Property > Simulated MBE

Question 1

Name this type of recording statute: “Any conveyance of an estate in land, other than a lease for less than one year, shall not be valid against any subsequent purchaser for value, without notice, unless the conveyance is recorded.”

Answer 1

A pure notice statute.

Question 2

A pure notice jurisdiction allows subsequent purchasers for value and without notice of a prior conveyance to prevail over the prior transferee regardless of what?

Answer 2

regardless of whether the subsequent purchaser records.

Question 3

In a ______ notice jurisdiction, the “shelter rule” allows a person who takes from a bona fide purchaser to prevail against any interest that the transferor-bona fide purchaser would have prevailed against, even if _____.

Answer 3

pure notice jurisdiction

the transferee had actual knowledge of the prior unrecorded interest.

Question 4

Name this type of recording statute: “No conveyance or mortgage of real property shall be valid against a subsequent purchaser for value and without notice whose conveyance is first recorded.”

Answer 4

A race-notice statute

Question 5

Under a race-notice statute, a bona fide purchaser is protected only if ______

Answer 5

he records before the prior transferee or mortgagee records.

Question 6

Recording statutes apply both to purchases and _______. And thus, _______are treated as “purchasers” under the recording statutes.

Answer 6

mortgages;

mortgagees for value

Question 7

When a life estate ends and goes to the remainderman, do encumbrances attach to it?

Answer 7

Yes, except for taxes owed.

Question 8

What happens if the state decides to take a property with taxes owed and sell it in a tax sale?

Answer 8

All interests in the property are cut off.

Question 9

IF a property subject to a tax sale has a life estate interest, who is responsible to pay taxes? Who is not?

Answer 9

The present life estate interest holder. Not the future interest holder/remainderman.

Question 10

If the life estate holder doesn’t pay taxes, because all interests are cut off in a tax sale, the remaindermen must ______ .

Answer 10

find someone to pay taxes or else there interest will be eliminated.

Question 11

An owner devised his property by will to a friend “so long as one or more dogs are kept on the property; if dogs are no longer kept on the property, then to the American Society for the Prevention of Cruelty to Animals (ASPCA).” The will also provided that the residuary estate would go to the owner’s niece.

Disregarding any RAP analysis, what kind of future interest exists and who holds it?

Answer 11

APSCA holds an executory interest

Question 12

An owner devised his property by will to a friend “so long as one or more dogs are kept on the property; if dogs are no longer kept on the property, then to the American Society for the Prevention of Cruelty to Animals (ASPCA).” The will also provided that the residuary estate would go to the owner’s niece.

The RAP provides that ___________. It applies to executory interests created in third persons but not to reversionary interests of the grantor. Like any other gift, a gift for charitable purposes is void for remoteness if it ____________.

Here, the first gift is to an individual and the “gift over” (a shifting executory interest) is to a charity. Because the triggering event that will transfer the property (no dogs kept on the property) ___________, the interest is stricken under the RAP.

Answer 12

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

is contingent on the happening of an event that may not occur within the perpetuities period.

may occur more than 21 years after lives in being at the creation of the interest,

Question 13

An owner devised his property by will to a friend “so long as one or more dogs are kept on the property; if dogs are no longer kept on the property, then to the American Society for the Prevention of Cruelty to Animals (ASPCA).” The will also provided that the residuary estate would go to the owner’s niece.

If the RAP applies to the ASPCA’s interest, what kind of present interest does the friend have and what kind of future interest now exists, who holds that future interest, and when is the triggering event for that future interest to occur?

Answer 13

The friend will have a fee simple deteriminable and the niece will have a possibility of reverter on the owner’s death.

A FSD is an estate that automatically terminates on the happening of a stated event and goes back to the grantor. The interest that is left in a grantor who conveys a FSD is a possibility of reverter, which arises automatically in the grantor and can be devised by will in almost all jurisdictions.

Here, the friend has a fee simple that is subject to automatic termination if dogs are no longer kept on the property. The APSCA’s interest is stricken because it violates the RAP. This leaves the possibility of reverter in the niece s the owner’s residuary devisee.

Question 14

When does the “Two charities” exception apply?

Answer 14

RAP does not strike a future interest when there is a gift to one charity followed by a “gift over” to another charity upon a possibly remove event

Question 15

Does a RAP apply to Fee Simple Subject to Condition Subsequent?

Answer 15

No. And not fee simple determinable either - in both cases the f.i. is with the grantor

Question 16

When is a fee simple subject to a condition subsequent created?

Answer 16

when the grantor retains the power to terminate the estate of the grantee on the happening of a specified event.

Question 17

On the happening of a state event in a FSSCS, the estate of the grantee continues until the grantor exercises her power of termination (right of entry) by _____ or ______.

Answer 17

bringing suit or making reentry

Question 18

A right of entry is a ________ interest of the transferor, which is not subject to RAP because it is ________.

Answer 18

reversionary

vested

Question 19

Why is the restriction in this conveyance not invalid as a restraint on alienation?

O “to A, provided that no multi-family dwellings may be built on the property for 25 years. If such construction is undertaken, the grantor may terminate the conveyance and retake the land.”

Answer 19

This is a valid conveyance of a defeasible fee simple. Restraints on alienation refer to restrictions in transferring property to others. There was nothing in the conveyance preventing A from transferring his interest to a third party. The restriction on the use of the property was valid as a condition subsequent.

Question 20

The Open Mines doctrine applies only to whom?

Answer 20

life tenants and tenants for years

Question 21

A miner conveyed his land by deed “to my sister, her heirs, and assigns; but if my sister should die without producing issue, then to the American Cancer Society.” At the time of conveyance, the land had a gold mine that was producing a net annual value of $25,000 in gold and had proven reserves valued at $1 million. Shortly after the conveyance, the American Cancer Society brings an action to enjoin the sister from operating the mine.

The court should rule for the sister because ______ and not because ________.

Answer 21

she has a defeasible fee simple

not because of the open mines doctrine

The sister owns a fee simple, albeit subject to a divesting condition subsequent (her dying without having any children). Thus, the sister is entitled to operate the mine on the land, and the ACS can’t prevent her from doing so.

Question 22

A miner conveyed his land by deed “to my sister, her heirs, and assigns; but if my sister should die without producing issue, then to the American Cancer Society.” At the time of conveyance, the land had a gold mine that was producing a net annual value of $25,000 in gold and had proven reserves valued at $1 million. Shortly after the conveyance, the American Cancer Society brings an action to enjoin the sister from operating the mine.

What kind of present possessory interest does the sister have? Why?

Answer 22

A fee simple subject to an executory interest.

Here, according to the language of the miner’s deed, the sister has a fee simple in the land. However, this fee simple is subject to a divesting condition subsequent, in that title will vest in the ACS if the sister dies without having produced issue. The ACS is a transferee whose future interest is not capable of taking on the natural termination of a preceding life estate (i.e., it divests the interest of another). Thus, the interest of the Society is classified as an executory interest, meaning that the sister has a fee simple subject to an executory interest.

Question 23

What is the effect of the sister having a fee simple subject to an executory interest on the open mines doctrine?

Answer 23

Although title will vest to ACS if the sister dies without having produced children, this may never happen. Thus, the sister’s estate is of potentially infinite duration. As a result, the ACS (in whom title may never vest) cannot prevent the sister from operating the mine on the land.

Question 24

Generally, a life tenant may not consume or exploit natural resources on the land unless the land was used in exploitation of such natural resources prior to the grant.

Under the open mines doctrine, what may a tenant do regarding mines on the property? What may the holder of a fee do?

Answer 24

Under the open mines doctrine, the tenant may continue to mine the property, but only using the mines already open.

When the person is not a tenant but instead the holder of a fee, they can continue to mine the property; however they can also open a mine on the land even if it was not in operation when they took the interest.

Question 25

What is the analysis if you see a class gift to decide who is part of the class?

Answer 25

1) Class opens when the property is transferred from the grantor (e.g. if a will, when owner dies; if a trust, pretty much immediately)
2) Class closes when any member of the class has a present possessory interest in the property / becomes entitled to take (e.g. death of a life estate tenant)
3) Anyone not alive or in the womb when the class closes is not in the class

Question 26

A landowner devised her land by will to her husband for life, then “to my grandchildren in fee simple.” When the landowner died, she had one granddaughter. Three months later, a grandson was born. The landowner’s husband died shortly after that. Six months later, a second grandson was born. A year after that, a second granddaughter was born. At this point, who owns the land in fee simple?

Use this class gift analysis:

1) Class opens when the property is transferred from the grantor (e.g. if a will, when owner dies; if a trust, pretty much immediately)
2) Class closes when any member of the class has a present possessory interest in the property / becomes entitled to take (e.g. death of a life estate tenant)
3) Anyone not alive or in the womb when the class closes is not in the class

Answer 26

Granddaughter and BOTH grandsons

1) Class opens when property is transferred from the grantor: When L died (it was a will)
* * Granddaughter was alive when L died - she’s in class

2) Class closes when a member of the class becomes entitled to take: When L’s husband died (end of life estate tenancy).
* * First grandson was alive when husband died

3) Anyone not alive or in the womb when the class closes is not in the class
* * Second grandson was born six months after husband’s death - so IN THE WOMB

Question 27

What is the unborn widow rule?

Answer 27

Because a person’s widow is not determined until his death, it may turn out to be someone who was not in being at the time of the disposition. Thus, a gift to a person that can only occur after the death of a widow (e.g. to “A’s widow for life, then to A’s surviving issue.”) is invalid because A’s widow might be a spouse who was not in being when the interest was created. (e.g. the surviving issue’s interest is void).

Question 28

Watch out for the unborn widow rule when a remainder is to “A’s surviving issue.” However, why would it be different if the remainder is to “A’s children”?

Answer 28

A remainder to “A’s children” would be valid because, unlike issue, they would be determined at A’s death.

Question 29

An elderly landowner executed a will that devised the land to “my widow for life, then to my children for life, then to my grandchildren for life, then to my great-grandchildren for life, then to my first-born great-great-grandchild in fee simple.” When the landowner died, he was survived by his wife, a son and a daughter, five grandchildren, and two great-grandchildren The jurisdiction has a RAP unmodified by statute.

Is the gift to the widow OK under RAP? Why?

Answer 29

Yes. Because at the moment he died, she became a widow, and this was a will that didn’t execute until after his death. Thus, the RAP won’t apply until after he dies either. The unborn widow rule won’t apply because this is a will.

Question 30

An elderly landowner executed a will that devised the land to “my widow for life, then to my children for life, then to my grandchildren for life, then to my great-grandchildren for life, then to my first-born great-great-grandchild in fee simple.” When the landowner died, he was survived by his wife, a son and a daughter, five grandchildren, and two great-grandchildren The jurisdiction has a RAP unmodified by statute.

Is the gift to the children OK under RAP? Why?

Answer 30

Yes. We know at the moment he dies whether or not he has children.

Question 31

An elderly landowner executed a will that devised the land to “my widow for life, then to my children for life, then to my grandchildren for life, then to my great-grandchildren for life, then to my first-born great-great-grandchild in fee simple.” When the landowner died, he was survived by his wife, a son and a daughter, five grandchildren, and two great-grandchildren The jurisdiction has a RAP unmodified by statute.

Is the gift to the grandchildren OK under RAP? Why?

Answer 31

Yes. All of the grandchildren will be ascertained at the deaths of the landowner’s son and daughter (lives in being at the time the will took effect), so their interests will vest within the perpetuities period.

Question 32

An elderly landowner executed a will that devised the land to “my widow for life, then to my children for life, then to my grandchildren for life, then to my great-grandchildren for life, then to my first-born great-great-grandchild in fee simple.” When the landowner died, he was survived by his wife, a son and a daughter, five grandchildren, and two great-grandchildren The jurisdiction has a RAP unmodified by statute.

Is the gift to the great grandchildren OK under RAP? Why?

Answer 32

No, there is a RAP violation. Under the RAP, a disposition to members of a class will be invalid if it is possible that the disposition might vest beyond the prepetuities period with respect to any member of the class. Here, even though there are 2 great-grandchildren alive at the time of the landowner’s death, their interest is void because not every member of that class will be ascertained until the death of the last of the landowner’s grandchildren. And that last grandchild might be born to the son or daughter after the time the disposition took effect (the landowner’s death). All of the persons who were lives in being might die and the surviving grandchild might give birth to a great-grandchild more than 21 years later, violating the Rule. grandchildren will be even upon the death of the five grandchildren.

NOTE: It follows that the subsequent disposition to the first born great-great grandchild is also void because it could vest more than 21 years after a life in being.

Question 33

An elderly landowner executed a will that devised the land to “my widow for life, then to my children for life, then to my grandchildren for life, then to my great-grandchildren for life, then to my first-born great-great-grandchild in fee simple.” When the landowner died, he was survived by his wife, a son and a daughter, five grandchildren, and two great-grandchildren The jurisdiction has a RAP unmodified by statute.

Who gets the reversionary interest if one of these descendents is struck because of RAP?

Answer 33

There is a reversion to the grantor (landowner), that will be left to the residuary beneficiaries of the landowner’s will.

Question 34

A right of first refusal gives its holder the preemptive right to meet any third party’s offer to purchase real estate. What happens if the present interest holder goes ahead and sells the property without giving the right of first refusal holder notice and thus the opportunity to match the offer?

Answer 34

As long as the third party purchaser’s interest is no larger than the the present interest holder’s interest, the holder of the right of first refusal may, upon later knowledge of this improper transfer, enforce this right to pay the purchase price against the purchaser.

Question 35

When is a right of first refusal going to be struck by the RAP?

Answer 35

When it allows heirs or assigns (lives not in being) to seek out the right of first refusal to match offers for the property granted to their descendants.

Question 36

What happens to to a holder’s right of first refusal after the present interest holder dies?

Answer 36

It is eliminated.

Question 37

Reasonable restrictions on commercial transactions; reasonable options and rights of first refusal; and restrictions on assignment and sublease of leaseholds (e.g. requiring landlord’s consent) are

Answer 37

VALID restraints on alienation

Question 38

A landlord entered into a 10 year lease of a building with an auctioneer, who planned to use the building itself for a storage area and the covered porch at the front of the building for auctions. A term in the auctioneer’s lease stated, “Lessor agrees to maintain all structures on the property in good repair.” Four years into the lease the the landlord sold the property to a buyer. The buyer did not agree to perform any obligations under the lease. As instructed, the auctioneer began paying rent to the buyer. In the fifth year of the lease, the porch roof began to leak. Citing the lease terms, the auctioneer asked the buyer to repair the roof. He continually refused to do so. The auctioneer finally repaired the roof at a cost of $2,000. The auctioneer then brought a lawsuit to recover the money.

From who and how much can auctioneer recover the cost of repair from?

Answer 38

The auctioneer may recover the cost of repair from either the landlord or the buyer.

A landlord’s promise in a lease to maintain the property does not terminate because the property is sold. Although no longer in privity of estate, the original landlord and tenant remain in privity of contract, and the original landlord remains liable on the covenant unless there is a novation. A novation substitutes a new party for an original party to the contract. It requires the assent of all parties and completely releases the original party. Because neither the auctioneer nor the buyer has agreed to a novation, the landlord remains liable for the covenant because he and the auctioneer remaine din privity of contract even after the sale. Thus the promise to repair can be enforced against the landlord.

When leased property is sold, the purchaser may be liable for his predecessor’s promise if the promise runs with the land. A covenant in a lease runs with the land if the parties to a lease so intend and the covenant touches and concerns the land. Generally, promises to do a physical act, such as maintain or repair the property, are considered to run with the land. Thus, the buyer is liable because he is in privity of estate with the auctioneer and the covenent ot repair runs with the land. Consequently, both the landlord and the buyer are potentially liable to the auctioneer for the repairs.

While it is true that the sale /assignment to the bueyr did not sever the landlord’s obligation to the auctioneer, the landlord is not the only person who is liable to the auctioneer.

Question 39

A landlord entered into a 10 year lease of a building with an auctioneer, who planned to use the building itself for a storage area and the covered porch at the front of the building for auctions. A term in the auctioneer’s lease stated, “Lessor agrees to maintain all structures on the property in good repair.” Four years into the lease the the landlord sold the property to a buyer. The buyer did not agree to perform any obligations under the lease. As instructed, the auctioneer began paying rent to the buyer. In the fifth year of the lease, the porch roof began to leak. Citing the lease terms, the auctioneer asked the buyer to repair the roof. He continually refused to do so. The auctioneer finally repaired the roof at a cost of $2,000. The auctioneer then brought a lawsuit to recover the money.

How is landlord liable to auctioneer if he sold the property to buyer?
How is buyer liable to auctioneer if he never made the promise?

Answer 39

Landlord is liable because of privity of contract:

• A landlord’s promise in a lease to maintain the property does not terminate because the property is sold.
• Although no longer in privity of estate, the original landlord and tenant remain in privity of contract, and the original landlord remains liable on the covenant unless there is a novation.
• Because neither the auctioneer nor the buyer has agreed to a novation, the landlord remains liable for the covenant because he and the auctioneer remained in privity of contract even after the sale.
• Thus the promise to repair can be enforced against the landlord.

Buyer is liable because: privity of estate + landlord’s covenant ran with the land:

• When leased property is sold, the purchaser may be liable for his predecessor’s promise if the promise runs with the land.
• A covenant in a lease runs with the land if the parties to a lease so intend and the covenant touches and concerns the land.
• Generally, promises to do a physical act, such as maintain or repair the property, are considered to run with the land.
• Thus, the buyer is liable because he is in privity of estate with the auctioneer and the covenant to repair runs with the land.

Consequently, both the landlord and the buyer are potentially liable to the auctioneer for the repairs.

Question 40

What is the only way L could have gotten out of liability in its sale to buyer?

Answer 40

A novation between all 3 parties.

A novation substitutes a new party for an original party to the contract. It requires the assent of all parties and completely releases the original party.