Real Property

Question 1

Zoning

Answer 1

• Variance: Is an exception to a zoning ordinance.
  
  • Two types→(i) use variance, and (ii) area variance.
  • A variance application may be granted if:
    
    1. Property owner shows he will suffer hardship because of the ordinance; AND
    2. Variance will not damage or harm the public welfare.
• Previous Non-Conforming Use: Allows a landowner to continue to use his land in violation of a later enacted zoning law.
  
  • If the prior use was originally legal, a subsequent zoning law will NOT bar the continued use.
  • The non-conforming use MUST be continuous, otherwise it’s no longer protected.
• Changes to a Non-Conforming Use Property:
  
  • Insubstantial changes and reasonable alterations to repair the property→ PERMITTED.
  • Substantial changes that enlarge, alter, or extend the non-conforming use→NOT ALLOWED.

Question 2

Future Advance Mortgage

Answer 2

• Is a loan by which the lender may provide future payments under the original loan.
  
  • Lender secures the mortgage for the ENTIRE amount of the loan, including future advances.
• Obligatory vs. Optional Future Payments:
  
  • Obligatory→lender has a duty to advance funds regardless of the situation (no discretion).
  • Optional→lender has discretion whether to make future advances.
• Priority Over Other Creditors:
  
  • Future payments are obligatory → ALL payments are part of the original loan and have priority over later liens.
  • Future payments are optional→the future payment(s) DO NOT have priority over liens recorded before the payment is made.

Question 3

Types of Deeds

Answer 3

• General Warranty Deed – Contains 6 covenants of title:
  
  • Present Covenants (only breached at the time of conveyance):
    
    1. Seisin – rightful owner;
    2. Right to convey; and
    3. Covenant against encumbrances.
  • Future Covenants:
    
    1. Warranty – to defend against any third-party claims to title;
    2. Quiet enjoyment – to not be bothered by a third-party’s claim to title; and
    3. Further assurances – to do whatever is reasonable to perfect title.
  • Enforcement of Present Covenants:
    
    • Common Law→present covenants are NOT enforceable by remote grantees.
    • Some States→will enforce the covenant against encumbrances if the remote grantee did not have notice of the encumbrance.
• Special Warranty Deed – Warrants that seller has not breached the covenants of title during the ownership:
  
  1. Seller has not previously conveyed the property; AND
  2. No encumbrances against title made by seller.
• Quitclaim Deed – Is an “as is” deed; contains NO warrantees/covenants.
  
  • The grantor is NOT liable for any encumbrances or defects in title.

Question 4

Recording Statutes & Notice

Answer 4

1. Notice Statute Jurisdiction→Subsequent bona fide purchaser (i.e., for value, without notice) prevails.
2. Race Statute Jurisdiction→whomever records first prevails (notice is irrelevant).
3. Race-Notice Statute Jurisdiction→Subsequent bona fide purchaser (i.e., for value, without notice) who records first prevails.

• Notice = (a) actual notice; (b) constructive (record) notice; or (c) inquiry notice (notice of what a reasonable inspection of land would provide).
  
  • Everyone who buys land is expected to physically examine land and records.

Question 5

Home Builder’s Implied Warranty

Answer 5

• Protects buyers of newly built homes against latent defects AND warrants the home is safe and fit for human habitation at the time of sale.
  
  • Latent Defect = a defect that not discoverable by a reasonable inspection.
• Breach – allows a buyer to recover damages discovered within a reasonable time for:
  
  1. Defective construction; OR
  2. Construction not performed in a workmanlike manner (the accepted norms of the industry).
• Subsequent Purchasers:
  
  • Some States→requires privity of contract with the home builder.
  • Other States→warranty applies because a subsequent buyer is in the same vulnerable position.

Common Law Rule: Contracts of sale and deeds carry no implied warranty of quality or fitness for the purpose intended. Home Builer’s Warranty is an exception.

Question 6

Tenants Duty to Pay Rent

Answer 6

• Runs with the land. If tenant remains on land + does not pay rent, landlord can:
  
  1. Evict the tenant; OR
  2. Allow to remain on property and sue for damages.
• If tenant abandons and doesn’t pay rent, landlord may have to take reasonable steps to mitigate losses (depends on state law, common law = no need to mitigate).

Question 7

Landlord’s Duty to Mitigate Damages

Answer 7

• Common Law→NO duty to mitigate damages.
• Most States→Impose a duty to take reasonable steps to mitigate losses (i.e. attempting to lease the property to another).
  
  • The mitigation DOES NOT need to be successful in order to recover damages.

Question 8

Assignement of Lease

Answer 8

• When a tenant transfers ALL of his remaining lease interest to a third-party.
  
  • A lease may be freely assigned UNLESS the lease states otherwise.
  • An assignment CANNOT be for a longer period than the remaining lease term.
• Liability for Rent/Breach:
  
  • Assignee→liable to the landlord for rent and all other covenants that run with the land (privity of estate).
  • Assignor (Original Tenant)→also remains liable for rent (privity of contract).
  • Landlord→maintenance obligation runs with the land (privity of estate).
• Landlord’s Consent for Assignment→If the lease requires landlord’s consent, consent MUST be obtained.
  
  • Most States→landlord may withhold consent for any reason.
  • Some States→landlord MUST have a reasonable basis for withholding consent.

Question 9

Surrender of Lease

Answer 9

• An agreement to end a lease early.
  
  • Landlord must clearly accept surrender of the lease (unless otherwise agreed).
  • An attempt to end the lease early (such as leaving the keys) DOES NOT constitute a surrender unless landlord clearly accepts.
• If landlord:
  
  • ACCEPTS the surrender→tenant’s duty to pay rent (after the acceptance) ends.
  • DOES NOT accept the surrender→tenant is deemed to have abandoned and is liable for damages.
• Usually, when a landlord substantially reconfigures the building immediately after the tenant has vacated, such that the space is no longer consistent with the space the doctor rented, then it is a clear acceptance of a tenant’s surrender of lease. It shows the intent to accept surrender especially when the place is leased for a higher rent.

Question 10

Adverse Possession

Answer 10

• Allows a possessor of land to acquire title to that land.
• Elements – The possession must be:
  
  1. Continuous for the statutory period;
  2. Open and notorious – use that would put a true owner on notice;
  3. Exclusive;
  4. Actual – possess the land as a true owner would; AND
  5. Hostile and under a claim of right (without the true owner’s consent).
• Aggregation / Tacking – Adverse possessors in privity may aggregate their years spent possessing the property to meet the statutory period.
  
  • Privity→exists when the land is voluntarily transferred to another (i.e. deed or bequest).
• Title Acquired – Is the same title as the original owner possessed (including easements).
• Constructive Adverse Possession – If a person takes possession of a portion of land under color of title (invalid deed), the adverse possession extends to the entire portion of land described in the deed/title.
• General Rule: Adverse possessor only gains title to land he actually occupies.
• Adverse possessor > subsequent BFP (even if recorded) because there is no doc the interest holder could record.

Question 11

Implied Warranty of Habitability

Answer 11

• Landlord MUST provide a place to live that is habitable→reasonably suitable for human needs.
  
  • Implied in every residential lease.
  • Some courts also impose this warranty in commercial leases (in limited circumstances).
• If warranty is breached, tenant may:
  
  • move out & terminate the lease;
  • withhold or reduce the rent;
  • repair the issue & deduct the cost; OR
  • remain on the premises & sue for damages.

Question 12

Constructive Eviction

Answer 12

• Every lease includes an implied covenant of quiet enjoyment that prevents a landlord from interfering with the tenant’s quiet enjoyment and possession of the property.
  
  • This covenant is breached when a tenant is constructively evicted.
• Constructive Eviction→occurs when:
  
  • Landlord breached a duty to tenant;
  • The breach caused a loss of the substantial use and enjoyment of the premises;
  • Tenant gave landlord notice of the condition;
  • Landlord failed to remedy the condition within a reasonable time; AND
  • Tenant vacated the premises.
• If constructive eviction occurs, tenant may terminate the lease, seek damages, & may avoid rent for time constructively evicted.
• Residential Leases→Landlord HAS a duty to (1) repair common areas, and (2) warn of latent defects that create a risk of serious harm that the landlord knows of (or should know of).
• Commercial Leases→Landlord has NO duty to repair (unless specified in the lease agreement).

Question 13

Joint Tenancy: Creation

Answer 13

• Created when 4 unities are present→Unity of (1) time, (2) title (same instrument), (3) interest, AND (4) possession.
  
  • MUST have clear express intent to create a Joint Tenancy with a right of survivorship (i.e. deed states “as joint tenants”, “right of survivorship”).

Question 14

Joint Tenancy: Severence

Answer 14

• Joint tenant unilaterally transfers his ownership = joint tenancy is severed = hold as tenants in common.
  
  • If there are more than two joint tenants, the joint tenancy remains, but only among the other joint tenants.
• If a joint tenant takes out a mortgage on her interest:
  
  • Title Theory Jurisdiction→severs joint tenancy
  • Lien Theory Jurisdiction→does not sever
• If one joint tenant leases the property:
  
  • Most States→severs joint tenancy

Question 15

Types of Leasehold Interests

Answer 15

• 3 Types:
  
  1. Tenancy for Years – lasts for a fixed period of time; automatically terminated after the period ends.
  2. Periodic Tenancy – lasts for initial period, then automatically continues for additional equal periods (weekly/monthly) until terminated by proper notice.
     
     • Is created by: (a) express agreement; (b) implication if rent is paid at specific periods; OR (c) law (when a tenant-for-years remains after termination of the period or lease is invalid).
     • Termination→written notice at least a full period in advance (if yearly, 6 months’ notice is required).
  3. Tenancy at Will – continues until either party terminates it; usually created by express agreement.
     
     1. Termination→notice + reasonable time to quit the premises (in some states, no notice is required).

Question 16

Easement

Answer 16

• Is a non-possessory interest in the use of someone else’s land.
  
  • Easement in Gross→benefits a specific owner’s enjoyment (DOES NOT pass to subsequent owners, unless easement is for commercial activity).
  • Easement Appurtenant → benefits any owner’s enjoyment (DOES pass to subsequent owners, if owner had notice).
• 4 Ways to Create an Easement:
  
  • Easement by Grant→Requires:
    
    1. a signed writing by the grantor;
    2. identify the land and parties involved; AND
    3. indicate grantor’s intent to convey the easement.
    4. *Scope = the use agreed upon.
  • Easement by Prescription→Created when a possessor’s use of the land is:
    
    1. open and notorious;
    2. continuous;
    3. hostile (without permission from the land owner); AND
    4. for the statutory period (i.e. 10 years).
    5. *Scope = actual usage during statutory period.
  • Easement by Implication→Established when:
    
    1. a single tract of land is divided by a common owner;
    2. a pre-existing use by the grantor is established prior to the division;
    3. use was continuous and apparent indicating that it was meant to be permanent; AND
    4. the use is reasonably necessary for the owner’s use and enjoyment of the land conveyed.
    5. *Scope = the prior use.
  • Easement by Necessity→Created if:
    
    1. land owned by one owner is subdivided; AND
    2. the easement (access of land) is essential to the use because no other ingress/egress is available.
    3. *Scope = is limited to remedying the necessity.

Question 17

Termination of Easement

Answer 17

• An easement may be terminated by:
  
  • Estoppel – when the servient estate owner reasonably relies (or materially changes position) on an assurance that the easement will not be enforced;
  • Termination of necessity;
  • Involuntary destruction of servient estate;
  • Condemnation of servient estate;
  • Written release;
  • Abandonment – a physical action showing an intent to never use the easement again;
  • Merger of the properties (if land is separated again, it does not revive the easement); OR
  • Prescription.

Question 18

Fixture

Answer 18

• Is personal property affixed to the land/dwelling so that it becomes part of the land.
  
  • Whether an item is a fixture is determined by the objective intent of the installer.
• Determining if a Fixture → Courts consider the (1) nature of item, (2) way it is attached, (3) possible damage of removal, and (4) extent to which the item is adapted to the property.
  
  • The more its incorporated into the property, the more likely it’s a fixture.
• Trade Fixture Exception – An item attached for a tenant’s trade or business is NOT a fixture UNLESS removal causes substantial damage to the property.
  
  • But, the item may become a fixture if it’s not removed by end of lease term.

Question 19

Chain of Title

Answer 19

• Shows all transfers for a piece of land.
  
  • 2 Indexes→one organized by names of grantors, and one organized by names of grantees.
• Wild Deed = A deed NOT recorded properly, and thus not discoverable in the chain of title.
  
  • A wild deed DOES NOT put subsequent purchasers on constructive notice of a land transfer.

Question 20

Bondafide Purchasers & Shelter Rule

Answer 20

Bona Fide Purchasers (BFP) – is a person who:

1) takes real property without notice of a prior

conveyance; AND

2) pays valuable consideration.

*A person who receives land by gift (a donee) or by bequest (heir, devisee) is NOT a BFP.

Shelter Rule – A person who purchases from BFP receives the same status and rights as BFP.

Question 21

Land Sale Contract Requirements

Answer 21

• To be valid, the contract MUST:
  
  1. Be in writing (satisfy the Statute of Frauds);
  2. Describe property;
  3. Identify parties;
  4. Contain the purchase price; AND
  5. Be signed by grantor/grantee (depending on whom the contract is being enforced against).
• Merger Doctrine→Once the deed is delivered & accepted, the land sale contract merges with the deed.
  
  • Result is that rights to sue under the contract are EXTINGUISHED, and a buyer may only sue upon the deed.
• Some Courts→will NOT apply the merger doctrine if it doesn’t carry out the probable intent of the parties.
  
  • Examples: mutual mistake, scrivener’s error.

Question 22

Doctrine of Equitable Conversion & Risk of Loss

Answer 22

• Doctrine of Equitable Conversion→splits ownership between the buyer and seller once the land sale contract is signed.
  
  • Buyer → has equitable title of the property.
  • Seller→has legal title, and holds the property in trust for the buyer.
• Risk of Loss:
  
  • Most States→risk of loss transfers to the buyer upon signing the contract.
  • Minority States→Seller bears the risk of loss UNLESS buyer has possession or title to the property at the time of loss.

Question 23

Deed Requirements

Answer 23

• A valid deed MUST:
  
  • be in writing;
  • signed by grantor;
  • identify parties (grantor & grantee);
  • describe property; AND
  • indicate the grantor’s intent to convey the land.
• Grantor’s Intent to Convey Land – Any words indicating grantor’s intent to immediately convey the land are sufficient (i.e. grant, convey, give, transfer).
  
  • BUT, intent will not be found if: (a) grantor expressly reserves the right to revoke the deed; OR (b) gives an instruction to only deliver the deed upon grantor’s death.
• When a deed is unconditional on its face and given to a grantee, any additional oral conditions are NOT valid.
  
  • BUT, if same deed is given to a third-party (i.e. to be held in escrow), the additional conditions create a conditional delivery.

Question 24

Assumption & Transfer Subject to Mortgage

Answer 24

• Assumption of a Mortgage→may be express or implied.
  
  • Express Mortgage Assumption – occurs if there is an express agreement for grantee to (1) take the real property, AND (2) continue making mortgage payments.
  • Implied Mortgage Assumption (only allowed in a few states) – occurs if: (1) no express agreement exists; (2) grantee/buyer pays the seller only the equity in the home; AND (3) grantee continues to make payments to the lender on the balance of the mortgage.
• If a buyer “assumes” the mortgage, he is primarily and personally liable on the mortgage.
  
  • Seller remains secondarily liable.
• Transfer Subject to a Mortgage → If a buyer takes real property subject to a seller’s mortgage, he is NOT personally liable on the mortgage.
  
  • BUT, a duly recorded mortgage remains on the land, and mortgagee (lender) may foreclose on the mortgage.