Real Property

Question 1

What is a Fee Simple Absolute?

Answer 1

A conveyance of absolute ownership of real property (no conditions placed on it). (i.e. “to A and his heirs” or “to A”)
-Its freely devisable, descendible, and alienable.

Priority: Medium

Question 2

What is a Fee Tail?

Answer 2

A conveyance of real property to a person AND their heirs.

*Abolished in most jurisdictions; is treated as a
fee simple absolute.

Priority: Medium

Question 3

What is a Fee Simple Defeasible, and when is it created?

Answer 3

A conveyance of real property with conditions.
− Created with express conditional language.
− Ownership may be terminated upon the
occurrence/non-occurrence of an event or
condition.

Priority: Medium

Question 4

What are the three types of Fee Simple Defeasibles?

Answer 4

Fee Simple Determinable → reserves a future interest
in the grantor (possibility of reverter).
− Created with words of duration (i.e. so long as,
during, while).
− Conveyance is automatically terminated if the
specific condition occurs and automatically reverts to the grantor.

Fee Simple Subject to a Condition Subsequent →
reserves a future interest in the grantor (right of reentry).
− Created when a conveyance is subject to
grantor’s right of re-entry if a specific condition
occurs. (i.e. but if, upon condition that, provided that)
− Only terminates if grantor affirmatively exercises
his right of re-entry.

Fee Simple Subject to Executory Interest → reserves
a future interest in a third-party (not the grantor or his
heirs).
− Example → “To person X, so long as (or “but if”)
… to person Y.”

Priority: Medium

Question 5

What is a Life Estate?

Answer 5

conveyance where the life tenant is entitled to possession during their lifetime, and upon death the real property transfers to another party (specified by deed).
- (i.e. “to A for life” or “to A for the life of B”)
− The life-tenant is responsible for ordinary expenses and taxes for the property during their lifetime.
− Life-tenant CANNOT commit waste (causing the
property to decrease in value).

Priority: Medium

Question 6

Statute of Limitations

Answer 6

Interest in Fee Simple Determinable/Subject to
Condition Subsequent lasts through the
applicable statute of limitations (SOL) period.
− An action for possession may be brought
anytime within the SOL period (a set number of
years after the action accrued).

Question 7

Interests retained by the grantor

Answer 7

Reversion: grantor transfers a shorter estate than she owns (i.e grantor with a fee simple transfers a life estate)

Possibility of Reverter: Creates a future interest of possession in the grantor if a specified condition occurs (property automatically vests to the grantor upon occurrence of the condition).

Right of Re-entry: Creates a future interest in the grantor, where upon the occurrence of a specified condition, the grantor MAY re-enter and take the property
- the grantor MUST exercise the right to terminate the interest
I
Priority: Medium

Question 8

Interests created in a transferee (Note: Rule Against Perpetuities may apply)

Answer 8

Executory interests- cut short the prior estate

Remainders- possessory only on the natural termination of the prior estate (i.e death of the tenant)
-remainders are vested if made in an ascertained person and with no condition
precedent; otherwise are contingent

Class gifts- remainders in a class are contingent if no member of the class yet exists, vested if all possible members exist, and vested subject to open if more members might come to exist
-under the rule of convenience, an open class closes when any member can demand possession

Question 9

Vested Remainder vs. Contingent Remainder

Answer 9

Vested remainder: A future interest in land that is given to an identifiable person with NO conditions.

Contingent remainder: A future interest in land that is conditioned upon the occurrence (or non- occurrence) of a specific event.

Priority: Medium

Question 10

Life estate (Remainderman)

Answer 10

upon the life-tenant’s death, ownership of the property transfers to a specified
person.
− Remainderman = person(s) who receive the
property upon the life-tenant’s death.

Question 11

Rule Against Perpetuities

Answer 11

Any future interest that is not certain to vest or fail within a life in being plus 21 years is void

applies to contingent remainders, executory interests, class gifts (even if vested remainders), options and rights of first refusal, and powers of appointment

only the interest that violates the Rule is stricken

Examples
-Executory interest following a defeasible fee- executory interest is stricken
-Gift to an open class conditioned on members surviving to an age beyond 21 - entire class gift is stricken
- Remainder to A’s children living at his widow’s death (“unborn widow” problem)- contingent remainder is stricken

Question 12

What is Tenancy in Common?

Answer 12

The default estate created when land is conveyed to two or more people UNLESS:
a) There is express language stating that the parties have survivorship rights (joint tenancy); OR
b) If the conveyance stated “as husband and wife” (creating a tenancy by the entirety).

*Each tenant has an undivided interest in the property and the right to use and enjoy the ENTIRE property.

Priority: Medium

Question 13

What Four Unities must be present for a Joint Tenancy to be created?

Answer 13

1) The unity of time;
2) The unity of title (same instrument);
3) The unity of interest; AND
4) The unity of possession.

MUST have clear express intent to create a Joint Tenancy with a right of survivorship (i.e. deed states “as joint tenants”, “right of survivorship”).

Priority: Medium

Question 14

Joint Tenancy Severance

Answer 14

When one joint tenant unilaterally transfers his ownership interest in the
property, the joint tenancy is severed. Tenants then hold the property as tenants in common.
− If there are more than two joint tenants, the joint
tenancy remains, but only among the other joint
tenants.

If a joint tenant takes out a mortgage on her interest:
− Title Theory Jurisdiction → severs joint tenancy
− Lien Theory Jurisdiction → does not sever

If one joint tenant leases the property:
− Most States → severs joint tenancy

Question 15

Under what circumstances can an out-of-possession co-tenant collect rent from an in-possession co-tenant (who is in exclusive possession of the property)?

Answer 15

An out-of-possession cotenant DOES NOT have the right to receive rent unless:
a) otherwise agreed; OR
b) wrongfully ousted.

Priority: Medium

Question 16

When is a co-tenant entitled to rent from a third-party?

Answer 16

Co-tenant is entitled to a fair share of rent received from a third-party.

Question 17

Is a co-tenant entitled to reimbursement for repairs?

Answer 17

Co-tenant is entitled to reimbursement for the costs of necessary repairs paid for (unless there was a wrongful ouster).

Question 18

Is a co-tenant entitled to reimbursement for improvements?

Answer 18

Co-tenant is NOT entitled to reimbursement for improvements to the property (unless
otherwise agreed).
– BUT, the improving co-tenant is entitled to the downside risk or upside gain when the property is sold.

Question 19

what is a leaseshold interest?

Answer 19

A lease grants a tenant the present possessory interest in real property for a
limited period of time.

Question 20

What are the three types of Leasehold interests?

Answer 20

(1) Tenancy for Years – lasts for a fixed period of time;
automatically terminated after the period ends.

(2) Periodic Tenancy – lasts for initial period, then
automatically continues for additional equal periods
(weekly/monthly) until terminated by proper notice.
− Is created by:
(a) express agreement;
(b) implication if rent is paid at specific periods; OR
(c) law (when a tenant-for-years remains after
termination of the period or lease is invalid).

− Termination → written notice at least a full
period in advance (if yearly, 6 months’ notice is
required).

(3) Tenancy at Will – continues until either party
terminates it; usually created by express agreement.
− Termination → notice + reasonable time to quit
the premises (in some states, no notice is
required).

Priority: HIGH

Question 21

What may a Landlord do if a Tenant remains on the property and does not pay rent?

Answer 21

a) Initiate eviction proceedings; OR
b) Allow the tenant to remain on the property, and sue for damages.

Priority: Medium

Question 22

What may a Landlord do if a Tenant abandons the property and does not pay rent?

Answer 22

If tenant abandons the property and doesn’t pay rent, landlord may have to take reasonable steps to mitigate losses (depends on state law).

Question 23

What are the Landlord’s two options if a tenant holds over?

Answer 23

If a tenant holds-over (remains in possession after the lease ends), the landlord may:
a) Initiate eviction proceedings; OR
b) Hold the tenant over.

When a hold-over occurs, an implied month-to-month tenancy is created with identical terms to the original lease.
− If tenant is informed of a higher rent before the
end of the lease, the higher rent applies.

Duration:
− Modern View → month-to-month tenancy is
created.
− Common Law → term is equal to original
tenancy period.

Priority: Medium

Question 24

What is the Warranty of Habitability?

What can the Tenant do upon breach?

Answer 24

Landlord MUST provide a place to live that is habitable → reasonably
suitable for human needs.
− Implied in every residential lease.
− Some courts also impose this warranty in commercial leases (in limited circumstances).

If warranty is breached, tenant may:
a) move out & terminate the lease;
b) withhold or reduce the rent;
c) repair the issue & deduct the cost; OR
d) remain on the premises & sue for damages.

Priority: Medium

Question 25

Implied Covenant of Quiet Enjoyment

Answer 25

Every lease includes an implied covenant of quiet enjoyment that prevents a
landlord from interfering with the tenant’s quiet enjoyment and possession of the property.
− This covenant is breached when a tenant is
constructively evicted.

Question 26

When does Constructive Eviction occur?

Answer 26

When:
1) The landlord breached a duty to the tenant;
2) The landlord’s breach caused a loss of the substantial use and enjoyment of the premises;
3) The tenant gave the landlord notice of the condition;
4) The landlord failed to remedy it in a reasonable time after notice was given; AND
5) The tenant vacated the premises.

*If constructive eviction occurs, tenant may terminate the lease, seek damages, & may avoid rent for time constructively evicted.

Priority: Medium

Question 27

Landlord duties in a Residential Lease?

Answer 27

Landlord HAS a duty to (1) repair common areas, and (2) warn of latent defects that create a risk of serious harm that the landlord knows of (or should know of).

Question 28

Landlord duties in a Residential Lease?

Answer 28

Landlord has NO duty to repair (unless specified in the lease agreement).

Question 29

Does a Landlord have a duty to mitigate his damages?

Answer 29

Common Law → NO duty to mitigate damages.

Most States → Impose a duty to take reasonable steps to mitigate losses (i.e. attempting to lease the property to another).
− The mitigation DOES NOT need to be
successful in order to recover damages.

Priority: HIGH

Question 30

Assignment of a Lease

Answer 30

when a tenant transfers ALL of his remaining lease interest to a third-party.
− A lease may be freely assigned UNLESS the
lease states otherwise.
− An assignment CANNOT be for a longer period
than the remaining lease term.

Question 31

Assignment of a Lease

who is liable to the Landlord for rent/breach after assignment of a lease?

Answer 31

Assignee → liable to the landlord for rent and all
other covenants that run with the land (privity of
estate).

− Assignor (Original Tenant) → also remains
liable for rent (privity of contract).

− Landlord → maintenance obligation runs with
the land (privity of estate).

Priority: HIGH

Question 32

Does a Landlord have to consent to the assignment of a lease?

Answer 32

If the lease requires landlord’s consent, consent MUST be obtained.
− Landlord waives the right to enforce a provision prohibiting assignment if he accepts rent from the assignee.

Question 33

Assignment of a Lease

When a lease has a Silent Consent Clause, what two approaches have been adopted by state courts to determine how consent is given?

Answer 33

Most States, allow the landlord to withhold consent for any reason (even if unreasonable).

Some States, require the landlord to have a reasonable basis for withholding consent.

For example: Inability to fulfill lease terms, financial irresponsibility, instability, etc.

Priority: Medium

Question 34

What is a Sublease?

Is a Sublessee liable to the Landlord for rent?

Answer 34

when a tenant (sublessor) transfers ONLY SOME of his remaining lease interest.
− Tenant may freely sublet UNLESS a provision in the lease states otherwise.
− A sublease CANNOT be for a longer period than the remaining lease term.

Sublessee is NOT liable to the landlord for rent or other
covenants (there is no privity of estate).
− Sublessor (original tenant) remains liable to
landlord for rent (privity of contract).

Priority: Medium

Question 35

Surrender of a Lease

Answer 35

an agreement to end a lease early.
− Landlord must clearly accept surrender of the
lease (unless otherwise agreed).
− An attempt to end the lease early (such as
leaving the keys) DOES NOT constitute a
surrender unless landlord clearly accepts.

If landlord:
− ACCEPTS the surrender → tenant’s duty to
pay rent (after the acceptance) ends.
− DOES NOT accept the surrender → tenant is
deemed to have abandoned and is liable for
damages.

Priority: HIGH

Question 36

What is a Real Covenant?

Answer 36

a non-possessory interest in land that obligates the holder to either do something or refrain from doing something.
− Remedy = damages

(The remedy is damages, unlike equitable servitudes)

Priority: Medium

Question 37

What must be present to enforce the benefit of a Real Covenant?

Answer 37

There must be:
1) A writing that satisfies the statue of frauds;
2) Intent that the covenant runs with the land;
3) Vertical privity (when a successor holds the entire interest held by a predecessor); AND
4) The covenant must touch and concern the land( makes the land more useful or valuable).

Priority: Medium

Question 38

What must be present to enforce the burden of a Real Covenant?

Answer 38

There must be:
1) A writing that satisfies the statue of frauds;
2) Intent that the covenant runs with the land;
3) Vertical privity (when a successor holds the entire interest held by a predecessor);
4) Horizontal privity between the original parties (the two parties shared some interest in the land independent of the covenant);
4) The covenant must touch and concern the land( makes the land more useful or valuable); AND
5) The new owner must have notice of the covenant

Notice = actual (knowledge), record (covenant is
recorded), OR inquiry (inspection would reveal it).

Priority: Medium

Question 39

What is an Equitable Servitude?

Answer 39

a covenant that equity will enforce if the burdened estate had notice of the
covenant (regardless of whether it runs with the land).

(The remedy is injunctive relief, rather than damages)

Priority: Medium

Question 40

What must be present to enforce the benefit of an Equitable Servitude?

Answer 40

There must be:
1) A writing that satisfies the statue of frauds;
2) Intent for the servitude to be enforceable; AND
3) The servitude must touch and concern the land (makes the land more useful or valuable)

Priority: Medium

Question 41

What must be present to enforce the burden of an Equitable Servitude?

Answer 41

There must be:
1) A writing that satisfies the statue of frauds;
2) Intent for the servitude to be enforceable; AND
3) The servitude must touch and concern the land (makes the land more useful or valuable); AND
4) The new owner must of had notice of the servitude (actual, record, or inquiry notice).

Priority: Medium

Question 42

What is the Common Scheme or Plan Doctrine?

Answer 42

courts will imply reciprocal restrictive covenants on land parcels in a
subdivision sold by a developer ONLY IF:
1) Developer had a common scheme or plan that ALL parcels would be subject to the restriction at the time sold; AND
2) Land owner had notice of the restriction
(a) actual,
(b) constructive/record, or
(c) inquiry –obvious from looking at the subdivision.

Priority: Medium

Question 43

What is a Common Interest Community (CIC)?

Answer 43

A development/neighborhood of individually owned lots which have an obligation to:
a) pay for/contribute maintenance of the property held in common; OR
b) pay dues or assessments to an association that maintains the neighborhood and/or
properties.

*Typical CIC’s = condos, co-ops, and HOA’s.

Residents and successive owners are subject to
recorded obligations (restrictive covenants) that run with
the land.

Priority: Medium

Question 44

What is an easement?

Answer 44

is a non-possessory interest in the use of someone else’s land.

Question 45

Easements

Easement in Gross vs. Easement Appurtenant

Answer 45

Easement in Gross: Benefits a specific owner’s enjoyment (DOES NOT pass to subsequent owners, unless easement is for commercial activity)

Easement Appurtenant: Benefits ANY owner’s enjoyment (DOES pass to subsequent owners, if owner had notice)

Priority: HIGH

Question 46

Easements

What is an Easement by Grant?

Answer 46

An express agreement by the grantor allowing the easement, which must:
1) Be in writing signed by the grantor;
2) Identify the land and parties involved; AND
3) Indicate the grantor’s intent to convey the easement.

Priority: HIGH

Question 47

Easements

What is an Easement by Prescription?

Answer 47

It’s created when the possessor’s use of the land is:
1) Open and notorious;
2) Continuous;
3) Hostile(without permission of the owner); AND
4) For the statutory period.

Priority: HIGH

Question 48

Easements

What is an Easement by Implication?

Answer 48

It’s established when:
1) a single tract of land is divided by a common owner;
2) a pre-existing use by the grantor is established prior to the division;
3) use was continuous and apparent indicating that it was meant to be permanent; AND
4) the use is reasonably necessary for the owner’s use and enjoyment of the land
conveyed.

Priority: HIGH

Question 49

Easements

What is an Easement by Necessity?

Answer 49

It’s created when:
1) land owned by the one owner is subdivided; AND
2) the easement (access of land) is essential to the use because no other entrance/exit is available.

Priority: HIGH

Question 50

Easements

What are the ways an Easement can be Terminated?

Answer 50

a) Estoppel – when the servient estate owner
reasonably relies (or materially changes
position) on an assurance that the easement will
not be enforced;
b) Termination of the necessity;
c) Involuntary destruction of the servient estate;
d) Condemnation of the servient estate;
e) Written release;
f) Abandonment – a physical action showing an
intent to never use the easement again;
g) Merger of the properties (if land is separated
again, it does not revive the easement); OR
h) Prescription.

Priority: HIGH

Question 51

What is a License?

Answer 51

the privilege to use another’s land in a particular way.
− Doesn’t need to be in writing.
− May be revoked at any time by the licensor, BUT licensor may be estopped from revoking if licensee invested substantial money/labor in reasonable reliance.
*A license is NOT an interest in land.

Priority: Medium

Question 52

What is Profit

Answer 52

gives the holder the right to take natural resources such as petroleum, minerals, timber, and wild game from the land of another.

Question 53

What is a fixture?

Answer 53

Is personal property affixed to the land/dwelling so that it becomes part of the land.
− Whether an item is a fixture is determined by the objective intent of the installer.

Question 54

What factors are considered to determine if an item is a Fixture?

Answer 54

Courts consider:
1) The nature of the item;
2) way it’s attached;
3) damage that would result if removed; AND
4) extent to which the item is adapted to the property.
-the more the item is incorporated into the property, the more likely its a fixture.

Priority: Medium

Question 55

What is the Trade Fixture Exception?

Answer 55

An item attached for a tenant’s trade or business is NOT a fixture UNLESS
removal causes substantial damage to the property.
– But, the item may become a fixture if it’s not removed before the end of the lease term.

Question 56

What are the elements of Adverse Possession?

Answer 56

It allows someone who is in possession of land, owned by another, to acquire title when the possession of the property is: “OCEANS”
1)Continuous for the statutory period (i.e. 10 yrs);
2) Open and notorious. (use that would put a true owner on notice);
3) Exclusive;
4) Actual (possess the land as a true owner would); AND
5) Hostile and under a claim of right (without the true owner’s consent)

*title acquired by adverse possession is the same title that the original owner possessed

Priority: HIGH

Question 57

Adverse Possession Aggregation/Tacking

Answer 57

Adverse possessors in privity may aggregate their years spent possessing the
property to meet the statutory period.
− Privity → exists when the land is voluntarily
transferred to another (i.e. deed or bequest).

Question 58

What is Constructive Adverse Possession?

Answer 58

If a person takes possession of a portion of land under color of title (invalid deed), the adverse possession extends to the entire portion of land described in the deed/title.

Priority: HIGH

Question 59

What are the elements of a valid Land Sale Contract?

Answer 59

The contract must:
1) Be in writing;
2) Describe the property;
3) Identify the parties involved;
4) Contain the purchase price; AND
5) Be signed by the grantor/grantee (depending on who the contract will be enforced against).

Priority: Medium

Question 60

Merger Doctrine

Answer 60

Once the deed is delivered & accepted, the land sale contract merges with the deed.
− Result is that rights to sue under the contract are EXTINGUISHED, and a buyer may only sue upon the deed.

Some Courts → will NOT apply the merger doctrine if it
doesn’t carry out the probable intent of the parties.
− Examples: mutual mistake, scrivener’s error.

Question 61

What is the Warranty of Marketable Title?

Answer 61

The Seller has the duty to convey marketable title to a buyer.
− Marketable Title = title free from an unreasonable risk of litigation at closing (i.e when purchase price and deed exchanged)

Title is Unmarketable if the property has a substantial
defect, such as:
a) Defect in the record chain of title; and/or
b) Encumbrances → mortgages, liens, restrictive covenants, easements, a claim of adverse possession, or zoning violations.
*Zoning restrictions DO NOT make title unmarketable.

If seller CANNOT convey marketable title at closing, the
buyer may withdraw without penalty.
− A buyer MAY waive the defect. If the buyer
waives, seller cannot cancel the contract.

Priority: Medium

Question 62

What is the Equitable Conversion Doctrine?

Answer 62

splits ownership between the buyer and seller once the land sale contract
is signed.
– Buyer → has equitable title of the property.
– Seller → has legal title, and holds the property in trust for the buyer.

Priority: Medium

Question 63

Risk of Loss in a Land Sale

Answer 63

Risk of Loss:
− Most States → risk of loss transfers to the buyer
upon signing the contract.
− Minority States → Seller bears the risk of loss
UNLESS buyer has possession or title to the
property at the time of loss.

Question 64

Time for Performance in a Land Sale

Answer 64

Even though a land sale contract may specify a closing date, the time for
performance may be changed if requested by one of the parties.

EXCEPTION → If the contract contains a “time is of the essence” clause.
− If buyer fails to perform on the closing date, it’s
deemed a material breach and the seller may
keep the down payment as liquidated damages.

Priority: Medium

Question 65

Action for Specific Performance

Answer 65

Real property is deemed unique, and specific performance is an
appropriate remedy.
− EXCEPTION → when the property has been
sold to a Bona Fide Purchaser without notice.

Priority: Medium

Question 66

What is a Home Builder’s Implied Warranty?

Answer 66

Protects buyers of newly built homes against latent defects AND warrants
the home is safe and fit for human habitation at the time of sale.
− Latent Defect = a defect that could not have
been discovered by a reasonable inspection.

Priority: HIGH

Question 67

What are the requirements of a valid Deed?

Answer 67

A valid Deed must:
1) Be in writing;
2) Be signed by the grantor;
3) Identify the parties (the grantor and grantee);
4) Describe the property; AND
5) Indicate the grantor’s present intent to convey the land.

Grantor’s Intent to Convey Land – Any words indicating grantor’s intent to immediately convey the land are sufficient (i.e. grant, convey, give, transfer).
− BUT, intent will not be found if:
(a) grantor expressly reserves the right to revoke the deed; OR
(b) gives an instruction to only deliver the deed upon grantor’s death.

Priority: Medium

Question 68

What are the six covenants of a General Warranty Deed?

Answer 68

General warranty deed covenants against any title defects created by the grantor or prior titleholders

The three present covenants are:
1) Seisin (rightful owner);
2) Right to convey; AND
3) Covenant against encumbrances.

The three future covenants are:
1) Warranty (to defend against any third party claims to title);
2) Quiet enjoyment (not to be bothered by a third party’s claim to title); AND
3) Further assurances (to do whatever is reasonable to perfect title).

Priority: HIGH

Question 69

What is a Special Warranty Deed?

Answer 69

Warrants that seller has not breached the covenants of title during the ownership:
1) Seller has not previously conveyed the property; AND
2) No encumbrances against title made by seller.

Priority: HIGH

Question 70

What is a Quitclaim Deed?

Answer 70

Is an “as is” deed; contains NO warrantees/covenants.
− The grantor is NOT liable for any encumbrances or defects in title.

Priority: HIGH

Question 71

Estoppel by Deed

Answer 71

If grantor conveys title to real property before he owns it, the title will automatically
vest in the grantee as soon as grantor acquires title.

Question 72

Chain of Title

Answer 72

shows all transfers for a piece of land.
− 2 Indexes → one organized by names of
grantors, and one organized by names of
grantees.

Question 73

Wild Deed

Answer 73

Wild Deed = A deed NOT recorded properly, and thus not discoverable in the chain of title.
− A wild deed DOES NOT put subsequent purchasers on constructive notice of a land
transfer.

Question 74

What are the three types of Recording Statutes?

Answer 74

1) A notice statute – a subsequent bona fide purchaser (no notice+pays value) will prevail over prior grantee that failed to record.

2) A race statute – whomever records first prevails (notice is irrelevant).

3) A race-notice statute – a subsequent bona fide purchaser (no notice + pays value) is protected ONLY if he records before the prior grantee.

Notice = (a) actual notice; (b) constructive (record)
notice; or (c) inquiry notice (notice of what a reasonable
inspection of land would provide).

Priority: Medium

Question 75

What is a Bona Fide Purchaser (BFP)?

Answer 75

A person who:
1) Takes real property without notice of a prior conveyance; AND
2) Pays valuable consideration.

*A person who receives land by gift (a donee) or by bequest (heir, devisee) is NOT a Bona Fide Purchaser.

Priority: HIGH

Question 76

Shelter Rule

Answer 76

A person who purchases land from a BFP receives the same status and rights as the BFP.

Question 77

Elements for a valid mortgage

Answer 77

MUST:
1) be in writing,
2) be signed by the party to be charged, AND
3) reasonably identify the parties and the land.

Question 78

What is a Purchase Money Mortgage?

Answer 78

Used by the buyer (the borrower) to purchase real property, and the seller is the lender who secures the mortgage on the property.
− The holder has priority over ALL other junior and
senior mortgages.

Priority: Medium

Question 79

What is a Future Advance Mortgage?

Answer 79

A loan in which the lender may provide future payments under the original loan.

The lender secures a mortgage on the real property for the entire amount of the loan, including future advances.

Priority: HIGH

Question 80

What parties are involved in a Deed of Trust?

Answer 80

1) The borrower (the purchaser of the property);
2) The lender; AND
3) A third-party trustee who holds title to the property until the loan is paid off.

*Title is transferred to the purchaser once the loan is
paid.

Priority: Medium

Question 81

Express vs. Implied Mortgage Assumption

Answer 81

Express Mortgage Assumption – occurs if there is an express agreement for grantee to (1) take the real property, AND (2) continue making mortgage payments.

Implied Mortgage Assumption (only allowed in a few states) – occurs if:
(1) no express agreement exists;
(2) grantee/buyer pays the seller only the equity in the home; AND
(3) grantee continues to make payments to the
lender on the balance of the mortgage.

If a buyer “assumes” the mortgage, he is primarily and personally liable on the mortgage.
− Seller remains secondarily liable.

Priority: Medium

Question 82

Transfer Subject to a Mortgage

Answer 82

If a buyer takes real property subject to a seller’s mortgage, he is NOT personally liable on the mortgage.
− BUT, a duly recorded mortgage remains on the
land, and mortgagee (lender) may foreclose on
the mortgage.

Question 83

Foreclosure

Answer 83

It extinguishes (destroys) all junior mortgages.
− All senior (prior recorded) mortgages are NOT
affected.

Order of Preference – Proceeds from a foreclosure sale are used to pay off debts in this order:
1) Attorney fees and expenses associated with
the sale.
2) Debts owed to mortgagee (the lender).
3) Any amount leftover goes to the mortgagor
(debtor).

Question 84

Deficiency Judgment

Answer 84

Mortgagee (lender) may seek a deficiency judgment against the debtor if the proceeds
are insufficient to satisfy the mortgage debt.

Question 85

When are Zoning Ordinances and Laws permitted?

Answer 85

(land-use regulations) –
are ALLOWED when it reasonably protects the health, safety, morals, or general welfare of the community.

Question 86

What is a Variance?

When may it be granted?

Answer 86

It is an exception to a zoning ordinance, and two types exist:
1) Use variance;
2) Area variance.

A variance application may be granted if:
(1) property owner shows he will suffer hardship because of the ordinance; AND
(2) variance would NOT damage or harm the public welfare.

Priority: Medium

Question 87

Previous Non-Conforming Use

Answer 87

Allows a landowner to continue to use his land in violation of a later enacted zoning law.

− If the prior use was originally legal, a subsequent zoning law will NOT bar the
continued use.
*The non-conforming use MUST be continuous,
otherwise it’s no longer protected.

Changes to a Non-Conforming Use Property:
− Insubstantial changes and reasonable alterations to repair the property →PERMITTED.
− Substantial changes that enlarge, alter, or extend the non-conforming use → NOT
ALLOWED.

Question 88

Conflict of Laws

What is the situs rule for Real Property actions?

Answer 88

Apply the State law where real property at issue is located (the situs rule) for cases involving the title/sale of real property.
*States have a strong interest in actions that affect real property within their state.

Priority: Medium

Question 89

What are the three Real Property conflict of laws tests?

Answer 89

1) 1st Restatement – Situs rule – the laws of the state where the real property is located will govern.

2) 2nd Restatement – The state with the Most Significant Relationship to the property will govern. The situs state is presumed to have the most significant relationship.

3) Interest Analysis Test – Situs rule will apply UNLESS another state has a greater interest in having their law applied.

*Apply the test that has been adopted by the jurisdiction.

*If the land is merely incidental to a contract (i.e.
brokerage contract, mortgage agreement), then apply
the choice of law rules for contracts.

Priority: Medium

Question 90

Fair Housing Act

Answer 90

The FHA prohibits discrimination in housing-related activities
based on a person’s race/color, religion, sex, national origin, disability, and/or familial status (except for facilities designated as 55+ year old “senior housing”).

FHA Exemptions → The FHA does not apply to:
a) Religious organizations;
b) Private clubs that limit occupancy to members;
c) Owner-occupied buildings with no more than
4 units occupied by persons living
independently of each other; OR
d) Single-family houses sold or rented by the
owner (without the use of an agent) as long
as the private landlord/owner doesn’t own more
than three homes at the time.

Discriminatory Advertisements → are prohibited.
− A discriminatory ad violates the FHA even if the
property falls under an exemption.