Property review Flashcards
Life tenant’s duties
A life tenant has the duty to pay ordinary taxes on the property, but only to the extent they receive a financial benefit from it
If they live there, financial benefit = fair market rental value
If they don’t live there, financial benefit = income derived from the land
What happens if LT didn’t pay taxes and property passes to a remainderman
If the LT doesn’t pay taxes, the remainder holder may pay them in order to protect their interest, but is NOT required to do so
If the remainderman pays taxes, they can then sue the LT for what they paid, not to exceed the value of the financial benefit the LT received from the property
Fee simple subject to an executory interest
A FSSEI is a present estate limited by durational or conditional language. When the condition occurs, title automatically passes to a third party who holds the future executory interest
Effect of assigning a lease
When the tenant assigns the lease, the original tenant retains privity of contract and remains liable for all covenants in the lease (e.g., rent) and the assignee gains privity of estate and is liable to landlord for rent and any other covenants that run with the lease
This means original tenant and assignee may be jointly and severally liable for landlord’s entire harm arising from breach of lease
Merger doctrine
Under the merger doctrine, any obligations contained in the land sale contract merge into the deed and are extinguished upon closing
These obligations are only enforceable if they are contained in the deed
Present covenants of title
Seisin
Right to convey
Against encumberances
Covenant of seisin
Grantor owns interest being conveyed
Covenant of the right to convey
Grantor has legal right to convey interest
Covenant against encumbrances
No encumbrances against interest conveyed (easements, mortgages, etc.)
Covenant of warranty
Grantor will defend and compensate grantee for lawful claims made against grantee’s title
Covenant of quiet enjoyment
Grantee’s possession and enjoyment will not be disturbed by another’s lawful claim of title
Warranty of future assurances
Grantor will take any actions reasonably necessary to perfect grantee’s title
Implied covenant of marketable title
Unless otherwise stated, an implied covenant of marketable title is part of a land sale contract, regardless of the type of deed that is created
Merger doctrine
Any obligations contained in the land sale contract merge into the deed and are extinguished at closing. These obligations are only enforceable if they are contained in the deed.
a violation of a land-sale contract must be raised before/upon closing
Doctrine of equitable conversion
Risk of loss is placed on the party with equitable title at the time the property was destyroyed unless the other party is at fault for the loss
majority rule
Uniform Vendor and Purchaser Risk Act
Seller retains the risk of loss unless and until the buyer takes possession or title is transferred
minority approach
Estoppel by deed
A grantor who conveys an interest in land by warranty deed before actually owning it is esopped from later denying the effectiveness of that deed.
When the grantor acquires ownership of the land, the after-acquired title is transferred automatically to the prior grantee
Shelter rule
A person who receives a property interest from a BFP is entitled to the same protection under the recording act
BFP = innocent purchaser for value
Equitable right of redemption
Allows debtor to retain property and avoid foreclosure by paying the amount currently owed on the loan plus any accrued interest before the foreclosure sale
Statutory right of redemption
This right of redemption arises after a foreclosure sale. A JDX may provide this right by statute to allow additional time for the debtor to reclaim property by compensating the party who purchased the property at the foreclosure sale.
Deed in lieu of foreclosure
Mortgagor conveys all interest in mortgaged property to mortgagee.
Allows the mortgagee to take immediate possession of the property without the formalities of a forelcosure sale.
Effect of deed in lieu of foreclosure on junior interests
The mortgagee takes the property along with any junior interests attached to the property.
Deed in lieu of foreclosure without reserving right to foreclose
If mortgagee accepts a deed in lieu of foreclosure without reserving the right to foreclose, its mortgage is extinguished
Enforceability of express equitable servitudes
Enforceable if:
- writing (satisfies SOF)
- parties intend for it to run (bind their successors in interest)
- touch and concern the land (relates to the use, enjoyment or occupation of the dominant and servient estates)
- notice (person to be bound had actual, record, or inquiry notice)
Vested remainder
not subject to any condition precedent and held by an identifiable living person
contingent remainder
subject to some condition precedent (other than the natural termination of the prior estate) or held by an unknown/unborn person (“to my heirs, but only if they survive my friend)
Vested remainder subject to complete divestment
A vested remainder is subject to complete divestment if the occurrence of a subsequent condition will eliminate the remainder interest
Doctrine of worthier title
Conveyance of a life estate followed by a remainder to the “grantor’s heirs” is treated as creating a reversion in fee simple to the grantor as opposed to a remainder in the grantor’s heirs
minority approach
Vested remainder subject to open
A vested remainder is subject to open when the remainder is granted to a class of persons whose number, identity, and share of the interest are determined in the future
Rule of convenience
Closes class membership once any member of the class is entitled to immediate possession of a share in a class gift.
includes those in gestation upon closing the class
What happens when a deed names a co-T that is void
The grantor retains the nonexistent co-Ts interest and becomes TIC with the other co-Ts named in the deed.
