Real Property Flashcards
What is co-ownership?
Two or more owners of an estate in land, all of whom have the right to enjoyment and possession of the land.
What are the three forms of co-ownership? (concurrent estates)
- Joint tenancy – two or more own with the right of survivorship
- Tenancy by the entirety – protected marital interest between spouses with a right of survivorship
- Tenancy in common – two or more own without the right of survivorship
What is a joint tenancy? Is it alienable, devisable, or descendible?
Key feature is right of survivorship. The deceased JT’s share goes automatically to the surviving JT.
It is alienable inter vivos (transferable during holder’s lifetime), but it is not devisable (cannot pass by will), and it is not descendible (cannot pass to heirs by statutes of intestacy).
How is a joint tenancy created?
The “four unities” – Joint tenants must take their interests:
(T) – At the same time
(T) – By the same title
(I) – Identical equal interests
(P) – Right to possess the whole
Grantor must clearly express right of survivorship → otherwise, presumed to be a tenancy in common.
How is a joint tenancy severed?
(1) Sale – JT may sell or transfer interest during his lifetime. Does not need knowledge or consent of other JT. Buyer becomes tenant in common. If initially more than two JTs, JT remains intact between those tenants.
(2) Partition – three types:
(i) Voluntary agreement – allowable and peaceable way to end relationship
(ii) Judicial: Partition-in-kind – action for physical division of property
(iii) Judicial: Forced sale – land is sold and proceeds divided proportionately
(3) Mortgages – two theories:
(i) Lien theory (majority) – JT’s execution of a mortgage on her share won’t sever the JT; only if mortgage foreclosed and property sold. Other JTs not subject to mortgage should they take title to JT’s portion.
(ii) Title theory (minority) – JT’s execution of a mortgage does sever JT; giving creditor a lien is equivalent to transferring title. Heirs inherit portion subject to mortgage; other initial JT gets their portion not subject to mortgage.
What is a tenancy by the entirety?
Between married partners only. Arises presumptively in any conveyance to married partners, unless grant clearly expresses otherwise.
Very protected form of ownership: (1) Creditors of only one spouse cannot touch this tenancy; (2) One spouse alone cannot defeat right of survivorship by unilaterally conveying to third party.
How is a tenancy by the entirety severed?
Only by divorce, death, mutual agreement, or mutual execution of a lien.
In the event of divorce, it becomes a tenancy in common.
What is a tenancy in common? Is it alienable, devisable, or descendible?
No right of survivorship. Co-tenant owns individual part and the right to possess the whole.
A tenancy in common is devisable, descendible, and alienable.
Rights and duties of co-tenants: Possession
Neither co-tenant has the right to exclusive possession of any part of the property.
Prohibits ouster – wrongful exclusion from part or the whole.
Rights and duties of co-tenants: Rents and profits
(1) None from a co-tenant in exclusive possession. Unless there has been ouster, co-tenant in exclusive possession is not liable to other co-tenants for rent.
(2) Fair share if leased to a third party. A co-tenant who leases all or part of the property must account to their co-tenants.
Rights and duties of co-tenants: Adverse Possession
No AP against co-tenants unless there has been ouster. The hostility element is absent.
Rights and duties of co-tenants: Carrying costs
Each co-tenant pays his fair share. Includes: taxes, mortgage, interest payments
Rights and duties of co-tenants: Repairs
Each owes contributions for reasonable, necessary repairs with notice. Owe in proportion to ownership.
Rights and duties of co-tenants: Unilateral improvements
No contribution owed if. made without advice and consent of other co-tenants.
Credit at partition – equal to any value increase. Improver also suffers a debit equal to any diminution in value he caused.
Rights and duties of co-tenants: Waste
A co-tenant must not commit waste. Three kinds:
(1) Voluntary – willful destruction
(2) Permissive – neglect
(3) Ameliorative – unilateral change that increases value
Rights and duties of co-tenants: Partition
Co-tenants have a right to partition – seeking dissolution of the tenancy.
Three types: voluntary, partition-in-kind, forced sale.
Any restraint or restriction on a party’s right to seek partition must be reasonable in nature and duration.
What is a tenancy for years?
- Known, fixed period of time – could be any length, key is a set end date
- Termination is automatic (on end date); no notice required
- Writing typically needed if longer than one year (SoF)
What is a periodic tenancy?
- Continues for successive intervals until properly terminated
- Created: (1) expressly; or (2) by implication (no mention of duration, rent set at intervals; oral term of years violating SoF; or holdover tenant after lease ends)
- Terminated with notice, usually must be written
What is the minimum notice requirement for termination of a periodic tenancy?
- Common law – at least equal to length of the period itself
- Month-to-month – one month
- Week-to-week – one week
- Year-to-year – one month under Restatement (6 months at CL)
Note: Parties may lengthen or shorten these provisions by private agreement.
What is a tenancy at will?
- No fixed duration
- Terminable at will of either party (most states require reasonable demand to vacate)
- Generally requires express agreement
What is a tenancy at sufferance?
- When a tenant wrongfully holds over past the lease expiration
- Landlord proceeds to cover rent
- Terminates when landlord moves to evict, or holds tenant to a new tenancy
What are the tenant’s two primary duties?
(1) To repair; and (2) to pay rent.
Tenant’s duty to repair if lease silent
Only needs to maintain the premises. Make routine repairs other than those due to ordinary wear and tear.
Must not commit waste:
(1) Voluntary – tenant’s overt conduct damages premises
(2) Permissive – tenant fails to protect premises from damage from the elements
(3) Ameliorative – unilaterally alters the leased property, increasing the value. Tenant generally liable for cost of restoration, unless a long-term tenant and the reasonable changes reflect changes in the neighborhood.
Tenant’s duty to repair when express covenant in lease
Tenant must maintain in good condition or repair for the duration of the lease.
T may end the lease if premises are destroyed without T’s fault. L is obligated to repair (except for damages caused by T) under implied warranty of habitability.
Tenant’s duty to pay rent – breaches and in possession of premises
Landlord can evict (unlawful detainer statute), or continue relationship and sue for rent due.
L must not engage in self-help – cannot change locks, or forcibly remove tenant or his possessions
Tenant’s duty to pay rent – breaches but is out of possession
Landlord has three options:
(1) Surrender – T shows by words or conduct that she wants to give up lease; landlord accepts
(2) Ignore – Do nothing; hold T accountable for rent each month as if still present
(3) Relet – Find a new lessor; hold T liable for any deficiency. L must at least try to relet.
Rent deposits
- Most states restrict security deposits to one month’s rent, and require Ls to pay interest
- L can retain SD only for damages actually suffered to premises as consequence of T’s wrongdoing
Landlord’s duty to deliver possession
Landlord must place tenant in actual, physical possession at start of the lease
If prior holdover T is still on site, L has breached → new T gets damages
Implied covenant of quiet enjoyment
T has the right to quiet use and enjoyment of the premises without interference from L
Arises by implication in every residential and commercial lease
Breach of implied covenant of quiet enjoyment
(two types)
- (1) Wrongful eviction – landlord wrongfully evicts T without cause
- Actual eviction – excludes T from entire premises; terminates T’s obligation to pay any rent
-
Partial eviction – excludes T from part of premises; terminates T’s obligation to pay any rent (even though T i possession of remainder)
- Note: Partial eviction by paramount title holder (not L) results in apportionment of rent (T liable for reasonable rental value of portion he continues to possess)
- (2) Constructive eviction – L renders premises unsuitable for occupancy
- (i) Substantial Interference – chronic or permanent problem due to L’s actions or failures
- (ii) Notice – T must notify L
- (ii) Goodbye – T must vacate
- If i-iii (“SING”) satisfied, T may terminate the lease and seek damages
Is a landlord liable for the acts of other tenants?
Generally, no.
Two exceptions:
(1) L has a duty to abate a nuisance on site
(2) L must control common areas
Implied warranty of habitability
The premises must be fit for basic human habitation. Standard discerned from case law and local housing code.
Arises in residential leases only. Nonwaivable.
Breach of implied warranty of habitability
What are T’s entitlements?
MR3
Move – Move out and terminate the lease; but T does not have to
Repair – Make necessary repairs and deduct cost from future rent
Reduce – Reduce or withhold rent until court can determine fair rental value in light of defects; typically must put withheld rental sums in escrow (good faith)
Remain – Remain in possession, pay full rent, and affirmatively seek money damages
Covenant of quiet enjoyment vs. Implied warranty of habitability
How do T’s rights differ if there’s breach?
Covenant of quiet enjoyment – T must vacate to plead constructive eviction
Implied warranty of habitability – T could vacate, but does not have to
Retaliatory eviction
L can’t terminate lease or penalize T in retaliation for T’s exercise of legal rights. Ex: raising rent, harassment.
Presumption of retaliation if L acts within a certain window – usually 90-180 days. L must show valid, non-retaliatory reason for actions.
Civil Rights Act
Bars racial or ethnic discrimination in the sale or rental of all property
Fair Housing Act
No housing discrimination based on race, color, religion, sex, disability, familial status, or national origin.
Must allow reasonable accommodations or modifications for Ts with disabilities. T makes at own expense, but L must allow.
Fair Housing Act – Exemptions
(1) Doesn’t apply to owner-occupied buildings with four or fewer units.
(2) Doesn’t apply to single-family homes sold or rented by an owner who owns no more than three single-family homes.
Fair Housing Act – Prohibited Actions
(1) Refusing to negotiate, rent, sell housing, or give a mortgage.
(2) Providing different terms or conditions for sale or rental.
(3) Falsely representing dwelling as unavailable.
Transfers of leasehold interest – two kinds
Absent some prohibition against it in the lease, T can transfer interest in the lease.
(1) Assignment – transfer of entire remaining term of lease
(2) Sublease – transfer of part of the remaining term of lease
Prohibition on transfer
All jurisdictions permit covenants against assignment or sublease. A covenant against assignment does not prevent sublease.
If T transfers her interest in violation of a covenant, the transfer is not void. However, L may terminate the lease or sue for damages.
If L consents to one transfer that violates a covenant in the lease, he waives his right to avoid future transfers. He may reserve the right to avoid future transfers, but must happen explicitly at time of granting consent.
Assignment
Assignee’s privity? Original T’s privity? Liability?
Assignee stands in shoes of original tenant in direct relationship with L. Assignee is in privity of estate with L. Liable on covenants that run with the land.
Original T in privity of contract with L. Liable for original lease obligations. Remains secondarily liable to assignee; if A cannot pay, T is liable.
Sublease
Sublessee’s privity? Original T’s? Liability?
Sublessee and L have no privity. Sublessee is responsible to original T.
Relationship between L and T remains fully intact.
If S breaches, L proceeds immediately against T (primarily liable). T then proceeds against S.
If L breaches, S proceeds against T. T then proceeds against L.
Landlord’s tort liability
Caveat lessee – “tenant beware”
At common law, the landlord is under no duty to make the premises safe. Five exceptions.
Exceptions to caveat lessee (landlord’s limited tort liability)
- Common areas – ex: hallways, stairs, elevators
-
Latent defects – landlord has duty to warn tenant, not a duty to repair
- Latent defect = dangerous condition T couldn’t discover by reasonable inspection
-
Assumption of repairs – once L undertakes repairs, must complete with reasonable care
- L liable if negligent
-
Public use rule – lease for public space (ex: convention hall) and L should know (significant nature of defect + short nature of lease) that T won’t repair
- L liable for any defects that cause injury to members of the public
-
Short-term lease of furnished dwelling – ex: furnished summer cottage for a few weeks
- L responsible for any defective condition that injures T
“CLAPS”
Easement
The grant of a non-possessory property interest. Entitles holders to use or enjoyment of another’s land.
Affirmative easement
The right to go onto another’s land (the servient parcel) and do something.
The most common type of easement.
Negative easement
The right to prevent the servient landowner from doing something that would otherwise be permissible. These can only be created expressly, signed writing by grantor.
Four categories: (1) Light; (2) Air; (3) Support; (4) Stream water from artificial slow; minority of states also allow for scenic view.
Easement appurtenant
Benefits its holder in his physical use or enjoyment of his own land.
Requires two parcels be involved:
Dominant tenement – derives benefit
Servient tenement – bears burden
Easement in gross
Confers upon its holder some personal or pecuniary advantage unrelated to the use or enjoyment of their land.
Servient land is burdened; however – no benefitted or dominant tenement.
Examples: Right to place a billboard on another’s lot, right to swim in another’s pond, utility company’s right to lay power lines
Transferability of easements
Easement appurtenant – passes automatically with transfers of the dominant tenant.
Does not need to be mentioned in conveyance.
Burden also passes automatically with servient estate, unless new owner is BFP without notice.
Easement in gross – not transferrable, unless it is for commercial purposes
Methods for creating an easement
-
Prescription – analogous to adverse possession
- Use must be: continuous, open and notorious, actual (but not exclusive), and hostile
-
Implication – created by operation of law
- Pre-existing use / quasi-easement – (1) previous use apparent and continuous; and (2) parties expected use would survive division, reasonably necessary to dominant tenant’s use and enjoyment
-
Necessity – when O conveys part of their land with no way out except over part of O’s remaining land
- Servient parcel owner has right to locate easement
-
Grant – memorialized in writing and signed by holder of servient tenement (unless outside SoF for short duration)
- Dead of easement, must comply with all deed requirements
“PING”
Scope of an easement
Determined by terms of the grant or the conditions that create the easement.
No unilateral expansion.
Note: Overuse or misuse does not terminate the easement.
Termination of an easement
-
Estoppel – If servient owner materially changes position in reasonable reliance on easement holder’s representations that easement will no longer be used
- Usually, oral expression of intent to abandon won’t terminate unless also in writing (release) or accompanied by action (abandonment)
-
Necessity – Expires as soon as the need that created the easement has ended
- Unless easement born of necessity was reduced to an express writing
- Destruction – of servient land, other than by willful conduct of owner
- Condemnation – of servient land by governmental eminent domain
- Release – by easement holder, must be in writing
-
Abandonment – easement holder shows by physical action an intent to never use again
- Pattern of nonuse, or mere words, are insufficient
- Merger – easement and title to servient land become vested in same person (estates merge)
- Prescription – servient owner interferes with easement using elements of adverse possession
“END CRAMP”
License
A mere privilege to enter another’s land for a narrow or delineated purpose.
Not considered an “interest” in land – very flimsy
Creation of a license
No writing required – not subject to SoF.
Freely revocable at will of licensor (unless estoppel).
Estoppel barring revocation of a license
Only when licensee has invested substantial money or labor (or both) in reasonable reliance on the license’s continuation.
Becomes easement by estoppel – lasts until holder receives sufficient benefit to reimburse him for his expenditures.
Profit
A profit entitles its holder to enter the servient land and take some resource. Ex: minerals, timber, oil, fish, game.
All rules governing creation, alienation, and termination of easements are applicable to profits. Additionally: Profit may be extinguished through surcharge – misuse that overly burdens the serivent estate.
Covenant – two kinds
A written promise to do, or not do, something related to land (contractual).
Negative or restrictive – promise to refrain from doing something related to land
Affirmative – promise to do something related to land
Covenant vs. Equitable Servitude
If plaintiff wants money damages → covenant
If plaintiff wants injunction → equitable servitude
When does a covenant run with the land?
i.e., when is a covenant capable of binding successors?
Must determine whether: (1) the burden runs with the land; then whether (2) the benefit runs with the land.
Requirements for burden to run – “WITHN”
(1) Writing
(2) Intent – can be inferred from circumstances, but usually in conveyance itself
(3) Touch and concern the land – affects legal relations as landowners
(4) Horizontal and vertical privity
Horizontal – original promising parties were in succession of estate when covenant was made (shared some other relationship regarding land); ex: grantor-grantee, landlord-tenant, mortgagor-mortgagee
Vertical – non-hostile necus between successor in interest and originally covenanting party (only absent in case of adverse possession)
(5) Notice – successor must have had notice of promise when she took
Requirements for benefit to run – Writing, Intent, Touch and Concern, Vertical privity
Equitable servitude
Promise that equity will enforce against successors of burdened land, regardless of whether it runs with the land at law. Relief from strict rules of covenants.
Unless the successor is a BFP.
Accompanied by injunctive relief.
Creation of an equitable servitude
- Writing – generally, but not always (common scheme doctrine is exception)
- Intent
- Touch and concern the land
-
Notice – successor to burdened land must have had some notice when they took
- Non-purchasers (i.e. donees, heirs) bound by covenant whether they knew or not
- Equitable Servitude
Note: No privity requirement
Implied equitable servitude
Common scheme doctrine – court will imply a reciprocal negative servitude. Two elements:
(1) When sales began, subdivider had general scheme of residential development which included defendant’s plot. Ex: recorded plat, general pattern of restrictions, oral representations to early buyers
(2) Defendant lot-holder had notice of the promise contained in those prior deeds when it took.
Actual notice – literal knowledge of promises; Inquiry notice – lay of the land, neighborhood appears to conform to common restriction; Record notice – prior deed in grantee’s chain of title, or other documents.
Common scheme must have been in place from the inception. If arises after some initial lots sold, no ES.
Doctrine of changed conditions
An equitable defense to enforcement.
A court will not enforce an ES if the surrounding neighborhood has so forever changed as to obviate the very purpose of the restriction.
Note: Piecemeal change, or mere pockets of limited change, are never sufficient.
Adverse Possession
Possession for a statutorily prescribed time can ripen into tile if the elements of AP are met. Elements:
(1) Continuous – Uninterrupted, as an owner might use; intermittent insufficient. One AP may tack his time onto a previous AP’s time, so long as privity (non-hostile nexus) between the possessors.
(2) Open and notorious – Sufficiently apparent to put true owner on notice.
(3) Actual and exclusive – Must actually occupy; not sharing with true owner or the public.
(4) Hostile – Without owner’s consent (permission defeats)
Adverse possession – Disability of owner
Statute of limitations will not run against a true owner who is afflicted by a disability at the inception of the adverse possession.
Disability ex: insanity, infancy, imprisonment
The land contract – two-step process
(1) Land contract – conveys equitable title (risk of loss)
(2) Closing – deed passes legal title (right to possess)
Time between contract and closing → the “escrow period” (gives buyer chance for inspection, mortgage, check integrity of title, etc.)
What if inaccurate description in contract of land to be transferred?
Specific performance with a pro rata reduction in price
Land contract requirements
- In writing (SoF)
- Signed by party against whom enforcement is sought
- Identifies the parties
- Describes the property
- State consideration (or a means of determining the price)
Doctrine of party performance – exception to SoF
Allows buyer to enforce an oral contract for land by specific performance if: (1) contract is certain and clear; and (2) acts prove the existence of a contract.
“Acts” usually satisfied by two of the following: (i) buyer took possession; (ii) buyer paid purchase price or a specific portion; (iii) buyer made substantial improvements.
Two implied promises in every land contract
(1) Seller will provide marketable title – title free from reasonable doubt or the threat of litigation at closing. Unmarketable examples:
Defects in record chain of title – ex: If even a portion of the title rests on AP, unmarketable; must be good, record title
Encumbrances – ex: mortgages, liens, easements, restrictive covenants, significant encroachments
Zoning violations – existing violation of a zoning ordinance
(2) Seller will not make false statements of material fact, nor fail to disclose latent material defects.
Seller can disclaim specific defects (general disclaimers likely not upheld). No implied warranties of fitness or habitability (unless new home from builder).
Deed
Land contract merges with the deed at closing; deed becomes the legally operative document.
To pass legal title, the deed must be lawfully executed and delivered.
Requirements for lawful execution of a deed
- Writing signed by grantor
- Unambiguous description of land (okay if imperfect, just needs to provide good “lead”)
- Identification of parties
- Words of intent
Note: No consideration required
Deed – delivery requirement
Legal standard testing grantor’s present intent to be bound. Does not require actual physical transfer.
Rejection defeats delivery – if grantee expressly rejects, deed is ineffective to pass title.
Deed – delivery with oral conditions
If deed is absolute on its face, but transferred to grantee with oral condition – oral condition drops out.
The delivery is done and oral condition can’t be proved
Deed – delivery to third party with conditions
Grantor may deliver executed deed to third party, known as an escrow agent, with instructions that the deed be delivered to grantee once certain conditions are met (ex: payment of purchase price).
Written instructions – grantor bound by delivery to agent
Oral instructions – grantor may change instructions or recall deed while in agent’s hands (unless written contract of sale)
General warranty deed
Identify all six covenants
Best deed – warrants against all defects in title, including those attributable to grantor’s predecessors.
Present covenants – breached, if ever, at time of delivery (SoL runs)
(1) Covenant of seisin – grantor owns this estate
(2) Covenant of right to convey – grantor has power to transfer
(3) Covenant against encumbrances – no servitudes or liens
Future covenants – breached if grantee disturbed in possession (SoL runs at disturbance)
(4) Quiet enjoyment – grantee won’t be disturbed in possession by a third party’s lawful superior claim of title
(5) Warranty – grantor will defend grantee (should any claims be asserted by others)
(6) Further assurances – grantor will do whatever needed to perfect grantee’s title if later turns out to be imperfect
Special warranty deed
Contains the same six covenants as a general warranty deed (warrants against all defects in title), but grantor makes those promises only on behalf of himself.
Does not protect against actions by predecessors in interest.
Quitclaim deed
Worst deed – contains no covenants for title
Grantor not even promising that he has good title to convey.
Statutory special warranty deed
When not specified as to what kind of deed (just says “grant”) – statutory special warranty deed presumed
Grantor makes two promises, only on behalf of himself: (1) hasn’t granted estate to anyone other than grantee; (2) estate free of encumbrances made by grantor.
Recording systems – at common law
At common law, the first conveyance takes title. Unless there is a recording statute, this applies.
Bona fide purchase (BFP) requirements
- Be a purchaser
- Does not protect heirs, donees, or devisees (unless shelter rule)
- Pay valuable consideration
- Even if a “bargain basement sale” – so long as substantial pecuniary consideration
- Take without notice of prior conveyance
- Actual, inquiry, or record
Race recording statute
B wins, if he wins the race to record. Very few states have pure race statute.
Under a race statute, the first party to record wins. Notice of a prior conveyance by the grantor doesn’t matter (don’t need to be a BFP).
“Conveyance shall not be valid against a subsequent purchaser for value unless the conveyance is first recorded.”
Notice recording statute
B wins, if he’s the last BFP to take.
The last BFP to enter the facts wins, regardless of who wins the race to record. If properly recorded, B would have notice, and would not be a BFP.
“Conveyance of land shall not be valid against any subsequent purchaser for value, without notice thereof, unless the conveyance is recorded.”
Race-notice recording statute
B wins, if he’s a BFP, and he records before A does.
Must be a BFP, and must record first.
“Conveyance of land shall not be valid against any subsequent purchase for value, without notice thereof, whose conveyance is first recorded.”
“Conveyance shall not be valid against a subsequent purchaser for value unless the conveyance is first recorded.”
Race statute
“Conveyance of land shall not be valid against any subsequent purchaser for value, without notice thereof, unless the conveyance is recorded.”
Notice statute
“Conveyance of land shall not be valid against any subsequent purchaser for value, without notice thereof, whose conveyance is first recorded.”
Race-notice statute
Chain of title
To give record notice, a deed must be recorded properly within the chain of title.
The chain of title is the sequence of recorded documents capable of giving record notice to later takers.
Established, for example, through title search of the grantor-grantee index.
Shelter rule
Anyone who takes from a BFP will prevail against any interest the BFP would have prevailed against.
Transferee “takes shelter” in the status of her transferor. System protects BFP, makes it easier for her to transfer successfully.
Wild deed
A recorded deed that isn’t connected to the chain of title.
It does not impart record notice because a subsequent buyer could not feasibly find it.
Estoppel by deed
One who conveys realty in which he has no interest is estopped from denying the validity of that conveyance if he subsequently acquires the title.
The title automatically vests in the grantee.
But – watch out for a BFP! The early recording is outside chain of title, a wild deed that gives no notice.
Mortgage transaction – two documents
-
Promissory note – mortgagor’s personal obligation
- Mortgagee not limited to the land when seeking a remedy for default (can sue personally for repayment)
- Mortgage – agreement that if the mortgagor quits paying, the land can be sold to pay the mortgagee
Mortgagor
Borrower
Mortgagee
Lender
Purchase-money mortgage
Extension of value by a lender who takes as collateral a security interest (lien – mortgage) on the very parcel that the loan enables the debtor to acquire
Non-purchase-money mortgage
Lender is not extending value to enable mortgagors to own a home; it is a collateralization of land (owned outright) to finance a new venture
Creation of a mortgage
Debt (promissory note) + voluntary lien in land to secure debt (mortgage)
In writing – legal mortgage; must satisfy SoF
Other terms for a mortgage
Mortgage deed, deed of trust, sale leaseback, security interest in land
Can a mortgagee transfer his interest? How?
Yes. Two methods:
(1) Endorsing the note and delivering it to the transferee; or
(2) Executing a separate document of assignment
Can a mortgagor transfer his interest? How?
Yes. If mortgagor transfers the property, the buyer either assumes the mortgage*, or *takes the property subject to the mortgage.
Transferee assumes no personal liability. Only the original debtor-mortgagor is personally liable.
However, if the mortgagor defaults, the mortgagee can foreclose on the land.
Note: Recording statutes protect mortgages. If recorded, the mortgage sticks with the land.
Who is liable if buyer “assumes” mortgage?
If B “assumes” the mortgage – both original debtor and B are personally liable.
B is primarily liable, and O remains secondarily liable.
Who is personally liable if buyer takes “subject to” the mortgage?
B assumes no personal liability. Only the original mortgagor is personally liable.
However, if recorded, the mortgage remains on the land; if mortgagor does not pay, mortgage may be foreclosed.
Foreclosure
Occurs through proper judicial proceedings.
Land is sold, and proceeds go towards satisfying the debt.
What is the proceeds from foreclosure are less than the amount owed on the mortgage?
Mortgagee brings a deficiency action against the debtor.
What if there is a surplus after a foreclosure?
- Junior lien are paid off in order of their priority
- Any remaining surplus goes to the debtor
Repayment – effect of foreclosure on interests
(1) Off the top – attorney’s fees and expenses of foreclosure; any accrued interest on the first priority lender’s mortgage
(2) Proceeds then used to pay off mortgages in order of priority; each claimant entitled to satisfaction in full before a junior lienholder may take
(3) Junior interests are terminated (not senior interests). Junior lienholders can no longer look to the land for satisfaction – must bring deficiency judgment.
Priority of creditors
First in time, first in right. However – must record.
A purchase-money mortgage has first priority in the parcel financed – takes “super priority” over, for ex: a floating lien.
Subordination agreement – by private agreement, a senior creditor may agree to subordinate its priority to a junior creditor.
Necessary parties to a foreclosure action
All junior lienholders and the debtor.
If a necessary party is not joined, their mortgage remains on the land (despite foreclosure and sale).
Equitable redemption
Acceleration clause vs. no acceleration clause
Universally recognized up to the date of foreclosure sale. Debtor has a right to redeem the land (by paying) and free it of the mortgage.
Acceleration clause – permits the mortgagee to declare the full balance due in the event of default.
If no acceleration clause → ER by paying off missed payments + accrued interests and costs
If acceleration clause → ER by paying off entire balance owed + accrued interests and costs
Can a debtor waive their right to equitable redemption?
No
Enabling legislation
Delegates to local government the capacity to pass zoning ordinances in furtherance of the state’s police powers
The variance
A means to achieve flexibility in zoning. Permission to depart from zoning restrictions.
Must show: (1) undue hardship; and (2) no diminution to neighboring property values.
Determined by administrative action.
The nonconforming use
A previously allowed use cannot be eliminated all at once by a new zoning ordinance unless just compensation is paid.
Cumulative zoning
- Land is ranked and categorized to create a hierarchy of uses
- Single-family home is highest use
- Then: two-family home, apartment building, strip mall, factory
- Land zoned for particular use may be used for that use, as well as any higher use
Noncumulative zoning
Land may be used only for the purpose for which it is zoned
Special use permit
Must be obtained even though the zoning is proper for the intended use.
Usually in areas where there are safety, general welfare concerns. Ex: hospitals, funeral homes, drive-in businesses, etc.
Condominium association
Each owner owns the interior of their individual unit*, plus an *undivided interest in the exterior and common elements.
Owns unit in fee simple.
Owns exterior/common elements as a tenant in common.
Homeowner’s associations
- Each condo owner is a member
- Oversee common elements
- Board enforces covenants, conditions, restrictions on each owner’s use of the property
- Members must pay regular dues to HOA, used to maintain common elements
- Special assessment – one-time fee if dues don’t cover an expense
Rights incidental to ownernship of land
Landowner has exclusive right to use and possess the surface, airspace, and soil of the property.
Lateral support rights
The right to have land supported in its natural state by adjoining land.
If landowner causes adjacent land to subside:
(1) Land in natural state – strict liability
(2) Land improved – liability if negligent
Watercourse rights
Watercourses – streams, rivers, lakes
Riparian doctrine – Water belongs to those who own the land bordering the watercourse
Owners riparian share the right of reasonable use of the water.
Prior appropriation doctrine – Water belongs to the state; right to divert or use can be acquired through actual use
Priority of beneficial use – be among the first to use, regardless of land ownership.
Groundwater rights
Groundwater – percolating water
Surface owner can make reasonable use of groundwater.
Surface water rights
Surface waters – waters passing across your lands as a consequence of heavy rains, springs, or melting snow, which have not yet reached a natural watercourse or basin
Owner can use surface water within their boundaries for any purpose they desire.
Common enemy rule – owner can take any protective measures to get rid of surface water or combat its flow.
Right to exclude
Right to be free of trespass and nuisance.
Trespass – invasion by tangible physical object
Continuing trespass – land repeatedly invaded by trespasser
Private nuisance – land invaded by intangibles, such as odor or noise
Doctrine of equitable conversion
Once a land contract is signed, both parties are entitled to specific performance.
Equity regards the buyer as the owner of the real property, and the seller has the right to the proceeds of sale (personal property).
If seller dies – the bare legal title passes to takers of her real property, but must give to buyer when contract closes. (Buyer gets deed, full legal title, from estate). The money passes to those who take the seller’s personal property.
If property destroyed – buyer bears risk following completed contract.
