REAL ESTATE MBE Flashcards
Five years ago, an investor who owned a vacant lot in a residential area borrowed $25,000 from a friend and gave the friend a note for $25,000 due in five years, secured by a mortgage on the lot. The friend neglected to record the mortgage. The fair market value of the lot was then $25,000.
Three years ago, the investor discovered that the friend had not recorded his mortgage and in consideration of $50,000 conveyed the lot to a buyer. The fair market value of the lot was then $50,000. The buyer knew nothing of the friend’s mortgage. One month thereafter, the friend discovered the sale to the buyer, recorded his $25,000 mortgage, and notified the buyer that he held a $25,000 mortgage on the lot.
Two years ago, the buyer needed funds. Although she told her bank of the mortgage claimed by the investor’s friend, the bank loaned her $15,000, and she gave the bank a note for $15,000 due in two years secured by a mortgage on the lot. The bank promptly recorded the mortgage. At that time, the fair market value of the lot was $75,000.
The recording act of the jurisdiction provides: “No conveyance or mortgage of real property shall be good against subsequent purchasers for value and without notic
Only the bank’s mortgage is an enforceable lien, because the buyer was an innocent purchaser for value.
the recording statute for this jurisdiction is a notice statute, which means a BFP will take free and clear of any mortgages if they bought the property without real or constructive notice. Thus, the friend’s lien will not attach at all.
Question
A testator owned Blackacre, a vacant one-acre tract of land. Five years ago, he executed a deed conveying Blackacre to “the church for the purpose of erecting a church building thereon.” Three years ago, the testator died leaving his son as his sole heir at law. His duly probated will left “all my estate, both real and personal, to my friend.”
The church never constructed a church building on Blackacre and last month the church, for valid consideration, conveyed Blackacre to a developer.
The developer brought an appropriate action to quiet title against the son, the friend, and the church, and joined the appropriate state official. Such official asserted that a charitable trust was created which has not terminated.
In such action, the court should find that title is now in
the developer.
Pay close attention to the language used in the conveyance to the church. The testator’s language did not create a fee simple subject to a condition subsequent (through the use of “but if” or “upon condition that”) or a fee simple determinable (through the use of “while,” “during,” or “until”). Instead, the testator used the language “for the purpose that,” which has no effect on the title, so the church held fee simple absolute. Therefore, after the church transferred title to the developer, the developer held in fee simple.
A woman owned land subject to a mortgage held by a bank. She fell behind in her mortgage loan payments, and the bank properly initiated foreclosure proceedings. The land was sold at a foreclosure sale that resulted in surplus proceeds to which the woman was entitled. Before payment of the surplus proceeds to her, she died testate.
In her duly probated will, which she had executed before granting the mortgage to the bank, the woman specifically devised the land to a charity. The remainder of the woman’s estate was given by the will to her brother, her sole heir.
A dispute has arisen in the administration of the woman’s estate about the foreclosure sale surplus proceeds. The woman’s brother contends that he is now entitled to those proceeds.
Is the brother correct?
Yes, because the foreclosure sale was completed before the woman’s death.
C is correct. A will speaks at the time of the testator’s death. Here, before her death the woman lost her interest in the land due to the foreclosure action. Thus, at the time of the woman’s death, she only had an interest in the surplus proceeds, which was personal property that passed to the brother, who is the woman’s residuary legatee.
A landowner owned Blueacre, a valuable tract of land located in York County. The owner executed a document in the form of a warranty deed of Blueacre, which was regular in all respects except that the only language designating the grantees in each of the granting and habendum clauses was: “The leaders of all the Protestant Churches in York County.” The instrument was acknowledged as required by statute and promptly and properly recorded. The owner told his lawyer, but no one else, that he had made the conveyance as he did because he abhorred sectarianism in the Protestant movement and because he thought that the leaders would devote the asset to lessening sectarianism.
The owner died suddenly and unexpectedly a week later, leaving a will that bequeathed and devised his entire estate to a friend. After probate of the will became final and the administration on the owner’s estate was closed, the friend instituted an appropriate action to quiet title to Blueacre and properly served as defendant each Protestant church situated in the county.
The only evidence introduced consisted of the chain of title under which the owner held, the probated will, the recorded deed, the fact that no person knew about the deed except the owner and his lawyer, and the conversation the owner had with his lawyer described above.
In such action, judgment should be for
the friend, because there is inadequate identification of the grantees in the deed.
A deed must unambiguously identify the land and the parties to transfer title. A grant to “the leaders of all the Protestant Churches in York County” is simply too broad and vague to adequately identify the intended grantees. Therefore, the deed will not transfer title, and the friend will take Blueacre under the will.
A landowner owned Blueacre, a valuable tract of land located in York County. The owner executed a document in the form of a warranty deed of Blueacre, which was regular in all respects except that the only language designating the grantees in each of the granting and habendum clauses was: “The leaders of all the Protestant Churches in York County.” The instrument was acknowledged as required by statute and promptly and properly recorded. The owner told his lawyer, but no one else, that he had made the conveyance as he did because he abhorred sectarianism in the Protestant movement and because he thought that the leaders would devote the asset to lessening sectarianism.
The owner died suddenly and unexpectedly a week later, leaving a will that bequeathed and devised his entire estate to a friend. After probate of the will became final and the administration on the owner’s estate was closed, the friend instituted an appropriate action to quiet title to Blueacre and properly served as defendant each Protestant church situated in the county.
The only evidence introduced consisted of the chain of title under which the owner held, the probated will, the recorded deed, the fact that no person knew about the deed except the owner and his lawyer, and the conversation the owner had with his lawyer described above.
In such action, judgment should be for
the friend, because there is inadequate identification of the grantees in the deed.
A woman entered into a valid written contract to purchase Blackacre, a large tract of land, from its owner for its fair market value of $50,000. The contract was assignable by the woman. The woman duly notified the owner to convey title to the woman and a friend of the woman whom the woman had not seen for many years.
When the woman learned that the friend would have to sign certain documents in connection with the closing, she asked her brother to attend the closing and pretend to be the friend. The woman and her brother attended the closing, and the owner executed an instrument in the proper form of a deed, purporting to convey Blackacre to the woman and the friend, as tenants in common. The brother pretended that he was the friend, and he signed the friend’s name to all the required documents. The woman provided the entire $50,000 consideration for the transaction. The deed was promptly and properly recorded.
Unknown to the woman or her brother, the friend had died several months before the closing. The friend’s will, which was duly probated, devised “All my real estate to my nephew” and the residue of his estate to the woman.
The woman and the nephew have been unable to agree as to the status or disposition of Blackacre. The nephew brought an appropriate action against the owner and the woman to quiet title to an undivided one-half interest in Blackacre.
The court should hold that legal title to Blackacre is vested
C. one-half in the woman and one-half in the owner.
For the assignment to become effective, the assignee must manifest his acceptance under most circumstances.
C is correct. Even though the woman intended the friend to receive half of the title to Blackacre through her assignment, that assignment was not effective. Half of the interest will remain with the owner, and half the interest belongs to the woman, because at the time of the closing the friend was dead, so the interest could not be assigned. The friend could not properly accept the assignment of this land sale contract because he died before manifesting any kind of acceptance.
Eight years ago, a doctor, prior to moving to a distant city, conveyed Blackacre, an isolated farm, to his son by a quitclaim deed. His son paid no consideration. The son, who was 19 years old, without formal education, and without experience in business, took possession of Blackacre and operated the farm but neglected to record his deed. Subsequently, the doctor conveyed Blackacre to a buyer by warranty deed. The buyer, a substantial land and timber promoter, paid valuable consideration for the deed to him. He was unaware of the son’s possession, his quitclaim deed, or his relationship to the doctor. The buyer promptly and properly recorded his deed and began removing timber from the land.
Immediately upon learning of the buyer’s actions, the son recorded his deed and brought an appropriate action to enjoin the buyer from removing the timber and to quiet title. The recording act of the jurisdiction provides:
“No conveyance or mortgage of real property shall be good against subsequent purchasers for value and without notice unless the same be recorded according to law.”
In this action, the buyer should
C - lose, because the son’s possession charged the buyer with notice.
The recording statute identified in the facts is a notice act. In this case, the facts state that the buyer was “unaware of the son’s possession.” The buyer, however, is charged with inquiry notice by virtue of the fact that the son’s possession and use of the land were open and notorious
A grantor executed an instrument in the proper form of a warranty deed purporting to convey a tract of land to his church. The granting clause of the instrument ran to the church “and its successors forever, so long as the premises are used for church purposes.” The church took possession of the land and used it as its site of worship for many years. Subsequently, the church decided to relocate and entered into a valid written contract to sell the land to a buyer for a substantial price. The buyer wanted to use the land as a site for business activities and objected to the church’s title. The contract contained no provision relating to the quality of title the church was bound to convey. There is no applicable statute. When the buyer refused to close, the church sued the buyer for specific performance and properly joined the grantor as a party.
Is the church likely to prevail?
A: No, because the grantor’s interest prevents the church’s title from being marketable.
The church holds title to the land by a warranty deed that conveyed a fee simple determinable. The possibility of reverter held in the grantor makes this title unmarketable because a reasonable person would not purchase property with such a limitation attached. The grantor’s future interest in the property (i.e., the possibility of reverter) is enough to make the title unmarketable; If the stated limitation occurs, the fee simple estate terminates automatically and title is forfeited to the holder of the future interest (in this case, the grantor)
The owner of Blackacre in fee simple mortgaged Blackacre to a man to secure a loan of $100,000. The mortgage was promptly and properly recorded. The owner later mortgaged Blackacre to a woman to secure a loan of $50,000. The mortgage was promptly and properly recorded. Subsequently, the owner conveyed Blackacre to a businessman. About a year later, the businessman borrowed $100,000 from an elderly widow and gave her a mortgage on Blackacre to secure repayment of the loan. The elderly widow did not know about the mortgage held by the woman. The understanding between the businessman and the elderly widow was that the businessman would use the $100,000 to pay off the mortgage held by the man and that the elderly widow would, therefore, have a first mortgage on Blackacre. The elderly widow’s mortgage was promptly and properly recorded. The businessman paid the $100,000 received from the elderly widow to the man and obtained and recorded a release of the man’s mortgage.
The $50,000 debt secured by the woman’s mortgage was not paid when it was due, and the woman brought an appropriate action to foreclose, joining the owner, the businessman, and the elderly widow as defendants and alleging that the woman’s mortgage was senior to the elderly widow’s mortgage on Blackacre.
If the court rules that the elderly widow’s mortgage is entitled priority over the woman’s mortgage, which of the following determinations are necessary to support that ruling?
D. The man’s mortgage was originally senior to the woman’s mortgage, there are no countervailing equities in favor of the woman, and the elderly widow is entitled to have the man’s mortgage revived for her benefit and be subrogated to the man’s original position as senior mortgagee.
