Real Property

Question 1

Rules for failure of landlord to deliver possession

Answer 1

Common Law Rule (a/k/a English Rule): LL is duty bound to deliver actual possession of premises to T. If he could not do so, then T was excused from having to pay rent until LL succeeded in delivering possession to premises (Majority Rule).

American Rule: Obligation to deliver the right to possession, rather than actual possession (Minority Rule).

Question 2

What is the implied warranty of habitability and how is it breached? What are the tenant’s remedies?

Answer 2

The majority of jurisdictions impose an implied covenant of habitability in residential leases (but NOT commercial leases). This warranty is not waivable. It provides that the premises must be fit for basic human condition. Usually, this means complying with local case law and housing codes (ex. no heat in the winter, no working plumbing, etc.). When the warranty is breached, the tenants options are as follows:

• (a) Move out and terminate the lease;
• (b) Repair and deduct (only if statute allows);
• (c) Reduce or withhold rent until the court determines a fair rental value; or
• (d) Remain in possession, pay full rent, and sue for damages

The main difference between IWH and CQE is that the tenant must vacate for CQE; the tenant may vacate for IWH but is not required to.

Question 3

What is the covenant of quiet enjoyment and how may a landlord breach it?

Answer 3

The covenant of quiet enjoyment is implied in all residential and commercial leases. It provides that a tenant has a right to quiet use and enjoyment of the premises, without interference from the landlord or a paramount title holder (for example, a prior mortgagee who forecloses). A landlord may breach the covenant of quiet enjoyment by either wrongful eviction or constructive eviction.

Question 4

When does a wrongful (actual) eviction occur and what are the tenant’s remedies?

Answer 4

An actual eviction occurs where the LL or a holdover tenant, by affirmative act, removes T from all or part of the premises.

Acts as a defense to payment of rent. If the tenant is evicted from any part of the premises, the rent obligation stops entirely until he or she repossesses the entire property. In addition, the tenant can stay in possession of the rest of the property without paying rent.

Question 5

What elements must be met for a constructive eviction to occur and what are the tenant’s remedies? Can it be partial?

Answer 5

Constructive eviction occurs when the landlord’s breach of duty renders the premises unsuitable for occupancy. For example, it rains and the apartment floods. Constructive eviction requires three elements to be met:

• (1) There must be a substantial interference with the tenant’s use and enjoyment of the property;
• (2) Tenant must provide landlord with notice of the condition and the landlord must fail to fix it; and
• (3) Tenant must move out.

A tenant who has been constructively evicted may terminate the lease and sue for damages.

The majority of jurisdictions recognize “partial constructive eviction.” In that instance, the tenant need not vacate the entire premises, and is entitled to a rent abatement.

Question 6

Rules for destruction of leasehold as a defense to payment of rent

Answer 6

Common Law: Destruction of the leasehold no excuse to rent obligation. Land was the key, not the structures on the land.

Modern Law: Destruction is a defense to payment of rent UNLESS Tenant intentionally or negligently caused destruction.

Question 7

Rules for early lease termination without agreement

Answer 7

Common law: Tenant has duty to find replacement tenant or continue to pay rent.

Modern jurisdictions: Landlord has duty to attempt to mitigate damages by finding a new tenant. The landlord does not actually have to find one, but must make a reasonable attempt. Burden is on the landlord to prove there was a reasonable attempt.

Question 8

Duties owed by landlord to tenant and guests

Answer 8

A landlord is not liable to the tenant, or others on the premises with the consent of the tenant, for injuries caused by a condition of the premises, except for an undisclosed dangerous condition that is known or should have been known to the landlord, but which is unknown to the tenant (latent defect).

When the landlord warns the tenant of the condition but the tenant does not warn a guest, the guest’s action is against the tenant and has no claim against the landlord.

Question 9

Voluntary waste

Answer 9

Tenant cannot intentionally or negligently damage anything on the property.

T is liable for the cost of correcting damage.

Question 10

Permissive waste

Answer 10

Tenant is obligated to take reasonable steps to guard against damage to premises and make reasonable repairs when needed prevent future damage (tenant is in the best position to correct the problem).

Duty to prevent permissive waste = duty to make minor repairs.

Question 11

Ameliorative waste

Answer 11

T alters or improves the leased premises. LL can sue for cost of restoring land to original condition.

Life tenants may commit ameliorative waste without being liable to LL.

Question 12

Landlord’s breach of express covenant

Answer 12

At common law, the landlord’s express covenants in a lease are independent of the tenant’s covenant to pay rent. Therefore, where a landlord breaches an express covenant, the tenant is still obligated to pay rent.

Question 13

Lease v. license

Answer 13

A lease is a possessory interest in land. A license merely authorizes the licensee to use land in the possession of another.

Question 14

Assignment v. sublease

Answer 14

Question 15

Privity of estate

Answer 15

Privity of estate refers to the transferor’s/transferee’s right to be on the property. It operates simultaneously and independently from privity of contract.

• In an assignment, privity of estate is moved from being between the landlord and the tenant/assignor, to between the landlord and the assignee. This is because the assignor no longer has any right to be on the property because he has transferred all of his rights to the assignee. The assignor still has privity of contract with the landlord, however.
• In a sublease, privity of estate is between both the landlord and the tenant/sublessor, and between the sublessor and the sublessee. In this situation, the sublessor retains his privity of estate because he still has the right to be on the property once the sublease has expired, since he has not transferred all of his rights through the sublease.

Reversionary Interest → Refers to the interest of the party that takes the property back once the transfer is over. Any sublessor has a reversionary interest in the property because possession goes back to him once the sublease has expired.

Question 16

Privity of contract

Answer 16

Privity of contract refers to the lease agreement between two specific parties.

In both assignments and subleases, privity of contract is between the landlord and the tenant/transferor, and between the transferor and the transferee. There is no privity of contract between the transferee and the landlord because there is no agreement made between the landlord and the transferee.

The only way for a tenant to get out of privity of contract is through a novation, in which the landlord agrees to terminate the original contract in favor of the transfer.

Question 17

Remedies for unpaid rent from assignee

Answer 17

If the transfer is an assignment, and if the assignee does not pay rent, the landlord can go after either the assignor (under privity of contract) or the assignee (under privity of estate), or he can go after both.

If the landlord decides to go after the assignor, the assignor can then sue the assignee to be reimbursed under privity of contract between them.

Unless there is a novation, the first tenant can always be held liable through privity of contract, no matter how many assignments there are. Following assignees are only liable for as long as they have privity of estate.

Question 18

Remedies for unpaid rent from sublessee

Answer 18

If the transfer is a sublease, and the sublessee does not pay rent, the landlord can only go after the sublessor, because there is neither privity of contract nor estate between the landlord and the sublessee, but there is both between the landlord and the sublessor.

In such a case, the sublessor has the right to sue the sublessee for reimbursement, because he has both privity of contract and estate with the sublessee.

Question 19

Tenant’s right to transfer

Answer 19

When the lease does not include a clause stating that the tenant must obtain the landlord’s consent to assign or sublease, the tenant does not need any consent from the landlord to assign or sublease and the landlord may not prevent the tenant from doing so.

When the lease does include such a clause, subsequent transfers generally do not require consent from the landlord after he gives consent to the first transfer. However, the landlord does not waive his right to object to subsequent transfers if he gives permission “just this once.”

The landlord similarly has the right to transfer the property to another landlod.

Question 20

Tenancy for years

Answer 20

Any lease for a fixed or computable period of time with a fixed start and end date.

• Created by express agreement of the parties.
• Terminates automatically without notice at the end of the specified term.
• Death of either party does not terminate.

Question 21

Periodic tenancy

Answer 21

Continues for successive periods until terminated and is automatically renewed.

• Created by express agreement of the parties, or can be inferred from facts.
• Notice is required to terminate.
• Death of either party does not terminate.

Question 22

Tenancy at will

Answer 22

No designated period of time.

• Created by express agreement of the parties or inferred from the circumstances.
• Terminated at the will of either party at any time without notice, but a “reasonable” time to vacate must be provided.
• Can be terminated by death of either party, when the landlord conveys the property, or when the tenant attempts to assign the property.
  
  • Under the majority rule, courts will find that either party has the right to terminate the tenancy even if the lease states that only the landlord may terminate the lease.

Question 23

Tenancy at sufferance

Answer 23

Results when a tenant originally in rightful possession under a valid lease “holds over” after his lease expires, falling just short of being a trespasser.

Right to possession is based on landlord’s neglect. The landlord can either choose to evict the tenant, or treat the hold over as an election to extend the lease for another period or term. If the landlord accepts, a periodic tenancy is created.

Question 24

Fee simple absolute

Answer 24

Refers to a normal purchase, with ownership for a potentially unlimited amount of time and with no strings attached.

• Created by phrases such as “O to A and heirs” or “O to A.”
• Grantor has no future interest.
• Hint → “. . . and heirs” will always activate a fee simple, not a life estate.

Question 25

Fee simple determinable

Answer 25

An estate that will end automatically at the happening of a condition. It happens automatically because the condition is a durational marker set at the beginning.

• Created by words of duration, such as “so long as,” “until,” “while,” or “during.”
• Grantor’s future interest is a possibility of reverter. No notice of termination is required once the condition is met. If the condition is never met, it is treated as a fee simple absolute.
• Hint → Limiting words will be placed before the first punctuation mark.

Question 26

Fee simple subject to a condition subsequent

Answer 26

The estate is not limited by duration, but rather by a condition which will give the grantor the right to take the property back once it is met.

• Created by conditional phrases, such as “on the condition that,” “provided that,” “but if,” or “however.”
• Grantor’s future interest is a right of reentry, also called a power of termination which must be stated in the original deed.
• Hint → Limiting words will be placed after the first punctuation mark.

Question 27

Fee simple subject to an executory limitation

Answer 27

Limited by a condition, but instead of the property going back to the grantor, it will go to a third party when the condition is met.

• Created by phrases such as “until . . . then to” or “but if . . . then to.”
• Grantor has no future interest.
• Third party will have an executory interest (shifting v. springing).
• Subject to the rule against perpetuities.

Question 28

Life estate

Answer 28

Property is granted to someone for life.

• Created by “O to A for life.”
• Grantor’s future interest is a reversion.
• Life estates are alienable, meaning they can be sold to someone else.
  
  • A can sell to B, but when A dies, B will be removed from the property.
  • “Pur autre vie” → Life estate for the life of another.

Note: life estates can be determinable, subject to a condition subsequent, or subject to an executory limitation as well.

Question 29

Shifting v. springing executory interest

Answer 29

Shifting Executory Interest → Simply goes to another transferee upon the condition being met.

Springing Executory Interest → Possession follows a gap in time during which no transferee has the right to possession.

• For example, “to C and heirs, if C returns from France.”

Question 30

Vested v. contingent remainder

Answer 30

Vested Remainder → Given to an ascertained person, and the words of condition will not include a condition precedent (other than the natural termination of the estate). A person is ascertained if they are born or identified.

Contingent Remainder → Given to an unascertained person, or the words creating the remainder contain a condition precedent (in addition to the natural termination of the estate). A person is unascertained when they are unborn or unidentified.

• Since heirs cannot be identified until the grantee dies, “to heirs” creates a contingent remainder.

Question 31

Rule against perpetuities

Answer 31

If a situation can be imagined in which the interest might not vest within the perpetuities period, the interest is void. This is the result even though the circumstances that might bring about the remote vesting are unlikely to occur or are unrealistic. Ask: within 21 years, are we guaranteed to know whether the one with the future interest will get the property?

The validity of interests under the Rule is determined at the time the interests are created, taking into account the facts then existing. The “lives in being plus 21 years” period begins to run, and the measuring lives used to show the validity of an interest must be in existence, at that time.

Applies to COPER:

• Contingent remainders/Class gifts
• Option to purchase connected with a fee
• Powers of appointment
• Executory interests
• Rights of first refusal

Question 32

Joint tenancy

Answer 32

“To A and B, as joint tenants, and not as tenants in common.”

Main difference from a tenancy in common is that each tenant has a right of survivorship. A right of survivorship is destroyed if a joint tenant transfers his interest.

Joint tenancies are alienable, which means that joint tenants are free to transfer their interest. When this happens, the transferee has a tenancy in common, and the remaining joint tenants still have a joint tenancy. Joint tenancies are not descendable or devisable. A right of survivorship will always trump a will.

Requires the four unities to be met. Failure to meet any one of the unities creates a tenancy in common.

• (1) Unity of Time → All tenants must take their interest at the same time.
  
  • This was traditionally circumvented by the use of a straw person.
• (2) Unity of Title → All tenants must take their interest from the same source (deed, will, grant, etc.).
• (3) Unity of Interest → All tenants must have equal and identical interest in the property.
• (4) Unity of Possession → All tenants must have a possessory interest in the whole.

Question 33

Tenancy in common

Answer 33

“To A and B” creates a tenancy in common, which is the form favored by the law currently.

Tenants in common do not have a right of survivorship. A deceased tenant’s share will transfer to his or her heirs upon death.

Interests in a tenancy in common are alienable (can transfer), descendable (death without a will), and devisable (death with a will).

Jurisdictions in the United States will view the tenancy as a tenancy in common over a joint tenancy if there is any type of ambiguity. This is because joint tenants can turn their estates into tenancies in common at any time, without the knowledge of the other joint tenants.

Question 34

Lien theory v. title theory

Answer 34

In a lien theory state, a joint tenancy is not severed when one joint tenant mortgages his interest in the property. However, a joint tenancy is severed when one joint tenant conveys his interest.

In a title theory state, when you go to the bank to get a mortgage, you give title to the bank until mortgage is paid off and JT is severed. In title theory, bank holds legal title until mortgage is paid off. Until then, the borrower has equitable title.

Question 35

Open mines doctrine

Answer 35

The open mine doctrine permits a life tenant (does not apply to other freehold estates) to commit voluntary waste by depleting resources if the mines were open at the time the tenant took possession of the land. The life tenant can only use mines already in existence and cannot open new ones. The life tenant also may not deplete more of the resources than the interest that he owns.

Question 36

Requirements for valid boundary line agreements

Answer 36

Where the owners of adjacent parcels are uncertain of the true boundary, they may establish a boundary between their parcels by agreement. There must be an actual taking (and relinquishing) of possession following the agreement to evidence that agreement.

The agreement may be oral.

Question 37

Duties of life tenant (waste and mortgage interests)

Answer 37

A life tenant’s rights are limited by the law of waste. The law of waste is designed to preserve the land so the remaindermen can receive the land in the same (or better) condition that it was in at the beginning of the life tenancy. Remaindermen can sue to prevent life tenant from committing waste.

A life tenant also has a duty to pay the interest on the mortgage to the extent of profits derived from the property. The remainderman must pay the mortgage principal.

Question 38

Adverse possession by co-tenant

Answer 38

If one tenant wrongfully excludes another co-tenant from possession of the whole or any part of the whole property, such conduct amounts to an ouster. This is required before one co-tenant can begin to adversely possess the property against another co-tenant.

Ouster is the act of wrongfully excluding a cotenant from the property. Acts such as changing the locks, posting “no trespassing” signs, or physically denying a cotenant admittance to a piece of property are all considered ousters.

Question 39

Adverse possession elements and tacking

Answer 39

Adverse possession requires proof of possession that is:

• (1) open, visible, and notorious;
• (2) actual;
• (3) exclusive;
• (4) hostile and under a claim of title or right; and
• (5) continuous for the statutory period.

An adverse possessor may tack his/her possession onto the possession of a previous adverse possessor. Tacking is allowed if the adverse possessors are in privity of estate. Privity of estate is an intentional transfer of possession.

Hostility is determined from the view of the rightful owner; subjective intent of the adverse possessor does not matter.

Real property obtained by adverse possession is not marketable until the possessor obtains a legal decree in court that they are the title owner.

Question 40

Color of title v. claim of right

Answer 40

An adverse possessor who enters under “color of title” (i.e., with a facially valid but for some other reason invalid deed) will be deemed in constructive possession of all the property described in the deed so long as the portion of the property constructively possessed is reasonable in proportion to the property actually possessed.

In the absence of a deed, an adverse possessor has title under a claim of right, and only obtains title to that portion of the land he actually possesses.

Question 41

What promises does a general warranty deed carry?

Answer 41

3 Present (Do NOT run with the land, breached at time of conveyance)

• Covenant of seisin
• Covenant of right to convey (grantor has the right to convey)
• Covenant against encumbrances (breached if third party has an interest in land that diminishes grantee’s value of the land)

3 Future (Do run with the land, breached if third party interferes with grantee’s possession)

• Quiet enjoyment (breached if someone interferes with grantee’s right to possession)
• General warranty (grantor will defend grantee against claims by third parties and will compensate for losses resulting from successful claims)
• Further assurances (grantor will perform all acts necessary to perfect title if found to be imperfect)

Question 42

Steps to determine recording statutes

Answer 42

How to identify:

• (1) Look for phrases: “without notice,” or “in good faith,” or “subsequent purchaser for value.” If present, NOT a Race Statute
• (2) If one of the above phrases present, it is either Race/Notice or Notice statute.
• (3) Look for the word “first.” If present, is a Race/Notice statute, if not, is a Notice statute

Question 43

Differences between recording statutes

Answer 43

Race: First person to record wins

Notice: Last BFP wins

Race/Notice: First BFP to record wins

BFP pays value (purchaser, mortgagee, judgment creditor), takes in good faith, and takes without notice of earlier conveyance/mortgage. Promising to pay value is insufficient, the BFP must actually pay the value.

A majority of jurisdictions interpreting such statutes treat judgment creditors as protected in full (i.e., against all unrecorded interests subject to the recording act) only if they purchase the debtor’s property at a judicial sale. Mere entry of the judgment, creating a lien against the judgment debtor’s property, is not considered a “purchase for value” under the ordinary notice-type recording statute.

Question 44

Effect of delivery of deed

Answer 44

Acts as a conveyance of the property: where the grantor intends an immediate transfer of the property, and the grantee accepts delivery of the deed. Physical delivery is not important, the intent of the parties controls. Recordation of a validly executed deed, even if the absence of actual knowledge of the grantee, constitutes prima facie evidence of delivery.

Once accepted, title to land can only be returned to the grantor by way of a deed delivered to and accepted by the original grantor.

Question 45

Effect of adverse possession on recording statutes

Answer 45

Acquisition of title to real property via adverse possession is not a conveyance within the operation of the recording act, and thus that act does not benefit a subsequent (to the perfection of adverse possession) purchaser of the same property.

Question 46

Shelter rule

Answer 46

The shelter rule provides protection for a subsequent purchaser who does not satisfy the applicable recording statute.

Under this rule, a person who is a successor in interest to a person protected by the recording statute is also protected.

Question 47

Mortgage modifications and priorities

Answer 47

Where there is a modification, a junior mortgage holder prevails over the modification if the modification materially prejudices the holder of the junior mortgage. Increasing the amount of the principal and increasing the interest rate are examples of modifications materially prejudicing the holder of a junior mortgage.

Extending time does not materially prejudice because it lowers monthly rates and makes it easier to pay off the mortgage so junior is in a better spot.

Question 48

Deficiency judgment

Answer 48

If the proceeds of the sale are insufficient to satisfy the mortgage debt, the mortgagee can bring a personal action against the mortgagor/debtor for the deficiency.

Question 49

Right of redemption

Answer 49

At any time after default but before foreclosure, the mortgagor has the right to redeem the property by paying the debt due (Equitable Right of Redemption).

Statutory Right of Redemption: The mortgagor’s right to redeem during a statutory period following the foreclosure sale.

The right to redeem may not be waived (“clogged”) at the time the mortgage is created, but can be waived later on for consideration.

Question 50

Assumption v. subject to mortgage

Answer 50

One who assumes a mortgage is personally liable for payment of the amount still owed to the mortgagee. However, unless the original mortgagee releases the original mortgagor from liability, the original mortgagor remains liable as well. Unless prohibited in mortgage document, mortgages are freely assumable and the mortgagee’s permission is not required.

One who takes “subject to a mortgage” is not personally liable, but cannot prevent foreclosure if mortgagor defaults.

Question 51

Purchase money mortgage

Answer 51

A purchase money mortgage is a mortgage given to secure a loan that enables the mortgagor to acquire title to the property at issue. A PMM, whether recorded or unrecorded, is entitled to priority over other liens on the property.

A seller’s PMM has priority over a contemporaneous PMM from a 3rd party.

Question 52

What is an installment land contract? What options does the seller have on breach?

Answer 52

In an installment land contract, the debtor is the purchaser of the land who signs a contract with the vendor, agreeing to make regular installment payments until the full contract price (including accruing interest) has been paid. Only at that time will the vendor give a deed transferring legal title to the purchaser.

In case of default, the contract may contain a forfeiture clause providing that the vendor may cancel the contract, retain all money paid to date, and retake possession of the land. However, the defaulting purchaser may be entitled to restitution to the extent his payments exceed the vendor’s damages.

Question 53

When does personal property attached to real property become a fixture?

Answer 53

Personal property can become a fixture (and thus a part of the realty, not to be removed) if the one who attached it intended that it become part of the real property. If personal property is determined to be a fixture, it will be subject to mortgages on the property.

Chattels used in a trade or business are not intended to be fixtures and, thus, may be removed during the tenancy (and in many states, for a brief period after the termination of the tenancy) but the tenant must repair any damages caused by the removal.

Question 54

Priority of claims after foreclosure sale

Answer 54

The costs of the foreclosure get paid before anything else. Then, property tax liens have priority. Then, senior lienholders. Finally, junior lienholders. The homeowner will only receive proceeds from the foreclosure if there is a surplus after all of the mortgages and liens are paid off.

Foreclosure of a senior lien will wipe out all junior liens. If this happens, junior lienholders can sue the landowner for the debts owed, but cannot foreclose the property to secure the debt.

Question 55

Landlord’s right to evict & self help

Answer 55

If a tenant is on the premises and fails to pay rent, the landlord can evict through the courts or continue the relationship and sue for rent due.

However, the landlord must not engage in self-help, such as changing the locks, forcibly removing the tenant, or removing any of the tenant’s possessions. Self-help is flatly outlawed and is punishable civilly and criminally.

Question 56

Covenants v. equitable servitudes

Answer 56

A covenant is a written promise to do (affirmative) or not to do (negative) something related to land; it is a contractual limitation or promise regarding land. Real covenants are commonly found in deeds and when certain requirements are met, they may be binding on successors in interest (run with the land). If the enforcing party is seeking money damages, it is a covenant.

An equitable servitude is a promise that equity will enforce against successors of the burdened land regardless of whether it runs with the land, unless the successor is a BFP without notice of the covenant. If the enforcing party is seeking an injunction, it is an equitable servitude.

Question 57

Requirements for benefit and burden of a covenant to run with the land

Answer 57

For the burden of a covenant to run with the land, there must be writing, intent, notice (subject to the applicable recording statute), touch and concern, horizontal privity, and vertical privity.

For the benefit to run, there needs to be writing, intent, touch and concern, and vertical privity.

Question 58

Requirements for benefit and burden of an equitable servitude to run with the land

Answer 58

For the burden of an equitable servitude to run with the land, there must be writing, intent, notice, and touch and concern. Privity is not required.

For the benefit to run, there must be writing, intent, and touch and concern.

Question 59

Landowner rights to subjacent support

Answer 59

A landowner has a right to have his land supported in its natural state by adjoining land. If, however, the land has buildings on it, an excavating adjacent landowner is strictly liable for damage to the buildings caused by the excavation only if the excavation would have caused the land to subside even in its natural state (i.e., without buildings). Even if the land would not have subsided in its natural state, the excavating landowner is liable for the damages if she was negligent.

Question 60

Categories of negative easements

Answer 60

Negative easements entitle their holders to prevent the servient landowner from doing something that would otherwise be permissible. Negative easements are generally recognized in only four categories: light, air, support, and stream water from an artificial flow. Negative easements can only be created by express grant.

A minority of states allow negative easements for a scenic view.

Question 61

Transferability of easement appurtenant

Answer 61

The appurtenant easement passes automatically with transfers of the dominant tenement, regardless of whether it is even mentioned in the conveyance. The burden of the easement appurtenant also passes automatically with the servient estate, unless the new owner is a bona fide purchaser without notice of the easement.

Question 62

Transferability of an easement in gross

Answer 62

An easement in gross is not transferable unless for commercial purposes.

Question 63

Easement implied by preexisting use

Answer 63

For a court to find an easement by implication from preexisting use, is must find that the previous use on the servient part was apparent and continuous, and the parties expected that the use would survive division because it is reasonably necessary to the dominant tenement’s use and enjoyment.

Question 64

Easement by implication without preexisting use

Answer 64

In two limited situations, easements may be implied without preexisting use:

• When lots are sold in a subdivision with reference to a recorded plat or map that shows streets leading to the lots, buyers of the lots have implied easements to use the streets to access their lots.
• The holder of a profit à prendre has an implied easement to pass over the surface of the servient land and to use it as reasonably necessary to extract from the servient property its minerals or some product of the servient property (such as timber, fish, or game), as specified by the terms of the profit.

Question 65

Easement by necessity & termination

Answer 65

An easement by necessity (another form of easement by implication) will be implied when a landowner conveys a portion of her land with no way out except over some part of the grantor’s remaining land. The owner of the servient parcel has the right to locate the easement.

An easement by necessity will be terminated as soon as the necessity ends, unless the easement was by express grant.

Question 66

Easement by prescription & termination by prescription

Answer 66

An easement may be acquired by analogy to adverse possession. The elements are:

• (1) continuous and uninterrupted use for the statutory period;
• (2) open and notorious use;
• (3) actual use that need not be exclusive; and
• (4) hostile use (without consent).

Granting permission automatically defeats an easement by prescription.

The owner of the dominant tenement may also terminate an easement by satisfying the elements through interference with the easement.

Question 67

Scope of easements

Answer 67

The scope of an easement is determined by the terms of the grant or the conditions that created it. If there are no specific limitations in the grant, courts assume that an easement was intended to meet both present and future needs of the dominant tenement. If, however, the dominant parcel is subdivided, the lot owners will not succeed to the easement if to do so would unreasonably overburden the servient estate.

Exceeding the scope of an easement does not terminate the easement. The proper remedy for the servient owner is an injunction against the misuse.

Question 68

Termination of an easement by estoppel (release & abandonment)

Answer 68

An oral expression of an intent to abandon an easement won’t terminate an easement unless it’s also committed to writing (a release) or accompanied by action (abandonment). But if the servient owner materially changes their position in reasonable reliance on the easement holder’s assurances or representations (such as that the easement will no longer be enforced), the easement terminates through estoppel.

A release must be in writing.

To terminate an easement by abandonment, there must be some physical action which demonstrates an intent to never use the easement again. Mere nonuse coupled with words of abandonment is insufficient.

Question 69

Termination of easement by merger

Answer 69

An easement is extinguished when title to the easement and title to the servient land become vested in the same person (because a person doesn’t need an easement over their own land). So, if the same person acquires ownership of both the easement and the servient estate, those estates merge and the easement is destroyed.

Question 70

Rules for exercising & enforcing purchase options

Answer 70

Options to purchase are sometimes attached to leases. An option to purchase real property is a separate contract supported by consideration that is a continuing offer to sell the land at a specified price. As long as the option is contained within the lease itself, the consideration for the lease supports the option. Because it is an interest in land, an option must be evidenced by a signed writing to satisfy the Statute of Frauds.

Absent a contrary provision, the option lasts as long as the lease. The method of exercise is determined by the agreement. Generally, the party granting the option may keep the consideration regardless of whether the option is exercised; the consideration is for the continuing offer, and not money for the purchase.

An option to purchase in a lease is enforceable even if it would otherwise violate the Rule Against Perpetuities. The usual remedy for enforcement of an option to purchase is specific performance, but damages are also available.

Question 71

Remedies for breach of land sale contract

Answer 71

The nonbreaching party is entitled to damages (difference between contract price and market value on the date of breach, plus incidental costs) or, because land is unique, specific performance. Note that if the buyer wishes to proceed despite unmarketable title, they can usually get specific performance with an abatement of the purchase price.

Sales contracts usually require the buyer to deposit “earnest money” with the seller and provide that if the buyer defaults in performance, the seller may retain this money as liquidated damages. Courts routinely uphold the seller’s retention of earnest money if the amount appears to be reasonable in light of the seller’s anticipated and actual damages. However, if the clause includes an option to recover actual damages instead, courts view the clause as a penalty rather than liquidated damages and will not enforce it.

Question 72

Implied warranty of title & remedies for seller’s breach

Answer 72

Absent a provision to the contrary, a contract for the sale of land contains an implied promise by the seller that she will deliver to the buyer a marketable title at the time of closing. This promise imposes on the seller an obligation to deliver a title that is free from reasonable doubt; i.e., free from questions that might present an unreasonable risk of litigation. Title is marketable if a reasonably prudent buyer would accept it in the exercise of ordinary prudence. An easement that reduces the value of the property (e.g., an easement of way for the benefit of a neighbor) generally renders title unmarketable.

If the buyer determines, prior to closing, that the seller’s title is unmarketable, he must notify the seller and allow a reasonable time to cure the defect. If the seller is unable to acquire title before closing, so that title remains unmarketable, the buyer can rescind, sue for damages caused by the breach, or obtain specific performance with an abatement of the purchase price. However, the buyer cannot rescind prior to closing on grounds that the seller’s title is unmarketable.

Where an installment land contract is used, the seller’s obligation is to furnish marketable title when delivery is to occur. Thus, a buyer cannot withhold payments or seek other remedies on grounds that the seller’s title is unmarketable prior to the date of promised delivery.

Question 73

What is a profit? Can it be transferred?

Answer 73

A profit is a nonpossessory interest in land that entitles the holder of the profit to enter on the servient tenement and take something off of the land (e.g., minerals, timber, oil, or game). Like an easement, a profit may be appurtenant or in gross.

If the profit exists to serve a dominant estate, the profit is appurtenant and can only be transferred along with the dominant estate. Conversely, if the profit does not exist to serve a dominant estate, it is a profit in gross and may be transferred separate and apart from the dominant estate.

Question 74

Is a contract for the sale of land breached by late closing?

Answer 74

Generally, courts assume that time is not“of the essence” in real estate contracts. This means that the closing date stated in the contract is not absolutely binding in equity, and that a party, even though late in tendering her own performance, can still enforce the contract if she tenders within a reasonable time after the date.

Question 75

Fair Housing Act & exemptions

Answer 75

Under the Fair Housing Act, it is unlawful to take certain actions because of a person’s race, color, religion, sex, disability, familial status, or national origin, including:

• (1) Refusing to negotiate, rent, or sell housing or make available a mortgage loan or other financial assistance;
• (2) Providing different terms or conditions for the sale or rental of a dwelling or for a mortgage or other financial assistance; and
• (3) Falsely representing that a dwelling is not available for inspection, sale, or rental.

Except as relates to advertising, the Fair Housing Act does not apply to:

• (1) owner-occupied buildings with four or fewer units in which persons live independently of each other; and
• (2) single-family homes sold or rented by an owner who owns no more than three single-family homes.

Question 76

How does the doctrine of equitable conversion affect land sale contracts?

Answer 76

Under the doctrine of equitable conversion, once a contract for sale of real property is signed and each party is entitled to specific performance, equity regards the buyer as the owner of the property.

This affects the passing of title when a party to the contract dies before the contract is completed. A deceased buyer’s interest passes as real property, while a deceased seller’s interest passes as personal property (the right to receive payment).