Real Property

Question 1

vested remainder

Answer 1

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.

Question 2

vested remainder subject to complete divestment

Answer 2

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.

Question 3

contingent remainder

Answer 3

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

Question 4

vested remainder subject to open/

vested remainder subject to partial divestment

Answer 4

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

Question 5

easement in gross

Answer 5

granted to benefit a particular person, rather than the land

easements in gross remain tied to the dominant estate, not to the land

Question 6

fixture

Answer 6

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

Question 7

private nuisance

Answer 7

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

Question 8

public nuisance

Answer 8

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

Question 9

novation

Answer 9

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

Question 10

exoneration of liens doctrine

Answer 10

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

Question 11

wild, uncultivated crops

fructus naturales

Answer 11

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

Question 12

planted, cultivated crops

fructus industriales

Answer 12

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.

Question 13

ademption

Answer 13

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

Question 14

lien theory (majority mortgage rule)

Answer 14

lender: security interest in property
mortgagor: retains title and possession, as the owner, unless lender forecloses

Question 15

title theory (minority mortgage rule)

Answer 15

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

Question 16

defeasible fee

Answer 16

ownership of potentially infinite duration that may be terminated by the occurrence of an event

Question 17

fee simple determinable (FSD)

Answer 17

limited by durational language

terminates automatically upon occurrence of the condition

Question 18

fee simple subject to condition subsequent (FSSCS)

Answer 18

limited by durational language

grantor has a right to terminate upon occurrence of the condition

Question 19

fee simple subject to executory interest

Answer 19

limited by conditional language such that it automatically passes to a third party upon occurrence

Question 20

Rule Against Perpetuities applies to:

Answer 20

• equitable interest in trust
• contingent remainder
• vested remainder subject to open
• executory interests
• powers of appointment

Question 21

Rule Against Perpetuities does NOT apply to:

Answer 21

• 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

Question 22

“wait and see” rule

Answer 22

alternative approach to the common law rule against perpetuities:
a future interest is valid if it actually vests within 90 years

Question 23

Rule in Shelley’s case

Answer 23

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

Question 24

real covenant

Answer 24

an agreement between parties to do or not do something on land
+ enforceable by an action for money damages

Question 25

a real covenant is binding to its successors in interest if the covenant “runs with the land,” meaning these elements are met:

Answer 25

1. writing that satisfies the statute of frauds
2. intent to run (by the promising parties)
3. touch and concern - relates to the use, enjoyment, or occupation of the land
4. horizontal privity
5. vertical privity
6. notice - only if the person to be bound was a purchaser: they had actual, record, or inquiry notice

Question 26

horizontal privity

Answer 26

original promising parties simultaneously transfer the land and create the covenant

Question 27

vertical privity

Answer 27

successors have an unbroken chain of ownership from the original parties

Question 28

warranty of marketable title

Answer 28

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

Question 29

adverse possession

Answer 29

a person can acquire title by possessing another person’s property in a manner that is:

1. Open and notorious - apparent or visible to reasonable owner
2. Continuous - uninterrupted for the statutory period
3. Exclusive - not shared with the true owner
4. Actual - physical presence on the land
5. Non-permissive - hostile and adverse to owner

Question 30

tacking

Answer 30

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

Question 31

deed

Answer 31

legal instrument that transfers an interest in real property

to be effective, it must:

1. contain all essential components,
2. be delivered by the grantor, AND
3. be accepted by the grantee

Question 32

Uniform Vendor and Purchaser Risk Act

Answer 32

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

Question 33

equitable mortgage

Answer 33

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

Question 34

mortgage alternatives

Answer 34

1. absolute deed/equitable mortgage
2. deed of trust
3. installment land contract
4. sale-leaseback
5. equitable vendor’s lien

Question 35

deed of trust

Answer 35

debtor gives a deed of trust to a third-party trustee as collateral for debt
Rule: creditor can instruct trustee to foreclose upon default

Question 36

installment land contract

Answer 36

debtor agrees to buy land through installment payments

Rule: debtor gets immediate possession, but seller keeps legal title until paid in full

Question 37

sale leaseback

Answer 37

seller leases property from buyer immediately after sale

seller’s rental payments function as repayments on loan

Question 38

equitable vendor’s lien

Answer 38

seller finances buyer’s purchase with equitable vendor’s lien when seller transfers title to buyer
but purchase price is not yet fully paid

Question 39

a deed is VOID and cannot be enforced by a bona fide purchaser if:

Answer 39

• 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

Question 40

a deed is VOIDABLE (valid until set aside), and MAY be enforced by a bona fide purchaser if:

Answer 40

• procured by fraudulent inducement, OR

- party lacks capacity to execute the deed (e.g. due to infancy or lack of capacity)

Question 41

future advances mortgage (i.e. line of credit)

Answer 41

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

Question 42

acceleration clause

common mortgage provision

Answer 42

allows creditor to demand entire loan due and payable if debtor defaults

Question 43

due-on-sale clause

common mortgage provision

Answer 43

Allows creditor to demand entire loan due & payable if debtor sells mortgaged property without permission

Question 44

due-on-encumbrance clause

common mortgage provision

Answer 44

Allows creditor to accelerate mortgage obligation if debtor obtains second mortgage or otherwise encumbers property

Question 45

defeasance clause
(common mortgage provision)

Answer 45

requires creditor to give debtor legal title to property and release mortgage lien once all payments are made

Question 46

purchase money mortgage (PMM)

Answer 46

• 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

Question 47

implied reciprocal servitude

Answer 47

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

Question 48

spot zoning

Answer 48

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