Real Property Flashcards
Steps for real estate contracts:
- The contract of sale is signed.
- The K must satisfy or exclude the warranty of marketable title.
- Once the K is signed, legal, and equitable title split.
- Closing Occurs
- Once delivery occurs, the buyer can only sue on the deed.
What’s a mortgage?
A mortgage indicates the existence of a debt. The mortgagor is the debtor. The mortgagee
usually is a bank who lends money. Tip: remember “It’s better to be the mortgagee” if
you mix up these terms.
If the mortgagor gives away her interest “subject to” the mortgage, who is liable?
If the mortgagor gives away her interest “subject to” the mortgage, the original
mortgagor is liable on the mortgage.
If the new transferee “assumes” the interest, who’s liable?
both the original mortgagor and the new
transferee are liable. Tip: remember the new party “assumes” liability as well.
What’s novation?
Generally, a novation is a legal instrument used to replace one obligation or party with another in a contract. All parties in the original contract must agree to the changes to execute a novation. Once all parties accept it, the novation nullifies and replaces the previous agreement.
In a transfer by the mortgagor, if there’s a novation, who is liable?
If there is a novation, then only the new transferee is liable.
Due-on-sale clauses:
Note: due-on-sale clauses (which state that if the mortgagor transfers the
interest in land without the mortgagee’s consent, the full balance under the
loan is due immediately) are enforceable.
A majority of states follow what theory and what is it?
A majority of states follow the lien theory where the mortgagee only has a lien on the land.
Minority states follow what theory and what is it?
Some states follow the title theory where title is transferred to the bank right away upon
loaning the money.
When can a bank begin Foreclosure proceedings?
a bank can begin foreclosure proceedings upon default.
Equity right of redemption:
This allows a debtor to redeem the property by paying
everything due under the mortgage agreement prior to foreclosure. This right cannot be
waived in the mortgage or deed of trust but may be waived later for consideration.
Acceleration clauses:
this states the entire balance is due if a payment is missed, and it is
enforceable.
Other ways to discharge a mortgage:
full payment or the mortgagor can give a deed to
the mortgagee in lieu of foreclosure.
Who gets paid first in a foreclosure proceeding:
The party that forecloses and
anyone“junior” to it is paid off in order of priority. All junior parties must be parties to
the proceeding. Note: a purchase money mortgage (PMM) (i.e., when the money
loaned is used to purchase the property) is senior to a non-PMM.
What happens when a mortgagee voluntarily Increases the amount due?
If a mortgagee voluntarily increases the amount due under a
mortgage, the increase in debt becomes junior to existing mortgages. (This does not
apply if the increase was a mandatory future advance.)
Redemption after foreclosure—statutory right of redemption:
this allows the debtor to
get property back after the foreclosure sale by paying the full purchase price within a
period of time (e.g., six months).
Other types of security devices include an
include an absolute deed as security (the parties don’t
call it a “security interest” but one essentially gives a deed as security), a deed of trust
(similar to a mortgage, but a trustee proceeds with foreclosure), and an installment land
contract (one pays off land in a “lease” and gets title to the land once all payments
are made).
What happens if a buyer accepts the land with the defect and the seller refuses to perform?
If the buyer accepts the land with the defect and the seller refuses to perform, then the buyer can (1) rescind the contract and seek restitution, (2) seek specific performance with an abatement of the purchase price, or (3) sue for damages.
What happens if a seller cannot convey marketable title?
If a seller cannot convey marketable title, the buyer can rescind the land-sale contract.
What does it mean when a new transferee takes the land subject to the mortgage himself?
This means that the new transferee is not liable on the mortgage but if the
mortgage does not get paid, the mortgagee can foreclose on its interest. (Note that
sometimes the new transferee will make the mortgage payments to avoid foreclosure if
the initial mortgagor does not make payments. Under the majority law, this does not
mean that the new transferee has impliedly assumed the mortgage. And, just because
they make some payments does not mean they are personally liable for future
payments.)
What does it mean when a new transferee assumes the mortgage himself?
This means that the new transferee is personally liable for the
mortgage (they “assume” responsibility too). The original mortgagor is liable too.
Answer choice A is incorrect because it applies the rule in a contributory negligence jurisdiction, where plaintiff’s own negligence is a complete bar to recovery. Answer choice B is incorrect because it applies the modified comparative fault theory of recovery, where if the plaintiff is more at fault than the defendant, then the plaintiff’s recovery is barred. Answer choice D is incorrect because it does not reduce the plaintiff’s damages by her own proportion of fault as required in pure comparative negligence jurisdictions.
Answer choice A is incorrect because it applies the rule in a contributory negligence jurisdiction, where plaintiff’s own negligence is a complete bar to recovery. Answer choice B is incorrect because it applies the modified comparative fault theory of recovery, where if the plaintiff is more at fault than the defendant, then the plaintiff’s recovery is barred. Answer choice D is incorrect because it does not reduce the plaintiff’s damages by her own proportion of fault as required in pure comparative negligence jurisdictions.
Why is the following grant a fee simple absolute rather than a fee simple determinable?: Grantor conveys Blackacre “to B to be used for a horse farm.” B does not use Blackacre as a horse farm.
Grantor’s language merely indicates his desire, intent, or purpose for which the property should be used rather than imposing a condition that could limit the duration of the estate.
What are the three common types of recording acts?
1) Notice: A purchaser for value without notice of prior interest prevails.
2) Race: A purchaser for value who records first prevails.
3) Race-notice: A purchaser for value without notice and records first prevails.
What is a major difference between a vested remainder subject to open and a contingent remainder?
A vested remainder subject to open is transferred to a group rather than individual, and at least one member of the group is individually ascertainable and entitled to the remainder interest.
A contingent remainder is created in a grantee who is unascertainable.
What kind of tenants have the right to unilaterally partition a piece of property?
A tenant in common or a joint tenant may unilaterally partition property.
(NOTE: A tenant by the entirety does not have this right.)
After a mortgaged property is sold at a foreclosure sale, in what order are the proceeds distributed to different stakeholders? (Identify at least four.)
- Proceeds are used to pay any costs related to the sale.
- The party who foreclosed on the property is paid, up to the amount outstanding on its mortgage interest.
- If any money remains, any junior interests are paid in order of their priority.
- If any money remains, the mortgagor is paid.
What two possible components denote a contingent remainder?
A contingent remainder has two parts:
1. It goes to someone who is not known or not born yet.
2. It depends on something happening first, like “C will get it if C graduates from college.”
The remainder is created in an unascertainable grantee (unidentifiable like to the children of a but a doesn’t have children)
OR
The remainder is contingent if it is subject to a condition precedent that must be satisfied before the remainder can become possessory. This means that the interest will only vest if a certain event occurs. For example, a remainder to “B if B graduates from college,” where B has not yet graduated at the time the interest is created, is contingent upon B’s graduation.
Regarding the effect of a mortgage on a joint tenancy, what is the difference between a title theory jurisdiction and a lien theory jurisdiction, and which is the majority rule?
Lien theory states (the majority): no severance - the mortgage is only a lien on the property
Title theory states (the minority): severance - the joint tenancy is converted into a tenancy in common with respect to the mortgaging tenant
What does it mean if a remainder is subject to a condition precedent?
The condition must first be met or satisfied for a remainderman to ever take possession.
Example: Carlos conveys his bakery ““to A for life, then to B if B eats cake every day for one year.”” B’s remainder is contingent because she must eat cake every day for one year before she can take possession.
What are two major exceptions to a tenant’s duty to pay rent?
- Destruction of the premises not due to tenant’s fault, or
- Material breach of the lease by the landlord (e.g., breach of the covenant of quiet enjoyment or the implied warranty of habitability)
What are the two types of executory interests? How is each defined?
- Shifting executory interest: divests the interest of the grantee by cutting short a prior estate created in the same conveyance. The estate “shifts” from one grantee to another on the happening of the condition.
- Springing executory interest: divests the interest of the grantor or fills a gap in possession in which the estate reverts to the grantor.
A sublessee is not liable to the landlord for rent or any other covenants in the lease unless what happens?
If the sublessee expressly assumes the rent covenant (or any other covenants), then the sublessee becomes personally liable to the landlord.
A tenant is considered a holdover tenant when he continues to occupy the premises without the landlord’s consent and after the expiration of the lease. What two remedies does a landlord have?
The landlord may evict, or the landlord may bind the holdover tenant to a new periodic tenancy.
A conveyance by will by a joint tenant of his property interest has what effect?
NONE.
The property passes automatically to the remaining joint tenant(s) due to the right of survivorship.
What is a mortgage?
A mortgage is a security device used to secure payment of a debt.
What durational language is often used with a fee simple determinable?
So long as
While
During
Until
What estate requires clear language that the interest is measured in terms of a life, not a number of years?
A life estate is a present possessory estate that is limited in duration by a life. Upon the end of the measuring life, title reverts to the grantor or specified remainderman.
What is the fifth unity unique to a tenancy by the entirety?
The fifth unity, unique to tenancies by the entirety, is the unity of person.
The 5 unities are:
Possession, interest, time, title, and person.
What is an ouster?
Ouster occurs when a co-tenant refuses to allow another co-tenant access to the property. In this event, the ousted co-tenant may seek an injunction to gain access to the property and to recover the value of the use of the property for the time during which the co-tenant was denied access to the property.
What happens to a fee simple determinable estate upon the happening of the stated condition?
- The fee simple determinable terminates automatically and
- Full ownership of the property either
- returns to the grantor (possibility of reverter) or
- transfers to a third party (executory interest).