Real Property Flashcards
Contract of sale:
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 (money he will get from the sale). Thus, the risk of loss remains on the buyer under equitable conversion, even if the seller remains in possession and control of the land. (F2009)
Validity of a deed:
To be valid, a deed must identify the buyer and the seller, describe the land, contain words denoting a present intent to convey, and be signed by the grantor. It must also be delivered. Delivery is a question of intent to pass title presently. (J2007)
Covenants in the deed:
There are two kimds of deeds that you will see on the bar exam:
- Quitclaim deed
- Warranty deed
Quitclaim deed:
The grantor gives no covenants (promises nothing) 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. (J2013)
Warranty deed:
The grantor gives six covenants—three present covenants and three future covenants. The MEE tends to test present covenants rather than future covenants.
- The present covenants include (mnemonic=PRESENT): the right to convey, the covenant of seisen (both of these essentially meaning that the seller guarantees he owns the land he is selling), and the covenant against encumbrances (“no encumbrances”—i.e., there are no existing easements, liens, or encumbrances that are not stated in the deed).
- Future covenants include (mnemonic=FEW): further assurances, quiet enjoyment, and warranty. Under common law, remote grantees can sue only under future (not present) covenants. However, note in your answer that some jurisdictions do not follow the common law rule. (F2018, F2015, F2010)
Merger:
on the closing date, the contract for sale merges into the deed, so at that point, the buyer can only sue on the deed. (F2018)
Breach of the implied warranty of fitness and habitability:
A builder of new homes impliedly warrants to the buyer that the home is habitable and fit for its 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. (F2018, J2013)
Common law first-in-time first-in-right principle:
Start your essay with the common law rule. Under common law, a grantor can convey only those rights that the grantor had at the time of the conveyance. Thus, 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.
Three kinds of recording statutes:
- Notice statutes 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.”) (F2021, J2011, F2010)
- Race-notice statutes 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.”)
- Pure race statutes protect subsequent purchasers who are first to record (These are rare!)
What are the three types of notice?
“AIR”:
- Actual notice: the grantee actually knows about the conveyance.
- Inquiry notice: examination of the land or reference in an instrument would lead a reasonable person to inquire. (J2011, F2010)
- Record notice: 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 give notice. (J2011, F2009)
Who is liable on a mortgage when title to the property is transferred?
General rule: 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. This view is brought up on the MEE, but it is considered the wrong answer on the MBE.)
A novation occurs if the initial 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. (J2013)
Term for years lease:
a term for years lease specifies both a beginning date and an end date.
Periodic tenancy:
A periodic tenancy has no fixed end date (e.g., month-to-month lease = periodic tenancy). It simply repeats until one party gives valid notice to the 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 that violates the Statute of Frauds because the term is more than one year). Valid notice (i.e., notice equal to the rent payment term) is required to terminate a periodic tenancy. (J2008)
Assignment (for leases):
if the lease does not prohibit an assignment or sublease, a tenant can assign or sublease her interest in the lease. (F2017, J2008)
Eviction vs. the implied warranty of habitability:
- A tenant can sue for constructive eviction (commercial or residential) if the tenant can prove that the landlord breached a duty to the tenant (e.g., the duty to repair) and this 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.
- This is different than the implied warranty of habitability which is breached only in a residential lease if the premises are uninhabitable. If this occurs, the tenant has several remedies including vacating the premises, suing for damages, offsetting damages, etc. (S2020, F2013)
