Real Property Flashcards
Constructive Eviction
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 constructive eviction.
Joint Tenant Leases
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.
Buyer of Deed w/ Mortgage
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 to the property 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 still subject to a potential foreclosure action upon default. Then, only the seller (transferor) remains personally liable for a 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.
Warranty of Fitness/Suitability
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.
Quitclaim Deed
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. Instead, 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.
Easement Termination
The issue is whether Railroad has abandoned its interest. 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.
Covenant Against Encumbrances
The grantor of a general warranty deed guarantees that he holds six covenants of title, three of which are present covenants. The three present covenants are the covenant of seisin, the covenant of the right to convey, and the covenant against encumbrances. The covenant against encumbrances, which applies to this situation, guarantees that the deed contains no undisclosed encumbrances. A breach of the covenant against encumbrances occurs when a property is encumbered by a mortgage, lease, easement, or covenant not specified in the deed.
A breach of the covenant against encumbrances occurs when a property is encumbered by a mortgage, lease, easement, or covenant not specified in the deed. In most states, a breach occurs even if the grantee is aware of the encumbrance. However, some states do not recognize a breach if the grantee had knowledge of the encumbrance, if it was visible, or if it benefitted the land. A buyer can recover for breach of the covenant against encumbrances the lesser of the difference in value between title with and without the defect, or the cost of removing the encumbrance.
Easement in Gross
An easement is in gross if it was granted to benefit a particular person (as opposed to the land). An express easement by grant arises when it is affirmatively created by the parties in a writing that satisfies the requirements for a deed. If a written easement is granted but not recorded against the servient estate, then the easement is not enforceable against a bona fide purchaser. Otherwise, the burden of an easement in gross is transferred automatically with the transfer of the servient estate.
Warranty of Fitness/Suitability
A warranty of fitness or suitability is implied in a contract for the sale of a newly constructed residence. Under this type of warranty, the seller warrants that he used adequate materials and good workmanship in working on the residence. The implied warranty generally covers latent construction defects, such as a defective electrical, plumbing, or mechanical system, or a leaky roof or drainage problem that does not manifest itself until after the sale.
Nonconforming Use
When a zoning ordinance is enacted or modified, there are often properties within a zone that do not conform to the requirements for that zone (i.e., a nonconforming use). A zoning ordinance must generally make provision for property with an existing nonconforming use. Unless the ordinance provides otherwise, the time for testing whether the nonconforming use is protected by a grandfather provision is the date that the zoning ordinance takes effect.
Generally, a property owner whose nonconforming use has been grandfathered is not entitled to subsequently increase the nonconforming use, such as by enlarging a building that houses a nonconforming use or acquiring and developing adjacent property in accord with the nonconforming use. However, the owner may be permitted to increase the frequency of the nonconforming use to upgrade the means to accomplish the nonconforming use, so long as the nature and character of the use does not constitute a substantial change.
Future Advances Mortgage
A mortgage is an interest in real property that serves as security for an obligation. A future-advances mortgage is a mortgage given by a borrower in exchange for the right to receive money from the lender in the future. This type of mortgage is also known as a “line of credit.” It is often used for home-equity, construction, business, and commercial loans, and it can provide for obligatory advances or optional advances. Future advances made pursuant to a loan that makes advances conditioned on satisfactory progress of the project for which the loan was made are optional, not obligatory.
Priority of Interests
If there is more than one interest in the property, the basic “first in time, first in right” rule is applied to determine the priority of interests. However, this rule is subject to an exception for future-advances mortgages. If the advances under a future-advances mortgage are optional, then a subsequent mortgage has priority over amounts that are actually loaned after the future-advances mortgagee has notice of the subsequent mortgage. The jurisdictions are split as to whether actual notice is required or whether constructive notice is sufficient. In a majority of states, the mortgagee must have actual notice of a subsequent interest in order for later loan disbursements to lose priority. The minority rule, on the other hand, requires only constructive notice of a subsequent interest.
Assignment
Absent any language to the contrary, a lease can be freely assigned. When a lease prohibits the tenant from assigning the lease, the tenant may nevertheless assign the premises. However, the landlord generally can then terminate the lease for breach of one of its covenants and recover any damages. When a lease prevents assignment without the permission of the landlord, and the lease is silent as to a standard for exercising that permission, the majority approach imposes a requirement that the landlord may withhold permission only on a reasonable ground in relation to the property being leased and not on a whim or personal prejudice. The traditional rule is that the landlord may withhold permission at his discretion.
Termination
A tenancy for years is an estate measured by a fixed and ascertainable amount of time. Termination of a tenancy for years may occur before the expiration of the term, such as when the tenant surrenders the leasehold. A tenant surrenders a lease by offering to return the lease to the landlord and the landlord accepting the return. If the landlord accepts surrender, the lease is terminated and the tenant is not obligated for future rent. But the landlord who does not accept the tenant’s offer (e.g., notifies the tenant of such) retains the right to continue to enforce the lease, which means that the tenant remains obligated to continue paying the rent.
Mitigate
A majority of states impose on the landlord a duty to make reasonable efforts to mitigate damages when a tenant abandons a lease. What constitutes a reasonable effort depends on the circumstances. But an owner of multiple vacant apartments is typically required only to treat the premises as one of his vacant stock.
