Real Property

Question 1

What are the necessary elements for a covenant to run with the land?

Answer 1

Remember, it must be WITHVN the land

1. Writing: covenant is in a writing that satisfies the statute of frauds
2. Intent to run: promising parties intend for the covenant to run to their successors’ interest
3. Touch and concern the land: covenant relates to the use, enjoyment, or occupation of the land
4. Horizontal privity: promising parties simultaneously transfer the land and create the covenant
5. Vertical privity: successors have an unbroken chain of ownership from the original parties
6. Notice: person to be bound had actual, record, or inquiry notice of the covenant (required only if the person to be bound by the covenant was a purchaser).

Question 2

Elements of Adverse Possession

Answer 2

OCEAN

1. Open and Notorious
2. Continuous
3. Exclusive
4. Actual
5. Nonpermissive

One only acquires title to the area one actually possesses (unless there is color of title, a unitary tract, and possession of an amount that is reasonable in relation to the whole—in which case, the adverse possessor can acquire the whole tract).

Question 3

doctrine of tacking

Answer 3

An adverse possessor may tack on the predecessor’s time if there is privity between subsequent adverse possessors.

Privity is present where the the first possessor gives and the second possessor takes by nonhostile means (e.g. descent, devise, contract, or deed)

Question 4

Failure to record an interest acquired by adverse possession

Answer 4

The adverse possessor will prevail over a subsequent bona fide purchaser who complied with the recording act because there is no document that the interest holder could record

Question 5

Uniform Vendor and Purchaser Risk Act

Answer 5

Under this act, the risk of loss remains with the seller until the buyer takes possession of or receives legal title to the property. Thus, the common law presumption that the risk of loss goes to the buyer when they gain equitable title is reversed.

Question 6

What makes a deed void?

Answer 6

A deed is void and unenforceable, even by a bona fide purchaser, if (1) the grantor’s signature is forged, (2) the deed itself is forged, or (3) the grantor is deceived about nature of the executed document.

Question 7

Validity of a deed

Answer 7

To be valid, a deed must: 1) identify the buyer and the seller, describe the land, 2) contain words denoting a present intent to convey, 3) be signed by the grantor, and 4) be delivered. (Delivery is a question of intent to pass title presently)

Question 8

Contract of sale

Answer 8

Before a deed is delivered, the contract of sale is signed. Under equitable conversion, as soon as the contract is signed (but before closing) the buyer’s interest is real property (the land he contracted to buy), and the seller’s interest is personal property (the money he will get from the sale). Thus, the risk of loss remains in the buyer under equitable conversion, even if the seller remains in possession and control of the land.

Question 9

Types of deeds

Answer 9

1. general warranty deed
2. specific warranty deed
3. quitclaim deed

Question 10

What covenant is implied in all real estate contracts?

Answer 10

The warranty of marketable title is implied in all real estate contracts unless otherwise provided. This guarantees that, upon closing, the seller will convey the buyer title that is free from an unreasonable risk of litigation.

This rule applies to contracts for sale even if the deed that will be transferred is a quitclaim deed.

Question 11

Quitclaim deed

Answer 11

The grantor gives no covenants and the grantee gets whatever the grantor has. The grantee takes the land subject to a defect in the title, an undisclosed easement, or other problem, and has no recourse.

Question 12

General warranty deed

Answer 12

Provide the greatest amount of title protection. The grantor warrants title against all defects, even if the grantor did not cause the defects. 6 covenants included. (Remember Sally Can Enter Quietly With Fred)

Present covenants contained:

1. Seisin
2. (right to) Convey
3. (against) Encumbrances

Future covenants contained:

1. Quiet enjoyment
2. Warranty
3. Further assurances

Question 13

Covenant of seisin

Answer 13

Present covenant that the grantor owns the land described in the deed

Question 14

Covenant: right to convey

Answer 14

Present covenant that the grantor has the right to transfer title

Question 15

Covenant against encumbrances

Answer 15

Present covenant that there are no undeclared encumbrances against the land

Question 16

Covenant of quiet enjoyment

Answer 16

Future covenant that the grantee will not be disturbed in possession by a third party’s lawful claim

Question 17

Covenant of warranty

Answer 17

Future covenant that the grantor will defend the grantee against a third party’s claim

Question 18

Covenant of further assurances

Answer 18

Future covenant that the grantor will do whatever future acts acts reasonably necessary to pass title if it’s later determined that title is imperfect

Question 19

Special warranty deed

Answer 19

Same covenants of title as a general warranty deed, but only warrants against defects arising during the time the grantor has title

Question 20

Merger

Answer 20

On the closing date, the contract for sale merges with the deed, so the buyer can only sue on the deed from that point on

Question 21

Implied warranty of fitness and habitability

Answer 21

A builder of new homes implied warrants to the buyer that the home is habitable and dot did it’s intended purposes. This warranty applies to defects that are discovered within a reasonable time and are due to the builder’s negligence or failure to do work in a workmanlike manner

Question 22

Common law rule for rights against subsequent buyers

Answer 22

First in time, first in right. Under the common law, a grantor can convey only those rights that the grantor has at the time of the conveyance. Thus, the common law follows the first in time, first in right principle.

All states have recording statutes that change the results of the common law principle.

Question 23

Three kinds of recording statues

Answer 23

1) Race
2) Notice
3) Race-notice

Question 24

Notice statutes

Answer 24

Protect subsequent bona fide purchasers for value who take without notice of the earlier transaction.

E.g. A conveyance of interest in land is not valid against any subsequent purchaser for value without notice unless it is recorded

Question 25

Race-notice statutes

Answer 25

Protect subsequent bona fide purchasers for value who take without notice and are the first to record

E.g. no conveyance of an interest in land is valid against any subsequent purchaser for value without notice unless it is first recorded

Question 26

remember for race-notice

Answer 26

in a race-notice jurisdiction, you need to win the race AND not have actual notice

Question 27

Race statutes

Answer 27

Protect subsequent bona fide purchasers for value who take without notice and are first to record.

These are rare in real life.

Question 28

Three types of notice

Answer 28

1. Actual notice
2. Inquiry notice
3. Record notice

Question 29

Actual notice

Answer 29

Grantee actually knows about the conveyance

Question 30

Inquiry notice

Answer 30

Examination of the land or reference in an instrument would lead a reasonable person to inquire

Question 31

Record notice

Answer 31

The interest is recorded in the chain of title. Deeds that are recorded too late or too early are “wild deeds”. Wild deeds do not operate as giving notice.

Question 32

General mortgage liability after transfer

Answer 32

A mortgagor (homeowner) can transfer title to the property. However. The mortgage will remain on the property and the mortgagor is still personally liable on the note. Generally, a new transferee who takes the land “subject to” the mortgage is not personally liable. However, if the transferee “assumes” the mortgage, he is personally liable along with the original mortgagor. (Some jurisdictions say that if the transferee pays the mortgage payments, he impliedly assumes the mortgage).

A novation occurs when the original mortgagor, the new transferee, and the mortgagee all agree that the mortgagor is no longer liable and the transferee assumes all of the mortgagor’s duties.

The original mortgagor will also be released from all liability if the mortgagee releases the mortgaged property.

Question 33

Tenancy for years

Answer 33

A tenancy for years includes a lease that specifies both a beginning and an end date

Question 34

Periodic tenancy

Answer 34

A periodic tenancy has no fixed end date. It simply repeats until one party gives valid notice tot he other. It can be created by an express agreement, implication (where the lease contains no end date), or operation of law (e.g. an oral lease for a term of more than one year will be invalid under the statute of frauds).

Valid notice is required to terminate a periodic tenancy, and to be valid, the notice period must equal to or longer than the payment term

Question 35

Assignment

Answer 35

If a lease does not prohibit an assignment (for the remainder of the lease) or sublease (for less than the remainder of the lease), a tenant can assign or sublease her interest in the lease

Question 36

Constructive eviction

Answer 36

A tenant can sue for constructive eviction if the tenant can prove that the landlord breached a duty to the tenant (e.g. the duty do repair) and the breach caused a loss of substantial use and enjoyment of the premises, and the tenant vacated the premises within a reasonable time after giving the landlord adequate notice

Question 37

Remedies for breach of the implied warranty of habitability

Answer 37

In a residential lease, if the premises are uninhabitable, the tenant can vacate the premises, sue for damages, offset damages, and more

Question 38

Duties of the Tenant

Answer 38

The tenant must pay rent. If the tenant does not pay rent, but has abandoned the premises, the landlord can sue the tenant for damages or treat it as a surrender (the latter excuses future rent obligations)

Question 39

Duty to Mitigate

Answer 39

Under common law, the landlord has no duty to mitigate damages. Many states have abandoned this approach and require that the landlord make a reasonable effort to mitigate damages (e.g. by attempting to re-rent the premises if the tenant leaves)

Question 40

Fair Housing Act

Answer 40

Disallows discrimination of housing sales or rentals on the basis of race, color, religion, sex, familial status, or national origin (but not occupation). This does not apply if the owner occupies one of the units in a multiple-unit dwelling containing no more than four units occupied by persons “living independently of each other”. However, an owner may not place a discriminatory advertisement. If such an advertisement is made, the owner and publisher will have violated the acts

Question 41

Creation/types of easements

Answer 41

1. Express
2. Implied by implication
3. Implied by necessity
4. Implied by Prescription

Question 42

Express easement

Answer 42

An express easement by grant arises when the easement is affirmatively created by the parties in a writing that satisfies the statute of frauds.

An express easement by reservation is created when a grantor conveys land bust reserves an easement right in that land for his own use and enjoyment.

Question 43

Implied easement by implication

Answer 43

1) A single tract of land is divided by a common owner and a piece of the land is conveyed to another
2) Before the division, the common owner used the single tract of land as if there was an easement on it
3) After the division; the common owner’s use of the conveyed land must be continuous and apparent, AND
4) Such use must be reasonably necessary for the owner’s use and enjoyment

Question 44

implied easement by necessity

Answer 44

1. A single tract of land is divided by a common owner and a piece of the land is conveyed to another, AND
2. Necessity arose when the land was divided into two separate estates where one of the properties became virtually useless without the easement

Question 45

Implied easement by prescription

Answer 45

Created when a landowner allows a trespasser to use his land continuously for the statutory period. The trespasser’s use must be: 1) hostile 2) open and notorious, and 3) continuous for the statutory period

Question 46

Termination of an easement

Answer 46

1. Release
2. Merger
3. Abandonment
4. Prescription
5. Sale to a bona fide purchaser
6. Estoppel
7. End of necessity

Question 47

Creation of a joint tenancy

Answer 47

Four unities (TTIP)

1. Time
2. Title
3. Interest
4. Possession

Most states require the language “joint tenancy” and adding an express reference to survivorship to create a joint tenancy

Question 48

Severance of a joint tenancy

Answer 48

1. Giving it away
2. Sale
3. Judicial sale by a judgment lien creditor
4. Mortgage (if a title theory state)
5. Lease: There is a split among jurisdictions with respect to joint tenancies when one joint tenant leases his interest. Some jurisdictions hold that the lease destroys the unity of interest and thus severs the joint tenancy, while other jurisdictions believe that the lease merely temporarily suspends the joint tenancy, which resumes upon expiration of the lease.

Question 49

Is a co-tenant liable to other co-tenants for income earned from use of the property?

Answer 49

Yes, a co-tenant must account to other tenants for rent received from third parties, but can deduct operating expenses, including necessary repairs, when calculating net proceeds. Third party rents are divided based on the ownership interest of each party.

Question 50

Special circumstance where a transferee landlord does not have to honor a lease entered into by a transferor landlord

Answer 50

If the transferor landlord owns the land as a joint tenant with the right of survivorship, then dies, the transferor’s interest in the land is transferred to their co-tenant through the right of survivorship. In this case, the lease terminates.

Question 51

Tenant’s obligations after property is condemned

Answer 51

A tenant is excused from paying rent when the government condemns the entire leased property for the remainder of the lease term. However, when the government condemns only part of the property, or condemns all of the property for less than the remainder of the lease, the tenant remains liable for rent

Question 52

Marketable title

Answer 52

Marketable title exists when title is reasonably free from doubt and under no threat of litigation such that a reasonable person would accept and pay for it.

Question 53

Does a zoning violation make title marketable?

Answer 53

An existing zoning violation renders title unmarketable.

Question 54

What happens to a mortgage when the mortgagor dies?

Answer 54

After a person dies, creditors can only obtain satisfaction of their debts from the decedent’s estate. The decedent’s estate will only include their interests in land that continue after their death. Important example: If a joint tenant dies and had a mortgage on the JT property in a lien state, the bank cannot foreclose on the JT property because the debtor/decedent’s interest absorbed by the other JT due to the right of survivorship. If the JT property was in a title theory state, the mortgage destroyed the JT, so the decedent/debtor’s interest in property goes to their estate.

Question 55

Option to purchase

Answer 55

An option to purchase gives the option holder the exclusive right to purchase the property during a specified time. If the option is contained within a lease, it cannot be assigned separately from that lease in most jurisdictions.

Question 56

Acceleration clause in a mortgage contract

Answer 56

An acceleration clause allows the lender to demand full payment of the remaining mortgage debt plus any accrued interest if the debtor defaults on a mortgage loan. If the debtor is unable to pay, then the lender can move forward with foreclosure proceedings

Question 57

Can a prematurely recorded deed provide notice to subsequent property owners?

Answer 57

In most jurisdictions, a prematurely recorded deed (a deed recorded by a buyer before the seller owns the property) falls outside a later buyer’s chain of title and so fails to provide record notice.

Question 58

How does a transfer of a joint tenant’s internet affect the joint tenancy?

Answer 58

A lifetime transfer of a joint tenant’s interest severs that interest from the joint tenancy relationship, and it becomes a tenancy in common ownership interest