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Texas Bar Exam Feb. 2024 > Real Property > Flashcards

Real Property Flashcards

1
Q

Types of Estates

A
  • present estates
  • future estates
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2
Q

Present Estates

A

owner has present right of possession and right to use and enjoy the property.

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3
Q

Types of Present Estates

A
  • fee simple absolute
  • defeasible estate
  • life estate
  • fee tail
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4
Q

Fee Simple Absolute

A

infinite in duration; cannot be cut short; devisable and descendible

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5
Q

Defeasible Estate

A

may be cut short upon occurrence of event; devisable and descendible.

Types:
- fee simple determinable
- fee simple subject to a condition subsequent
- fee simple subject to an executory limitation

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6
Q

Defeasible Estate: Fee Simple Determinable

A

created using durational language (so long as during, while)

automatically terminates

held in the grantor (possibility of reverter)

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7
Q

Defeasible Estate: Fee Simple Subject to a Condition Subsequent

A

created using conditional language (provided that, but if) and requires EXPRESS language reserving future interest (right of reentry)

Claim of ownership must be asserted when condition is broken

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8
Q

Defeasible Estate: Fee Simple Subject to an Executory Limitation

A

created using durational OR conditional language.

requires EXPRESS language reserving the future interest in another grantee.

estate automatically terminates upon occurrence of stated condition

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9
Q

Life Estate

A

limited in duration by life of a person.

automatically terminates and transfers to the future interest holder upon the person’s death

can be conveyed with a condition (i.e., determinable)

can be conveyed by the life tenant to another (i.e., pur autre vie)

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10
Q

Fee Tail

A

created when conveyance confined the transfer of the property to the issue (children) of the first taker.

no longer recognized

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11
Q

Future Estates

A

not presently possessory but may become so in the future

types:
- future interests held by grantor
- remainders (future interests held by subsequent grantees)
- executory interest

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12
Q

Future Interests Held By Grantor: Reversion

A

grantor conveys less than grantor’s entire estate, vests upon the expiration of the preceding estate, and does not need to be expressly reserved.

freely alienable

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13
Q

Future Interests Held By Grantor: Possibility of Reverter

A

grantor transfers a determinable estate to the grantee that automatically reverts to the grantor once the condition occurs.

alienable

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14
Q

Future Interests Held By Grantor: Power of Termination / Right of Reentry

A

grantor transfers a fee simple subject to a condition subsequent to a grantee and requires the grantor to exercise the power of termination in order to terminate the estate when the condition is broken

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15
Q

Remainders

A

become immediately possessory at the natural termination of a preceding estate and will not cut short the preceding estate

types:
- vested remainder
- contingent remainder
- alternative contingent remainders

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16
Q

Vested Remainder

A

given to an ascertainable person and is not subject to any condition precedent.

alienable and classified as
- indefeasible (not subject to divestment)
- subject to partial divestment (size of interest diminishes if others enter the class) or
- subject to complete divestment (conditions can lead to termination of the estate)

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17
Q

Contingent Remainders

A

either:
- transferred to an unascertained person or
- subject to a condition precedent

alienable

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18
Q

Alternative Contingent Remainders

A

pair of remainders that have opposite conditions precedent in which one person will make if a condition is met and another person will take if the condition fails

not transferable

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19
Q

Executory Interest

A

future interest held by someone other than grantor that divests the preceding interest or follows a gap that existed after termination of preceding interest

classified as either:
- shifting (divesting another grantee) OR
- springing (divesting a grantor)

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20
Q

Doctrine of Worthier Title

A

presumption that grantor did not intend to convey a future interest to grantor’s own heirs but intended to retain interest.

applies when grantor conveys property to a grantee and creates a remainder in grantor’s own heirs

abolished in most states

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21
Q

Rule in Shelley’s Case

A

prevents creation of a remainder interest in heirs of a grantee or devisee and instead has the remainder vest in the grantee

applies when grantor conveys property to a grantee and creates a remainder in the grantee’s heirs

abolished in most states

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22
Q

Destructibility of Contingent Remainders

A

destroyed if:
- prior estate terminates before remainder vests or
- same person holds a present estate and future interest (intervening contingent remainders are destroyed)

abolished in most states

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23
Q

Conditions of Survivorship

A

if grantor has placed an express condition of survivorship in the transfer, then the future interest may not be alienable by the grantee

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24
Q

Class Gift

A

transfer that is made to a class of people

if class gift for which some members have qualified but for which others may qualify in the future, the vested remainder is classified as subject to partial divestment or subject to open

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25
Q

Class Gift: Rule of Convenience

A

future interest will not become possessory until the class naturally closes, but if the jurisdiction applies this rule, it can close the class when any of its members is entitled to that member’s share of the class gift

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26
Q

Rule Against Perpetuities

A

no interest is valid unless it vests, if at all, within 21 years of some life in being at the creation of the interest

only applies to future interests held by persons other than grantor (contingent remainders, vested remainders subject to partial divestment, executory interests).

life in being = person who was alive/in gestation when interest was created

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27
Q

Cy Pres Doctrine

A

RAP does not apply to charitable trusts.

some jurisdictions have applied this to non charitable transfers.

court has discretion to reform conveyance in a way that most closely meets the transferor’s intent

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28
Q

Waste

A

life estate holders and tenants in possession must not commit waste.

Types:
- voluntary
- permissive
- ameliorative

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29
Q

Voluntary Waste

A

person causes property damage.

includes permanent impairment, depletion of natural resources (unless already being put to that use at time of conveyance - open mines doctrine)

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30
Q

Permissive Waste

A

person’s failure to make minor repairs leads to substantial issues.

excludes ordinary wear and tear

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31
Q

Ameliorative Waste

A

person makes improvements to property that increase the property’s value

but it is permitted when the improvements reflect a substantial change that has occurred in the character of the surrounding area

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32
Q

Restraints on Alienation: Types

A

If a restraint is void, grantee takes the interest without the intended restraint

  • disabling: no right to transfer any interest
  • forfeiture: if attempts transfer, grantor permitted to reenter and retake land or property goes to 3P
  • promissory: promise not to transfer
  • against public policy or unconstitutional: prohibited by law (based on race, ethnicity, religion, or gender)
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33
Q

Total Restraints on Alienation

A

on fee simple estates, almost always void

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34
Q

Partial Restraints on Alienation

A

may be valid if:
- restraint qualified so as to permit alienation to some possible alienees and
- reasonable under the circumstances (like right of first refusal)

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35
Q

Cotenancy Types

A
  • tenancy in common
  • joint tenancy
  • tenancy by the entirety
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36
Q

Tenancy in Common

A

presumed unless conveyance states otherwise

no right of survivorship and freely transferable

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37
Q

Joint Tenancy

A

conveyance includes words of survivorship and four unities are met:
- possession: right to possess entire property
- interest: same interest in property
- time: take title at same time
- title: take title in the same document

Right of Survivorship: when one dies, interest automatically transfers to other covenants. Not devisable or inheritance

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38
Q

Joint Tenancy: Severance

A

occurs if joint tenant:
- conveys interest to another by deed
- signs contract to sell an interest in the property
- takes a mortgage out on the interest in a title theory jurisdiction
- in some states, lease can

Severance results in tenancy in common and destroys right of survivorship

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39
Q

Tenancy by the Entirety

A

Four unities (possession, interest, time, and title) are met and tenants are legally married.

Each covenant has equal and undivided interest with right of survivorship

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40
Q

Tenancy by the Entirety: Severance

A
  • one spouse dies
  • covenants divorce
  • mutual agreement between the spouses
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41
Q

Partition

A

destroys cotenancy.

available to tenants in common and joint tenants.

occurs if:
- parties voluntarily execute a writing agreeing to physically divide or jointly sell OR
- file court action to force division or sale

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42
Q

Partition: Accounting

A

cotenants entitled to accounting upon partition. enables adjustments based on expenses or improvements that one of the covenants has paid

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43
Q

Types of Partitions

A
  • partition in kind (physical division)
  • partition by sale (sold and proceeds split equitably). Available only if partition in kind is impossible, impracticable, or results in substantial injury to one of the cotenants
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44
Q

Rights and Obligations of Cotenants: Possession

A

each cotenant has right to possess all of the property

cotenant in exclusive possession of the property does not have to pay rent

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45
Q

Rights and Obligations of Cotenants: Ouster

A

if cotenant in possession refuses to grant other cotenants access, then non possessing cotenant will receive fair rental value of property at time access became impossible

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46
Q

Rights and Obligations of Cotenants: Expeness

A

share necessary / beneficial expenses (taxes) but cotenant in exclusive possession may not seek contribution unless expenses exceed fair rental value

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47
Q

Rights and Obligations of Cotenants: Rent or Profits

A

may not collect rent from cotenant unless ouster. But rents / profits from 3P are shared

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48
Q

Rights and Obligations of Cotenants: Repairs

A

necessary expense shared by cotenants. cotenant in exclusive possession may not seek contribution but can seek reimbursement in an accounting or partition action

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49
Q

Rights and Obligations of Cotenants: Improvements

A

are an unnecessary expense.

cotenant may seek reimbursement for this type of expense only in an accounting or partition action

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50
Q

Types of Tenancy

A
  • term of years
  • periodic tenancy
  • tenancy at will
  • tenancy at sufferance
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51
Q

Term of Years

A

fixed duration and not subject to statute of frauds if less than a year

notice of termination not required

automatically terminates at end of tenancy unless:
- parties agere to end lease early or
- material breach of the lease

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52
Q

Periodic Tenancy

A

default tenancy

runs for specified duration and continues in successive intervals until notice of termination from either landlord or tenant
- common law: notice measured by length of period; year-to-year = 6 mos.
- modern law: for residential, if month or longer, 30 days; if commercial, common law rule

statute of frauds does not apply unless lease expressly created for more than a year

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53
Q

Tenancy at Will

A

must be expressly created

no specific term

continues until party terminates
- common law: can terminate without notice
- modern law: requires advance express or implied notice

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54
Q

Tenancy at Sufferance

A

when tenant remains in possession without permission when lease ends.

landlord can either
- accept a new lease (periodic tenancy established by rental payments) or
- evict tenant and claim damages (NO SELF-HELP)

Exceptions: not created if
- time associated with the holdover was minor or
- tenant is not at fault in creating the circumstances that led to holdover

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55
Q

Landlord’s Duties

A
  • deliver possession
  • covenant of quiet enjoyment
  • implied warranty of habitability
  • duty to mitigate
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56
Q

Deliver Possession

A

must deliver legal and actual possession.

minority require delivery of only legal right of possession.

if violated, tenant can terminate the lease and seek damages OR enforce lease and seek relief

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57
Q

Covenant of Quiet Enjoyment

A

landlord or someone acting under landlord’s control cannot interfere with tenant’s right of possession

if tenant improperly evicted (actual or constructive), then tenant may terminate lease and seek damages

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58
Q

Implied Warranty of Habitability

A

must provide and maintain a premises fit for human habitation in residential leases

cannot be waived

after tenant gives notice of substantial defect, if landlord does not repair within reasonable amount of time, tenant can either:
- terminate lease
- remain in possession and withhold rent
- repair and deduct the cost from future rent

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59
Q

Duty to Mitigate

A

take reasonable steps to attempt to relet

if still cannot relet, tenant liable for remaining rent. If does, tenant liable for past-due rent and difference between rent obligation and amount of new rent (so long as reletting was in good faith)

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60
Q

Tenant’s Duties

A
  • pay rent
  • repair
  • not to commit waste
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61
Q

Pay Rent

A

primary duty of tenant.

if surrenders premises and landlord accepts surrender, relieved of future rent obligations. If fails to pay, tenant can evict or sue for rent.

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62
Q

Abandonment

A

tenant no longer in possession and improperly abandoned.

landlord may take possession and accept abandonment

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63
Q

Surrender

A

if landlord retakes, can be acceptance of surrender, which relieves the tenant of future rent obligations

but reentering to make repairs, accepting keys, or attempting to relet may not constitute acceptance.

if no acceptance, tenant must still pay rent

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64
Q

Tenant Duty to Repair

A

must make ordinary, minor repairs of damage caused by tenant (intentionally or negligently) and other repairs agreed upon by the parties

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65
Q

Types of Eviction

A
  • actual eviction
  • partial actual eviction
  • constructive eviction
  • partial constructive eviction
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66
Q

Actual Eviction

A

landlord, or someone under their control, ousts tenant

tenant can terminate lease and seek damages

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67
Q

Partial Actual Eviction

A

landlord deprives tenant of use of a portion of premises.

tenant can terminate lease ore remain in possession and withhold rent.

modern approach: only rent abatement

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68
Q

Constructive Eviction

A

tenant moves out because landlord, or someone under their control, substantially interfered with use and enjoyment of premises.

may terminate and withhold rent if abandons premises within a reasonable time

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69
Q

Partial Constructive Eviction

A

allows tenant only a rent abatement

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70
Q

Transfers by Landlord

A

may transfer landlord’s interest unless agreement says otherwise.

new owner obligated to abide by terms of existing lease unless tenancy at will

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71
Q

Transfers by Tenant

A

tenant may transfer tenant’s interest unless agreement says otherwise. landlord can enforce agreement if in privity of contract or estate with that party

restrictions on transfer strictly construed against landlord

traditionally, landlord could withhold consent for any reason but modern trend is cannot be unreasonable.

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72
Q

Assignment v. Sublease

A

assignment - lessee transfers lessee’s interest for entire duration of lease.

sublease: anything less than entire duration

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73
Q

Transfers By Tenant: Privity of Contract

A

original tenant in privity of contract unless novation.

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74
Q

Transfer by Tenant: Privity of Estate

A

if tenant sublets, tenant remains in privity of estate with landlord. Subtenant not in privity of contract or privity of estate.

If tenant assigns, subtenant in privity of estate with landlord

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75
Q

Sublease: Assumption

A

tenant subletting a property is in privity of contract or estate only if tenant expressly assumes obligations of original lease

if so, then landlord could sue subtenant as 3P beneficiary

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76
Q

Fair Housing Act

A

prohibits discrimination in housing against members of certain protected classes who are engaging in housing-related activities

discriminatory advertising always prohibited

protected classes = race, color, national origin, religion, sex, disability, family status

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77
Q

Real Covenants

A

agreements or promises that run with land and can be affirmative or negative. enforced by actions at law (money damages)

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78
Q

Real Covenants: Requirements for Burdens to Run with Land

A
  • written document (statute of frauds)
  • horizontal privity (shared interest in property at time covenant created)
  • vertical privity (original party transferred entire estate to subsequent owner)
  • intent: original parties must intend for it to run with land
  • touches and concerns the land
  • notice (actual, inquiry, or constructive)
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79
Q

Real Covenants: Requirements for Benefits to Run with Land

A
  • written document (statute of frauds)
  • vertical privity (OG party transferred entire estate or any lesser estate to subsequent owner)
  • intent
  • touches and concerns the land
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80
Q

Equitable Servitudes

A

identical to real covenants, except that they are enforced in equity (injunction)

requirements:
- intent
- touches and concerns the land
- written document (sometimes)

no writing required if:
- purchaser has partly performed agreement or
- party seeking to enforce has proof of detrimental reliance

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81
Q

Implied Reciprocal Servitude

A

courts can provide injunctive relief even if plat filed without inclusion of servitude if:
- intent to create a servitude on all the lots
- servitude benefits and burdens each parcel
- servitude is negative and
- owner subjected to the servitude has notice of it

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82
Q

Equitable Servitude: Defenses

A
  • estoppel
  • laches
  • unclean hands
  • acquiescence
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83
Q

Estoppel

A
  • benefitted landowner made statements or committed conduct indicating servitude will be released or abandoned
  • burdened landowner detrimentally relied on those statements / conduct
  • would be inequitable to enforce servitude
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84
Q

Laches

A

benefitted landowner has unreasonably delayed bringing an enforcement action

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85
Q

Unclean Hands

A

benefitted landowner violated the same/similar restriction that is the subject of the enforcement action or committed wrongful conduct related to action

86
Q

Acquiescence

A

benefitted landowner has indicated that he does not object to an ongoing violation of the restriction

87
Q

Covenant / Servitude: Termination

A
  • release: subsequent writing that complies with SoF and expressly releases right
  • abandonment: owner of right (a) intends to terminate and (b) acts in a way to terminate
  • merger: owner is the same for benefitted and burdened land
  • prescription: holder of right fails to protect it
  • condemnation (eminent domain)
  • changed circumstances: substantial change that affects all benefitted properties (lost usefulness, no longer possible)
88
Q

Common Interest Communities

A

individually owned lots/units burdened by servitude that imposes obligation:
- to pay for the use or maintenance of the property held or enjoyed in common by individual owners OR
- pay dues or assessments to an association that provides services or facilities to the common property or to the individually owned property or that enforces other servitudes burdening the property in the development or neighborhood

89
Q

Easements

A

can be negative or affirmative, appurtenant (two parcels of parcel) or in gross (particular person or entity)

90
Q

Easements: Types and Creation

A
  • express
  • by implication
  • by necessity
  • by prescription
  • by estoppel
91
Q

Express Easement

A

may be created:
- when servient estate owner expressly grants easement to another party (easement by grant) OR
- when party transferred, transferor expressly reserves easement (easement by reservation)

92
Q

Express Easement: Writing Requirements

A
  • identifies parties
  • adequately describes property (if no location stated, burdened owner selects reasonable location)
  • expresses grantor’s intent to create easement
  • signed by grantor (servient estate holder)
93
Q

Easement by Implication

A

created when easement reasonably necessary to access dominant estate and:
- common ownership (prior unity) in two parcels of land
- prior use of land consistent with easement
- use was continuous and apparent at the time of sale of one of the parcels and
- use is reasonably necessary to the use and enjoyment of the dominant estate

94
Q

Easement by Necessity

A

created when:
- common ownership (prior unity) in two parcels of land
- severance of the parcels created the necessity for the easement and
- easement is strictly necessary (landlocked)

95
Q

Easement by Prescription

A

created when the use is:
- open and notorious
- hostile
- continuous
- for the statutory period

Use at conclusion of prescriptive period establishes the scope of the easement granted.

96
Q

Easement by Estoppel

A

created if:
- permission to use the servient estate
- reasonable reliance on that permission to the party’s detriment and
- would be equitable to recognize the existence of an easement

easement by estoppel are subject to the usual equitable defenses (estoppel, laces, unclean hands, acquiescence)

97
Q

Easements: Scope

A

if scope not expressly defined, scope of easement is determined by:
- intent of the parties
- reasonableness of the use (development and character of the property over time)

overuse enjoined but will not terminate the easement

98
Q

Easements: Transferability

A

burden of easement in gross is always transferred if burdened property is sold. Traditionally, benefit could not but today courts look at intent of parties and usually allow commercial easements in gross.

easement appurtenants run with land ad always transfer upon sale

99
Q

Easements: Termination

A

duration is indefinite unless expressly stated or terminated. can terminate by:
- release
- abandonment
- merger
- prescription
- condemnation
- necessity ends (if created by necessity)
- no longer equitable (if created by estoppel)
- estoppel: (a) dominant estate holder makes statements/acts in a way that causes servient estate holder to reasonably believe easement abandoned and (b) servient estate holder reasonably relies to his detriment
- destruction: physical destruction will not normally terminate an easement but if tied to structure on property destroyed by extraordinary natural event, terminated

100
Q

Licenses

A
  • not subject to statute of frauds so can be created by oral agreement
  • personal in nature so only licensor can transfer license (not licensee)
101
Q

Licenses: Revocability

A

revocable unless:
- licensor expressly declares an intent to make irrevocable
- license coupled with another interest or
- there is estoppel

102
Q

Profits

A

rights to enter another’s property to remove natural resources.

can be created expressly or by prescription.

can be terminated or transferred in same manner as easements but can be terminated by overuse

103
Q

Fixtures

A

chattel that has become so attached to a structure as to become real property.

Elements:
- intent for chattel to become a fixture
- chattel permanently attached to real property and
- removal of chattel would cause substantial damage to property

104
Q

Fixtures: Real Property Sales

A

all fixtures transfer with sale.

for seller to retain fixture, must expressly reserve it in contract of sale or deed

105
Q

Fixtures: Life Estates

A

if life tenant intends for fixture to be removed, life tenant may remove at any time before estate terminates or within a reasonable time after estate ends

106
Q

Fixtures: Residential Tenants

A

traditionally, must avoid making changes

modern trend: focuses on intent of tenant and if property can be restored to former condition

107
Q

Fixtures: Commercial Tenants

A

trade fixture can be removed by tenant during or at termination of lease BUT must restore premises to original condition

108
Q

Fixtures: Liens

A

party with security interest in personal property may obtain priority over real property owner or a mortgagee by making a fixture filing

109
Q

Zoning: Nonconforming Use

A

new ordinance must allow nonconforming use (use that existed before zoning ordinance) to continue for reasonable amount of time (otherwise = taking).

Reasonable amount of time depends on circumstances but typically last until use ceases or is substantially destroyed or title transferred to new owner.

cannot extend or intensify nonconforming use in a way that constitutes a substantial change. Any doubts about whether substantial are resolved against change

110
Q

Zoning: Special-Use Permit

A

required when person seeks a use that is not zoned for that area and is allowed if
- not incompatible with zoned area and
- beneficial to the public health, safety, or welfare

111
Q

Zoning: Variance

A

created when gov’t grants exception to ordinance and is allowed only if denying would create a hardship that is:
- unnecessary
- unique and
- not created by the applicant

Must not be detrimental to public welfare or character of the neighborhood

112
Q

Spot Zoning

A

single parcel of land or relatively small group of parcels are rezoned in an area and is presumptively unconstitutional because does not further public health, safety, or welfare

generally benefits landowner at expense of surrounding landowners

113
Q

Watercourse

A

person who owns land that contains watercourse does not own it but has rights to use.

Three theories
- natural flow doctrine
- reasonable use doctrine
- prior appropriation doctrine

114
Q

Watercourse: Natural Flow Doctrine

A

upstream landowner whose land abuts watercourse has absolute right to use for natural purposes but cannot use for artificial purpose if would reduce water supply for downstream owners

115
Q

Watercourse: Reasonable Use Doctrine

A

all riparian landowners entitled to make reasonable use, whether for natural or artificial purposes

downstream owners cannot enjoin upstream owner’s use unless reasonably interferes with their own use

116
Q

Watercourse: Prior Appropriation Doctrine

A

right to use water is given to first person to use it for a beneficial purpose

117
Q

Underground Water

A

landowner may pump as much groundwater as can be used to benefit land above (reasonable use).

but if want to use in different way, cannot unreasonably interfere with rights of other landowners.

other theories:
- absolute ownership (entitled to any amount of water)
- correlative rights (proportion of land ownership)
- prior appropriation (first to use)

118
Q

Surface Waters

A

Three theories:
- natural flow: prohibited from altering natural flow
- common enemy: permitted to divert or alter flow of surface water, even if it means that surface water flows onto another’s land
- reasonable use: permitted to divert or alter flow if it would be reasonable

119
Q

Airspace

A

landowner has rights to airspace above the surface to the extent that the owner can reasonably make use of it and may build a tall structure on the land

BUT no right to sunlight

120
Q

Lateral Support

A

adjacent landowner strictly liable for damages caused to land in natural state. any liability to developed land based on negligence unless building owner can show activities on adjacent land would have building owner’s land to collapse even if in natural statute (in which case, strictly liable)

121
Q

Subjacent Support

A

subsurface landowner strictly liable for damages caused to undeveloped land but any liability to developed land based on negligence

122
Q

Real Estate Broker

A

representatives for either buyer or seller and has authority to make or accept offers, negotiate terms of sale, and help facilitate the sale

123
Q

Broker’s Compensation

A

entitled to reasonable fee or commission.

modern law: entitled to fee upon completion of sale.

Some states may allow seller’s broker to collect fee if the seller prevents the sale

124
Q

Broker: Fiduciary Duties

A

must act for benefit of party the broker represents. Should not represent both unless sufficient disclosures to show parties gave informed consent

Broker must disclose all relevant and material info that pertains to sale of property

125
Q

Seller’s Broker: Duty to Disclose

A

must disclose to the seller:
- all offers to purchase the seller’s property
- identity of all potential purchasers
- any facts affecting the value of the property
- information concerning the ability or willingness of the buyer to complete the sale or to offer a higher price
- broker’s relationship to, or interest in, a prospective buyer
- buyer’s intention to subdivide or resell the property for profit
- any other information that might affect the seller’s ability to obtain the highest price and best terms in the sale

Must disclose any known, material physical defects in the property to the buyer

126
Q

Buyer’s Broker: Duty to Disclose

A

must reveal to buyer:
- willingness of the seller to accept a lower price
- any facts relating to the urgency of the seller’s need to dispose of the property
- broker’s relationship to, or interest in, the seller
- any facts affecting the value of the property
- length of time the property has been on the market and any other offers or counteroffers that have been made relating to property
- any other information that would affect buyer’s ability to obtain the property at the lowest price and on the most favorable terms

127
Q

Transaction Broker

A

broker who offers real estate services to both buyer and seller but does not represent either.

legally neutral role - facilitator for transaction.

owes similar duties to that of an agent but no duty of loyalty.

128
Q

Sale of Real Property

A

contract for transfer of interest in real property must comply with SoF unless part performance or estoppel

129
Q

Sale of Real Property: Statute of Frauds

A

contract must:
- be in writing
- include an adequate description of the parties (do not need to use legal names)
- identify or adequately describe the property to be sold (do not need full legal description but must contain sufficient particulars and distinguish sold property)
- include language the reflects parties’ intention to transfer title in land
- include consideration for the sale of the land (generally the purchase price)
- be signed by the party to be charged

130
Q

Sale of Real Property: Part Performance Exception to SoF

A

requires an oral agreement and at least TWO of the three following factors:
- buyer is in open and notorious possession of the property
- all or part of the purchase price has been paid to and accepted by the seller
- substantial improvements made to property

131
Q

Sale of Real Property: Estoppel Exception to SoF

A

party must show:
- other party made a statement/committed conduct indicating a land sale contract
- party reasonably and detrimentally relied on that statement or conduct, and
- serious or irreparable harm would result if specific performance not granted

132
Q

Sale of Real Property: Time for Performance

A

implied in every contract is duty to act in good faith and timely perform terms.

timing (closing date) not an essential term. If no date, infer a reasonable time. Even if closing date, no breach for failing to close by then (still reasonable time).

133
Q

Sale of Real Property: Time Is of the Essence Clause

A

time not presumed to be of the essence unless expressly stated. If contain this provision, breach if party does not perform when specified

134
Q

Remedies for Sales Contract

A

specific performance, monetary damages (expectancy, consequential, reliance, and liquidated), and rescission

135
Q

Marketability of Title

A

implied in every contract for sale of real property unless otherwise stated.

breached if title encumbered at time of deed’s delivery (closing), regardless of seller’s knowledge of encumbrance

if encumbrance exists, buyer can rescind.

waivable

136
Q

Marketability of Title: Definition of Encumbrance

A
  • burden on title that a reasonable buyer would not have accepted if had known before signing the contract OR
  • risk of litigation over possible title defect
137
Q

Equitable Conversion

A

once parties enter into valid land sale contract, seller has a legal interest (personal property/sale proceeds) and buyer has equitable interest in land.

Death of party does not rescind land sale contract - estate must perform.

If structures destroyed through no fault of seller, buyer bears risk of loss unless parties agree otherwise

138
Q

Land Sale Contract & Deed: Merger

A

once a deed has been delivered and accepted, cannot sue for breach of sales contract and can only sue for covenants in deed.

modern courts generally only apply merger doctrine when use carries out likely intent of the parties

139
Q

Disclosures Concerning Fitness and Suitability of the Property

A

traditionally, seller did not have duty to disclose defects in property to buyer.

today, seller should disclose defects that would be of interest to the buyer, but in some jurisdictions a seller may disclaim this duty so long as disclaimer is clear and specific

140
Q

Sellers’ Duties

A
  • duty to disclose latent defects in property
  • duty to make no fraudulent assertions concerning the property
  • duty to make full disclosure when there is a special relationship giving rise to a fiduciary duty
141
Q

Implied Warranty of Fitness and Suitability

A

exists in sale of new home and warrants that home was skillfully constructed and is free from defects in workmanship, structural integrity, or installation of utilities that fail to meet standards of construction trade.

recognized in almost all states. extends to latent defects but generally doesn’t require buyer to prove defect rendered home uninhabitable - only needs to be major defect.

some states allow clear and conspicuous waiver

buyer must raise breach within a reasonable time and give seller notice and opportunity to cure defect.

if used home, cannot bring claim against seller for breach but some courts will allow buyer to recover against original builder when defect is latent at time of sale

142
Q

Option Contract

A

real property owner gives another the right to buy property within a certain or by a future date.

unilateral contract (optionee does not have to buy it). transfers into bilateral contract when exercise option

generally transferrable.

unless part of a lease, subject to RAP

143
Q

Right of First Refusal

A

owner of real property may not transfer interest in that property to another without allowing person/entity that holds right to match any offer received.

must exercise right within a reasonable time after receiving notice of intended transfer.

generally not transferable.

144
Q

Mortgage

A

mortgage is an interest in real property used to secure repayment of a loan or other debt and is typically created by executing two documents:
- promissory note, which makes mortgagor-borrower personally liable for loan if not paid in full and
- mortgage document, which runs with land and allows mortgagee-lender to foreclose by selling it to recover loan balance

145
Q

Title Holder Theories

A

three theories to determine if mortgagor-borrower or mortgagee-lender holds title to real property during mortgage term:

  • lien theory: mortgagor-borrower retains title to property unless foreclosure occurs
  • title theory: provides that mortgagee-lender gains legal title and retains title as long as there is a balance on the mortgage, but the mortgagor-borrower remains in possession of the property
  • intermediate theory: provides that the mortgagor-borrower retains title to property unless and until mortgagor-borrower defaults on loan; after default, title automatically transfers to mortgagee-lender
146
Q

Absolute Deed as Security

A

aka equitable mortgage

transaction in which a real property owner gives the lender a deed, rather than a mortgage, as security for a loan.

not subject to SoF

clear and convincing evidence needed to show deed was intended to be a mortgage

parol evidence rule does not bar party from presenting evidence to show parties intended to create a security interest and not a transfer of title to property

147
Q

Mortgage: Transfers

A

mortgage runs with land, which means that if land is transferred to another before mortgage debt paid in full, new owner takes title to land subject to mortgage or other security interest

148
Q

Due-on-Sale Clause

A

presumptively valid

if mortgagor-borrower transfers real property securing the mortgage, balance of mortgage is accelerated (must be paid in full)

149
Q

Due-on-Encumbrance Clause

A

presumptively valid

requires senior mortgage to be paid in full if property encumbered by a subordinate lien

150
Q

Mortgage: Liability

A

absent novation, borrower liable for debt.

If transferee assume mortgage, transferee primarily liable and borrower secondarily liable.

If transferee takes subject to mortgage, transferee not obligated to pay mortgage but can lose property if mortgage not paid

151
Q

Mortgage: Novation

A

if mortgage not repaid, lender may relieve borrower of personal liability through understanding that transferee will assume obligation.

lender must agree to discharge original obligation in exchange for new obligation between lender and transferee.

most jurisdiction require the novation to be express (either orally or in writing). minority of states will infer lender released borrower based on clear evidence of parties’ subsequent dealings that support such a finding

152
Q

Discharge of Mortgage

A

mortgagor pays off debt

express release (like novation)
- if state follows title theory, generally require compliance with SoF. if follow lien theory, generally do not.

153
Q

Discharge of Mortgage: Prepayment

A

traditionally, could not prepay in advance of due date without penalty.

today, if mortgage silent on prepayment, allowed without penalty but a majority of states will prohibit unless:
- promissory note or mortgage allows for prepayment without penalty OR
- mortgagee-lender subsequently consents to prepayment without penalty

154
Q

Deed in Lieu of Foreclosure

A

borrower who wishes to default on mortgage without incurring personal liability on promissory note may give mortgagee-lender a deed in lieu of foreclosure

borrower will transfer title in release of obligations.

release should in writing that reflects intent of parties (but some jurisdictions will uphold oral agreements)

155
Q

Foreclosure

A

if mortgagor-borrower defaults on mortgage, mortgagee-lender can:
- renegotiate terms of mortgage
- sue the borrower based on promissory note OR
- foreclose on lien on real property

156
Q

Mortgagee-Lender’s Pre-Foreclosure Rights

A
  • acceleration of loan if acceleration clause
  • right to take possession of property prior to foreclosure (if title theory)
  • right to protect security interest against waste by seeking injunction / damages
157
Q

Mortgage: Priority

A

purchase money mortgages have first priority. priority of other mortgagees and judgment lien holders will be in the order in which interests created unless:
- subsequent mortgagee or judgment lien holder can claim protection under recording act OR
- loan modification agreement that makes first mortgagee’s priority subordinate to that of a junior mortgagee

158
Q

Purchase Money Mortgages

A

include loans used to pay for all or part of purchase price.

to have priority:
- proceeds must be used for purchase of property
- mortgagor-borrower must take title and execute mortgage simultaneously and
- purchase money mortgage must be properly recorded immediately after deed

159
Q

Future Advance Mortgages

A

include loans where a party other than seller creates an agreement that lender will disburse loan funds to borrower in installments

if obligatory, mortgagor-borrower entitled to receive entire loan amount before subsequent lenders receive proceeds from foreclosure sale

if optional disbursements, future disbursements made only if mortgagor-borrower requests on contractual dates and mortgagee-lender concludes in good faith that underlying construction project met any satisfactory-progress condition. If foreclosure sale, will receive only disbursements requested and paid. If mortgagee-lender has notice when it makes advance that subsequent lender has acquired interest in property, advance loses priority to that creditor (most states require actual notice)

160
Q

Necessary Parties to Foreclosure

A

parties subject to mortgage and parties who acquired an interest in the property after the execution of the mortgage being foreclosed

161
Q

Junior and Senior Mortgagees

A

foreclosure eliminates all junior mortgages and liens but purchaser of property takes it subject to interests of any senior creditors

162
Q

Distributing Foreclosure Sale Proceeds

A

proceeds applied in following order:
- costs associated with sale
- balance and interest of foreclosed mortgage
- mortgage obligations owed to junior interest holders, in order of priority

if surplus, goes to borrower

163
Q

Foreclosure Sale: Deficiency

A

if results in deficiency (price does not cover mortgage), lender who brought foreclosure action and junior lien holders may seek deficiency judgments under promissory note by filing separate judicial actions

164
Q

Redemption

A

if mortgagor-borrower defaults, may exercise right of redemption to retain title to property

types:
- equitable redemption
- statutory redemption

165
Q

Equitable Redemption

A

mortgagor-borrower must pay off mortgage BEFORE foreclosure sale.

right waived if lender proves:
- waiver agreement made after existence of mortgage
- right was exchanged for good and valuable consideration AND
- transaction not fraudulent or otherwise unfair

166
Q

Statutory Redemption

A

mortgagor-borrower must pay amount paid for property at foreclosure sale within a set period of time

167
Q

Mortgage: Assignment

A

if mortgagee-lender transfers mortgage but not note, some states presume not also transferred. Other states treat transfer as void

if transfer note but not mortgage, majority rule is that mortgage will be deemed to transfer

168
Q

Mortgage: Recording Assignment

A

majority rule is that assignment by mortgagee-lender should be recorded. some jurisdictions allow assignee to have prio over others under theory that original mortgage’s recording provided notice

once recorded, assignee-lender will have priority as assignor-lender

169
Q

Subrogation

A

equitable doctrine that applies when, following a default, a 3P who has interest in property pays mortgage in full and becomes subrogee

subrogee obtains original creditor’s rights against the debtor / junior creditors.

subrogee cannot be person primarily liable for debt

170
Q

Installment Land Contract

A

seller of real property retains deed to property while granting possession of property to intended buyer

buyer makes payments toward purchase price.

when buyer pays total amount due, seller executes a deed and delivers it to buyer. If buyer defaults, seller need not bring a foreclosure action because seller holds title to property

171
Q

Recording Acts: Common Law

A

if owner sellers same property twice, first buyer takes title

172
Q

Recording Acts: Recording Statutes

A

if jurisdiction has recording statute, second buyer might have superior title if second sale meets requirements of recording statute.

Types:
- race
- notice
- race-notice

173
Q

Recording Statute: Race

A

first purchaser to record interest prevails, even if purchaser knows of prior conflicting interest

174
Q

Recording Statute: Notice

A

subsequent purchaser of property who takes without notice of a prior claim prevails over prior grantee.

can be actual, constructive, or inquiry notice

175
Q

Actual Notice

A

subsequent purchaser has actual knowledge of interest

176
Q

Constructive Notice

A

instrument conveying interest in real property is properly recorded and indexed

177
Q

Inquiry Notice

A

purchaser knows of some fact that would prompt a reasonable person to conduct a further investigation into a potential issue involving a superior interest

178
Q

Recording Statute: Race-Notice

A

purchaser must record first and have no notice of prior claim

179
Q

Parties Protected by Recording Statutes

A

usually include:
- bona fide purchasers (purchaser who paid value for interest in property)
- mortgagee-lenders
- grantees under the shelter rule
- purchasers who take without notice of a wild deed
- grantees protected by estoppel by deed

180
Q

Shelter Rule

A

party that takes from someone protected under recording statute will be protected by grantor’s status

181
Q

Wild Deed

A

deed that is recording in such a way that it cannot be found in title search

182
Q

Estoppel by Deed

A

if seller does not have title to property at time the parties execute contract but later acquires title, that seller must transfer it per terms of contract

183
Q

Parties Not Protected by Recording Statutes

A
  • heirs, devisees, donees
  • judgment or tax lien holders
  • bona fide purchasers against an adverse possessor
  • transferees of owners who obtained title by forged deed
184
Q

Adverse Possessor and Recording Statutes

A

party that acquires title by adverse possession has superior title to those protected by a recording statute

185
Q

Adverse Possession

A

to claim title, possession must be:
- actual
- open and notorious
- hostile
- exclusive
- continuous
- and for the statutory period

186
Q

Adverse Possession: Actual

A

may claim title only to portion of land actually possessed UNLESS enters land under color of title in which case title to whole property given

187
Q

Adverse Possession: Open & Notorious

A

use of land must be so obvious that if a reasonable owner were to inspect the property, the owner would have notice of an adverse claim

188
Q

Adverse Possession: Hostile

A

must occupy land without owner’s permission.

adverse possessor’s intent irrelevant in majority of jurisdictions

189
Q

Adverse Possession: Exclusive

A

possession cannot be shared with owner or general public

190
Q

Adverse Possession: Continuous

A

must exercise control over property in same way a reasonable owner would for the prescribed period of time

191
Q

Adverse Possession: Statutory Period

A

varies by state. begins running once enters and physically occupies property

192
Q

Tacking - Possessors

A

for series of possessors to tack time together, need:
- privity of possession (consensual and voluntary transfer by contract, deed, or will) and
- no gaps in time from transfer to another (continuous use)

193
Q

Tacking - Owners

A

if property owner conveys property to another, period of adverse possession does not reset with regard to new owner but tacking cannot be used if one person holds a present possessory interest and another holds a future interest

194
Q

Adverse Possession: Disability

A

if take possession while owner disabled, clock will not start to run

but if enter property when not disabled and owner becomes disabled later, statutory period continues to run

195
Q

Transfer by Deed

A

requirements:
- deed must comply with SoF (writing that describes property with reasonable certainty that is signed by grantor, includes words of transfer, and names parties)
- grantor must have immediate, present intent to transfer title
- deed must be delivered (dominion and control released) and
- grantee must accept deed

196
Q

Transfer by Deed: 3P Delivery

A

transfer made to uninterested 3P deemed to show grantor’s intent to transfer title if:
- grantor does not retain power to reclaim deed from 3P
- terms for delivering deed to grantee are in writing and
- all conditions on transfer of title satisfied

197
Q

Transfer by Deed: Grantee’s Agent

A

delivery presumed if instrument transferred to grantee’s agent but transfer to grantor’s agent will not satisfy delivery element

198
Q

Deed Covenants and Warranties

A

merger once deed delivered.

types of deeds:
- general warranty deed
- special warranty deed
- quitclaim deed

199
Q

General Warranty Deed

A

includes six covenants:
- seisin
- right to convey
- against encumbrances
- quiet enjoyment
- warranty of title
- further assurances

200
Q

Seisin

A

warrants that grantor owns estate that grantor is transferring and has good title

201
Q

Right to Convey

A

warrants that grantor has legal right to convey land

202
Q

Covenant Against Encumbrances

A

warrants that title is free of encumbrances at time of transfer

203
Q

Covenant of Quiet Enjoyment (Deeds)

A

warrants that another party will not disturb grantee’s use or enjoyment of land

204
Q

Warranty of Title

A

obligates grantor to either defend title claims from 3P or otherwise compensate grantee for losses the grantee might incur from 3P claims

205
Q

Further Assurances

A

warrants that grantor will do whatever is reasonably necessary to help grantee perfect title

206
Q

Special Warranty Deed

A

contains same covenants of title as a general warranty deed, but it warrants against only defects that were caused by, through, or under grantor or by acts allowing transfer of interest in property

207
Q

Quitclaim Deed

A

promises no covenants of title.

grantee of a quitclaim deed receives no better title than grantor’s title

208
Q

Indexes

A

Grantor-grantee index: provides vehicle for searching a property’s chain of title by searching grantors’ and grantees’ last names

Tract index: files all recorded documents by property location

209
Q

Title Insurance

A

parties not protected under recording acts or who risk a monetary loss may purchase title insurance.

protects parties, including both owners and lenders, from monetary loss due to title defects or other lien problems

210
Q

Conflicts of Law

A

traditional: law of situs of land. occasionally, considered contractual and will apply law of place where contract made. parties may also specify applicable law

modern: state that has more significant relationship to facts of case or a greater interest in outcome. Factors:
- where contract negotiated
- where parties entered into contract
- where parties to contract are domiciled
If determining validity of contracts to convey land, will most likely apply situs state’s law

Texas Bar Exam Feb. 2024 (16 decks)

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