Property Rule Language

Question 1

Equitable Conversion Doctrine

Answer 1

“Under equitable conversion, as soon as the contract is signed (but before closing), the buyer’s interest is real property (the land he contracted to buy) and the seller’s interest is personal property (many he will get from the sale).”

“Thus, the risk of loss remains on the buyer under equitable conversion, even if the seller remains in possession and control of the land.”

“Under the doctrine, once a contract is signed and each party is entitled to specific performance, equity regards the purchaser as the owner of the real property and the seller’s right to the proceeds of sale as personal property.”

Question 2

Validity of a Deed

Answer 2

“For a deed to be valid, it must
(i) identify the buyer and the seller,
(ii) sufficiently describe the land,
(iii) contain words denoting a present intent to convey, and
(iv) be signed by the grantor.”

It must also be delivered. Delivery is a question of intent to pass title presently.

Question 3

Quitclaim Deed

Answer 3

“This is a deed where the grantor gives no covenants (promises noting) and the grantee gets whatever the grantor has.”

“The grantee takes the land subject to a defect in the title, an undisclosed easement, or other problem, and has no recourse.”

Question 4

Warranty Deed

Answer 4

“In a warranty deed, the grant gives six covenants–three present and three future–to the grantee.

Question 5

Covenants contained in a warranty deed (both present and future)

Answer 5

Present:
1. Right to convey
2. Seisen
3. No Encumbrances

Future:
1. Further assurances
2. Quiet enjoyment
3. Warranty

NOTE: Under common law, remote grantees can sue only under future (not present) covenants. HOWEVER, note in your answer that some jurisdictions do NOT follow the common law rule.

Question 6

Covenant Against Encumbrances/Running with the land

Answer 6

The covenant against encumbrances assures that there are neither visible encumbrances (easements, servitudes, etc.) nor invisible encumbrances (mortgages, liens, etc.) against the title or interest conveyed.

This is a PRESENT covenant and is breached, if at all, at the time of conveyance.

If a covenant for title can be enforced against the covenantor by a transferee of the covenantee, it is said to “run with the land.”

EXAM TIP: The majority rules is that present covenants do NOT run with the land and cannot be enforced by remote grantees.

   -In jurisdictions that do not follow the majority rule, a remote grantee may sue on the covenant against encumbrances unless the grantee had notice of the encumbrance.

Question 7

Doctrine of Merger

Answer 7

“The doctrine of merger holds that, on the closing date, the contract for sale merges into the deed, so at that point, the buyer can only sue on the DEED–not the contract.”

Question 8

Breach on the Implied Warranty of Fitness and Habitability

Answer 8

“A builder of new homes impliedly warrants to the buyer that the home is habitable and fit for its intended purposes.”

“This warranty applies to defects that are discovered within a reasonable time and are due to the builders negligence or failure to do work in a workmanlike manner.”

Question 9

Common Law rule for first in time, first in right (Language for recording statute questions)

Answer 9

“Under common law, a grantor can convey only those rights that the grantor had at the time of the conveyance.”

“Thus, common law follows the first in time, first in right principle.”

“However, all states have recording statutes that change the results of the common law principle.”

Question 10

Notice Statutes

Answer 10

“Notice statues protect subsequent bona fide purchasers for value who take without notice of the earlier transaction.”

Question 11

Bona Fide Purchaser (definition)

Answer 11

“A bona fide purchaser is a purchaser who takes for value consideration and without notice of a prior coma at the time of the conveyance.”

Question 12

Race-Notice Statutes

Answer 12

“Race notice statutes protect subsequent bona fide purchasers for value who take without notice and are the first to record.”

Question 13

Pure Race Statutes

Answer 13

“Pure race statutes protect subsequent purchasers who are first to record.”

Question 14

Three types of notice (for recording statutes)

Answer 14

AIR
1. Actual: the grantee actually knows about the conveyance.

2. Inquiry: examination of the land or reference in an instrument would lead a reasonable person to inquire.
3. Record: The interest is recorded in the chain of title. Deeds that are recorded too late or too early are wild dads. Wild deeds do not give notice.

Question 15

Liability on a mortgage when title to the property is transferred

Answer 15

“A mortgagor (homeowner) can transfer title to the property. However, the mortgage will remain on the property and the mortgagor is still personally liable on the note. Generally, a new transferee who takes the land ‘subject to’ the mortgage is not personally liable.”

“However, if the transferee ‘assumes’ the mortgage, he is personally liable along with the original mortgagor.”

Question 16

Novation (for mortgages)

Answer 16

“A novation occurs if the initial mortgagor, the new transferee, and the mortgagee all agree that the mortgagor is no longer liable and the transferee assumes all of the mortgagor’s duties.”

Question 17

Term for Years Lease

Answer 17

“A term for years lease specifies both a beginning date and an end date.”

Question 18

Periodic tenancy

Answer 18

“A periodic tenancy has no fixed end date. It simply repeats until one party gives valid notice to the other. It can be created by an express agreement, implication, or operation of law.”

“Valid notice is required to terminate a periodic tenancy.”

Question 19

Assignment (of lease)

Answer 19

“If the lease does not prohibit an assignment or sublease, a tenant can assign or sublease her interest in the lease.”

Question 20

“Eviction vs. The implied warranty of habitability

Answer 20

“A tenant can sue for constructive eviction (commercial or residential) if the tenant can prove that the landlord breached a duty to the Tennant and this breach caused a loss of substantial use and enjoyment of the premises, and the tenant vacated the premises within a reasonable time after giving the landlord adequate notice.”

“This is different than the implied warranty of habitability which is breached only in a residential lease if the premises are uninhabitable. If this occurs, the tenant has several remedies including vacating the premises, suing for damages, offsetting damages, etc.”

Question 21

Duties of a Tenant

Answer 21

The Tenant must pay rent. if the tenant does not pay rent but has abandoned the property, the landlord can sue the tenant for damages or treat it as a surrender (the latter excuses future rent obligations).

Question 22

Duty to Mitigate

Answer 22

Under common law, the landlord has no duty to mitigate damages. Many states have abandoned this approach and require that the landlord make a reasonable effort to mitigate damages.

Question 23

The Fair Housing Act

Answer 23

“This act disallows discrimination in housing sales or rentals off the basis of race, color, religion, sex, familial status, or national origin (but not occupation.”

“The act does not apply if the owner occupies one of the units in a multiple-unit dwelling containing NO MORE than 4 units occupied by persons ‘living independently of each other.’”

“However, an owner nay NOT place discriminatory advertisement. If such advertisement is made, the owner and publisher will have violated the act.”

Question 24

Easement Creation

Answer 24

“Easements can be created expressly, impliedly (by prior use or necessity), or by prescription.”

Question 25

Termination of Easements

Answer 25

“Easements may be terminated in a variety of ways such as by their express terms, written release, merger of the dominant and servant tenements, prescription, estoppel, condemnation, or abandonment.”

“For abandonment, mere nonuse of the easement is not sufficient to abandon it. There MUST be an act of abandonment.”

Question 26

Creation of a Joint Tenancy

Answer 26

“At common law, a conveyance to two or more persons at the same time, by the same instrument, of the same interests, giving them identical rights to possession of the property created a joint tenancy.”

“A joint tenancy requires the four unities (TTIP), time, title, interest, and possession.”

“Most states also require using language ‘joint tenancy’ and adding an express reference to ‘survivorship’ or ‘survivors’ to create a joint tenancy.”

Question 27

Right of Survivorship

Answer 27

“The right of survivorship guarantees that when one joint tenant dies, the property is freed from her concurrent interest, so that the survivors retain an undivided right in the property no longer subject to the deceased co tenant’s interest.”

Question 28

Severance of a Joint Tenancy

Answer 28

“A joint tenancy can be severed in one of four ways (G-SAM): by giving it away during life, by signing a contract for sale, by an actual judicial sale by a judgment lien creditor, or by granting a mortgage in a title theory state.”

Question 29

Lien Theory vs. Title Theory

Answer 29

MAJORITY “In states that follow the lien theory, a mortgage is regarded as a lien on title, and one joint tenant’s execution of a mortgage on her interest DOES NOT by itself cause a severance of the joint tenancy. Rather, a severance occurs only if the mortgage is foreclosed and the property is sold.”

MINORITY: “In states that follow the title theory, a mortgage is regarded as a transfer of title, which destroys the unity of title and severs the joint tenancy.”

Question 30

Requirements/Elements of Adverse Possession

Answer 30

OCEAH:
Open and notorious
Continuous (through the statutory period)
Exclusive
Actual
Hostile

Question 31

Exclusive Possession (definition)

Answer 31

“Exclusive possession generally means not sharing possession with the true owner or the general public.”

Question 32

Open and Notorious (definition)

Answer 32

“Possession is open and notorious when it is such as the usual owner would make of the land and is sufficient to put the true owner on notice of the fact of possession.”

Question 33

Hostile definition

Answer 33

“Possession is hostile when it is without the owner’s consent; it does not matter whether the possessor believes he is on his own land or knows he is trespassing on someone else’s land.”

Question 34

Continuous definition

Answer 34

“Continuous possession is possession that the average owner would make of the property under the circumstances.”

Question 35

Tacking (Adverse Possession)

Answer 35

“IN some circumstances, an adverse possessor may tack on the time that a prior adverse possessor had possessed the land to his own time to reach the statutory period.”

Question 36

Failure to record an interest acquired by adverse possession

Answer 36

“The adverse possessor will prevail over a subsequent bona fide purchaser who compels with the recording act because there is no document that the interest holder could record.”

Question 37

Creation of a fee simple subject to a condition subsequent

Answer 37

“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 pot 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.”

Question 38

Language creating a FSSCS

Answer 38

“Provided that”
“But if”
“If it happens that”

Question 39

Creation of Fee Simple Determinable (Def and creation)

Answer 39

“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.”

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

Question 40

Future interests passing (language)

Answer 40

“Future interests pass at death or by will or inheritance unless subject to an express of implied contingency of survival.”

Question 41

Doctrine of Constructive Eviction (Elements) 3 “CUV”

Answer 41

A tenant cannot claim a constructive eviction unless:
1. the injurious acts were caused by the landlord,
2. the premises are uninhabitable, and
3. the tenant vacates the premises within a reasonable time.

Question 42

The benefit of an equitable servitude runs to successors if:

Answer 42

1. the original parties so intended,
2. the servitude touches and concerns the land
3. the subsequent purchaser has actual or constructive notice of the covenant.

Question 43

What follows a fee simple determinable

Answer 43

Possibility of reverter

Question 44

What follows a FSSCS

Answer 44

Right of reentry

Question 45

What follows a fee simple

Answer 45

Possibility of reverter

Question 46

What follows a fee simple subject to an executory limitation

Answer 46

An executory interest (by a third party)

Question 47

Fee Simple Determinable Phrases (4)

Answer 47

-For so long as
-While
-During
-Until

Question 48

Fee simple subject to condition subsequent phrases (4)

Answer 48

-on condition that
-provided that
-however if
-but if

Question 49

Fee Simple Absolute

Answer 49

“Fee Simple Absolute” is an estate in real property, by which the owner has the greatest power over the title, which it is possible to have, being an absolute estate. In modern use, it expressly establishes the title of real property in the owner, without limitation or end.

Question 50

Rule Against Perpetuities (Language)

Answer 50

“Pursuant to the RAP, no interest in property is valid unless it must vest, if at all, not later than 21 years after one or more lives in being at the creation of the interest.”

Question 51

What is a remainder?

Answer 51

“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.”