Real Property Flashcards
Fee Simple Determinable
A fee simple determinable is an estate that automatically terminates on the happening of a stated event and reverts to the grantor.
It is created by the use of durational language, such as “so long as,” “while,” “during,” or “until.”
Fee Simple Subject to Condition Subsequent
A fee simple subject to a condition subsequent is created when the grantor retains the power to terminate the estate of the grantee upon the happening of a specified event.
Upon the happening of the event stated in the conveyance, the estate of the grantee continues until the grantor exercises his power of termination (right of entry) by bringing suit or making reentry.
Generally, the grantor must expressly reserve the right of entry; this retained interest does not automatically arise. The following words are usually held to create conditions subsequent:
-“upon condition that”
-“provided that”
-“but if” and
-“if it happens that”
UPBI
Ambiguous b/w Fee Simple Determinable and Fee Simple Subject to Condition Subsequent?
The general policy of courts is to avoid forfeiture of estates. Thus, where the terms of conveyance are ambiguous, there is a presumption in favor of the fee simple subject to condition subsequent because forfeiture is not automatic.
How Can Future Interests Pass?
Future interests can pass at death by will or inheritance unless an interest’s taking is subject to an express or implied contingency of survival.
ex: Wife devised her entire estate to Husband for life, with remainder to “My surviving children.” → words “my surviving children” imposes a condition precedent that the remaindermen survive in order to take. However, the language is ambiguous as to whether children must survive the Wife or Husband, the life tenant. Unless the language or circumstances establish that the transferor had a different intention, the ambiguity is resolved by construing the word “surviving” as referring to the distribution date (Husband’s death)
Recording Statutes Types
1) Race Statute
2) Notice Statute
3) Race-Notice Statute
Use for determining whether someone took subject to mortgages, easements, etc.
**The recording acts do NOT protect a subsequent purchaser against interests that arise by operation of law (ex: implied easements, title by adverse possession), because there is no instrument to record in order to perfect such interests.
Race Statute
“Pure Race Statute protects whoever records first. The first to record wins.”
How to spot → if don’t see word “notice” probably a pure race statute
Notice Statute
“Under a notice statute, a subsequent bona fide purchaser (“BFP”) prevails over a prior grantee even without recording.”
In pure notice jrdx, it’s always the last BFP to win.
How to spot → if see “without notice” and don’t see “first recorded” then probably pure notice statute
ONLY protect BFP’s so a donee, heir or devisee, ppl who get property for free are NOT protected under this.
Race-Notice Statute (aka Notice recording system)
“In a Race-Notice jurisdiction, a later bona fide purchaser is protected only if they record their interest. “
looking for BFP for value who recorded first without notice
How to spot → will probably have the words “notice” and “first recorded” in it
ONLY protect BFP’s so a donee, heir or devisee, ppl who get property for free are NOT protected under this (unless they take shelter under BFP status)
Valid Deed
Only requirements that must be met for conveyance of land to be valid (and thereby transfer legal title in that land from one party to another) are 1) Execution and 2) Delivery of the deed. NO consideration needed!
WISE SIG valid deed
To be valid, a deed must be:
1) In writing,
2) Identify the grantor and grantee
3) Sufficiently describe the land
4) Evidence an intention to convey the land
5) Signed by the grantor
The parties may be identified by name or by describing them in some other way (ex: “to my eldest daughter,” “to the trustee of my irrevocable trust”.) If the deed is delivered with the identity of the grantee left blank, some courts presume that the person taking delivery had authority to fill in the name of the grantee, and if he does so, the deed is valid.
Title by Adverse Possession
OCEANS
To establish title by adverse possession, the possession must be:
1) Open & notorious
2) Continuous throughout the statutory period
3) Exclusive
4) Actual
5) Not with consent → Hostile/Claim of Right
6) Statutory Period
Exclusive possession generally means not sharing possession with the true owner or the general public. Possession is open and notorious when it is such as the usual owner would make of the land and is sufficient to put the true owner on notice of the fact of possession. Possession is hostile when it is without the owner’s consent; it does not matter whether the possessor believes he is on his own land or knows he is trespassing on someone else’s land. Continuous possession is possession that the average owner would make of the property under the circumstances. In most states, payment of property taxes is not required to establish title by adverse possession but is good evidence of a claim of right.
If person entered property under an invalid deed→ their possession was under a claim of right. Any time someone enters possession with an invalid deed, the possession is hostile because they are claiming rights superior to that of the true owner.
Two or more people can work together to take title by adverse possession, and if they meet the requirements, they take as tenants in common. Tenancy in common is a concurrent estate w/ no right of survivorship. Each tenant has a distinct, undivided interest in the property. This interest is freely alienable and is inheritable.
Bona Fide Purchaser (BFP)
A BFP is a purchaser who takes for valuable consideration and without notice of a prior claim at the time of the conveyance.
There are three types of notice:
1) Actual notice is what the purchaser actually knows
2) Record notice is notice that the law imputes to the purchaser if a prior deed was properly recorded in the grantee’s chain of title
3) Inquiry notice is notice of what the purchaser would have discovered by inquiring into the property (ex: by visiting it to determine who is occupying the land)
[if not BFP, probably taking subject to x’s mortgage]
Shelter Doctrine
Under the “shelter rule,” a person who takes from a BFP will prevail against any interest that the transferor-bona fide purchaser would have prevailed against. This is true even where the transferee has actual knowledge of the prior unrecorded interest.
Shelter doctrine protects a non-BFP if they receive the property from a BFP (they can take shelter under that person’s BFP status). They then will assume the status of that BFP for value without notice → so not subject to mortgage/easement
Joint Tenancy
At common law, a conveyance to two or more persons:
1) at the same time
2) by the same instrument
3) of the same interests
4) giving them identical rights to possession of the property (the “four unities”) created a joint tenancy.
Joint tenants have the right of survivorship meaning when one joint tenant dies, the survivor(s) retain an undivided right in the property no longer subject to the deceased co-tenant’s interest.
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Under modern law, however, JT’s are disfavored. A conveyance to two or more persons presumptively creates a tenancy in common, which has no right of survivorship, rather than a joint tenancy. A JT results only when an intention to create a right of survivorship is clearly expressed.
Severing a Joint Tenancy
Joint tenant’s interest is freely alienable during his/her lifetime without the consent of the other joint tenant. But, that interest cannot be devised in a will.
Although an inter vivos conveyance by one joint tenant of her entire undivided interest destroys the joint tenancy, so that the transferee takes the interest as a tenant in common and not as a joint tenant, a conveyance of a lesser interest (ex: a mortgage) may not effect a severance.
Joint tenant transfers inter vivos conveyance → transferor takes as tenant in common
In most states, a severance results when one joint tenant executes a valid contract to convey her interest to another, even though no actual transfer of title has yet been made. The contract to convey is enforceable in equity, and hence is treated as an effective transfer of an equitable interest. If the seller dies before the title is transferred, the purchaser is entitled to a deed from the seller’s estate and becomes a tenant in common with the original joint tenant.
Severing a Joint Tenancy: Mortgages
In states that follow the “lien theory,” a mortgage is regarded as a lien on title, and one joint tenant’s execution of a mortgage on her interest does not by itself cause a severance. Rather, a severance occurs only if the mortgage is foreclosed and the property sold. In these states, the mortgagee risks losing its interest if the mortgagor dies prior to foreclosure.
lien theory: mortgages does not sever jt until foreclosure & property is sold
In the states that follow the “title theory,” a mortgage is regarded as a transfer of title, which destroys the unity of title and severs the joint tenancy.
title theory = transfer of title & severs JT
Chain of Title Issues
To give record notice to later takers, it’s not enough to merely record, deed must be properly recorded.
A deed is properly recorded when it is recorded within the chain of title. Chain of title is established in most states through a title search of the grantor-grantee index.
Grantor-Grantee Index?
Seller’s failure to record her deed does not affect Buyer’s title because Buyer would have found x’s mortgage had he searched under Seller’s name in the jurisdiction’s grantor-grantee index system
Deceased Seller
Under the doctrine of equitable conversion, once a contract is signed and each party is entitled to specific performance, equity regards the purchaser as the owner of the real property and the seller’s right to the proceeds of sale as personal property.
The bare legal title that remains in the seller is considered to be held in trust for the purchaser as security for the debt owed the seller. If the seller dies, the bare legal title passes to the takers of her real property, but they must give up title to the purchaser when the contract closes. When the purchase price is paid, the money passes to those who take the seller’s personal property.
General Warranty Deed (aka Full Covenant and Warranty Deed)
A general warranty deed contains 6 covenants of title through which grantor warrants against title defects created by himself and prior titleholders.
Present Covenants: Breached ONLY at time of closing/conveyance and do not run with the land. Present covenants can only be enforced by the buyer.
1) Covenant of Seisin: I own it
2) Covenant of Conveyance: I can sell it
3) Covenant Against Encumbrances: assures there are neither visible encumbrances (easement, servitudes, etc) nor invisible encumbrances (mortgages, etc) against the title or interest conveyed
**In jurisdictions that do not follow the majority rule, a remote grantee may sue on the covenant against encumbrances unless the grantee had notice of the encumbrance.
Future Covenants: Run with the land and are enforceable by the buyer and all subsequent owners and occupiers of the land.
1) Covenant of Quiet Enjoyment: no one will disturb you
2) Covenant of Warranty: if someone disturbs you, I will defend you
3) Covenant of Further Assurances: after I’m done defending you, I will take whatever steps are necessary to make sure this does not happen again. I will do whatever it takes to perfect your title.
Real Estate K’s Require a Writing that Satisfies the SOF
Remember: 4 P’s → property, parties, price, party to be charged
Need a writing that includes:
1) a description of the property
2) names of the parties
3) price
4) signature of the party to be charged (party to be charged if defendant, whoever you are trying to enforce it against)
Assignment of Real Estate K’s
A dead person cannot properly manifest acceptance of an assignment of real estate contract rights.
If Deed Given Before Grantor had Proper Title
If deed that is passed from grantor to purchaser was before the grantor had proper title, even if it was recorded, that recorded deed is not connected to the proper chain of title.
Easement
Holder of an easement (Dominant tenement) has a right to use a tract of land (called a servient tenement) for a special purpose, but has no right to possess and enjoy the tract of land.
The owner of the servient tenement continues to have the right of full possession and enjoyment of the land, subject only to the limitation that he cannot interfere with the right of special use created in the easement holder.
Creating an Easement
3 ways:
1) Express Grant: One that is recorded and signed by the grantor and must comply w/ all the formalities of a deed
2) Implication: created by operation of law rather than a written instrument.
3 types: 1) Intended easement: based on a use that existed when the dominant and servient estates were separate 2) Implied Easement: An easement implied from a recorded subdivision plan, and 3) Easement by Necessity: created when the owner of a tract of land sells a part of the tract & by this division deprives one lot of access to a public road or utility line. When this happens, a right-of-way of absolute necessity is created by implied grant over the lot with access to the public road or utility line. This is true regardless of whether the landlocked owner could obtain a right-of-way from another neighbor!!!! The owner of the servient parcel has the right to locate the easement, provided the location is reasonably convenient.
3) Prescription: like adverse possession but exclusive use is not required, COAH Cotinuous, open & notorious, actual, hostile
Valid Delivery of a Deed
A deed is not effective to transfer an interest in realty unless it has been delivered. Delivery refers to the grantor’s intent.
To make an effective delivery, the grantor MUST relinquish absolute and unconditional control
There must be words or conduct showing the grantor intended that the deed have some present operative effect - that title pass immediately and irrevocably, even though the right of possession may be postponed. If the right of possession is to be postponed until the grantor’s death, the deed may be held Testamentary and therefore void (unless executed with testamentary formalities). However, most courts hold that if the grantor executes a deed and gives it to another with instructions to give it to the grantee upon the grantor’s death, the grantor’s intent was to presently convey a future interest to the grantee (either a remainder, with a life estate reserved in the grantor, or an executory interest) and so the gift is inter vivos, not testamentary.
Delivering a deed means taking some action intended to make the deed effective presently. What that action is doesn’t really matter, but one obvious action is for the grantor to hand the deed to the grantee. Physically handing the deed to the grantee commonly creates a presumption of delivery, whereas retaining possession may create a presumption of non-delivery
Intent, rather than mere physical possession, is determinative with regard to the purported delivery of a deed.
Remember if grantor hands to attorney but retains a right of control over it then this is not delivery bc did not relinquish control.
Tenants in Common Mortgaging a Property Jointly
If tenants in common decide to mortgage a property jointly, the private lender holds a mortgage to all of the property, for which both tenants in common are jointly and severally liable.
Equitable Right of Redemption
At any time prior to the foreclosure sale, the mortgagor has the right to “redeem the land” or free it of the mortgage, by paying off the amount due, together with any accrued interest.
ALL states provide for an equitable right of redemption.
Who is liable for torts caused by commonly held property?
Typically, only the association is liable for torts that occur on or that are caused by the commonly held property. (condo associations etc)
Members of the board and members of the association are not jointly and severally liable for torts that occur on or that are caused by the commonly held property.
Purchaser of Property with Mortgage Can Take Property: Subject to Mortgage OR Assuming Mortgage
Subject to → If the creditor has to foreclose, and foreclosure proceeds do not cover the outstanding debt, the purchaser is not personally liable for the outstanding amount. The transferor is the only person liable for a deficiency judgment.
Assumption → express promise by purchaser to pay the mortgage debt. By assuming the mortgage, the purchaser becomes primarily liable to the creditor and transferor will be secondarily liable as a surety in the foreclosure.
Novation → Novation is an agreement that substitutes the new purchaser for the original mortgagor’s own personal liability. In event of foreclosure, transferor would be completely off the hook. Transferor would have to ask purchaser to sign this.
