Real Property Flashcards
Real Estate Contracts
Five Steps in Property Transaction
- K created and Signed
- K must satisfy or exclude Warranty of Marketable Title
- Once K signed, Legal and Equitable Split
- Closing
- Once delivered, buyer may only sue on deed
Real Estate Contracts
Requirements of Real Estate Contract
- Must be in writing
- signed by the party to be charged
- Contain Essential Terms: Name the parties, provide a property description, and list price.
Part Performance Exception: Possession, pay, improvement.
Real Estate Contracts
Exception to Real Estate Contract Requirements
Part performance exception exists if the a party (a) takes possession, (b) pays the purchase price or a substantial portion of it, or (3) makes a substantial improvement to the property.
Real Estate Contracts
Who may negotiate Real Estate Ks on behalf of a party?
Broker, real estate agent, or lawyer so long as they are in an agency relationship and have the legal capacity to do so.
Real Estate Contracts
Real Estate Broker rights under Exclsuive Agency Agreement?
Right to commission only if broker finds the buyer during k period
Real Estate Contracts
Real Estate Broker rights under Exclsuive Right to Sell Agreement?
Right to commission no matter who finds the buyer (even the party themself) so long as the buyer was found during the K period.
Real Estate Contracts
Disclosure of Defects by the Seller?
Seller does not have to disclose defects unless they are (1) not obvious, (2) he knows or should of them, (3) and the defect is serious. The cannot actively conceal defects.
Not obvious - buyer can identify it (inspection?)
Real Estate Contracts
Warranty of Fitness
For new homes sold by a builder-seller, there is an implied warranty of fitness.
Are their construction defects?
Real Estate Contracts
Warranty Marketable Title
A marketable title is one that is “reasonably free of defects.” Must be given on day of closing. Sale Contract must satisfy or exclude this warranty.
One can pay off mortgage with funds from sale.
Real Estate Contracts
What makes a title unmarketable?
- Defects in the CHAIN OF TITLE
- Encumberance (mortgange or easement) not mentioned in the contract.
- Violation of a Zoning Ordinance.
- Title acquired by adverse possession
Housing or building code violation does not make title unmarketable
DEVA
Real Estate Contracts
When is Legal and Equitable Title Split?
Once K is signed, Equitable title is passed to the Buyer
Real Estate Contracts
Equitable Title
The buyer has equitable title once the K is signed. Risk of loss is on the buyer (flood, tornado, etc.).
Buyer’s interest is in the property
Real Estate Contracts
Legal Title
Legal title remains with the seller. The seller’s interest is in the money (personal property interest) for the sale.
Real Estate Contracts
Closing Requirements
Deed Must be (1) Executed and (2) Delivered
Meger occurs at closing, B cannot sue on K only deed.
Real Estate Contracts
Executing a deed requirements (Closing)
The deed (1) identifies the parties, (2) has words of grant, (3) is signed by the seller, and (4) describes the land.
Marketable title must be given on the day of closing, not before.
Real Estate Contracts
Delivery of Deed Requirements (Closing)
Delivery means intent to pass pass title presently. Delivery is assumed if the deed is in the grantee’s possession, or it is recorded.
Real Estate Transactions
Quitclaim Deed
gives no warranties
Real Estate Transactions
Warranty Deed Covenents:
Three Present: (1) right to Convey, (2) right to Seisin (possess), and (3) the right to no encumberances.
Three Future: Covenants of (1) further assurances, (2) quiet enjoyment, and (3) warranty.
Recording Acts
Common Law Rights (for recording)
First in time, first in right.
One does not need to record one’s interest to have title. However, recording acts have to power to change the common law result.
Recording Acts
Notice Act
A subsequent (1) BFP for (2) value and (3) without notice can obtain title that is superior to that of someone who recieved property before him.
Recording Acts
Race-Notice Act
A subsequent (1) BFP (2) for value (3) without notice (4) who records their interest forst can obtain superior title.
Recording Acts
Purchasers
Mortgagess and those qwho pay consideration.
Not donees, heirs, and judgement lien creditors.
Recording Acts
Notice
Actual, inquiry, or record notice.
Recording Acts
Shelter Rule Exception
Traditional grantees who are not protected by a recording act previal by sheltering under the rights of those who conveyed the land to them.
Recording Acts
Forged Deed and Defective Documents
Forged deeds and defective documents do not give notice, so BFP’s who recieve these are not protected by recording acts.
Recording Acts
Estoppel by Deed
If a grantor (without title) transfers property to a grantee by warranty deed and then later gets title, the title will automatically go to the grantee unless the grantor later gave to a BFP.
Recording Acts
Ttitle Insurance
The purchaser’s protection against unknown defects. Personal to the person, not the property.
Adverse Possession requirements
- Continuous
- hostile
- actual
- open and notorious
- for the statutory period
- exclusive
Adverse Possession Tacking
If the owner has a disability JIM (jail, insane, or minor) at the time the adverse possessor enters, the adverse possession date is tolled until the disability lifts.
Property
Exoneration (wills)
A devise of land in a will that is subject to a line may be paid off by the testator’s residuary estate.
Mortgages and Security Devices
Debtor v. Debtee
Morgator is the Debtor (owes money)
Morgatee is the Debtee (owed/lended the money)
Mortgages and Security Devices
Morgator
Gives away their interest “subject to” the morgate.
The original morgator is liable on the morgate.
Mortgages and Security Devices
Transferee
The new transferee “assumes” the interest.
Both the new Trnasferee and the O.Morgator are liable.
New party assumes liablity as well
Mortgages and Security Devices
Novation
Takes the interest and liabllity. Only the new trnasferee (the one who took the novation) is liable.
Mortgages and Security Devices
Due-on-Sale Clauses
That state that if the mortgagor transfers the land without the Mortgagee’s consent, the full balnce of the loan is immedietly due are enforceable.
Mortgages and Security Devices
Foreclosure
A bank may begin foreclosure proceedings upon a debtor’s default.
Mortgages and Security Devices
Equity Right of Redemption
A debtor may redeem the property by paying everything due under the mortgage agreement prior to foreclosure.
Mortgages and Security Devices
Waiver of Equity Right of Redemption
- Equity Right of Redemption may not be waived in mortgage or deed of trust.
- However, it may be waived later for consideration.
Mortgages and Security Devices
Acceleration Clauses
- The entire balnce due upon a missed payment.
- These are enforceable
Mortgages and Security Devices
Other Ways to discharge a Mortgage
- Full payment, or
- The mortgagor can give (surrender) the deed over to the mortgagee to avoid foreclusre (walk away from property).
Mortgages and Security Devices
Debtee Order in Foreclosure
- the party foreclosing is senior
- The Purchase Money Mortgage (money used to purchase property) is always senior to any other interest.
- All junior debtees must be party to the proceeding
Mortgages and Security Devices
Increasing amount due on mortgage
- If a mortgage voluntarily increases the amount due on a mortgage, the increase in debt becomes junior to other interests.
Exception: Mandatory Future Advances
Mortgages and Security Devices
Redemtion After Foreclosure (Statutory Right)
Allows the debtor to get the property back if they:
1. pay the full purchase price
2. within a certain period of time (6 months)
Present Interests
Fee Simple Absolute
- “To A,” “To A and her heirs”
- Gives the estate forever
- Total restraint on ownership not permitted.
- Limited conditions and rights of first refusal are.
Present Interests
Life Estate
“To A for life.”
* Must pay taxes, pay interest on the mortgage, and make repairs.
* Cannot commit waste.
* Restrictions on alientation.
Present Interests
Fee Simple Determinable
“To A so long as A is in college”
* A has an FSD, O has a possibility of reverter.
1. Measured by time
2. Magic words of creation (so long as, until, while, and during)
3. The estate ends automatically when the time period ends (upon graduation, in this case).
Present Interests
Fee Simple Subject to Condition Subsequent
“To A but if A smokes, O reserves right of entry”
* Conditional: measured by the occurence of an event
* O will have a right of entry reserved.
* The estate ends when O enters.
Present Interests
Fee Simple Subject to Executory Interest
“To A but if A smokes, to B”
* Conditional or durational language, but will go to a party and not back to O.
Future Interests
Future Interests held by Grantor (3)
- Right of entry
- Possibility of Reverter
- Reversion
Future Interests
Future Interests held by Grantee (2)
- Remainder
- Executory Interest
Future Interests
Vested Remainder
Usually follows a life estate
* A remainder is vested when the remainderman is ascertained and it is certain to become possessory.
Future Interests
Contingent Remainder
Usually follows a life estate
* A remainder is contingent when the reminderman is (UUU) unborn, unascertained, or if it is uncertain to vest due to condition.
Future Interests
Executory Interest
- S**hifting when B divests a third party of his interest
- Springing when B divests O of his interest
Concurrent Estates
Joint Tenancy Creation Requirements
- Time, title, interest, and possession
- Express langauge needs to identify the parties as “joint tenants with a right of survivorship.”
- JTs have a right of survivorship.
Concurrent Estates
Joint Tenancy Destruction Requirements
- Partioned (becomes tenancy in common)
- Severed by (1) giving it away, (2) signing a contract of sale, (3) an actual judicial sale by a creditor, or (40 granting a mortgage in a title theory sale.
One cannot give away a JT interest by will.
Concurrent Estates
Tenancy in Common Creation
Only the right to possess the whole is needed, there is no right of survivorship.
Concurrent Estates
Tenancy By the Entirety
- Only in some jursidictions (like JTs)
- Must be married
- death, divorce, mutual agreement, or mutual creditor of both executing on its interest.
Concurrent Estates
Co-Tenants
- Possession. Each Tenant may possess the whole.
- Profits: In general, a contenant does not have to share profits gained from his own efforts.
- Right to Contribution. for taxes, mortgages, and necessay repairs.
Landlord and Tenant
Types of Tenancies
- Term of Years: a tenancy for a specific period of time.
- Periodic Tenancy: a tenancy without a specific end date.
- Tenancy at Will: a tenancy that either party may terminate without notice.
- Holdover Tenancy: a tenancy that occurs when a tenant stays past the end date of their lease.
Landlord and Tenant
Rights and Duties Landlord and Tenant
- Tenant must pay rent and not commit waste.
- Implied Warranty of Habitability (Constructive eviction if something renders the premises unusable. Tenant must actually leave to win eviction action)
Landlord and Tenant
Assignment (Rent)
When a tenant assigns his entire interest, he is liable on the lease under privity of contract. The assignee is liable under privity of estate.
Landlord and Tenant
Sublease
When the tenant rents his land to a sublease, but has some interest left, the sublessor is liable on privity of contract and estate. the Sublessee is not liable to the landlord on the lease, but may be sued by the subleasor.
Landlord and Tenant
Termination (landlord tenant)
- Eviction if the tenant does not pay rent the landlord can evict the tenant from the property.
- Surrender If the tenant has not paid rent but has abandoned the property, the landlord can treqt it as a surrender. This excuses future rent obligation.
- Duty to mitigate the landlord must try to mitigate losses by re-renting the land.
Rules Affecting Real Property
Class Gifts
- Class gifts are gifts to unnamed persons.
- Unless otherwise stated, the class closes when any member of the class can call for a distribution.
Rules Affecting Real Property
Cy pres
When a gift to charity fails, the court may reform it to match’s the donor’s intention. Three considerations:
1. there must be property (or money) given for a charitable purpose;
2. it must be impossible, impracticable, or illegal to carry out the purpose;
3. the settlor must have manifested a general intent to devote the property to a charitable purpose.
Rules Affecting Real Property
Rules against perpetuities
- No interest is good unless it must vest, if at all, not later than 21 years after a life in being at the creation of the interest.
- Statutory reforms: the Uniform Statutory Rule states that an interest is good (a) if it is valid under common law, or (b) if it vests or terminates within 90 years after its creation
Rules Affecting Real Property
Conflicts of Law (Property)
Controlling law is the law of the land where the property is located.
Rules Affecting Real Property
The Fair Housing Act
bars discrimination based on:
* race
* religion
* national origin
* gender
* disability
In the sale or rental of a dwelling.
Fixtures, Zoning, and Associations
Fixtures
A fixture passes with the real property. Look at the following factors to determine intent (DAMN):
* Damage removal would cause
* Adaption of the item to the realty
* Manner in which it is attached
* Nature of the item
Rules Affecting Real Property
Zoning
- Variance a variance from an ordinance may be granted if the property owner shows he has a unique hardship.
- Preexisting Use Many zoning ordinances protect a preexisting use. But, as soon as that property is sold to a new party, the preexisting use no longer is protected.
Rules Affecting Real Property
Property Associations
- Must be a master deed and privity between the original purchasers and the developer.
- Restrictions generally carry a presumption of reasonableness and are enforced.
Rights in Land
Real Covenants
Needed to enforce covenants (PINT):
* Horizontel and Vertical Privity
* Intent for the covenant to run
* Notice of the covenent
* must touch and concern the land (make it more valuble.
Damages - money
Rights in Land
Equitable Servitudes
- Intent for the covenant to run
- Notice of the covenent
- must touch and concern the land (make it more valuble.
- Equitable defenses: laches, unclean hands)
Rights in Land
Easement
(Creation)
Four methids to create easement:
1. Express signed writing required
2. Implied by prior use common apparent use by a landowner who subdivieds land.
3. Implied by Necessity land is landlocked
4. Prescription one uses the land openly, notoriously, continuously, and without permission from the owner for the statutory period of time.
Rights in Land
Easement Termination
- Merger if one owns the dominant and subservient state, the easement ends
- Release a signed writing
- Abandonment act + intent to abandon (mere nonuse is not enought to abandon an easement)
- Estoppel A statement by the dominant estate holder and reliance by the subservient
- Prescription easement blocked by statutory period
- End of Necessity applies only for easement by necessity
Easement
A license can be created orally. It is revocable at will unless coupled with an interest or reliance.
Profits
A profit is the right to go on land and take a resource away (oil)
