Real Property Flashcards
What is the header statement on adverse possession?
Under adverse possession, possession for the statutory period can create title to real property.
What are the 5 ways to acquire land?
Adverse possession
Land sale contract
Security interest in land through mortgage
Deed (e.g., by gift)
Conveyance (by will)
What are the 4 elements of adverse possession?
(1) Actual and exclusive
(2) Open and notorious
(3) Hostile
(4) Continuous for the statutory period
Define actual and exclusive
Adverse possessor must use the property exclusive of the true owner and of the public although one can rent the property (and stay on it)
An adverse possessor can only gain land on the land they occupy while under color of title, where the adverse possessor was conveyed title but the deed was not valid, the possessor will claim the whole property, unless the true owner is living on a portion of the property.
If typical owner would only use property in summer, adverse possessor may also use property seasonally.
Define open and notorious
Entry must be so open and notorious that it would put a reasonable owner on notice of the trespass
Define hostile
Possession must without the owner’s consent.
Boundary dispute, ouster, and a claim of right are sufficient.
Define continuous through the statutory period and tacking.
Once the statutory period starts, the owner cannot reenter, or else the period starts over. When the period passes, the possessor can file an action to quiet title.
Tacking is allowed, where a possessor can add the time of another possessor to meet the period, so long as the two are in privity. Transfer must be voluntary; abandonment or forceful removing insufficient and restart SoL time
Define tolling/disabilities.
The Statute of Limitations will not run against a true owner who has a disability (e.g., minor, incompetent) at the inception of the adverse possession. Disabilities cannot be added.
Adverse Possession and Future Interests
Rule: Statute of limitations does not begin to run until a grantor asserts his right of rentry, because until that time, the grantee’s continued possession of the land is proper.
When Real Covenant in Play
* If an adverse possessor uses the land in violation of a real covenant, she takes title free of the covenant even if she had knowledge of it. However, if she complies with the covenant for the statutory period, she takes title subject to the real covenant.
Exam Tip – Adverse possession fact triggers
Attempted transfer of property that is ineffective and the purported new owner acts like an owner (contract fails to meet SOF, deed not property delivered, etc.)
Fact pattern includes events occurring 15 to 20 years in the past
Seasonal use of a property, such as a vacation home or hunting cabin
Building is placed over the property line and onto neighbor’s land
What is the 2 step process in a land sale contract?
(1) Land Sale Contract where the seller conveys equitable title
(2) Closing where the seller conveys legal title
Step 1: The land sale contract, which conveys equitable title. The land contract endures until Step 2.
Time in between Step 1 and Step 2
* Buyer investigates seller’s title and if defective, buyer must notify seller and give seller opportunity to cure
* Risk of loss on buyer
Step 2: Closing (where the deed passes legal title and becomes the operative document).
* Seller provides form to buyer notifying buyer of any physical defects of which seller is aware. Failure to disclose a known defect makes seller liable for defect after closing. No duty to disclose visible defects.
Step 3: Buyer records deed to protect her title against a subsequent purchaser for value.
What happens when title passes from the seller to the buyer?
The land sale contract is extinguished along with the implied covenant of marketability. Only basis for a suit after title passes is by suing on the deed and any express covenants therein.
Recall the 6 possible covenants
* Seisin
* Right to convey
* Encumbrances
* Quiet enjoyment
* Warranty
* Further assurances
What does the Land Sale Contract require and what is the exception?
A land sale contract must contain the essential terms - parties, price, and an adequate description of the party, and be signed by the party to be bound, in order to satisfy the Statute of Frauds.
Time is typically not of the essence in real estate contracts.
Exception - court may enforce an oral contract if partial performance is met
Payment + [Possession or Improvements]
Define marketable title.
The seller promises to provide marketable title at closing which is title free from reasonable doubt of litigation. The covenant is extinguished at closing and any promises merge into the deed (under the doctrine of merger).
Examples of unmarketable title
- A violation of a zoning ordinance (even if the government hasn’t imposed liability, because the government has the power to do so)
- Easement that reduces value to the buyer
- Easement that is unknown to the buyer
- A significant encroachment
- Mortgages: Exception: Seller may satisfy a mortgage at closing with the land sale proceeds.
- Liens
- Landowner with future interest on the land (e.g., possibility of reverter)
- Covenants
Examples of still marketable title
- A visible easement that is known to the buyer
- A beneficial easement to the buyer, like a utility easement
- A very slight encroachment onto an adjacent landowner’s land
- An encroachment where the owner encroached upon indicated that he will not sue on it
- An encroachment that has existed for so many decades that it has become legal by adverse possession
- Mortgage that is not satisfied by closing (because the mortgage runs with the land and will encumber the title in the hands of the buyer)
What is the rule on mortgages and the closing? What right does the seller have?
A seller has the right to satisfy a mortgage or a lien at closing with the proceeds of the sale. Thus, prior to closing, the buyer cannot claim that title is unmarketable because it is subject to a mortgage so long as the mortgage is paid off by closing.
Define the doctrine of equitable conversion
Under the doctrine of equitable conversion, equitable title passes to the buyer at the time of the signing of the land sale contract. At this time, any risk of loss passes to the buyer unless the contract provides otherwise. This means that if the property is destroyed (through no fault of either party) or if either party dies, the real property belongs to the buyer.
What must the buyer do if they determine the seller’s title is not marketable?
The buyer must notify the seller and give the seller reasonable time to cure defects, even if this requires extending the closing date, and even if time is of the essence.
If the seller fails to cure marketable title, what are the buyer’s 3 options?
(1) Rescind the contract
(2) Sue for damages
(3) Obtain specific performance (and also obtain a pro rata abatement of the purchase price)
What is the relationship between a quit claim deed and marketable title?
None. The quitclaim deed does not remove an implied covenant to provide marketable title
What option does the seller have if the buyer walks away from the contract and the seller has offered to cure?
Obtain specific performance
Exam Tip: Avoid answer choices referring to the implied covenant of marketability if the closing has passed. After deed changes hands, seller is no longer liable on this implied covenant. The seller is then liable only for express promises made in the deed.
Exam Tips - Marketable Title
- Encumbrances, such as outstanding mortgage or lien (but seller has until escrow closes to pay it off)
- Record chain of title indicating seller does not have a full interest in the property to convey
- Easement that reduces “full enjoyment” of the premises
- Use restrictions, such as real covenants
- Rule regarding visible and known encumbrances is different for the real estate contract (pre-closing) and the deed (post-closing). For real estate contracts, purchaser is presumed to have contracted to accept the land subject to visible easements (and therefore such easements do not impair marketability). For deeds, covenants against encumbrances is breached even if the grantee knew of the encumbrance.
Define a deed.
A deed is a document that serves to pass legal title from the grantor to the grantee.
If you define a deed, what are the other rules you are going to list?
What happens under doctrine of merger
What terms are required in a land sale contract
Whether oral conditions are binding when the deed is passed