Real Property

Question 1

The issue is whether the tenant can raise the excuse of constructive eviction.

Answer 1

When a landlord substantially interferes with the tenant’s use and enjoyment of the property by breaching a duty to the tenant, the tenant’s obligation to pay rent may be excused under the theory of constructive eviction. In order to end a lease before the end of its term by constructive eviction, the landlord must have breached a duty, which caused the loss of the substantial use and enjoyment of the premises, the tenant must give the landlord notice of the problem and reasonable opportunity to cure, and the tenant must vacate the property within a reasonable period of time. Not every interference with the use and enjoyment of the premises amounts to a constructive eviction. Temporary or de minimis acts generally do not amount to a constructive eviction.

Question 2

The issue is whether the landlord breached his duty to repair the premises.

Answer 2

Under the common law, there was no implied duty on the part of the landlord to repair leased premises. However, the majority of jurisdictions today enforce an implied duty upon the landlord to repair under a residential lease, even when the lease attempts to place the burden on the tenant, except for damages caused by the tenant. In contrast, courts are reluctant to imply a landlord’s duty to repair in commercial leases because the implied warranty of habitability does not apply in commercial leases.

Moreover, the covenant of quiet enjoyment is breached only when the landlord, someone claiming through the landlord, or someone with superior title disrupts the possession of the tenant. Accordingly, there is no duty to repair implicit in the covenant.

Question 3

The issue is when the lease was terminated.

Answer 3

Termination of a lease occurs automatically upon the expiration of the term. Termination may also occur before the expiration of the term when the tenant surrenders the leasehold, and the landlord accepts the return of the leasehold. When a tenant abandons the leasehold without justification, the landlord may treat the abandonment as an offer of surrender and could accept that surrender by retaking the premises.

Question 4

The issue is whether the landlord made a good-faith effort to mitigate his damages.

Answer 4

When a tenant abandons the leasehold, the landlord may treat the abandonment as an offer of surrender and accept such surrender, or the landlord may attempt to re-rent the premises on the tenant’s behalf and hold the tenant liable for any deficiency. The majority of jurisdictions now require a landlord to mitigate damages by attempting to re-rent the premises in the event that the tenant abandons the property and breaches the lease. Accordingly, the landlord has a responsibility to make a good-faith attempt to re-rent the property. Because the landlord did not take any steps to re-rent the property, he is likely not entitled to any unpaid rent.

Furthermore, the doctrine of anticipatory breach does not apply to leases. While the landlord may sue the tenant for rent as it becomes due, a landlord may not sue for future rent under the lease. Accordingly, even if the landlord were not required to mitigate damages, the landlord would, as of November 1, 2012 [when LL filed suit], only be entitled to the two months of unpaid rent, or $5,000, but not to any future rent until that rent accrues.

Question 5

The issue is whether the easement over Blackacre that Sue purchased from Tom was terminated when Sue purchased Blackacre from Tom.

Answer 5

An easement is terminated if the owner of the dominant or servient estate acquires fee title to the other estate. The easement is said to “merge” into the title. The merger of property interests results in the extinguishment of the property right.

Question 6

The issue is whether the prior use over Blackacre implied an easement over Blackacre when Sue sold Whiteacre to Dan.

Answer 6

If the owner of two parcels of land previously used one parcel to benefit the other, then the court may find that, upon the transfer of one parcel, the parties intended the use to continue if that use was continuous, apparent or known, and reasonably necessary to the dominant land’s use and enjoyment (as distinguished from an easement by necessity, which requires strict necessity).

Question 7

The issue is whether Bank’s future-advances mortgage has priority over Finance Company’s lien in distributing the proceeds from the foreclosure sale of Whiteacre.

Answer 7

When multiple interests must be paid out of the proceeds of a foreclosure sale, generally, the earliest mortgage placed on the property has priority over the other interests. Further, obligatory payments under a senior future-advances mortgage paid out after a junior lender remits its loan amount and records its lien have priority over amounts loaned by the junior lender.

[Though Bank made its final advance after Finance Company recorded its mortgage, Finance Company’s lien is still junior to Bank’s. This is because Bank’s mortgage on Whiteacre was the earliest mortgage and its payments were obligatory rather than optional. Because the loan payments were obligatory rather than optional, Bank’s right to the $700,000 paid out after Finance Company recorded its lien has priority over Finance Company’s lien. Therefore, all proceeds from the foreclosure sale of Whiteacre should be paid to Bank.]

Question 8

The issue is whether the husband’s execution of the mortgage to the friend severed the joint tenancy with his wife.

Answer 8

A joint tenancy exists when at least two people own property with the right of survivorship. In addition to the right of survivorship, each joint tenant must have the four unities: the right to possess or use the property and equal interests which were created at the same time and in the same instrument. The severance of joint tenancy may occur in several ways and converts it into a tenancy in common. A joint tenant may grant a mortgage in his joint tenancy interest. In title theory states, which is the minority of states, the granting of a mortgage constitutes a transfer of title. A transfer of title severs the joint tenancy and converts it into a tenancy in common.

Question 9

The issue is whether the husband’s execution of the lease severed the joint tenancy.

Answer 9

There is a split among jurisdictions with respect to joint tenancies when one joint tenant leases his interest. Some jurisdictions hold that the lease destroys the unity of interest and thus severs the joint tenancy, while other jurisdictions believe that the lease merely temporarily suspends the joint tenancy, which resumes upon expiration of the lease.

Question 10

The issue is whether the tenant’s lease would be valid.

Answer 10

A tenancy in common exists when two or more co-owners have an equal right to possess property, but do not have a right of survivorship. In that case, each co-tenant holds an undivided interest with unrestricted rights to possess the whole property, regardless of the size of the co-tenant’s interest. Each tenant can unilaterally transfer, devise, mortgage, or lease his interest to a third party, without affecting the interest of the other tenants.

Question 11

The issue is whether the woman would be entitled to half the rental income.

Answer 11

A co-tenant must account to other co-tenants for rent received from third parties, but can deduct operating expenses, including necessary repairs, when calculating net proceeds. Third-party rents are divided based on the ownership interest of each tenant.

If the execution of the lease did not sever the joint tenancy then the husband and wife own the property still as joint tenants. The third-party rent should therefore be divided equally between the two of them.

Question 12

The issue is whether the husband’s grant of the lease survives his death.

Answer 12

At death, a joint tenant’s property passes automatically to the remaining joint tenants due to the right of survivorship.

Here, assuming the lease did not sever the joint tenancy, the wife still has the right of survivorship after her husband passes. When the husband dies, then, the lease would terminate and the remaining property would pass automatically to her.

Question 13

The issue is whether the owner’s building was subject to the provisions of the Fair Housing Act.

Answer 13

The Fair Housing Act of 1968 makes it illegal for a landlord to refuse to rent a dwelling place to any person on account of that person’s race, national origin, sex, religion, or familial status. The Act carves out an exception for landlord-occupied buildings with four or fewer units. The FHA, therefore, only applies if the building with four or fewer dwelling places is not owner-occupied or if the building has more than four units, even if one of the units is owner-occupied.

Question 14

The issue is whether the owner and the newspaper publisher violated the FHA.

Answer 14

The FHA makes it illegal for a landlord or a publisher to publish an advertisement that states a preference for renters on account of a protected class (race, sex, national origin, religion, familial status). The FHA does not carve out any exceptions with reference to advertisements, and therefore advertisements that discriminate against a protected class violate the FHA.

Question 15

The issue is whether Railroad has abandoned its easement.

Answer 15

Easements can terminate by written release, prescription, estoppel, condemnation, and abandonment. Neither a statement of intent to abandon nor non-use can extinguish an easement absent affirmative conduct. An easement can only be terminated based on a theory of abandonment if the owner of the easement acts in an affirmative way that clearly shows intent to relinquish the easement right.

Question 16

The issue is determining who owns the land by assigning priority to the competing interests.

Answer 16

Unless a recording act governs, the common law rule of “first in time, first in right” generally applies to determine priorities

Question 17

The issue is whether Purchaser is protected under the state’s recording statute as a bona fide purchaser without notice of either prior interest.

Answer 17

A notice statute tends to protect subsequent purchasers against interest holders who could have, but failed to record documents describing their interests. Here, the statute provides that unless a conveyance is recorded, it will not be good “against subsequent purchasers for value and without notice.” Purchaser here would prevail against Railroad and/or Daughter if Purchaser gave value in good faith and without notice of a prior claim. “Notice” can be actual, by inquiry, or constructive.

Purchaser paid value and had no actual notice of Sam’s conveyance of an easement to Railroad or of Sam’s conveyance to Daughter. Nor did Purchaser have constructive notice of these conveyances. Purchaser can only be held to have constructive notice of prior conveyances that were properly recorded. Railroad and Daughter recorded their interests but Sam, from whom they received the conveyances, did not. [Wild Deed rules in separate flash card, but that’s the next part of this analysis].

Question 18

Wild deed

Answer 18

A recorded deed that is not within the chian of title is a wild deed. Because Sam never recorded his deed from Oscar, a search of the state’s grantor-grantee index would not reflect that Oscar had previously conveyed the property to anyone. Neither the conveyance to Railroad nor the conveyance to Daughter would be reflected. Therefore, Purchaser did not have constructive notice and, absent inquiry notice, would prevail.

Question 19

The issue is whether Purchaser was on inquiry notice and thus not protected by the statute.

Answer 19

A grantee has inquiry notice if a reasonable investigation would have disclosed the existence of prior claims. A grantee with inquiry notice cannot prevail against those prior claims. A purchaser is held to know whatever a reasonable inspection of the property would have disclosed. Taking a quitclaim deed does not in itself create inquiry notice of prior claims in most states.

Analysis from Q:

Here, had Purchaser viewed the property, he would have seen the railroad tracks left by Railroad on land that was otherwise undeveloped. A reasonable investigation would include inquiry into the interests of whoever put the tracks on the property. Further, inquiry made of Railroad would disclose Sam as grantor of Railroad’s interest, which would lead to a search for Sam in the grantor index and discovery fo the deed to Daughter, which was recorded (albeit outside the chain of title). Therefore, it is likely that Purchaser had inquiry notice of both Railroad’s and Daughter’s interests and so would not prevail against those prior claims. Though the state’s recording act does not apply to Daughter because Sam conveyed the land to her by gift and she was therefore not a purchaser for value, her rights are still recognized because she became a legal titleholder before Purchaser and, under the common law “first in right” principle, she would prevail.

Question 20

The issue is whether the landlord breached the implied covenant of quiet enjoyment.

Answer 20

A landlord owes a tenant the covenant of quiet enjoyment in both commercial and residential leases. A landlord breaches the covenant if the landlord’s actions or inactions render the property unusable by the tenant and the tenant is constructively evicted. Under the doctrine of constructive eviction, if the landlord fails to repair the property as provided in the lease, the tenant notifies the landlord and gives reasonable opportunity to cure the problem, and the tenant leaves the property, the tenant may claim constructive eviction.

Question 21

The issue is whether the landlord sued the right tenant because of the assignment.

Answer 21

An assignment of a lease occurs when the original tenant gives the rest of the lease over to a new tenant. A sublease occurs when the original tenant gives part of the balance of the lease over to a new tenant. A sublease occurs when the original tenant gives only part of the balance of the lease over to a new tenant. Both are permitted unless the lease provides otherwise. Under an assignment, the new tenant has privity of estate with the landlord, and privity of contract with the original tenant.

Question 22

The issue is whether the landlord accepted the doctor’s surrender of the lease, relieving the doctor of the duty to pay rent, or whether the doctor merely abandoned the lease.

Answer 22

A tenant may volunarily surrender her lease by notifying the landlord and giving over possession of the property. The tenant may do this by giving her keys back to the landlord and moving out. However, if the landlord refuses to accept the surrender prior to the end of the lease, then the tenant has merely abandoned the lease and continues to be responsible for unpaid rent.

[Although LL told doctor that he would not accept keys, doc threw at LL’s feet, and LL said doc would be liable for all unpaid rent–LL immediately renovated the building, so LL likely accepted the surrender]

Question 23

The issue is whether the friend had an implied easement from prior use.

Answer 23

An easement is an interest granted to someone that allows them to make use of another’s property in a specified and certain way. Similarly to a license, it requires permission, but unlike a license, it is often not revocable. An express easement is one that is written and signed by the servient party/estate (the land being used). On the other hand, an implied easement exists when (1) two parcels of land were once one whole parcel and prior to their severance, the owner had a “quasi-easement” on his land (note, the term quasi-easement refers to the fact that an owner of land cannot have an easement over his own proprty), (2) the land was then severed, (3) the owner intended for the easement to continue after severance, and (4) the easement is necessary to the use and enjoyment of the land. The necessity for an implied easement does not have to rise to the level of land-locked property usually required for easements by necessity.

Question 24

The issue is whether an easement by prescription exists.

Answer 24

Similarly to adverse possession, easements by prescription exist if the use of the easement was (1) open and notorious, (2) hostile, and (3) continuous for the statutory period. The difference between an easement by prescription and adverse possession is that acquisition of an easement by prescription does not require proof that the use was exclusive.

Question 25

The issue is whether the builder took subject to the easement, even though his deed made no mention of it.

Answer 25

An easement is generally considered to be appurtenant, i.e., tied to the land rather than a person. However, easements are subject to recording acts. The applicable recording act in the jurisdiction is a notice-type statute and uses a grantor-grantee index. Thus, a bona fide purchaser takes land free of an easement if he paid value for the land and did not have notice of the esaement, regardless of whether he recorded his deed or not. A person can have notice in three ways: (1) actual notice, (2) inquiry notice, and (3) record notice. Actual notice means the person has personal knowledge (e.g., the deed states there is a prior conveyance or the buyer was orally told of the prior conveyance). Inquiry notice is when a reasonable investigation into the property or inquiry of the neighbors would have yielded information alerting the buyer to the prior conveyance. Record, or constructive notice, occurs when a reasonable search of the state’s grantor-grantee index would have revealed the prior conveyance.

Question 26

The issue is whether the man can recover from the builder for the $80,000 used to repair the property.

Answer 26

A warranty of fitness or suitability is implied in almost all jurisdictions in a contract for the sale of a newly constructed residence. Under this warranty, the seller asserts that he used adequate materials and workmanship for the residence. The implied warranty generally covers latent construction defects or problems that do not manifest themselves until after the sale. The buyer has a duty to reasonably inspect the residence for patent defects but is not required to employ an expert home inspector. Generally, a suit for breach of the implied warranty may be brought against builders, developers, and contractors within a reasonable time after discovery of the defect. A majority of jurisdictions permit both the initial homeowner-purchaser and subsequent purchasers who do not contract directly with the commercial developer to recover damages.

Question 27

The issue is whether the man is personally liable on the woman’s mortgage obligation.

Answer 27

Unless the lender (mortgagee) agrees to release the borrower (mortgagor) from liability for the loan, the borrower remains personally liable on the loan obligation after the mortgaged property is transferred. If a deed is silent or ambiguous as to the buyer’s (transferee’s) liability, then the buyer takes title subject to the mortgage and is not personally liable upon default. But although the buyer has title, which allows him to possess the property, the property is stilll subject to a potential foreclosure action upon default. Then, only the seller (transferor) remains personall liable for the deficiency.

But if a buyer of the property assumes the mortgage obligation, then the buyer and the original mortgagor are both personally liable to the lender. If the mortgage obligation is unpaid, the lender may sue either the mortgagor-borrower or the transferee-buyer personally and if there is still a deficiency, sue the other. Most jurisdictions do not require that the assumption agreement be in writing; if proven, an oral agreement is enforceable.

A minority of jurisdictions imply an assumption of the mortgage when the transferee-buyer pays the seller the difference between what the property was worth and the outstanding balance on the mortgage obligation.

Question 28

The issue is whether the man may recover damages from the woman if the bank forecloses on the property.

Answer 28

Generally, a seller is liable to a buyer for any claims of encumbrances against the property when the seller warrants that no such encumbrance exists, as with a general warranty deed. However, a quitclaim deed contains no covenants of title. Instaed, the grantee of a quitclaim deed receives no better title than what the grantor possessed. A grantee who has actual, inquiry, or record (constructive) notice of a prior claim to property cannot assert priority over it.