Real Prop Flashcards
What is a freehold?
An estate that is immobile and for indeterminate duration.
What is a fee simple absolute/fee simple? How is it written?
A present estate of absolute ownership of a potentially infinite duration. Freely alienable and no accompanying future interest.
Ex: “To A” or “to A and his heirs”
What is a defeasible fee?
Present estate of a potentially infinite duration, subject to termination by the occurrence of an event. Alienable, devisable, and descendible.
What is a fee simple determinable?
A defeasible fee limited by specific durational language (ex: so long as, while, during, until). It automatically terminates upon happening of a stated event. Wrt future interest, grantor (or his successor in interest) retains possibility of reverter. Full ownership of the property is returned to the grantor (or his successor in interest).
What is a fee simple subject to condition subsequent?
A defeasible fee that is limited by specific conditional language (ex: upon condition that, provided that, but if, if it happens that). Will terminate only if the grantor affirmatively demonstrates intent to terminate. Wrt future interest, grantor reserves right to terminate estate upon happening of a state event. Grantor must specifically retain right to reenter. If it goes to a third party, NOT a fee simple subject to condition subsequent, it’s a fee simple subject to executory interest.
What is a fee simple subject to executory interest/limitation?
A defeasible fee that is limited by specific durational or conditional language. Automatically terminates upon happening of a state event, and title passes to a third party. Wrt future interest, executory interest held by the. third party (i.e., someone other than the grantor).
What is a life estate?
A present possessory estate fully transferable during the measuring life (ex: “for life”). If measured by the grantee’s life, not devisable/descendible.
What are a life tenant’s rights and duties?
Rights: to possess; to collect rents, lease/sell/mortgage
Duties: Life tenants are not necessarily responsible for paying the full amount of taxes assessed on the property. Life tenants have the obligation to pay all ordinary taxes on the land to the extent he receives a financial benefit from the property. When the life tenant occupies the property, his financial benefit is measured by the fair market rental value of the property. Also, obligation not to commit waste.
What is affirmative waste?
When overt conduct causes a decrease in prop value.
Exception: Exploitation of natural resources not waste if i) authorized by grantor, ii) in effect when tenancy began, or iii) necessary to maintain the prop.
Who may bring suit for affirmative waste?
Holder of a vested future interest may bring suit against a life tenant for damages. Holder of any future interest may bring suit against life tenant for an injunction.
What is permissive waste?
When life tenant permits the premises to deteriorate through neglect, failure to preserve, or a failure to reasonably protect the prop. Life tenant must make reasonable repairs up to amount of income produced by the prop or, if in actual possession, the fair rental value.
What is ameliorative waste?
When a change in use of the prop increases its value. Life tenant may alter structures on the prop when a sub and permanent change in the neighborhood makes it necessary in order to continue reasonable use of the prop, so long as the prop value is not diminished.
What is a future interest?
An ownership interest in presently existing prop which may commence in possession or enjoyment sometimes in the future.
What is reversion?
Held by grantor who transfers life estate or estate for years without conveying the remaining future interest to a third party. Not subject to rule against perpetuities. Alienable, devisable, and descendible.
What is a possibility of reverter?
A future interest retained by a grantor when a fee simple determinable is conveyed. Alienable, devisable, and descendible.
What is a right of reentry/right to terminate/right of entry/power of termination?
A future interest retained by a grantor after a fee simple subject to condition subsequent is granted. No inter vivos transfer permitted under common law, but permitted in some states. Devisable and descendible in most states.
What is a remainder?
A future interest that becomes possessory upon the natural expiration of a prior estate that is created in the same conveyance in which the remainder is created. Transferable inter vivos and devisable/descendible.
What is a vested remainder?
One not subject to any conditions precedent. Ascertainable grantee.
What is a class gift?
A group of unspecified persons whose number, ID, and share of the interest is determined in the future.
What is a remainder vested subject to open?
If at least one class member is qualified to take possession at the time of the conveyance (but less than all of them), each class member’s share is subject to partial diminution bc additional takers not yet ascertained can still vest. Once a class closes, any person who might otherwise have become a class member cannot claim an interest in the prop as a class member. Rule of convenience applies.
What is the rule of convenience?
Closes the class when any class member is entitled to immediate possession, to avoid RAP.
What is a remainder vested subject to complete divestment?
the occurrence of a condition subsequent will divest the remainder.
What is a remainder contingent?
Created in an unascertainable grantee or is subject to an express condition precedent to grantee’s taking (bc of unknown beneficiary or known beneficiary subject to condition precedent that has not yet occurred.
Although, at common law, a contingent remainder could not be transferred inter vivos, most jurisdictions today permit such a transfer.
What is survivorship contingency?
Majority: Applies at termination of interest that precedes remainder.
Minority: Requires surviving only testator, not life tenant.
What is an executory interest?
A future interest in a third party (not a remainder) that cuts the prior estate short upon the occurrence of a specified condition. Transferable inter vivos, devisable/descendible, and subject to RAP. Automatically comes into existence; there is no need for the third party to take any action (e.g., an eviction action).
Although at common law an inter vivos transfer of an executory interest was not permitted, today such a transfer is recognized as effective to pass this property interest.
What is a shifting executory interest?
Cuts short a prior estate created in the same conveyance, so the estate shifts from one grantee to another grantee upon the happening of a condition.
What is a springing executory interest?
Divests the grantor’s interest or fills a gap in possession in which the estate reverts to the grantor.
What is the rule against perpetuities?
Specific future interests are valid only if they must vest or fail by the end of a life in being plus 21 years.
What future interests does RAP apply to?
Contingent remainders, vested remainders subject to open, executory interests, powers of appointment, rights of first refusal, and options.
RAP does not apply to a right of first refusal that is granted to a lessee in conjunction with a lease.
What future interests does RAP not apply to?
Those that revert to the grantor (reversion, possibility of reverter, right of reentry).
Requirements for the measuring life (for RAP)
Must be human. There can be more than one. If not specified, then measuring life is the life directly related to the future interest that is subject to RAP.
RAP tests the future interest as of the time that…
it is created.
What is the vest or fail requirement for RAP?
If there is any possibility that it will not be known whether the interest will vest or fail within the applicable period, then RAP has not been satisfied.
What happens if RAP is violated?
Except in rare cases when voiding the future interest undermines the grantor’s intent, only the offending interest fails.
How does RAP apply to class gifts?
Bad as to one, bad as to all: If RAP voids a transfer to any class member, then the transfer is void as to all class members, even those whose interests have already vested. Hence rule of convenience. Exceptions: transfers of a specific dollar amount to each class member; transfers to a subclass that vests at a specific time.
Common RAP violations
1) survival beyond age 21 condition
2) fertile octogenarian
3) unborn spouse
4) defeasible fee followed by executory interest
5) conditional passage of interest
What is a tenancy in common
The default co-tenancy. Two or more grantees with unity of possession. No right of survivorship. Each co-tenant holds undivided interest with unrestricted rights to possess whole. Interest freely devisable/transferable.
What is a joint tenancy and how is it created?
Two or more persons own the prop with right of survivorship. Interest is alienable, but not devisable/descendible.
4 Unities (PITT):
1) Equal rights to Possess the whole
2) With identical and equal Interests
3) Created at the same Time
4) By the same Title
Requires express language creating a joint tenancy.
What does severance do to a joint tenancy?
It converts it into a tenancy in common, but only wrt the severed share.
What happens when there is a sale of a joint tenancy?
Don’t need consent for one. It severs the joint tenancy as to seller, but remains intact for non-transferors.
What happens when there is a mortgage on a joint tenancy?
Severs the joint tenancy under the title theory, but not under the lien theory.
What happens when there is a judicial lien on a joint tenancy?
Typically will not sever the joint tenancy. But severance does occur when the prop is levied and sold.
What is a tenancy by entirety?
4 Unities + unity of person (parties must be married to each other when deed is executed or conveyance occurs). Neither party can alienate or encumber the prop without the consent of the other. It’s recognized in about half of the states. Where recognized, majority presume a conveyance to a married couple creates a tenancy by entirety and that divorce converts it to a tenancy in common.
What are a co-tenant’s rights wrt possessing the prop?
Each co-tenant has the right to possess the entire prop and is generally not required to pay rent when other co-tenants do not use the prop, unless the co-tenant has been ousted.
What are co-tenant’s obligations with regard to third party rents?
Co-tenant is liable to other co-tenants for third party rents, after deducting operating expenses and necessary repairs.
What are a co-tenant’s rights wrt collecting contribution from other co-tenants for operating expenses?
Can do so (like for taxes, for example), but if in sole possession, only if they exceed the rental value of the prop.
What are a co-tenant’s rights wrt expenses for repairs?
Co-tenant can only compel others to share expenses for repairs if i) they are necessary and ii) co-tenant seeks accounting or partition. Co-tenant may maintain a separate action for contribution in some states if notified other co-tenants of need for the repairs.
What are a co-tenant’s rights wrt reimbursement for improvements?
No right to reimbursement for improvements except in contribution /partition.
What are a co-tenant’s duties to other co-tenants?
Duty of fair dealing, but no fiduciary duty. Exception: a co-tenant buys the prop at a tax or foreclosure sale; the other co-tenants can buy back their interests within a reasonable time.
Although co-tenants owe a duty of fair dealing to each other, co-tenants generally do not owe fiduciary duties to each other. However, a fiduciary obligation can be imposed on co-tenants who jointly purchase the property in reliance on each other or acquire their interests at the same time from a common source, such as by gift, will, or inheritance. Typically, these co-tenants will be related or in a confidential relationship. The primary situation in which such a co-tenant is found to have a fiduciary obligation arises when the property is sold at a tax or mortgage foreclosure sale and a co-tenant acquires the property. In such a situation, the other co-tenants have the right to reacquire their original interests by paying their due contributions within a reasonable time.
What are the rules around partition?
A tenancy in common or joint tenancy, but not a tenancy by entirety, generally has the right to unilaterally partition prop. A partition in kind–a physical division of the prop–is preferred by courts.
What does the FHA do?
Prohibits discrim in renting/selling, terms, refusing financing, etc.
Exceptions to FHA
Owner-occupied buildings with no more than four units (including the owner’s unit) and single family homes sold or rented without a broker. But they are still subject to advertising rules.
What law do you apply when there is a conflict of laws? Exceptions?
Law of the situs in real prop cases (i.e. state where real prop is located).
Exceptions: document (instrument, will) specifies applicable law; certain issues involving marriage; mortgage notes; foreclosure-related rights
What is a tenancy year for years?
For any fixed period of time. Automatically terminates at the end of the term without notice required. May be terminated before the end of the term (e.g., breach of lease covenant gives rise to right to terminate). Created by express agreement. If term longer than one year, SOF applies–written lease signed by party to be charged must ID parties, premises, lease duration, and rend to be paid. Any right to renew the agreement must be explicitly set out in the lease.
Termination may also occur before the expiration of the term when the tenant surrenders the leasehold, and the landlord accepts the return of the leasehold. When a tenant abandons the leasehold without justification, the landlord may treat the abandonment as an offer of surrender and could accept that surrender by retaking the premises.
What is a periodic tenancy?
Repetitive, ongoing estate by set periods of time with no predetermined termination date. Term may be fixed by the parties or by their actions. Auto renews at the end of each period unless valid termination notice. SOF does not apply unless initial term exceeds one year. Created by express agreement, implication (no mention of duration), or operation of law (holdover tenant). Termination notice must be given before last period begins. Late notice is effective by the next period. Generally effective as of the last day of the period. Oral notice sufficient under CL, but most states now require some writing.
A landlord can create a periodic tenancy by accepting a tenant’s tender of a rental payment after the expiration of the lease. A landlord, by accepting rent after the termination of a lease, creates a periodic tenancy, even when the prior tenancy was a tenancy for years.
What is a tenancy at will?
Does not have specific term. Continues as long as L and T want. Created by express agreement or by implication. May be terminated by either party. At CL, no notice required, but L must give T reasonable time to vacate. Most states now require notice. May also be terminated by operation of law.
If only one party is expressly given the right to terminate the leasehold, the lease may, when taking into account all other circumstances, be unconscionable. In such a case, either party is given the ability to terminate the lease. landlord is not granted an implied right of termination when a lease expressly gives a tenant the right of termination but is silent as to the landlord.
What is a tenancy at sufferance (holdover tenancy)?
T wrongfully remains in possession after the expiration of a lease. T is bound by terms of the lease that existed before expiration, including payment of rent. Tenancy lasts until T vacates, L evicts T, or L elects to hold T to periodic tenancy.
What are a tenant’s duties wrt paying rent?
Duty to pay unless premises destroyed (lease terminated and tenant excused), or material breach by landlord.
What are tenant’s duties wrt waste?
Affirmative waste: T prohibited from committing voluntary waste.
Ameliorative waste: T may make changes to physical condition of prop that increase the prop value if reasonably necessary for T to use prop in reasonable manner, unless L and T agree otherwise.
Permissive waste: Unless relieved by lease, statute, or ordinance, T has duty to repair the premises to keep it in its pre-rental condition. No duty to repair normal wear and tear, unless L and T agree.
Who is liable for repairs–landlord or tenant?
Except for T damages, L must repair for residential but not for commercial leases. For non-residential leases, T may be contractually liable for all damages to prop unless caused by L.
Residential: Under the common law, there was no implied duty on the part of the landlord to repair leased premises. However, the majority of jurisdictions today enforce an implied duty upon the landlord to repair under a residential lease, even when the lease attempts to place the burden on the tenant, except for damages caused by the tenant.
Commercial: In contrast, courts are reluctant to imply a landlord’s duty to repair in commercial leases because the implied warranty of habitability does not apply in commercial leases.
What remedies does L have if T fails to pay rent?
Majority: L can sue for damages and evict and terminate lease.
No anticipatory repudiation in most states. Where it is allowed, damages limited to diff btw future rent under lease and either i) reasonable rental value or ii) actual rent collected from re-letting???? BUT OTHER SOURCE SAYS doctrine of anticipatory breach does not apply to leases. While the landlord may sue the tenant for rent as it becomes due, a landlord may not sue for future rent under the lease.
Wrt late rent: L entitled to damages. Whether L can sue to remove depends on if breach is material or L waived right to evict by accepting late rent.
What are L’s remedies if T abandons prop?
Treated as offer to surrender rights under lease. If L accepts the surrender, lease terminates and T liability for future rent ends. If L rejects surrender, T remains liable for rent, but under majority rule, L has duty to mitigate damages.
What are L’s remedies wrt a holdover T?
L can accept holdover tenant as periodic tenant or tenant at sufferance or sue after notice to vacate.
What are L’s duties to T wrt possession?
L must deliver actual physical possession or no obligation for T to pay rent.
Does L owe T a warranty of some kind?
Yes–for residential props, a warranty of habitability: premises must be fit for basic human habitation (health/safety).
What happens if warranty of habitability breached btw L and T?
T must notify L of defect and give reasonable time to repair, and then T can refuse to pay rent; make reasonable repairs and deduct cost from future rent; or remain in possession, pay rent, and seek damages.
Are there any covenants btw L and T?
Yes–covenant of quiet enjoyment (for commercial and residential). T has right to quiet use and enjoyment of the premises without interference from L. L has duty to control other tenants’ nuisance in common areas.
the covenant of quiet enjoyment is breached only when the landlord, someone claiming through the landlord, or someone with superior title disrupts the possession of the tenant.
What happens if covenant of quiet enjoyment btw L and T breached–actual?
Actual: If L excludes T from premises, then lease is terminated and T’s obligation to pay rent ends.
What happens if covenant of quiet enjoyment btw L and T breached–partial?
Partial: T excused from paying rent for L’s partial eviction, but must pay reasonable rental value if partial eviction by third party with superior claim. T not excused from paying rent for partial eviction by adverse possessor/trespasser.
What happens if covenant of quiet enjoyment btw L and T breached–constructive?
Constructive: Substantial interference caused by L’s actions or failure to act. T must give notice of problem. If L fails to respond, T must vacate premises within reasonable time after L fails to fix problem.
What happens if covenant of quiet enjoyment btw L and T breached–retaliatory?
Retaliatory: L may not evict a residential T for reporting housing code violations or refusing to pay rent when L breaches the warranty of habitability (defense not available to T in arrears).
How is security deposit amount set?
Amount and terms usually set by state statute
What happens to your security deposit?
Usually retained in an escrow account and must be promptly returned at the end of the lease, absent an explanation for retaining it.
What are T’s possible tort duties/liabilities?
Duty of care to invitees/licensees/foreseeable trespassers and may be liable for dangerous conditions/activities.
What are L’s possible tort duties/liabilities?
CL: Liable for injuries in common/public areas, non-common areas under L’s control, or from hidden defect/faulty repair by L or L’s agent.
Modern trend: General duty of reasonable care. Liability for defects existing prior to T’s occupancy, failure to make required repairs, and crim activities of third parties who injure Ts.
What is an assignment and a partial assignment (of a lease)?
Complete transfer of T’s remaining lease term.
Partial assignment: Transfer of a physical portion for remaining lease term.
What is a sublease?
Any transfer for less than the entire duration of the lease.
What is a lease assignee liable for?
Liable to L for rent/covenants running with lease.
Is lease assignee in privity with L and what kind?
Yes–privity of estate, thus they are liable to the landlord for the rent and any other covenants in the lease that run with the lease.
What happens if assignee-T reassigns lease?
Privity of estate with L ends and subsequent T is now in privity with L.
What is a sublease tenant liable for?
Not liable for rent/covenants in lease to L. Liable to original lessee. Unless sub-T expressly assumes covenants, then personally liable to L.
Is a sublease tenant in privity with L and what kind?
No, not in privity of estate or contract with L.
Can sublease tenant enforce any covenants?
Can enforce all covenants made by original lessee in sublease, but not any made by L.
What is original tenant still liable for in a sublease or assignment situation?
Liable for lease covenants unless novation by L.
What kind of privity exists btw original tenant and landlord after a sublease or assignment?
Assignment: Privity of estate ends. Still in privity of contract (unless novation?).
Sublease: Privity of estate does not end. Still in privity of contract (unless novation?).
Can landlord assign lease rights? If so, what happens?
Generally L may assign lease rights to a third party, butL remains liable to T for all covenants in the lease. T must pay rent to assignee-L and obey lease covenants. Assignee-L must perform any burden imposed by lease covenant.
What is attornment?
T’s acknowledgement of a new L. Usually arises automatically upon payment of rent to assignee-L or notice to T, but formal acknowledgement of an assignee-L’s ownership may be required in commercial leases.
What happens if a lease prohibits assignment/subletting by a T? When can L withhold permission to grant assignment/sublease?
T can still do either, but L can terminate for breach and recover damages.
L can only withhold permission to grant assignment or sublease on reasonable grounds in relationship to the prop being leased and not on a whim or personal prejudice.
What is a listing broker?
Helps set the asking price and advertises the prop. Seller’s agent. Generally shares commission with selling broker.
What is a selling broker?
Subagent of the listing broker. Finds a buyer. Generally shares commission with listing broker.
What is a dual agent?
Reps both buyer and seller. Prohibited in many jx.
What are the SOF requirements for a land sale contract?
Under the Statute of Frauds, a land sales contract must:
(i) be in writing,
(ii) be signed by the party to be charged, and
(iii) contain all of the essential terms (i.e., parties, property description, terms of price and payment).
Does SOF apply to other prop interests like assignments and options regarding the purchase of real prop?
Yes
Does SOF apply to leases under 1 year?
No. Just to leases over one year?
Does a deed need to satisfy SOF?
No
What are the SOF exceptions for land sales?
1) Part performance
2) Detrimental reliance
3) Admission
What counts as part performance wrt a land sale?
Most jx require 2 of the following:
1) Buyer takes possession of land
2) Buyer remits all or part of the purchase price, and/or
3) Buyer makes sub improvements
What happens if there is detrimental reliance on a land sales contract?
Specific perf permitted when party seeking enforcement has reasonably relied on K and would suffer hardship.
