Real Property Flashcards
Estoppel by Deed
Under the “estoppel by deed” doctrine, a grantor who conveys an interest in land by warranty deed before actually owning it is estopped from later denying the effectiveness of that deed. When the grantor acquires ownership of the land, the after-acquired title is transferred automatically to the prior grantee.
Statute of Limitations - Adverse Possession
The statute of limitations for adverse possession does not run against a true owner of the property who was afflicted with a disability at the inception of the adverse possession. Insanity, infancy, and imprisonment are disabilities that toll the statute of limitations until the disability is removed.
Subsurface Rights
A landowner has the right to have the land physically supported in its natural state. The right to subjacent support—i.e., support from beneath the surface of the land—arises when the landowner conveys to a third party the right to access and remove oil, gas, or minerals from beneath the land. Then the owner of the rights is strictly liable—i.e., liable without proof of fault—for any failure to support the land and buildings that existed on the land when the mining rights were conveyed, provided that the damage would have occurred in the land’s natural state. But the owner is liable only for negligence for damage to improvements built after the mineral rights were conveyed.
Common-Law Exoneration-Of-Liens Doctrine
The common-law exoneration-of-liens doctrine* applies when a devisee receives a specific devise of real property that is subject to an encumbrance (e.g., mortgage, lien). Under this doctrine, the devisee is entitled to pay off any encumbrances on that property—including a purchase-money mortgage—from the remaining assets in the testator’s estate.
*Most states have abolished this doctrine, and payment of an encumbrance on devised real property is required only if the will so specifies.
Fructus Naturales
Wild, uncultivated crops (i.e., fructus naturales) are considered part of the real property on which they grow, and they pass automatically with the land. The prior owner has no right to reenter the land to remove the crops.
Implied Equitable Servitude
An equitable servitude can be implied from a common scheme if (1) the owner intended to create a common scheme, (2) the intended servitude was restrictive, and (3) persons to be bound had notice of the servitude. But it cannot be enforced against lots sold before the common scheme arose.
“Due on Sale” Clause
A “due on sale” clause allows a lender to demand full payment of any remaining mortgage debt if the debtor transfers the mortgaged property without the lender’s written consent. If this clause is waived, the debtor remains liable on the note—even after transferring the mortgaged property—until the debtor is released by the lender.
Mortgage Defenses
A mortgage is subject to the same defenses (e.g., mistake, duress, fraud) as the underlying obligation or debt secured by that mortgage. So when mortgaged property is transferred to a donee, the donee is entitled to assert the donor-mortgagor’s defenses against the mortgagee-lender. However, a purchaser who assumes an existing mortgage obligation as part of the purchase price may not assert the donor-mortgagor’s defenses.
Uniform Vendor & Purchaser Risk Act
In most jurisdictions, the risk of loss shifts to the buyer during the executory period. But in the minority of jurisdictions that have adopted the Uniform Vendor and Purchaser Risk Act, the risk of loss remains with the seller until the buyer takes possession of or receives legal title to the property.
Equitable Mortgage
An equitable mortgage can be established when a debtor gives an absolute deed—i.e., a deed that is free of encumbrances and transfers unrestricted title to property—to a lender with the intent to secure a loan. The debtor-grantor must prove by clear and convincing evidence that the deed was intended as security for a loan—not as an outright transfer. The deed recipient, like any other lender, may then bring a foreclosure action if the debtor defaults.
Void Deed
A deed is a legal instrument that transfers an interest in real property. For a transfer by deed to be effective, the deed must contain all essential components, be delivered by the grantor, and be accepted by the grantee. However, a deed is void if:
the grantor’s signature on the deed is forged
the deed itself is forged—i.e., falsely made or materially altered with the intent to defraud or
the grantor is deceived about the nature of the executed document (e.g., when the grantor believes that he/she is signing something other than a deed).
A void deed is invalid at its inception and conveys no title to the grantee. As a result, a void deed is unenforceable even if it is relied upon by a bona fide purchaser—i.e., one who purchases a property interest without notice of another’s prior interest in the property.
Future-Advances Mortgage
A future-advances mortgage (i.e., “line of credit”) is a mortgage given by a debtor (mortgagor) in exchange for the right to receive money from the lender (mortgagee) in the future. Priority with regard to proceeds from a foreclosure sale depends on whether the advances are:
optional – in which case, the future-advances mortgage has priority with respect to amounts loaned before the future-advances mortgagee received notice of a subsequent mortgage or
obligatory – in which case, the future-advances mortgage has priority with respect to amounts loaned before and after the future-advances mortgagee received notice of a subsequent mortgage.
Fixture by Tenant
A fixture is tangible personal property attached to real property in such a manner that it is treated as part of the real property when determining its ownership (e.g., the sculpture). However, absent an agreement to the contrary, a fixture that the tenant has attached to the leased property may be removed if:
the leased property can be and is restored to its former condition and
the removal and the restoration are made within a reasonable time.
A reasonable time for removal generally does not extend beyond the termination of the lease. However, it does so when (1) the termination was not due to a breach by the tenant and (2) the date of termination was not foreseeable by the tenant sufficiently far enough in advance to permit removal before the lease terminates
Cotenant Fiduciary Duty
Cotenants owe each other a fiduciary duty when they (1) jointly purchase property in reliance on each other or (2) acquire their interests at the same time from a common source. This duty arises when the property is sold at a foreclosure sale and purchased by a cotenant, allowing the other cotenants to reacquire their interests by paying their share of the purchase price.
Tenants in Common - Cotenants
In any cotenancy, the cotenants have certain rights and duties (see table above). But absent an agreement to the contrary, a cotenant generally has no duty to pay rent to the other cotenants—even when the other cotenants do not make use of the property.
A cotenant can collect contribution from the other cotenants for paying more than his/her portion of necessary or beneficial operating expenses (e.g., taxes). But a cotenant in sole possession can collect only for the amount that exceeds the property’s rental value.
Additionally, cotenants have no right to be reimbursed by other cotenants for repairs made to the property—even when those repairs were necessary—absent an agreement.
