Real prop Flashcards
Key principle #1: Be aware of what is required to have a valid deed.
Be familiar with the different kinds of
deeds as well as the effects of equitable conversion and merger.
Contract of sale: Before a deed is delivered, the contract of sale is signed.
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 (money 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.
Validity of a deed :
Validity of a deed: To be valid, a deed must identify the buyer and the seller, describe the land,
contain words denoting a present intent to convey, and be signed by the grantor. It must also be
delivered. Delivery is a question of intent to pass title presently.
Covenants in deed :
quitclaim deed : warrants what he has.
and Warranty deed :
Present covenants : right to convey session (guarantees he owns the land) and the covenants against not encumbrances.
note that remote grants may sue under future covenants but this is jurisdictional.
Covenants in the deed: There are two kinds of deeds that you will see on the bar exam:
Quitclaim deed: The grantor gives no covenants (promises nothing) 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.
Warranty deed: The grantor gives six covenants—three present covenants and three
future covenants. The MEE tends to test present covenants rather than future covenants.
The present covenants include (mnemonic=PRESENT): the right to convey, the covenant of
seisen (both of these essentially meaning that the seller guarantees he owns the land he is
selling), and the covenant against encumbrances (“no encumbrances”—i.e., there are no
existing easements, liens, or encumbrances that are not stated in the deed). Future
covenants include (mnemonic=FEW): further assurances, quiet enjoyment, and warranty.
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.
Merger and Breach of implied warranty of habitility:
Merger: on the closing date, the contract for sale merges into the deed, so at that point, the buyer
can only sue on the deed.
- Breach of the implied warranty of habitability: 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 builder’s negligence or failure to do
work in a workmanlike manner.
Key principle #2: Be aware of the common law first-in-time first-in-right principle and how the recording
acts change that principle. Notice acts are tested frequently on the MEE.
Start your essay with the common law rule. 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.
All states have recording statutes that change the results of the common law
principle.
* There are three kinds of recording statutes:
Notice statutes protect subsequent bona fide purchasers for value who take without
notice of the earlier transaction. (E.g., “A conveyance of interest in land is not valid against
any subsequent purchaser for value without notice unless it is recorded.”)
Race-notice statutes protect subsequent bona fide purchasers for value who take without
notice and are the first to record. (E.g., “No conveyance of an interest in land is valid
against any subsequent purchaser for value without notice unless it is first recorded.”)
Pure race statutes protect subsequent purchasers who are first to record. (These are rare!)
* What is notice? There are three types of notice (mnemonic=AIR):
§ Actual notice: the grantee actually knows about the conveyance.
§ Inquiry notice: examination of the land or reference in an instrument would lead a
reasonable person to inquire. (July 2011, Feb 2010)
§ Record notice: The interest is recorded in the chain of title. Deeds that are recorded too
late or too early are wild deeds. Wild deeds do not give notice.
Key principle #3: Be aware of who is liable on a mortgage when title to the property is transferred.
General rule: 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. (Some jurisdictions say that if the transferee pays the mortgage payments, he impliedly assumes the
mortgage. This view is brought up on the MEE, but it is considered the wrong answer on the MBE.)
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.
Key principle #4: be familiar with leases, as well as rights and duties under leases.
Assignment:
Term for years lease: a term for years lease specifies both a beginning date and an end date.
- Periodic tenancy: A periodic tenancy has no fixed end date (e.g., a month-to-month lease is a
periodic tenancy). It simply repeats until one party gives valid notice to the other. It can be created
by an express agreement, implication (where the lease contains no end date), or operation of law
(e.g., an oral lease that violates the Statute of Frauds because the term is more than one year). Valid
notice—i.e., notice equal to the rent payment term—is required to terminate a periodic tenancy.
(July 2008) - Assignment: if the lease does not prohibit an assignment or sublease, a tenant can assign or
sublease her interest in the lease.
Constructive Eviction :
Eviction vs. the implied warranty of habitability: A tenant can sue for constructive eviction
(commercial or residential) if the tenant can prove that the landlord breached a duty to the tenant
(e.g., the duty to repair) 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 a variety of
remedies including vacating the premises, suing for damages, offsetting damages from his lease,
etc.
Key principle #5: easement creation and termination is sometimes tested on the MEE.
Creation: easements can be created expressly, impliedly (by prior use or necessity), or by
prescription.
- Termination of easements: Easements may be terminated in a variety of ways such as by their
express terms, written release, merger of the dominant and servient 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.
Key principle #6: know how to create and sever a joint tenancy.
Creation: A joint tenancy requires the four unities (mnemonic=TTIP): time, title, interest, and
possession.
Most states also require using the language “joint tenancy” and adding an express reference to “survivorship” or “survivors” to create a joint tenancy.
- Severance: a joint tenancy can be severed in one of four ways (mnemonic=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.
Key principle #7: be able to articulate the requirements for adverse possession.
Requirements: Requirements for adverse possession include possession that is
(mnemonic=CHANGE): (1) continuous, (2) hostile and under a claim of right, (3) actual, (4) open and
notorious, (5) goes on for the statutory period, and (6) exclusive. One only acquires title to the area
one actually possesses (unless there is color of title, a unitary tract, and possession of an amount
that is reasonable in relation to the whole—in which case, the adverse possessor can acquire the
whole tract)
- Tacking: 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. - Failure to record an interest acquired by adverse possession: the adverse possessor will prevail
over a subsequent bona fide purchaser who complies with the recording act because there is no
document that the interest holder could record.
