract).

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34
Q

***Surrender of a Lease

A

An agreement to end a lease early:

  • Landlord must CLEARLY ACCEPT SURRENDER of the lease (unless other wise agreed).
  • An attempt to end the lease early (such as leaving the keys) DOES NOT constitute a surrender UNLESS landlord clearly accepts.

If landlord:
- ACCEPTS the surrender –> tenant’s duty to pay rent (after the
acceptance) ends.
- DOES NOT accept the surrender –> tenant is deemed to have
abandoned and is liable for damages.

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35
Q

**Real Covenant

A

A non-possessory interest in land that obligates the holder to either do something OR refrain from doing something.
- Remedy = damages.

To enforce the BENEFIT OF A COVENANT, must have:
1) a WRITING satisfying the statute of frauds,
2) INTENT that the covenant runs with the land,
3) VERTICAL PRIVITY - when a successor hold the entire interest held by a predecessor,
AND
4) the covenant TOUCHES AND CONCERNS THE LAND (makes the land more useful or valuable).

To enforce the Burden of a Covenant, must have elements (1)-(4) above, PLUS:
1) HORIZONTAL PRIVITY between the original parties (the two parties shared some interest in the land independent of the covenant),
AND
2) the new owner must of had NOTICE of the covenant.

Notice = ACTUAL (knowledge), CONSTRUCTIVE (covenant is recorded), OR INQUIRY (inspection would reveal it).

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36
Q

**Equitable servitude

A

A covenant that equity will enforce if the burdened estate had notice of the covenant (regardless of whether it runs with the land).
- Remedy = injunctive relief.

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37
Q

**To enforce the Benefit of an Equitable Servitude, must have:

A

1) a WRITING satisfying the statue of frauds,
2) INTENT for the servitude to be enforceable,
AND
3) the servitude TOUCHES AND CONCERNS THE LAND (makes the land more useful or valuable).

To enforce the Burden of Equitable Servitude, must have elements (1)-(3) above, PLUS (4) the new owner must have NOTICE of all the servitude (actual, constructive, or inquiry).

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38
Q

**Common Scheme or Plan Doctrine

A

Courts will imply RECIPROCAL RESTRICTIVE COVENANTS on land parcels in a subdivision sold by a developer ONLY IF:
1) Developer had a COMMON SCHEME OR PLAN that ALL parcels would be subject to the restriction at the time sold;
AND
2) Land owner had NOTICE of the restriction - (a) actual, (b) constructive/record, or (c) inquiry -obvious from looking at the subdivision.

Reciprocal negative servitudes ONLY apply to negative covenants and equitable servitudes.

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39
Q

**Condos, Co-Ops, & HOAs

A

A Common Interest Community (“CIC”) is a development/neighborhood of individually owned lots which have an OBLIGATION TO:
a) PAY FOR/CONTRIBUTE MAINTENANCE of the property held in common;
OR
b) PAY DUES OR ASSESSMENTS TO AN ASSOCIATION that maintains the neighbourhood and/or properties.

*Typical CICs = condos, co-ops, HOAs

Residents and successive owners are subject to recorded obligations (restrictive covenants) that run with the land.

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40
Q

***Easement

A

Is a non-possessory interest in the use of someone’s else’s land.

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41
Q

***Easement in Gross

A
  • Easement in Gross –> Benefits a SPECIFIC OWNER’S enjoyment (DOES NOT pass to subsequent owners, unless easement is for commercial activity).
42
Q

***Easement Appurtenant

A

Benefits ANY OWNER’S enjoyment (Does pass to subsequent owners, if owner had notice).

43
Q

***4 Ways to Create and Easement

A

1) Easement by Grant
2) Easement by Prescription
3) Easement by Implication
4) Easement by Necessity

44
Q

***Easement by Grant

A

Requires:
1) a writing signed by the grantor;
2) Identify the land and parties involved;
AND
3) Indicate grantor’s intent to convey the easement.

*Score = the use agreed upon.

45
Q

***Easement by Prescription

Created when a possessor’s use of the land is:

A

1) Open and Notorious;
2) Continuous;
3) Hostile (without permission from the land owner);
AND
4) for the statutory period (i.e. 10 years).

*Scope = actual usage during statutory period

46
Q

***Easement by Implication

A

Established when:
1) a single tract of land is divided by a common owner;
2) a pre-existing use by the grantor is established prior to the division;
3) continuous and obvious indication that the use was meant to be permanent;
4) the use affects the value of the land conveyed;
AND
5) the use is reasonably necessary for the owner’s use and enjoyment of the land conveyed (important or highly convenient).

*Scope = the prior use.

47
Q

***Easement by Necessity - Created if:

A

1) land owned by one owner is subdivided;
AND
2) the easement (access of land) is essential to the use because no other ingress/egress is available .

*Scope = is limited to remedying the necessity.

48
Q

***Termination of an Easement

A

An easement may be terminated by:
a) Estoppel - when the servient estate owner reasonably relies (or materially changes position) on an assurance that the easement will not be enforced.
b) Termination of the necessity;
c) Involuntary destruction of the servient estate;
d) Condemnation of the servient estate;
e) Written release;
f) Abandonment - a physical action showing an intent to never use the easement again;
g) Merger of the properties (if land is separated again, it DOES NOT revive the easement);
OR
h) Prescription.

49
Q

**License

A

The privilege to use another land in a particular way.

  • Doesn’t need to be in writing.
  • May be REVOKED AT ANY TIME by the licensor, BUT licensor may be estopped from revoking if licensee invested substantial money/labor in reasonable reliance.

*A license is NOT an interest in land.

50
Q

**Profit

A

Gives the holder the right to take natural resources such as petroleum, minerals, timber, and wild game from the land of another.

51
Q

**Fixture

A

Is an ITEM AFFIXED TO THE LAND/DWELLING so that it becomes part of the land.

 - Whether an item is a fixture is determined by OBJECTIVE INTENT.
52
Q

**Determining if a Fixture

A 
Courts consider the:
(1) nature of the item,
(2) way it is attached;
(3) damage that would result if removed,
AND
(4) extent to which the item is adapted to the property.
 - The more item is incorporated into the property, the more likely it's a 
   fixture.
53
Q

**Trade Fixture Exception

A

An item attached for a tenant’s trade or business is NOT a fixture UNLESS removal causes substantial damage to the property.

 - But, the item may become a fixture if it's NOT REMOVED before the 
   end of the lease term.
54
Q

***Adverse Possession

A

Allows a possessor of land to acquire title to that land.

Elements - the possession must be:
1) CONTINUOUS for the statutory period;
2) OPEN AND NOTORIOUS - use that would put a true owner on notice;
3) EXCLUSIVE;
4) ACTUAL - possess the land as a true owner would;
AND
5) HOSTILE AND UNDER A CLAIM OF RIGHT (without the true owner’s consent).

55
Q

***Aggregation/Tacking

A

Adverse possessors in PRIVITY may aggregate their years spent possessing the property to meet the statutory period.

 - Privity --> exists when the land is voluntarily transferred to another (i.e. 
   deed or bequest).
56
Q

***Title Acquired

A

Is the same title that the original owner possessed.

57
Q

***Constructive Adverse Possession

A

If a person takes possession of a portion of land under color of title (invalid deed), the adverse POSSESSION EXTENDS TO THE ENTIRE PORTION OF LAND described in the deed/title.

58
Q

**Land Sale Contract Requirements - To be valid, the contract MUST:

A

1) Be in writing (satisfy the Statute of Frauds);
2) Describe the property;
3) Identify the parties;
4) Contain the purchase price;
AND
5) Be signed by the grantor/grantee (depending on whom the contract is being enforce against).

59
Q

**Merger Doctrine

A

Once the deed is delivered & accepted, the land sale contract MERGES WITH THE DEED
- Result is that rights to sue under the contract are EXTINGUISHED, and a buyer may only sue upon the deed.

  • Some Courts –> will NOT apply the merger doctrine if it doesn’t carry out the PROBABLE INTENT of the parties.
    • Examples: mutual mistake, scrivener’s error.
60
Q

**Warrant of Marketable Title

A

The Seller has the duty to convey marketable title to a buyer.
- Marketable Title = title must be free from any cloud and not subject to any adverse claim.

61
Q

**Title is Unmarketable if the property has a…

A

…substantial defect, such as:
a) Defect in the record chain of title;
AND/OR
b) Encumbrances –> mortgages, liens, restrictive covenants, easements, a claim of adverse possession, or zoning violations.

*Zoning restrictions DO NOT make title unmarketable.

If seller CANNOT convey marketable title at closing, the buyer may withdraw without penalty.
- A buyer MAY waive the defect. If the buyer waives, seller cannot
cancel the contract.

62
Q

**Damages for Breach of Warranty of Marketable Title

A
  • Measured by the REDUCED VALUE OF LAND.
    • Courts are divided on whether damages are recoverable if the
      encumbrance is KNOWN OR OBVIOUS (when actual, constructive, or
      inquiry notice exists).
63
Q

**Doctrine of Equitable Conversion

A

Splits ownership between the buyer and seller once the land sale contract is signed.

  • Buyer –> has EQUITABLE TITLE of the property.
  • Seller –> has LEGAL TITLE, and holds the property in trust for the buyer.
64
Q

**Risk of Loss

A

-Most States –> Risk of loss transfers to the buyer upon signing the contract.

Minority States –> Seller bears the risk of loss UNLESS buyer has possession or title to the property at the time of loss.

65
Q

**Time for Performance

A

Even though a land sale contract may specify a closing date, the time for performance MAY BE CHANGED if requested by one of the parties.

EXCEPTION –> If the contract contains a “TIME IS OF THE ESSENCE” CLAUSE.

 - If buyer fails to perform on the closing date, it's deemed a MATERIAL BREACH and the seller may keep the down payment as liquidated damages.
66
Q

**Action for Specific Performance

A

Real property is deemed unique, and specific performance is an appropriate remedy.
- EXCEPTION –> when the property has been sold to a Bona Fide Purchaser without notice.

67
Q

***Home Builder’s Implied Warranty

A

Protects buyers of newly built homes against LATENT DEFECTS AND warrants the home is SAFE AND FIT FOR HUMAN HABITATION at the time of sale.

 - LATENT DEFECT = a defect that could NOT have been discovered by a reasonable inspection.
68
Q

***Breach

A

Allows a buyer to recover damages discovered within a reasonable time for:
a) Defective construction;
OR
b) Construction not performed in a workmanlike manner (the accepted norms of the industry).

69
Q

***Subsequent Purchasers

A
  • Some States –> requires privity of contract with the home builder.
  • Other States –> warranty applies because a subsequent buyer is in the same vulnerable position.
70
Q

**Deed Requirements

A

A valid deed MUST:
1) be in writing;
2) signed by the grantor;
3) identify the parties (grantor & grantee);
4) describe the property;
AND
5) indicate the grantor’s intent to convey the land.

71
Q

**Grantor’s Intent to Convey Land

A

Any words indicating grantor’s intent to IMMEDIATELY CONVEY the land are sufficient (i.e. grant, convey, give, transfer)
- BUT, intent will NOT BE FOUND IF:
(a) grantor expressly reserves the right to revoke the deed;
OR
(b) gives an instruction to only deliver the deed upon grantor’s death.

When a DEED IS UNCONDITIONAL ON ITS FACE and given to the grantee, any additional ORAL CONDITIONS ARE NOT VALID.
- BUT, if same deed is given to a third-party (i.e. to be held in escrow), the additional conditions create a CONDITIONAL DELIVERY.

72
Q

***General Warranty Deed

A

Contains 6 covenants of title:

Present Covenants: (only breached at the time of conveyance):

1) SEISIN - rightful owner;
2) RIGHT TO CONVEY; and
3) COVENANT against encumbrances.

Future Covenants:
1) WARRANTY - to defend against any third-party claims to title;
2) QUIET ENJOYMENT - to not be bothered by a third-party’s claim to title;
AND
3) FUTURE ASSURANCES - to do whatever is reasonable to perfect title.

73
Q

***Enforcement of Present Covenants

A
  • Common Law –> present covenants are NOT enforceable by REMOTE GRANTEES.
  • Some States –> will enforce the covenant against encumbrances if the remote grantee DID NOT have notice of the encumbrance.
74
Q

***Special Warranty Deed

A

Warrants that seller has not breached the covenants of title DURING THE OWNERSHIP:
1) Seller has not previously conveyed the property
AND
2) No encumbrances against title made by seller.

75
Q

***Quitclaim Deed

A

Is an “as is” deed, contains NO warranties/covenants.

- The grantor is NOT LIABLE for any encumbrances or defects in title.

76
Q

**Estoppel by Deed

A

If grantor conveys title to real property BEFORE he owns it, the title will AUTOMATICALLY VEST IN THE GRANTEE as soon as grantor acquires title.

77
Q

***Chain of Title

A

Shows all transfers for. piece of land

- 2 indexes –> one organized by names of GRANTORS, and one organized by names of GRANTEES.

78
Q

***Will Deed

A

A deed NOT recorded properly, and thus not discoverable in the chain of title.

 - A Wild deed DOES NOT put subsequent purchasers on constructive notice of a land transfer.
79
Q

**Recording Statutes & Notice - 3 types

A
  • Notice Statute Jurisdiction –> a subsequent bona fide purchaser (no notice + pays value) will prevail over a prior grantee that failed to record.
  • Race Statute Jurisdiction –> whomever records first prevails (notice is irrelevant).
  • Race-Notice Statute Jurisdiction –> a subsequent bona fide purchaser (no notice + pays value) is protected ONLY IF he records before the prior guarantee.
80
Q

**Notice

A

(a) actual notice;
(b) constructive (record) notice;
OR
(c) inquiry notice (notice of what a reasonable inspection of land would provide).

81
Q

***Bona Fide Purchasers (BFP) - is a person who:

A

(1) takes real property WITHOUT NOTICE of a prior conveyances;
AND
(2) PAYS VALUABLE CONSIDERATION.

*A person who receives land by gift (a donee) or by bequest (heir, devisee) is NOT a Bona Fide Purchaser.

82
Q

***Shelter Rule

A

A person who purchases land from a BFP receives the SAME STATUS AND RIGHTS as the BFP.

83
Q

**Mortgage Requirements

A 
To be valid, the mortgage MUST:
1) be in writing,
2) be signed by the party to be charged,
AND
3) reasonably identify the parties and the land.
84
Q

**Purchase Money Mortgages

A

Used by the buyer (the borrower) to purchase real property, and the seller is the lender who secures the mortgage on the property.
- The holder has PRIORITY over ALL other junior and senior mortgages.

85
Q

***Future-Advance Morgage

A

Is a loan by which the lender may provide future payments under the original loan.

 - Lender secures the mortgage for the ENTIRE amount the loan, INCLUDED FUTURE ADVANCES.
86
Q

***Obligatory vs. Optional Future Payments

A
  • Obligatory –> lender has a DUTY to advance funds regardless of the situation (no discretion).
  • Optional –> lender has DISCRETION whether to make future advances.
87
Q

***Priority Over Other Creditors

A
  • Future payments are OBLIGATORY –> ALL payments are part of the original loan and have priority over later liens.
  • Future payments are OPTIONAL –> the future payment(s) DO NOT have priority over liens recorded BEFORE the payment is made.
88
Q

**Deed of Trust

A

Similar to a mortgage, but involves 3 parties:

1) Borrrower (the purchaser of the property);
2) Lender, and
3) Third-party Trustee who holds title to the property until the loan is pid off.

*Title is transferred to the purchaser once the loan is paid.

89
Q

**Express Mortgage Assumption

A
  • Occurs if there is an EXPRESS AGREEMENT for grantee to:
    1) take the real property,
    AND
    2) continue making mortgage payments.
90
Q

**Implied Mortgage Assumption

only allowed in a few states

A

Occurs if:
1) no express agreement exists;
2) grantee/buyer pays seller only the equity in the home;
AND
3) grantee continues to make payments to the lender on the balance of the mortgage.

  • If buyer “assumes” the mortgage he is PRIMARILY AND PERSONALLY LIABLE ON THE MORTGAGE.
    • Seller remains secondarily liable.
91
Q

**Transfer Subject to a Mortgage

A

If a buyer takes real property SUBJECT to a seller’s mortgage, he is NOT PERSONALLY LIABLE on the mortgage.

 - BUT, a duly recorded mortgage remains on the land, and mortgagee (lender) may foreclose on the mortgage.
92
Q

**Foreclosure

A 
It extinguishes (destroys) all JUNIOR MORTGAGES).
     - All senior (prior recorded) mortgages are NOT affected.
93
Q

**Order of Preference

A

Proceeds from a foreclosure sale are used to pay off debts in this order:

1) Attorney fees and expenses associated with the sale.
2) Debts owed to mortgagee (the lender)
3) Any amount leftover goes to the mortgagor (debtor).

94
Q

**Deficiency Judgment

A

Mortgagee (lender) may seek a deficiency judgment against the debtor if the PROCEEDS ARE INSUFFICIENT to satisfy the mortgage debt.

95
Q

**Transfer of a Mortgage Note

A
  • Some States –> require that the mortgage note BE ASSIGNED along with the mortgage.
  • Other States –> the note AUTOMATICALLY FOLLOWS THE MORTGAGE when it’s properly assigned (even without notice to the mortgagor).

A mortgagor is NOT liable to an assignee of the mortgage note (for any payments made to the assignor if:
1) Mortgagor pays assignor,
AND
2) never received notice of assignment.

96
Q

**Zoning Ordinances & Laws

land-use regulations

A

are ALLOWED when it REASONABLY PROTECTS THE HEALTH, SAFETY, MORALS, OR GENERAL WELFARE of the community.

97
Q

**Variance

A 
Is an exception to a zoning ordinance.
Two types:
(i) use variance, 
AND
(II) area variance.
98
Q

**A variance application may be granted if:

A

1) Property owner shows he will SUFFER HARDSHIP because of the ordinance;
AND
2) Variance will NOT DAMAGE OR HARM THE PUBLIC WELFARE.

99
Q

**Previous Non-Conforming Use

A
  • Allows a landowner to continue to use his land in violation of a LATER ENACTED zoning law.
    • If the prior use was ORIGINALLY LEGAL, a subsequent zoning law will
      NOT bar the continued use.

*The non-conforming use MUST be continuous, otherwise it’s no longer protected.

Changes to a Non-Conforming Use Property:
- Insubstantial changes and reasonable alterations to repair
the property –> PERMITTED
- Substantial changes that enlarge, alter, or extend the non-conforming use –> NOT ALLOWED.

100
Q

**Conflict of Laws for Real Property Cases

A

Apply the State law WHERE REAL PROPERTY AT ISSUE IS LOCATED (THE SITUS RULE) for cases involving the title/sale of real property.
- Rest. 2nd Approach –> it is PRESUMED that the situs State has the
MOST SIGNIFICANT RELATIONSHIP.
- Rest. 1st Approach –> apply State law where the real property is
located (situs rule).
- Interest Analysis Approach –> the State law where the real property is
located will generally govern UNLESS another State has a greater
interest in having its laws applied.

  • If the LAND IS MERELY INCIDENTAL to a contract (i.e. brokerage contract, mortgage agreement), then apply the choice of law rules for CONTRACTS.

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