Real Property Flashcards
vested remainder
an interest that is not subject to any condition precedent + created in an ascertainable grantee
Example: A conveys Blackacre “to B for life, then to C and his heirs.” Here, the grantee, C, has a vested remainder. There are no preconditions on C’s entitlement to his remainder interest and C, as the designated individual, is an ascertainable grantee.
vested remainder subject to complete divestment
the occurrence of a condition subsequent will completely divest the remainder interest
(vested remainder = an interest that is not subject to any conditions precedent + is created in an ascertainable grantee)
Example: A conveys Blackacre “to B for life, and then to C; but if C has no children, then to D’s children.” C has a vested remainder interest, but if he is not survived by his children at the time of B’s death, then C’s interest will be divested. Consequently, C has a vested remainder subject to complete divestment.
contingent remainder
created in a grantee that is unascertainable
OR subject to an express condition to a grantee’s taking
normally either:
property can’t vest bc beneficiary is unknown
OR property cannot vest bc the known beneficiary is subject to a condition precedent that has yet to occur
vested remainder subject to open/
vested remainder subject to partial divestment
remainder interest that is transferred to persons designated as a group rather than individually (e.g., children, grandchildren)
+ at least one member of the group is individually ascertainable and entitled to the remainder interest,
but that person’s interest may be subject to being shared with other members of the group
easement in gross
granted to benefit a particular person, rather than the land
easements in gross remain tied to the dominant estate, not to the land
fixture
tangible personal property that is:
attached to real property in such a manner that it is treated as an integral part of the realty
+ used for some larger component or function of the land
a fixture automatically transfers with the land UNLESS the conveying instrument provides otherwise
private nuisance
liability arises when D’s interferences with P’s (anyone with a possessory interest) use and enjoyment of P’s property is:
(i) substantial - offensive, intolerable, or annoying to a normal person in the community, AND
(ii) unreasonable - the severity of P’s harm outweighs utility of D’s conduct
public nuisance
interferes with a right common to the general public
unreasonable if interference is significant or violates law
P must show they suffered a different harm from the rest of the community
novation
substitution of a new contract for an old one when a party to the original contract (P2) agrees to release the other original party (P1)
after the novation, P1 is not personally liable to P2 in any capacity
exoneration of liens doctrine
applies AT COMMON LAW when a devisee receives a specific devise of real property subject to an encumbrance
devisee is entitled to pay off any encumbrances on the property (including a purchase-money mortgage) from the remaining assets in the estate
abolished in most states
wild, uncultivated crops
fructus naturales
considered part of the real property on which they grow
upon transfer, they pass automatically with the land; the prior owner has no right to enter the land to remove the crops
planted, cultivated crops
fructus industriales
considered personal property
upon transfer of the land, they pass with the land EXCEPT if:
(i) harvested - severed from land,
(ii) ripe - mature, some courts only,
(iii) planted by tenant with indefinite leasehold, OR
(iv) planted by AP under claim of right.
ademption
applies when testator transfers property AFTER executing a will and causes a devise to fail by either:
(i) extinction - T does not own a specifically devised asset at death, or
(ii) satisfaction - devisee received the asset or a satisfactory substitute during T’s life
THEN devisee takes nothing + proceeds from the specifically devised asset become part of the estate
lien theory (majority mortgage rule)
lender: security interest in property
mortgagor: retains title and possession, as the owner, unless lender forecloses
title theory (minority mortgage rule)
lender receives title and is the owner until mortgage is fully paid; entitled to take possession at any time, even absent default
mortgagor retains right of possession, and title reverts once repaid
defeasible fee
ownership of potentially infinite duration that may be terminated by the occurrence of an event
fee simple determinable (FSD)
limited by durational language
terminates automatically upon occurrence of the condition
fee simple subject to condition subsequent (FSSCS)
limited by durational language
grantor has a right to terminate upon occurrence of the condition
fee simple subject to executory interest
limited by conditional language such that it automatically passes to a third party upon occurrence
Rule Against Perpetuities applies to:
- equitable interest in trust
- contingent remainder
- vested remainder subject to open
- executory interests
- powers of appointment
Rule Against Perpetuities does NOT apply to:
- future interests held by a grantor (reversion, possibility of reverter, right of reentry)
- gifts from one charity to another charity
- transfers of specific dollar amounts to each member of a class
“wait and see” rule
alternative approach to the common law rule against perpetuities:
a future interest is valid if it actually vests within 90 years
Rule in Shelley’s case
COMMON LAW RULE abolished in most states
prevented a contingent remainder in the grantee’s heirs
Under the doctrine of merger, when the life estate in the grantee was immediately followed by a remainder in the grantee’s heirs, the grantee took the property in fee simple absolute
real covenant
an agreement between parties to do or not do something on land
+ enforceable by an action for money damages
a real covenant is binding to its successors in interest if the covenant “runs with the land,” meaning these elements are met:
- writing that satisfies the statute of frauds
- intent to run (by the promising parties)
- touch and concern - relates to the use, enjoyment, or occupation of the land
- horizontal privity
- vertical privity
- notice - only if the person to be bound was a purchaser: they had actual, record, or inquiry notice
horizontal privity
original promising parties simultaneously transfer the land and create the covenant
vertical privity
successors have an unbroken chain of ownership from the original parties
warranty of marketable title
implied in all real estate contracts
guarantees that, UPON CLOSING, the seller will convey to buyer
TITLE that is free from an UNREASONABLE risk of litigation
adverse possession
a person can acquire title by possessing another person’s property in a manner that is:
- Open and notorious - apparent or visible to reasonable owner
- Continuous - uninterrupted for the statutory period
- Exclusive - not shared with the true owner
- Actual - physical presence on the land
- Non-permissive - hostile and adverse to owner
tacking
an adverse possessor may tack on a predecessor’s time if there is privity between successive adverse possessors
privity requires taking by non-hostile means
deed
legal instrument that transfers an interest in real property
to be effective, it must:
- contain all essential components,
- be delivered by the grantor, AND
- be accepted by the grantee
Uniform Vendor and Purchaser Risk Act
minority rule
IF a material part of the property is destroyed,
passes the risk of loss during the period between execution of contract and closing on the SELLER,
UNLESS and until the buyer takes possession or title is transferred
equitable mortgage
can be established when a debtor gives an absolute deed (one free from encumbrances that transfers title to unrestricted property) to a lender
+ with intent to secure a loan
debtor-grantor must prove by clear and convincing evidence that the deed was intended as security for a loan—not as an outright transfer
Rule: the deed recipient (lender) may bring foreclosure action if the debtor defaults
mortgage alternatives
- absolute deed/equitable mortgage
- deed of trust
- installment land contract
- sale-leaseback
- equitable vendor’s lien
deed of trust
debtor gives a deed of trust to a third-party trustee as collateral for debt
Rule: creditor can instruct trustee to foreclose upon default
installment land contract
debtor agrees to buy land through installment payments
Rule: debtor gets immediate possession, but seller keeps legal title until paid in full
sale leaseback
seller leases property from buyer immediately after sale
seller’s rental payments function as repayments on loan
equitable vendor’s lien
seller finances buyer’s purchase with equitable vendor’s lien when seller transfers title to buyer
but purchase price is not yet fully paid
a deed is VOID and cannot be enforced by a bona fide purchaser if:
- grantor’s signature is forged,
- deed is forged (falsely made or materially altered with intent to defraud, OR
- grantor is deceived about nature of the executed document
a deed is VOIDABLE (valid until set aside), and MAY be enforced by a bona fide purchaser if:
- procured by fraudulent inducement, OR
- party lacks capacity to execute the deed (e.g. due to infancy or lack of capacity)
future advances mortgage (i.e. line of credit)
mortgage given by a debtor-mortgage in exchange for the right to receive money from the lender-mortgagee in the future
Rule: priority in case of foreclosure sale depends on the type of advances
- if optional: has priority with respect to amounts loaned BEFORE the future-advances mortgagee RECEIVED NOTICE of a subsequent mortgage, or
- if obligatory: has priority with respect to amounts loaned BEFORE AND AFTER the future-advances mortgagee received notice of a subsequent mortgage
acceleration clause
common mortgage provision
allows creditor to demand entire loan due and payable if debtor defaults
due-on-sale clause
common mortgage provision
Allows creditor to demand entire loan due & payable if debtor sells mortgaged property without permission
due-on-encumbrance clause
common mortgage provision
Allows creditor to accelerate mortgage obligation if debtor obtains second mortgage or otherwise encumbers property
defeasance clause (common mortgage provision)
requires creditor to give debtor legal title to property and release mortgage lien once all payments are made
purchase money mortgage (PMM)
- exception to the first in time, first in right
- mortgage granted to the seller of real property if the mortgage is given as part of the transaction in which title is acquired
Rule: a PMM has priority over liens that arose prior to the PMM regardless of whether the PMM was recorded, but not necessarily over subsequent liens because the recording act will control
implied reciprocal servitude
reciprocal negative servitudes are implied from the neighboring scheme, and requires the following to be enforceable:
(i) intent to create a servitude on all real property interests (i.e. common scheme),
(ii) the servitude must be negative (i.e. refrain from doing something), and
(iii) the party against whom the servitude is sought must have actual, record, or inquiry notice
spot zoning
impermissible rezoning that affects a small number of parcels of land, often 1 parcel, in manner that is inconsistent with the zoning of the neighboring land (or an existing comprehensive plan) and that usually benefits the owner of the parcel or parcels to the detriment of the neighboring land
