Real Property

Question 1

Before a deed is delivered,

Answer 1

The contract of sale is signed

Question 2

Under equitable conversion,

Answer 2

As soon as the contract is signed (but before closing), the buyer’s interest is real property (the land) and the seller’s interest is personal property (the money from the sale). Thus, the risk of loss is on the buyer under equitable conversion, even if the seller remains in control and possession of the land.

Question 3

To be valid, a deed must:

Answer 3

Identify the buyer and seller, describe the land, contain words denoting a present intent to convey, and be signed by the grantor.

It must also be delivered.

Question 4

How to determine if a deed has been delivered?

Answer 4

Question of intent to pass title presently.

Question 5

Quitclaim deed

Answer 5

Grantor gives no covenants (promises nothing) and the grantee gets whatever the grantor has. Grantee takes the land subject to a defect in the title, an undisclosed easement, or other problem, and has no recourse.

Question 6

Warranty deed

Answer 6

Grantor gives six covenants—three present covenants and three future covenants.

Present covenants: the right to convey, the covenant of seisin (both meaning that the seller guarantees he owns the land he is selling), and the covenant against encumbrances (no existing easements, liens, or encumbrances that are not stated in the deed).

Future covenants: further assurances, quite enjoyment, and warranty.

Under common law, remote grantees can sue only under future (not present) covenants.

Question 7

Merger

Answer 7

On the closing date, the contract for sale merges into the deed, so at that point, the buyer can only sue on the deed.

Question 8

Breach of the implied warranty of fitness and habitability

Answer 8

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.

Question 9

Common law rule for priority:

Answer 9

A grantor can only convey those right 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.

Question 10

Notice statutes

Answer 10

Protect subsequent BFPs for value who take without notice of the earlier transaction

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

Question 11

Race-notice statutes

Answer 11

Protect subsequent BFPs for value who take without notice and are the first to record

Ex: No conveyance of an interest in land is valid against any subsequent purchaser for value without notice unless it is first recorded.

Question 12

Pure race statutes

Answer 12

Protect subsequent purchasers who are the first to record

These are rare!

Question 13

Three types of notice

Answer 13

Actual: grantee actually knows about the conveyance
Inquiry: examination fo the land/reference in an instrument would lead a reasonable person to inquire
Record: 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.

Question 14

Can a mortgagor transfer title to the mortgaged property?

Answer 14

Yes—however, the mortgage will remain on the property and the mortgagor is still personally liable on the note.

Question 15

Transferee who takes the land “subject to” the mortgage

Answer 15

Is not personally liable on the mortgage.

Question 16

Transferee who “assumes” the mortgage

Answer 16

Is personally liable on the mortgage along with the original mortgagor.

Question 17

Novation

Answer 17

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.

Question 18

Term of years lease

Answer 18

Specifies both a beginning and end date

Question 19

Periodic tenancy

Answer 19

No fixed end date. Simply repeats until one party gives valid notice to the other.

Can be created by an express agreement, implication (where the lease contains no end date), or operation of law (oral lease that violates the SOF because the term is for more than one year).

Valid notice (notice equal to the rent payment term) is required to terminate a periodic tenancy.

Question 20

If the lease does not prohibit an assignment or sublease, a tenant…

Answer 20

Can assign or sublease her interest in the lease

Question 21

A tenant can sue for constructive eviction if…

Answer 21

The tenant can prove that the landlord breached a duty to the tenant (e.g., 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.

Question 22

The implied warranty of habitability is breached only in a residential lease if…

Answer 22

The premises are uninhabitable. If this occurs, the tenant has several remedies, including vacating the premises, suing for damages, offsetting damages, etc.

Question 23

Duties of a tenant.

Answer 23

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

Question 24

Duty to mitigate

Answer 24

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.

Question 25

The Fair Housing Act

Answer 25

This act disallows discrimination in 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 advertisement is made, the owner and publisher will have violated the act.

Question 26

How are easements created?

Answer 26

Expressly, impliedly (by prior use or necessity), or by prescription.

Question 27

Termination of easements:

Answer 27

Easements may be terminated in a variety of ways such as by their express terms, written release, merger of the dominant and serving tenements, prescription, estoppel, condemnation, or abandonment.

For abandonment, mere non use of the easement is not sufficient to abandon it. There must be an act of abandonment.

Question 28

How to create a joint tenancy:

Answer 28

Requires the four unities (TTIP): time, title, interest, and possession.

Most states also require using the language “joint tenancy” and adding an express reference to “survivorship” or “survivors” to create a joint tenancy.

Question 29

Severance of a joint tenancy:

Answer 29

Four ways (G SAM): Giving it away during life, Signing a contract for sale, Actual judicial sale by a judgment lien creditor, or granting a Mortgage in a title theory state.

Question 30

Requirements for adverse possession

Answer 30

1. Continuous for the statutory period
2. Hostile
3. Actual
4. Open and notorious
5. Exclusive

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 31

Tacking

Answer 31

In some circumstances, an adverse possessor may tack on the time that a prior adverse possessor had possessed the land to his own time to reach the statutory period.

Question 32

Failure to record an interest acquired by adverse possession

Answer 32

The adverse possessor will prevail over a subsequent BFP who complies with the recording act because there is no document that the interest holder could record.

Question 33

Two types of zoning ordinances:

Answer 33

Cumulative: creates a hierarchy of uses of land.

Non-cumulative: land may only be used for the purpose for which it is zoned.

Question 34

Can a use that exists at the time of passage of a zoning ordinance that does not conform be eliminated at once?

Answer 34

No. Generally, a nonconforming use may continue indefinitely, but any change in the use most comply with the zoning ordinance.

Question 35

Purchase money mortgages are created when:

Answer 35

When a mortgage is given by a buyer to a seller as part of the purchase price.

Also when a third-party lender is lending funds to the buyer to purchase property.

Question 36

Purchase money mortgages have priority over claims against a mortgagor that arise…

Answer 36

Prior to the mortgagor’s acquisition of title.

Question 37

What is a BFP

Answer 37

One who gives valuable consideration and has no notice of the prior instrument.

Question 38

May a seller retain earnest money as liquidated damages in the case of a breach?

Answer 38

Yes, when a contract for the sale of land calls for a buyer to deposit earnest money, the seller may retain that earnest money as liquidated damages in the case of a breach.

However, if the deposit is so large that it is not a reasonable estimate of the seller’s actual damages, courts will generally refuse to enforce it on the grounds that it is a penalty (look to whether the seller’s losses exceed the amount of the earnest money).

Question 39

Delivery of a deed may be satisfied by:

Answer 39

Words or conduct that evidence an intent that the deed has some present operating effect.

Delivery must show an intent that title passes immediately and irrevocably, even though the right of possession may be postponed until some future time.

Question 40

Is delivery of a deed conditioned on death valid?

Answer 40

It may be valid if there is a present intent to convey a future interest tot he grantee, such as the grantor’s intent to create a remainder with a life estate reserved to the grantor. The grantor would have to intend that the deed would be operative immediately to convey a future interest. Contrast to a situation where the instructions are to deliver the deed to the grantee only if she survives the grantor—there is generally no valid delivery. In such a case, it is the grantor’s intent to retain title and possession until the grantor’s death.

Question 41

What does a title insurance policy do?

Answer 41

It insures that a good record of title of the property exists as of the policy’s date and agrees to defend the record title if litigated.

It can be taken out by either the owner of the property or the mortgage lender.

Question 42

Who does a title insurance policy cover?

Answer 42

An owner’s policy protects only the person who owns the property and does not run with the land to subsequent purchasers. In contract, a lender’s policy follows any assignment of the mortgage loan.

Question 43

In order for an equitable servitude to be binding on successors, there must be:

Answer 43

(1) a writing; (2) an intent by the parties that the promise be binding on successors; (3) the promise must touch and concern the land; and (4) the successors of the burdened land must have notice fo the promise.

Question 44

Are restraints on the alienation fo a fee simple valid?

Answer 44

They are generally void, even if they are for a limited amount of time. Direct restraints upon the grantee’s right to dispose of the property by will or intestacy also are generally void as a restraint upon alienation.

A life estate can be subjected to restraints on alienation.

Certain types of indirect restraints have been upheld by courts—use restrictions, for example, are an exception to the general rule against restraints on alienation.

Question 45

A landlord is barred from:

Answer 45

Exercising retaliatory eviction or taking other reprisals against tenants for their lawful exercise of rights as tenants.