Real Property Flashcards
1
Q
What is a joint tenancy?
A
Two or more own property with the right of survivorship (deceased JT’s share automatically passes to the surviving JT).
- Property interest is alienable inter vivos.
- It is not devisable (testamentary devise) or descendible (pass through intestacy).
2
Q
What is a tenancy by the entirety?
A
A protected marital interest between spouses with the right of survivorship.
- Engaged people can’t have this–must be married at the time of creation.
- Is presumptive in any grant to married partners (unless a grant clearly indicates otherwise).
- Highly protected (sanctity of marriage). Creditors of only one spouse cannot defeat the right of survivorship. One spouse cannot unilaterally transfer the interest (it’s a nullity–unenforceable).
- Severance through divorce, death, or the execution of a lien by a joint creditor of both spouses. When severed, it becomes a tenancy in common.
3
Q
What is a tenancy in common?
A
Two or more own property without the right of survivorship.
- Modern presumption in favor of this type of ownership.
- Co-tenants own the individual part + the right to possess the whole.
- Devisable (testamentary devise), descendible (pass through intestacy), and alienable.
4
Q
What is required for a Joint Tenancy?
A
The Four Unities (T-TIP)
- T: At the same TIME.
- T: By the same TITLE (deed, will, etc.).
- I: With IDENTICAL, equal interests.
- P: With the right to POSSESS the whole.
5
Q
How can a joint tenancy be severed?
A
- Sale: A JT may sell-transfer her interest during her lifetime–even without the other’s knowledge or consent. The buyer in this case is a tenant in common (because the 3 unities are disrupted).
- Partition by Voluntary Agreement: An allowable and peaceful way to end the relationship.
- Partition by Judicial Action Called Partition in Kind: An action for a physical division of the property, if in the best interests of all parties (EX: sprawling acreage–lends itself to division).
- Judicial Action Called a Forced Sale: An action when, in the best interests of all parties, the land is sold and the sale proceeds are divided up proportionately (EX: Blackacre is a single building).
6
Q
At common law, when all joint tenants enter into an executory contract to sell, will this sever a joint tenancy? What about in other jurisdictions?
A
No. The joint tenancy continues in both right to the proceeds and legal title. If someone dies before proceeds are distributed, their proceeds will go to the other joint tenants.
- In other jurisdictions, this will result in a tenancy in common (equitable conversion doctrine).
7
Q
Will a joint tenant’s execution of a lien on her share sever a joint tenancy?
A
A joint tenant’s execution of a mere mortgage/lien will not sever the joint tenancy in the majority of states.
8
Q
What is the lien theory of mortgages?
A
Under the lien theory of mortgages, if a joint tenant encumbers her interest in the joint tenancy to back up / collateralize a bank’s extension of value, then all the bank has is a lien in the event that the debtor defaults (doesn’t sever the joint tenancy).
- This is the majority rule.
9
Q
In a lien theory state, when a joint tenant takes out a lien on the property and dies before default and disclosure proceedings, will the lender be able to maintain a loan on the property?
A
No. In most lien theory states, the mortgage is regarded as a lien on title. In these states, a mortgage of the property by one joint tenant does not, by itself, sever a joint tenancy until default and foreclosure proceedings have been completed. The lender loses their rights as to the property if the joint tenant dies before the foreclosure.
10
Q
What is the title theory of mortgages?
A
Under the title theory of mortgages, encumbrances by lien will sever the joint tenancy as to that encumbered share.
- This is the minority view (small minority).
11
Q
Can co-tenants exclude each other from parts of the property?
A
Each co-tenant has the right to possess all portions of the property but has no right to exclusive possession of any part. If one co-tenant wrongfully excludes another co-tenant from possession of the whole or any part, they’ve committed ouster. Ouster is an actionable wrong.
12
Q
When only one co-tenant is using jointly owned property, does she owe the other(s) rent?
A
Unless there has been an ouster, a co-tenant in exclusive possession is not liable to the other(s) for rent.
13
Q
When a co-tenant of a tenancy in common leases all or part of the property to a third party, what result with the profits?
A
When a co-tenant leases all or part of the property to a third party, they must provide other tenants with their fair share of the income
14
Q
Can co-tenants obtain right of the whole of the property through exclusive possession of the property (adverse possession)?
A
Unless they’ve ousted the other co-tenant, the co-tenant in exclusive possession for the statutory adverse possession period cannot acquire title to the whole to the exclusion of the other co-tenant (the hostility element is absent).
15
Q
What are carrying costs of co-tenants regarding the property owned?
A
Each pays their fair share of the property according to their interests (EX: taxes, mortgage, etc.).
16
Q
What are repair cost liabilities of co-tenants regarding the property owned? What are the rights of a repairing co-tenant?
A
A repairing co-tenant enjoys a right to contribution during the life of the co-tenancy for reasonable, necessary repairs, provided they gave notice to the other co-tenant(s) of the need for the repairs.
17
Q
If a co-tenant creates unilateral improvements, can they seek contribution from other co-tenants?
A
No. During the life of the co-tenancy, there is no right to contribution for unilateral “improvements” made by only one co-tenant.
- At partition/dissolution, an improver gets a credit equal to any value increase he caused in the property. The improver suffers a debit equal to any decrease in value that he caused.
18
Q
What are co-tenants duties regarding waste? What are the types of waste?
A
A co-tenant must not commit waste. During the life of the co-tenancy, a co-tenant is permitted to bring an action for waste against another co-tenant.
TYPES:
- Voluntary waste is willful destruction (overt damage and/or decrease in value).
- Permissive waste is neglect (EX: leaving windows open and weather causes harm).
- Ameliorative waste is unilateral change that increases value (others still have right to recover for sentimental loss if it’s quantifiable).
19
Q
What kind of partition is preferred?
A
A partition in kind is preferred because it’s easy, but they will also allow for a partition by forced sale if fair/equitable physical division is not possible.
20
Q
What is a Tenancy for Years?
A
In Landlord/Tenant law, a Tenancy for Years is a lease for a known, fixed period of time (as long as you know the end date from the start, you have a Tenancy for Years).
- Termination is automatic on the end date.
- No notice needed to terminate.
- Writing typically needed if more than 1 year (SOF).
21
Q
What is a Periodic Tenancy?
A
In Landlord/Tenant law, a Periodic Tenancy is a lease that continues in repeating intervals until the landlord or tenant gives proper notice of termination.
- Applies by IMPLICATION when (1) land is leased with no mention of duration, but rent is set at regular intervals (EX: end of each month); (2) there is an oral term of years violating the statute of frauds; OR (3) a landowner elects to hold over a tenant after the lease ends.
- TERMINATE: At common law, notice must be given at least equal to the length of the period itself. Month-to-month, one month of notice is needed. Week-to-week, one week is needed. Year-to-year, common law is 6 months and the restatement is 1 month (bar examiners preferred approach).
22
Q
What is a Tenancy at Will?
A
In Landlord/Tenant law, a Tenancy at Will has no fixed duration and is terminable at will by either the landlord or the tenant. This must be created by an express agreement (failing to explicitly do so, the periodic payment of rent will cause this to be treated as a Periodic Tenancy).
- In most states, a reasonable demand to quit/vacate will be required to end this.
23
Q
What is a Tenancy at Sufferance?
A
In Landlord/Tenant law, a Tenancy at Sufferance is created when a tenant wrongfully holds over past the expiration of the lease. The landlord then will go on to recover the rent.
- TERMINATES when the landlord moves to evict or holds the tenant to a new tenancy.
24
Q
When a lease is silent, what duties does the tenant have to repair?
A
T has the duty to maintain the premises. T must make routine repairs other than those due to ordinary wear and tear.
25
What duties regarding waste does a tenant have? What are the types of waste?
T has a duty to not commit waste.
TYPES:
- Voluntary (Affirmative) Waste: This results when the tenant’s overt conduct damages the premises.
- Permissive Waste: occurs when the tenant fails to take reasonable steps to protect the premises from damage from the elements. Remember, the tenant is liable for maintaining the premises, excluding ordinary wear and tear. If the duty to maintain the premises is shifted to the landlord (by lease or statute), the tenant has a duty to report deficiencies promptly.
- Ameliorative Waste: It occurs when the tenant unilaterally alters the leased property, thereby increasing its value. Generally, the tenant is liable for the cost of restoration. There is a modern exception to this rule, however, which permits a tenant to make this type of change if the tenant is a long-term tenant and the change reflects changes in the neighborhood.
26
What result when a tenant promises in the lease (express covenant) to repair and maintain the property in good condition?
At common law, a tenant was responsible for any loss to the property, including loss attributable to force of nature, such as hurricanes, earthquakes, or lightning strikes.
However, today, the majority view is: If a residential tenant covenants to repair, the landlord usually remains obligated to repair (except for damages caused by the
tenant) under the nonwaivable “implied warranty of habitability”.
However, a nonresidential tenant’s covenant to repair is enforceable, and a landlord may be awarded damages for breach based on the property’s condition when the lease terminates compared with its condition when the lease commenced. In the absence of a specific reference to ordinary wear and tear, a covenant to repair usually includes such repairs.
However, repair covenants frequently exclude ordinary wear and tear.
27
If a tenant breaches and remains on the premises, what options does the landlord have?
- Evict: If a tenant is on the premises and fails to pay rent, the landlord can evict through the courts; OR
- Continue the Relationship and Sue for Rent: L can proceed affirmatively for the rent that is owed.
NOTE: Self-help is NOT allowed (can't change the locks or forcibly remove the tenant). Self-help is flatly outlawed and is punishable civilly and criminally.
28
If a tenant breaches and is out of possession, what options does the landlord have?
SIR
Surrender: End the lease. (view as a voluntary offer of surrender--giving up the lease). Can sue to collect the rent owed. ((This option available only in a minority of states))
Ignore: Do nothing. Can hold T liable for rent. This is a mitigation principle.
Relet: Re-let the premises on the wrongdoer-tenant’s behalf and hold the wrongdoer-tenant liable for any deficiency.
29
What is a landlord's Duty to Deliver Possession?
At the beginning of the lease, L must place T in actual, physical possession of the property (otherwise they get damages).
30
What is the Implied Covenant of Quiet Enjoyment in LL/T law? What result when it is breached?
T has the right to the use and enjoyment of the property without interference from L (residential and commercial) or someone with paramount title. This is breached by wrongful eviction of constructive eviction.
- Wrongful Eviction: L excludes T from the whole or from part of the premises without cause. Both whole and partial evictions relieve T of the duty to pay rent.
- Constructive Eviction: L's breach of duty renders the premises unsuitable for occupancy. Elements are (1) Substantial Interference (chronic or permanent problem due to L's actions or failures), (2) Notice (T must notify L), (3) Reasonable time for L to repair, and (4) Vacate/Goodbye (T must vacate the property) (EX: the apartment floods every time it rains).
31
Is a landlord liable for the disruptions of other tenants?
No. However, there are two exceptions:
- A landlord has a duty to abate a nuisance on site.
- A landlord must control common areas.
32
What is the Implied Warranty of Habitability?
The implied warranty of habitability provides that the premises must be fit for basic human habitation. In other words, bare living requirements must be met. This is determined by caselaw and by the local housing code.
- Only applies to residential leases (NOT commercial leases).
- This is non-waivable.
33
What are a tenant's options if a landlord breaches the Implied Warranty of Habitability?
M & 3Rs:
- Move: T may move out and terminate the lease.
- Repair & Deduct: T may make the reasonable repairs and deduct their cost from future rent (allowable by statute in a growing number of jurisdictions).
- Reduce or Withhold Rent: T may reduce rent or withhold all rent until the court determines fair rental value (typically, the tenant must place withheld rent into an escrow account to show their good faith).
- Remain & Seek Damages: T may remain in possession, pay full rent, and affirmatively seek money damages.
34
What recourse does L have when T engages in "whistleblowing" on the premises?
L can't terminate/penalize T in retaliation for T's exercise of legal rights (EX: whistleblowing). L needs to show a good faith, valid reason for actions that might be retaliatory.
35
What housing protections are provided by the Civil Rights Act?
The Civil Rights Act bars racial or ethnic discrimination in the sale or rental of all property.
36
What protections does the Fair Housing Act provide?
The Fair Housing Act protects tenants and potential tenants from discrimination based on race, color, religion, national origin, sex, or disability, as well as familial status (except in senior housing). L must permit T with disabilities to make reasonable accommodations to meet the needs posed by disabilities (T makes those accommodations at their own expense, but L must make the proper policies to make this possible).
- Doesn't apply to (1) owner-occupied buildings with 4 or fewer units OR (2) single-family homes sold or rented by an owner who owns no more than 3 single-family homes.
- PROHIBITED ACTIONS: (1) Refusing to negotiate, rent, or sell housing, or give mortgage; (2) providing different terms for the sale/rent of a dwelling; and (3) Falsely representing dwelling available.
37
What result if a paramount title holder partially violates the Implied Covenant of Quiet Enjoyment owed to a tenant?
T is excused of rent to the portion that the paramount title holder is evicting them.
38
What is an Assignment in LL/T law?
An assignment is a transfer of the ENTIRE remaining term of a lease.
- The assignee and the landlord are in privity of estate (liable for all of the original covenants that run with the land in the first agreement).
39
What is a Sublease in property law?
A sublease is a transfer of PART of the remaining term of a lease.
- The second-tier tenant (T2) has no privity (estate or contract) with Landlord.
- The relationship between T1 and L remains fully intact.
40
When is a covenant considered to "run with the land" for purposes of an Assignment?
A covenant runs with the land if the original parties to the lease so intend AND if the covenant “touches and concerns” the land (that is, benefits the landlord and burdens the tenant (or vice versa) with respect to their interests in the property).
41
Do a landlord and tenant assignee share privity of contract?
No.
42
Do a landlord and tenant share privity of estate when the tenant makes an assignment? Do they have privity of contract anymore?
No privity of estate but yes privity of contract. T and L remain secondarily liable to each other (they are the backup to the new setup).
43
What is Caveat Lessee? What are its exceptions?
"Tenant beware." The landlord has no duty to make the premises safe.
EXCEPTIONS: (CLAPS)
- Common Areas: L has a duty to maintain in good repair all of the common areas.
- Latent Defects: L must WARN of hidden defects of which L has knowledge or reason to know of and which T couldn't discover by reasonable inspection (this isn't a duty to repair though!).
- Assumption of Repairs: While in tort a landlord is under no duty to make repairs, once repairs are undertaken, the landlord must complete them with reasonable care (L is liable if negligent).
- Public Use Rule: A landlord who leases public space (for example, a convention hall or a museum), and who should know, because of the significant nature of the defect and the short length of the lease, that T will not repair, is liable for any defects on the premises that cause injury to members of the public (because T doesn't have the time or the expertise to make the repairs herself).
- Short-Term Lease of Furnished Dwelling: A landlord who rents a fully furnished premises for a short period (for example, a summer cottage) is under a stricter duty. Such Ls are responsible for any defective condition which proximately injures a tenant (whether or not they knew of the defect).
44
If a landlord consents to a tenants’s transfer to someone else that violates a covenant against assignment or sublease, what, if anything, has he waived?
If a landlord consents to one transfer that violates a covenant against assignment or sublease, he waives his right to avoid future transfers.
45
If a tenant at will "transfer[s] [their] entire interest" to another tenant in order to create an assignment, what will result?
The attempted assignment is void and terminates the tenancy at will by operation of law. A tenancy at will is a leasehold estate that is terminable at the will of either the landlord or the tenant. Such a tenancy terminates by operation of law if: (1) Either party dies; (2) The tenant commits waste; (3) The tenant attempts to assign his tenancy; (4) The landlord transfers her interest in the property; or (5) The landlord executes a term lease to a third person.
46
What is an easement? What are the types of easements?
An easement is a non-possessory property interest entitling the holder to the use or enjoyment of another's land.
- AFFIRMATIVE: The right to go on to and do something on another's land.
- NEGATIVE: The right to prevent a landowner from doing something on their land (categories: light, air, support (EX: excavating), stream water from an artificial flow and sometimes a scenic view).
47
How can a negative easement be created?
A negative easement can be created ONLY expressly in a writing signed by the grantor.
48
What is an easement appurtenant?
An easement is appurtenant when it benefits its holder in his physical use or enjoyment of his own land. Two parcels of land must be involved: a dominant tenement (which derives the benefit) and a servient tenement (which bears the burden).
49
What is an easement in gross?
An easement is in gross if it confers upon its holder only some personal or pecuniary advantage that is not related to their use or enjoyment of their land. Here, servient land is burdened. However, there is no benefited or dominant tenement (because the easement benefits the holder rather than another parcel).
- EX: The right to place a billboard on another’s lot; The right to swim in another’s pond; The utility company’s right to lay power lines on another’s lot.
50
How is an easement appurtenant transferred?
An easement appurtenant transfers automatically with the dominant tenement, regardless of whether it is mentioned in the conveyance.
51
How is an easement in gross transferred?
An easement in gross is not transferable unless it is for commercial purposes.
52
How is an affirmative easement created?
PING (4 ways)
(1) Prescription: An easement may be acquired by analogy to adverse possession.
- ELEMENTS (COAH): (1) Continuous and uninterrupted use for the given statute’s period; (2) Open and notorious use (that is, it’s discoverable upon inspection); (3) Actual use that need not be exclusive; and (4) Hostile use (meaning, use without the servient owner’s consent).
- NOTE: Generally, prescriptive easements cannot be acquired in public land.
(2) Implication: Easements by implication are created by operation of law; they’re an exception to the Statute of Frauds (which would otherwise require these easements to be in writing).
- Easement may be implied by an existing use (quasi-easement).
- ELEMENTS: (1) Previous use had to be apparent/visible and continuous and (2) the parties are presumed to have reasonably expected that that prior use would continue (because it's reasonably necessary to the dominant tenement's use/enjoyment).
(3) Necessity: An easement by necessity (another form of easement by implication) will be implied when a landowner conveys a portion of her land with no way out except over some part of the grantor’s remaining land. The owner of the servient parcel has the right to locate the easement.
(4) Grant: Any easement must be memorialized in writing and signed by the holder of the servient tenement unless its duration is brief enough to be outside the coverage of a particular state’s Statute of Frauds.
53
What are the methods to terminate an easement?
ENDCRAMP
E - Estoppel: The servient owner materially changes positions in reliance (EX: after promise by the easement owner's assurances).
N - Necessity: Easements created by necessity expire as soon as the necessity ends, unless the easement was reduced to an express grant (writing).
D - Destruction: Destruction of the servient land, other than through the willful conduct of the servient owner, will terminate the easement.
C - Condemnation: Condemnation of the servient estate by governmental eminent domain power will terminate the easement. Courts are split as to whether easement holders are entitled to compensation.
R - Release: A release given by the easement holder to the servient land owner will terminate the easement. This must be in writing.
- NOTE: This applies even to an easement in gross, which is otherwise inalienable
A - Abandonment: An easement holder must show by physical action an intent to never use the easement again.
- NOTE: Mere nonuse, or mere words (such as expressing a wish to abandon), are insufficient to terminate by abandonment (though oral expressions combined with a long period of nonuse may be sufficient).
M - Merger (Unity of Ownership): An easement is extinguished when title to the easement and title to the servient land become vested in the same person (because a person doesn’t need an easement over their own land). Must be owned in the same way (EX: in fee simple).
P - Prescription: A servient owner may extinguish the easement by interfering with it in accordance with the elements of adverse possession (COAH).
54
What does it mean for an easement to be surcharged?
When an easement is surcharged, it means that the easement's legal scope was exceeded.
55
Is a long period of nonuse sufficient to terminate an easement?
Yes, if it is accompanied by other evidence of intent to abandon the easement.
56
What is a license in a real property context?
A license is a mere privilege to enter another's land for a narrow/delineated purpose.
- Freely revocable at the will of the licensor.
- No writing needed.
57
What is a Profit in a real property context?
The profit entitles its holder to enter the servient land and take from it some resources, for example, the soil, some substance of the soil (such as minerals, timber, or oil), or some product of the property (such as fish or game).
58
How is a Profit terminated (in a real property context)?
Exactly the same as an easement (apply all easement rules to Profits). May be extinguished through a surcharge (unreasonable and harmful use).
59
What is a covenant?
A promise to do or to not do something.
60
What is a negative covenant?
A negative/restrictive covenant is a promise to refrain from doing something to one's land (EX: not post signs on the front lawn or build for commercial purposes).
61
What is an affirmative covenant?
An affirmative covenant is a promise to do something related to land (EX: to maintain a shared fence).
62
What is required for a covenant’s burden to "run with the land?"
(WITHN) For Burden to run to the successor, need:
- Writing: The original promise must have been in writing.
- Intent: Need some inference or reasonable showing on the part of the originally covenanting parties that the covenant would run (courts are generous on this point).
- Touch & Concern: Affecting the parties in their legal relations as landowners--not just as members of the community at large.
- Horizontal & Vertical Privity: Horizontal privity refers to the nexus between the original promising parties. It requires that they be in succession of estate, meaning that they were in a grantor-grantee or landlord-tenant or mortgagor-mortgagee relationship when the covenant was created. Vertical privity refers to the nexus between the successor in interest and the originally covenanting party. It simply requires some non-hostile nexus, such as contract, devise, or descent. The only time vertical privity will be absent is when the successor acquired her interest through adverse possession.
- Notice: The successor must have had notice of the promise when she took.
63
What requirements must be met for a real covenant to "run with the land?"
(WIT-V)
- Writing: The original promise must have been in writing.
- Intent: Need some inference or reasonable showing on the part of the originally covenanting parties that the covenant would run (courts are generous on this point).
- Touch & Concern: Affecting the parties in their legal relations as landowners--not just as members of the community at large.
- Vertical Privity: Vertical privity refers to the nexus between the successor in interest and the originally covenanting party. It simply requires some non-hostile nexus, such as contract, devise, or descent. The only time vertical privity will be absent is when the successor acquired her interest through adverse possession.
64
What is an equitable servitude?
A promise that equity will enforce against successors of burdened land, regardless of whether it runs with the land at law).
65
How is an equitable servitude created?
(WITNES)
- Writing: The original promise must have been in writing.
- Intent: Need some inference or reasonable showing on the part of the originally covenanting parties that the covenant would run (courts are generous on this point).
- Touch & Concern: Affecting the parties in their legal relations as landowners--not just as members of the community at large.
- Notice: The successor must have had notice of the promise when she took.
- ES: (Equitable Servitude)
66
How is an equitable servitude terminated through abandonment?
If a benefited party acquiesces in a violation of the servitude by one burdened party, he may be deemed to have abandoned the servitude as to other burdened parties.
67
What is Adverse Possession and what is required for it?
Possession of property for a statutorily prescribed period of time can, if certain elements are met, ripen into title to real property.
ELEMENTS: (COAH): (1) Continuous and uninterrupted use for the given statute’s period (uninterrupted as an owner might use); (2) Open and notorious use (it’s discoverable upon inspection); (3) Actual use that is exclusive of the parcel's true owner; and (4) Hostile use (meaning, use without the servient owner’s consent).
- NOTE: Permission will defeat the hostility element.
- NOTE: State of mind is irrelevant--it's all objective judgments for the elements.
- Tacking: May tack on predecessor's time as long as they are in privity (some non-hostile relationship between them).
- SOL won't run against a property holder with a disability at the inception of the adverse possession.
- Insanity, imprisonment, and death are defenses against adverse possession.
68
What is the process of conveying real property?
2 STEP PROCESS
(1) Contract (conveying equitable title):
(2) Closing (deed passes legal title):
- Gap between contract and closing to give buyer the chance to inspect and to acquire needed capital. This is sometimes referred to as the escrow period.
69
What are the requirements for conveying title in land?
The SOF is applicable, so the contract must (1) be in writing. It must also (2) be signed by the party against whom enforcement is sought (defendant). It must also (3) identify the parties, (4) describe the property, and (5) state the consideration.
70
What remedy is available in a contract for the transfer of real estate when the property stated in the deed is greater than the actual land conveyed?
The remedy is specific performance with a pro rata reduction in price (remember that because all land is considered unique, the preferred remedy is specific performance).
71
What is an exception to the writing requirement in the conveyance of land?
Part Performance: Part performance allows a buyer to enforce an oral contract by specific performance if (1) the oral contract is certain and clear and (2) the acts of partial performance clearly prove the existence of a contract.
- The acts requirement is usually satisfied by 2/3 of the following: (1) buyer took possession, (2) buyer paid the purchase price or a significant portion, and (3) buyer made substantial improvements.
72
What are legal title and equitable title in a land contract?
Legal title is the deed. It is the right to possess the property.
Equitable title is the contract. It's a weaker title that covers the risk of loss. The buyer bears the risk unless the contract says otherwise.
73
What are the implied promises in land sale contracts?
(1) Seller's Promise to Provide Marketable Title: The seller is implied to promise to provide title reasonably free from doubt/threat of litigation on closing
- EX: Defects in the record chain of title--anything resting on adverse possession is unmarketable. Will need to quiet title.
- EX: Encumbrances: outstanding mortgages, liens, or servitudes will render title unmarketable UNLESS the buyer has waived them.
- EX: Zoning Violations: An existing violation will render title unmarketable--need more than the mere existence of zoning regulations. Think back to the threat of lawsuit requirement above.
(2) Seller's Promise That There Are No False Statements of Material Fact: The seller is liable for the failure to disclose latent/hidden material defects.
- A general disclaimer of liability will not suffice to waive this. If specific defects are identified in the waiver (EX: defects in the roof), this will likely be upheld.
- NOTE: No implied Warranty of Fitness or Habitability--the standard is caveat emptor (buyer beware), EXCEPT for the sale of a new home by a builder.
74
If a buyer of land determines that the seller's title is unmarketable, what must the buyer do?
Notify the seller and give a reasonable time to cure the defects.
75
What is an exception to the rule that easements are generally considered encumbrances that render title unmarketable?
A majority of courts have held that a BENEFICIAL easement (allows another person or entity to use a property for a specific purpose while still benefiting the owner of the land) that was VISIBLE OR KNOWN to the buyer does not constitute an encumbrance.
76
What is needed to execute a valid deed?
Must be Lawfully Executed And Delivered (LEAD).
Lawful Execution requires (1) a writing signed by the grantor, (2) an unambiguous description of the land (EX: "some of my land" is insufficient), (3) an identification of the parties, and (4) words of intent.
- NOTE: No consideration is needed.
Delivery requires that the grantor has a present intent to be bound. Actual physical transfer of the deed instrument isn't necessarily required (Ask: did the grantor have the present intent to part with legal control?).
77
Is there an exception for oral conditions accompanying a deed granting land that overcomes the statute of frauds limitation?
No, oral conditions accompanying a deed granting land are void.
78
What are the different types of deeds?
- Quitclaim Deed: With a quitclaim deed, the grantor isn’t even promising that he has title to convey. This is the worst deed a buyer could hope for. It conveys only what the grantor has at the time of the conveyance.
- General Warranty Deed: This warrants against all defects in title, including those attributable to grantor’s predecessors. This is the best deed that a grantee can hope for. The general warranty deed typically contains all six of the following covenants. The first three are present covenants, meaning that the covenant is breached, if ever, at the time the deed is delivered.
--- Present Covenants (breached at delivery): The covenant of seisin (grantor owns this estate); the covenant of the right to convey (grantor has power to transfer); the covenant against encumbrances (there are no servitudes/liens).
--- Future Covenants (breached if grantee disturbed in possession): The covenant for quiet enjoyment (no 3rd party lawful claims); the covenant of warranty (grantor will defend the grantee if reasonable claims of title arise); covenant for further assurances (grantor will do what is needed to perfect the grantee's title if it turns out to be imperfect).
- Special Warranty Deed: This warrants against all defects in title (but only for the grantor themselves, not predecessors). The grantor promises that (1) they haven't conveyed the parcel to anyone other than the grantee, and (2) the estate is free from encumbrances made by the grantor.
79
In the case of a double dealer, what are the different rules to be used to determine who gets the property?
For recording, there are three systems:
- Race (rare minority): A party wins the property if they record the deed properly before the other party. Notice of prior deal is irrelevant.
- Notice: A party wins the property if they were a bona fide purchaser when they took, regardless of whether they record the deed before the other does (the last bona fide purchaser to take wins).
- Race-Notice: A party wins the property if they were a bona fide purchaser and record the deed properly before the other party.
80
What is a bona fide purchaser?
A bona fide purchaser (BFP) (1) is a PURCHASER (didn't take by gift, will, or inheritance) (2) who paid VALUABLE CONSIDERATION (remitted substantial monetary consideration--it's okay if they got a great deal) and (3) took WITHOUT NOTICE of prior conveyance.
81
What are the types of notice that a buyer of property could be charged with?
- Actual: The party learns that the other party obtained the property (literal knowledge).
- Inquiry (constructive): The party is charged with what inspection would've revealed.
- Record (constructive): The party is on notice of deeds properly recorded in chain of title.
82
What is Chain of Title?
A sequence of recorded documents capable of giving record notice to later takers.
83
What is the Shelter Rule?
Anyone who takes from a bona fide purchaser (BFP) will prevail against any interest the BFP would have prevailed against (the transferee “takes shelter” in the status of her transferor even though she otherwise fails to meet the requirements of BFP status)
- This is true even if the grantee had actual notice of a prior unrecorded conveyance.
84
What is a Wild Deed? What result does this type of deed have on the Shelter Rule?
A recorded deed that isn't connected to chain of title (incapable of giving constructive notice).
- A later BFP will be successful in a race-notice state against another BFP who has recorded before (the Shelter Rule doesn't apply).
85
What is Estoppel by Deed?
The grantor purports to convey to the grantee realty that they don't then own. The grantor later acquires title to the property. Here, title automatically vests in the grantee. The grantor is estopped from denying the validity of preacquisition conveyance.
- Watch out for a BFP: early recording is outside the chain of title (wouldn't be found by a title search).
86
What is a mortgagor? What is a mortgagee?
Mortgagor: Debtor (person owing money to lender)
Mortgagee: Creditor (lender)
87
What is a note in a mortgage context? What is a mortgage?
The note represents the debtor/mortgager's personal obligation on the debt.
A mortgage is an agreement that if the mortgager is unable to repay the debt, the land can be foreclosed upon to pay the amount owed.
88
What are the types of mortgages?
- Purchase-Money Mortgage: A lender's security interest in real estate that their loan enables the debtor to acquire.
- Non-Purchase Money Mortgage: A collateralization in land to finance a new venture.
89
How is a mortgage created?
The following are needed: (1) a debt, (2) a lien in land to secure the debt (mortgage), and a writing (legal mortgage).
90
How do recording statutes affect mortgages?
If recorded, a mortgage stays with the land.
91
What is the difference between someone taking a property and "assuming the mortgage" vs. taking a property "subject to a mortgage?"
"Assuming Mortgage" = Both the mortgager and the new buyer being liable for the debt.
"Subject to Mortgage" = Only the mortgager is liable for the debt, but if it's recorded, then Blackacre can be foreclosed.
92
What is the process of foreclosure?
The mortgagee must foreclose by proper judicial proceeding (they bring a deficiency action against the debtor). At foreclosure, the land is sold. The sale proceeds go to satisfying the debt.
93
What result for junior lienholders when foreclosure of superior claims has occured?
Once foreclosure of a superior claim has occurred, with the proceeds distributed appropriately, junior lienholders can no longer look to the property for satisfaction of the debts owed to them.
94
In a mortgage situation, what is the priority of creditors?
Creditors must record their interest to have any priority. Once recorded, priority is determined by the norm of first-in-time, first-in-right (the creditor who records first takes first and so on).
- The Purchase-Money Mortgage can defy this norm. The PMM has first priority in the parcel it financed.
- ORDER: The foreclosing party, any junior lienors in the order of their priority, and then the mortgagor. Senior lienors receive none of the proceeds. Because a senior lien remains on the property (i.e., may itself be foreclosed in the future), a senior lienor is not entitled to any of the money from the sale, even if there is a surplus.
95
Must a junior mortgagee be named as a party to a senior mortgagee's foreclosure action?
Yes, because it has the right to pay off the senior mortgage to avoid being wiped out by foreclosure.
96
What is the amount that a mortgager may pay to recover land through statutory redemption once a foreclosure sale has occurred?
They must pay the foreclosure sale price.
97
When can a mortgagor exercise her statutory right of redemption?
After the foreclosure sale.
98
What is the difference between an equity right of redemption and a statutory right of redemption?
The equity of redemption gives the borrower the right to free the land of the mortgage by paying off the amount due, plus any accrued interest, at any time BEFORE the foreclosure sale. If the borrower has defaulted on a mortgage with an acceleration clause, he must pay the full balance in order to redeem.
A statutory right of redemption, recognized in about half the states, gives the borrower a right to redeem for the foreclosure price AFTER the foreclosure sale.
99
What is zoning?
Pursuant to its police powers, government may enact statutes to reasonably control land use for the protection of the health, safety, morals, and welfare of its citizens.
100
What is a variance from zoning?
A variance is permission to depart from a zoning restriction. Its proponents must show that there is undue hardship and that granting the variance will have no diminution to neighboring property values.
101
What result when a use of property is now nonconforming because of a new zoning restriction?
Previously allowed uses cannot be eliminates all at once unless just compensation is paid.
102
What is a cumulative zoning ordinance?
A cumulative zoning ordinance creates a hierarchy of uses of land, where a single-family home the highest use, followed for example by a two-family home (which is a lesser use), and then an apartment building (an even lesser use), and then a strip mall (even lesser), and then a factory (even lesser). Under a cumulative zoning ordinance, land that is zoned for a particular use may be used for the stated purpose (meaning, that particular use) and any higher use.
103
What is a special use permit?
This must be obtained even though zoning is proper for the intended use (e.g., hospitals, drive-ins, etc.).
104
What is a Homeowners' Association? What is a special assessment?
An association of owners of a condominium. Each condo owner is a member. The HOA oversees common elements. The board enforces covenants, conditions, and restrictions.
- A special assessment is a one-time fee assessed against all of the residents when dues don't cover operating expenses.
105
What is Lateral Support in property law?
Ownership of land includes the right to have the land supported in its natural state by adjoining land.
- If a landowner causes adjacent land in its natural state to subside, then that owner is held strictly liable.
- If a landowner causes improvements to adjacent land to subside, then that landowner is liable if they were negligent.
106
What doctrine governs the rights of landowners regarding bordering watercourses?
The Riparian Doctrine (majority rule): Water belongs to those who own land bordering a watercourse. Riparians share the right of reasonable use.
The Prior Appropriation Doctrine (minority rule): Water belongs to the state, and the right to divert/use can be acquired through actual use, irrespective of whether they are a Riparian owner. First in time = first in right.
107
What rule(s) govern rights to groundwater?
The surface owner can make reasonable use of groundwater.
108
What rule(s) govern surface waters (waters crossing land as a result of something like heavy rains or snow--may stagnate on the land)?
Common Enemy Rule: Owner can take any protective measures to get rid of surface water / combat its flow.
- The landowner must not unreasonably harm or interfere with others' use and enjoyment of their own parcels.
109
What rights regarding exclusion does a landowner have? How can a landowner enforce this right?
The possessor of land has the right to be free of trespass and nuisance. The landowner can bring an ejectment (or unlawful detainer) action to get rid of the nuisance.
110
What protections do Bona Fide Purchasers have against opposing interests arising by operation of law (adverse possession)?
BFPs are not protected against interests arising by operation of law (EX: adverse possession claimant).
111
What is the statutory period for adverse possession when it's not explicitly stated?
It's the limitation period for an ejectment action ("Actions to recover possession of real property shall be brought within 10 years after the cause of action accrues")
112
How does the condemnation of real property affect lease agreements?
If the entire leasehold is taken by eminent domain, the tenant’s liability for rent is extinguished because both the leasehold and reversion have merged in the condemnor and there is no longer a leasehold estate. The lessee is entitled to compensation.
However, if the taking is temporary or partial, the tenant is not discharged from the rent obligation, but is entitled to compensation (that is, a share of the condemnation award) for the taking.
113
How does Merger apply regarding contracts and deeds?
Under the doctrine of merger, the contract merges into the deed, and the terms of the contract are meaningless (EX: if there are no covenants of marketable title in the deed, then it doesn't matter if it was in the contract).
114
What result if a property owner becomes incompetent while another is adversely possessing their land?
So long as they weren't incompetent at the time the adverse possession period began, the adverse possession period isn't tolled.
115
What is a Profit? What is a Profit Appurtenant? What is a Profit in Gross?
NOTE: THERE ARE OTHER PROFIT CARDS EARLIER IN THE DECK.
A profit is a non-possessory interest in land that allows the profit-holder to enter onto the servient tenement to remove minerals, soil, substance, etc. from the land.
If a profit is going to benefit a dominant estate then it is a profit appurtenant. It cannot be transferred independently of the dominant estate.
If a profit is not to serve a dominant estate, it can be transferred independent of the transfer in land and it a profit in gross.
116
When there are multiple mortgages on a property and one of the mortgagers in the "middle" bring an action to foreclose, what result for the liens and proceeds from the sale?
- All of the liens to the "left" (timeline) of the foreclosing party will still have their liens on the property.
- The foreclosing party is the first to get paid out by the proceeds, then the mortgagees/lenders to the "right" (timeline) of the foreclosing party in order of seniority. Those junior interests are terminated. Anything left over goes to the mortgagor/borrower.
- If there's not enough made in the foreclosure sale to satisfy the amounts owed to the mortgagees, the mortgager will be personally liable for the outstanding amounts.
117
What result when a foreclosing party fails to give notice to junior lienholders? What about senior lienholders?
- For the junior lienholders, if they don't receive notice, their interest supersedes the foreclosing party's and stays on the property. They wouldn't receive proceeds from the foreclosure sale, but their interest would remain on the property.
- It doesn't really matter for senior lienholders--the effect above wouldn't change the position of the senior lienholders.
118
In the conveyance of real property, when there is a discrepancy between the physical description of property and the quantity description in the deed, which will prevail?
Under the rules of construction, the physical description takes precedent over the quantity description (EX: deed says 220 and it's actually 225--225 will prevail) unless the deed needs to be reformed (EX: mutual mistake or unilateral mistake with representation).
119
What is needed to make an easement good against subsequent holders of land?
Easements, like other interests in land, are good against subsequent holders of the burdened (servient) tenement as long as the interest is recorded.
120
Will the existence of encumbrances at the time of closing allow the buyer to void the contract under the Covenant Against Encumbrances even after the seller has provided assurances that they will resolve the encumbrances?
No. In a contract for the sale of real property, the seller of the land is entitled to use the proceeds of the sale to clear title if she can ensure that the purchaser will be protected.
121
Will the seller's liquidated damages be reduced (forcing them to return money) if they reduce their actual damages through a subsequent sale?
No. When a sales contract provides that a seller may retain the buyer's earnest money as liquidated damages, courts routinely uphold the seller's retention of the money upon breach if the amount appears reasonable in light of the seller's anticipated and actual damages.
122
When will chattel be considered changed into real property?
Under the concept of fixtures, a chattel that has been annexed/added to real property is converted from personalty to realty. As an accessory to the land, it passes with ownership of the land rather than with a transfer of the personal property of an estate.
The manifest intent of the annexor determines whether the chattel becomes a fixture. The factors for evaluating the annexor's intent are: (i) the relationship between the annexor and the premises, (ii) the degree of annexation, and (iii) the nature and use of the chattel.
Constructive annexation occurs when an article of personal property (an "accession") becomes an integral part of the property, even though it is not physically annexed to the property, in the same sense that a fixture becomes an integral part of the realty.
123
What are a leases new terms if the tenant holds over and the landlord chooses to keep them on instead of moving for eviction proceedings (term and price)? What effect does the commercial or residential nature of the property have on the lease?
If the landlord specified a new rent amount before the date of termination, that amount will be applied. If they said nothing (and/or specified one after the termination), the same price as before will be used.
If the original agreement was for a year+, then for commercial leases the term will continue to be a year, but for residential leases, most courts would rule that the tenant is a month-to-month tenant.
124
Can a purchaser of real property rely on the seller's title insurance to protect against potential defects that arise later?
A title insurance policy insures that a good record title of the property exists as of the policy's date and agrees to defend the record title if litigated. An owner's policy protects only the person who owns the policy (usually either the property owner or the mortgage lender) and does not run with the land to subsequent purchasers. In contrast, a lender's policy follows any assignment of the mortgage loan. However, the policy ends when the mortgage loan is paid off.
125
What relationship does the RAP have with leaseholds?
The general rule is that options to purchase are subject to the RAP, however, the RAP doesn't apply to options (to purchase after tenancy) regarding leaseholds.
126
What is a subordination agreement?
A subordination agreement is an agreement between a senior mortgagee to subordinate its interest to the junior mortgagee's.
- These are generally enforceable.
127
What is Equitable Conversion regarding land sale contracts?
After the contract has been executed, the buyer is considered the owner of the property.
- This is why if during that period the property is destroyed, the buyer bears that risk.
- EXAM: Apply this rule unless the test tells you otherwise.
128
What is Marketable title?
A title that a reasonable buyer would accept (must furnish the buyer with such title to the land as to eliminate a reasonable probability that the buyer will be subjected to a lawsuit).
- Seller didn't obtain via adverse possession (unless they've quieted title); No liens, encumbrances, mortgages, etc.; Gaps in chain of title that seller can't clear up by closing.
- Issues can be addressed by contract or removed at closing. Also, most jxs say that if it's visible, it's assumed by the buyer.
