Real Property Flashcards
Adverse Possession
Adverse possession allows someone in possession of land owned by another to acquire title if possession is actual, hostile, open and and notorious, exclusive, and continuous for the statutory period. Adverse possession does not convey marketable title, but allows for an action to quiet title.
Mnemonic - “NACHO” (notorious, actual, continuous, hostile, open)
Tacking
One adverse possessor may tack his time with the time of another adverse possessory to meet the required statutory period if the two adverse possessors are in privity.
Merger Doctrine
The contract for a conveyance of an interest in real property typically governs the agreement until the time of closing, at which time the deed becomes the operative document under the merger doctrine.
Valid Land Sale Contract
Contract law governs a contract for the sale of an interest in land, and the Statute of Frauds applies. The contract must be in writing, name the parties, signed by the party to be charged, sufficiently describe the land, and identify the purchase price and manner of payment.
Part Performance Exception to SOF
In the absence of a signed writing, part performance may sufficiently demonstrate the existence of a land sale contract. Part performance includes possession of the land by the purchaser, substantial improvements, and payment for some or all of the purchase price. Typically at least two of the three must be present.
Marketable Title
There is an implied promise in every land sale contract that the seller conveys marketable title at the time of closing. Marketable title is title free from defects, regardless of the deed contemplated in the contract.
Notes - title need not be perfect, just free from unreasonable risks of litigation and seller has reasonable time to cure
Triggers - outstanding mortgage or lien (seller has until escrow to pay off), easement that reduces full enjoyment of the property, use restrictions (i.e., real covenants)
Equitable Conversion
The doctrine of equitable conversion provides that once the contract is signed, the buyer is deemed the owner even though closing has not yet occurred. If the property is destroyed prior to closing through no fault of either party, the buyer bears the loss.
Remedies for Breach of Land Sale Contract
Damages: Typically calculated as the difference between the market price and the contract price.
Specific Performance: Specific performance is a permanent injunction where the court orders a party to perform on the contract as promised. Specific performance is usually preferred because land is unique.
Mortgage
A mortgage is a financing arrangement that conveys a security interest in land for the repayment of a monetary obligation.
Foreclosure
Foreclosure is a process by which the mortgagee may reach the land in satisfaction of the debt if the mortgagor defaults on the loan. A mortgagee must foreclose by proper judicial proceeding.
Priority of Mortgages
A purchase money mortgage (PPM) is a mortgage given to secure a loan that enables the debtor to purchase the original property. A PPM has priority over other mortgages.
Deficiency Judgment
A deficiency judgment occurs when the property is worth less than the amount owed on the outstanding loan(s). A lender can due the debtor personally for the remaining balance if there was a judicial foreclosure and the loan was not a PPM.
Conveyance by Deed
A deed is a document that serves to pass legal title from the grantor to the grantee. A deed must meet the same requirements as a land sale contract with the exception of consideration. There must be a present intent to transfer the interest and valid delivery.
General Warranty Deed
A general warranty deed warrants against all defects in title and contains six covenants of title (three present, three future).
Seisin - grantor warrants that he owns the estate he purports to own
Right to Convey - grantor warrants he has the power to make the conveyance
Covenant Against Encumbrances - grantor promises there are no mortgages, liens, easements, or use restrictions on the land other than those previously disclosed
Warranty of Title - grantor promises to defend lawful claims to the property asserted by others
Quiet Enjoyment - grantor promises grantee won’t be disturbed by third-party claims
Further Assurances - grantor will correct any future problems and do what is reasonably necessary to perfect the title conveyed
Quitclaim Deed
A quitclaim deed conveys whatever interest the grantor actually has in the property but warrants no covenants of title.
Special Warranty Deed
A special warranty deed covenants against title defects the grantor themselves created rather than all defects by prior owners.
Breach of Warranty Against Encumbrances
If an encumbrance is found to exist after the sale, damages are equal to the difference in value of the property due to the encumbrance.
Recording Acts
Recording acts function to provide a purchaser of land with a way to determine if he is getting good title to the property. Absent a recording statute, the common law rule of “first in time, first in right” applies.
Race Statutes
Under a race statute, the first to record title wins.
Notice Statutes
Under a notice statute, a subsequent bona fide purchaser (BFP) prevails over a grantee that failed to record first.
Race-Notice Statute
Under a race-notice statute, a subsequent BFP that records first prevails over a grantee that failed to record first.
Example - “no conveyance or mortgage of real property shall be good against subsequent purchasers for value and without notice, who shall first record.
Actual Notice
Actual notice occurs when a person has actual subjective knowledge.
Inquiry Notice
Inquiry notice occurs when a person is in possession of facts that would lead a reasonable person to make further inquiry.
(e.g., seeing a building or road physically present)
Constructive Notice
Constructive notice (aka, record notice) occurs when the prior interest was properly recorded in the chain of title.
Wild Deeds
A wild deed is one that is recorded but not in a way that a reasonable search of the grantee-grantor index would disclose. Wild deeds do not provide constructive notice.
Estoppel by Deed
If one purports to convey an interest in property that he does not own, but subsequently obtains an interest in, the interest will be automatically transferred to the grantee.
Shelter Doctrine
One who takes from a bona fide purchaser (BFP) will stand in the shoes of the BFP and is protected by the grantor’s BFP status.
Note - this is meant to protect people who did not take for consideration
Fee Simple Absolute
A fee simple absolute is the largest estate and can last forever.
Fee Simple Determinable
A fee simple determinable automatically terminates at the occurrence of a specified event. If the specified event occurs, the property automatically reverts back to the grantor.
Grantor’s future interest = possibility of reverter
Created with words of duration like “so long as,” “during,” “while,” “until,” or “unless”
Fee Simple Subject to Condition Subsequent
A fee simple subject to condition subsequent has the potential to terminate an estate at the occurrence of a stated event, but the termination is not automatic.
Grantor’s future interest = right of reentry
Created with words that carve out a right of reentry in the grantor like “but if,” “provided that,” or “upon the condition that”
Fee Simple Subject to Executory Interest
A fee simple subject to executory interest automatically terminates a proceeding estate at the occurrence of a stated event, but the estate passes to a third person rather than reverting to the grantor.
Third party’s future interest = executory interest
