Real Property

Question 1

Übersicht

Answer 1

I. Land Interests
II. Non-possessory interests
III. Conveyancing

Question 2

Conflict of laws: Welches Recht gilt? Will court of forum jx apply its laws or those of another interested jx?

Answer 2

Situs rule: For real property (immovables), law of the situs (state where property is situated) governs its disposition, If applied, the forum uses the (possibly foreign) jx’s whole law; the law ultimately used may be from anywhere

Question 3

I. Land interests

Arten

Answer 3

1. Present possessory estates: someone has the right to land now; someone may get the right to land later in some cases

2. Future interests: someone may get right to land later in some cases

3. Concurrent estates and interests (co-tenancy)

4. Adverse possession

5. Landlord-tenant non-freehold estates

6. Zoning

Question 4

I. Land interests

1. Present possessory estate

Answer 4

1. Fee simple absolute: Largest possible estate in land, indefinite duration (“to A [and his heirs]”)

2. Fee simple determinable: Terminates automatically after a duration, grantor has possibility of reverter (“so long as”)

3. Fee simple subject to condition subsequent: Can terminate after a named event, grantor has right of reentry (“but if”)

Abgrenzung: If ambiguous whether FSD or FSSCS (contains both language), treat as if FSSCS (grantor may elect forfeiture)

4. Fee simple subject to executory interest: Automatically divests in a third party on the happening of a named event, Invalid conditions: violate public policy, penalize marriage, promote divorce (OK to support until marriage/divorce) , Restraint on alienation: Public policy favors free alienability of property. Courts generally uphold reasonable
conditions and restraints. Any unreasonable language (e.g., indefinite restraint) are struck from the instrument

5. Life estate: Lasts for duration of grantee’s life (life estate transferred to someone else lasts for named grantee’s life)
a) Life tenant (LT) duties: Maintain the property in reasonable state; pay mortgage interest only; pay ordinary taxes
b) Remainderman is free of encumbrances by LT, has right to immediate possession from any lessee on LT’s death
c) Life estate pur autre vie (life of another): Measured by life other than grantee’s (“to A for life of B”), May also result when LT conveys its life estate to another (B has a life estate for the life of A (LT))

Question 5

I. Land Interests

P: Waste

Answer 5

Grds. Grantee of less than fee (life, term) cannot adversely injure future interest of remainderman or reversioner, future interest holder may seek damages or injunction, or reimbursement if $ spent to perform LT’s obligations

Differenziere:
a) Voluntary waste: Volitional act that decreases value of estate, intentional/negligent damage
aa) Exploitation of natural resources by LT limited to PURGE: prior use of land for exploitation before grant, necessary for repair or maintenance of land, express/implied grant to exploit, suitable only for exploitation
bb) Open mines doctrine: LT can continue mining existing resources; remainderman can enjoin if new mines

b) Permissive waste: Failure by LT to take reasonable steps to preserve land, or pay taxes or interest (not principal)

c) Ameliorative waste: Change that benefits property.
CL: Prohibited
Modern: Allowed if FMV not impaired and either remaindermen consent or substantial, permanent change in neighborhood deprived property of reas. value

Question 6

I. Land interests

2. Future interests

Answer 6

In grantor:
1. Possibility of reverter: A type of right that is automatically in effect when a grantor creates fee simple determinable

2. Right of reentry (power of termination): Must expressly state in conveyance of FSSCS and affirmatively exercised

3. Reversion: Created when grantor transfers less than a fee interest to 3P (“to A for life, then to B for life” → O)

In transferee:
4. Executory interest: Created in favor of 3P, cuts short previous estate before its natural termination
a) Shifting executory interest: Future interest in 3P that divests preceding freehold estate (3P1 → condition → 3P2)
b) Springing executory interest: Follows a gap or cuts short grantor’s estate (O → condition → 3P, 3P → O → 3P)

5. Remainder: Future interested created in 3P (remainderman), to be taken after natural termination of previous estate (“to A for life, then to B”—B has remainder), thus cannot follow a fee simple (but executory interest can cut it short)

**a) Vested remainder: **Created in ascertained person + not subject to a condition precedent (other than termination)
aa) VR subject to open (partial divestment) (class gift): Interest subject to diminution due to new class members (birth of additional persons who will share in the remainder as a class) (“to A for life, then to children of B”), Class closes when at least one member of the class becomes entitled to distribution, per rule of convenience
bb) VR subject to total divestment: Vested interest subject to condition subsequent (“to A for life, then to B and heirs, but if B dies unmarried, then to C and heirs”; B has VR subject to divestment by C’s executory interest), If ambiguous, construe as subject to divestment rather than contingent remainder or executory interest

b) Contingent remainder: Remainder not yet vested in unborn/unknown person, or subject to condition precedent (“To A for life, then to children of B”: Remainder is contingent if B has no children (cf. VR subject to open))

Question 7

I. Land interests

Regeln für future interests:
1. Transferability
2. Shelley’s rule
3. Doctrine of Worthier TItle
4. Rule against perpetuities

Answer 7

1.Transferability: Remainders and executory interests are transferable, descendible, and devisable inter vivos

2. Shelley’s rule: Modernly, if life estate in A with remainder to A’s heirs only, heirs get contingent remainder

3. Doctrine of Worthier Title: Remainder in grantor’s heirs (“to A for life, then O’s heirs”) is invalid and becomes reversion in grantor (O’s heirs get contingent remainder)

4. Rule against perpetuities: An interest is valid only if it must vest or fail within 21 years after the death of any measuring life in being (someone who existed when the deed or will takes effect) at the creation of the interest
- Applies to FSSEI, Executory interest, VR subject to open and contingent remaineder and to rights of first refusal, options to buy, but NOT charity-to-charity gifts

Question 8

I. Land interests

3. Concurrent estates and interests (co-tenancy)

Answer 8

A.
Joint tenancy/joint tenants (Sonderfall tenancy by the entirety)
v.
Tenancy in common

B. Position des Co-tenants
C. Communities

Question 9

I. Land interests

A. JT v. TIC

Answer 9

JT: (wegen gleicher Teilung idR bei Eheleuten etc.)
a) 4 unities of time, title, interest, possession: JTs must take identical interests at same time by same instrument w/ same right to possession
**b) Right of survivorship: **Upon death of a joint tenant, property interest automatically passes to surviving joint tenants (reduces JTs by 1)
c) Ownership interests are equally divided
d) Severance by JT creates TIC for the severed interest. Transferee becomes TIC; others still own one interest as JTs (if 2+ JTs remain), JT may be severed by: inter vivos conveyance/transfer/sale, partition action (to make TIC), mortgage taken on JT interest under title theory jx (no severance under lien theory—majority view), NOT by will

Sonderfall: tenancy by the entirety: (+ 5th unity of marriage): Only between legally married parties at time of grant, Conveyance needs both spouses (ineffective if by one spouse). Severed by death, divorce, mutual agreement

TIC: (insb. wenn co-owners unrelated sind)
a) Unity of possession required only: Each TIC is entitled to possess and control the whole property
b) Presumed form of co-tenancy unless grantor had clear intent/language for rt of survivorship. No such rt for TIC
c) Ownership interests are static and not necessarily equal
d) Termination: Any tenant in common has a right to judicial partition of the property (e.g., if they’re having a disagreement), TIC may be terminated by partition

Question 10

I. Land interests

B. Position des Co-tenants

Answer 10

1. Possession: Right to possess the whole property. If ousted from any portion, can sue for $ and/or ejectment
2. Partition: Right to demand (bring action) to physically divide if feasible, or seek to sell and divide proceeds
3. Profits: Entitled to 3P rent and profit from land proportionally. Profits belong to CT if brought by own efforts
4. Contributions for preservation of property: Entitled to taxes, mortgages, necessary repairs shared proportionally
a) Extraordinary repairs: No duty w/o agreement, but can offset with any rent collected and split rest of rent
b) Improvements: No duty w/o agreement, but difference from increased price created goes to improving CT
5. Waste: CT can bring an action for waste against another CT during life of the tenancy
6. Duty of fair dealing: If a CT gets title or lien in the property, other CTs may join and pay share or forfeit interest

Question 11

I. Land interests

C. Communities

Answer 11

Bsp. property owner (homeowner) associations (HOAs), cooperative apartments (co-ops), condominiums

1. Each homeowner is under overarching covenants & restrictions (incl. fees) that govern whole community
2. HOA may apply to planned unit developments (PUDs) or common interest developments (CIDs)
3. Each shareholder of co-op is tenant of corp. that holds title to land; co-op board decides who can occupy
4. Each condo owner owns fee simple to unit interior; all owners own walls, land, common areas as co-tenants

Question 12

I. Land interest

4. Adverse possession

Answer 12

Def. A trespasser may acquire title to real property by AP. Possessor must show actual entry giving exclusive possession that is open and notorious, hostile, and for the statutory period. Gov’t land not subject to AP

Vorauss.
1. Actual and exclusive: Physically occupied portion, not shared with the true owner or the public at large
(If reasonable portion of parcel actually occupied, under color of title (document purporting to give title but does not actually do so), may be deemed to possess entire parcel as if actually occupied)

2. Open and notorious: Plainly apparent occupation of land so as to put the true owner on notice of use upon inspection

3. Hostile: Contrary to true owner’s intent (regardless of possessor’s intent). Owner’s permission destroys hostility

4. Statutory period: Continuity of stay is a QOF based on circumstances (e.g., leaving for a year breaks continuity)
a) May be tolled if disability (insanity, jail, non-age) already exists at the time of entry until disability is removed
b) May tack periods of AP by privity. Requires intentional transfer. Combine to meet statutory requirement
c) CA 5 years?

5. Rights: Same as true owner (remainder, life estate, etc.) at time of entry. Must quiet title to make marketable

Question 13

I. Land interest

5. Landlord-tenant non-freehold estates: Def., Arten und Übertragbarkeit

Answer 13

Def. A nonfreehold estate is an estate which gives the right to possess the property but not title to hold the property. Nonfreehold estates are often called leaseholds or tenancies, as they are often occupied by tenants under leasing contracts (= Besitz)

Arten:
1. Tenancy for years: For fixed period. Terminates automatically. Created by express agreement (writing > 1 yr)
2. Periodic tenancy: Created by express or implied agreement (LL leases at monthly rent), or operation of law (T stays after lease expires). For fixed period that self-renews until notice equal to length of period, up to 6 months
3. Tenancy at will: No stated duration. Lasts until termination, death, or transfer. Created by express agreement
4. Tenancy at sufferance: T occupies after lease expires. Terminates when LL evicts or holds T to another term

Übertragbarkeit:
a) Assignment: T transfers entire remaining lease. T1 is in privity of estate with LL; covenants can be enforced against assignee (T1). T and LL remain in privity of K. LL can sue T or T1, e.g., for rent for period each owes
b) Sublease: T transfers part of remaining lease. T1 is not in privity of estate with LL; covenants not enforceable against sublessee. LL can sue only T, e.g., for rent (absent agreement). LL can evict T1

aa) Restriction: Lease may prohibit assignment or sublease only if reasonable, but is narrowly construed against LL
bb) Rule in Dumpor’s Case: Once waived (e.g., consent, accepting rent), an anti-assignment covenant is unenforceable for the lease duration (implicit consent to future assignments by T) unless stated otherwise

Question 14

I. Land interest

5. Landlord-tenant non-freehold estates: Rechte und Pflichten

Answer 14

A. Tenant duties
1. Duty to pay rent: Duty to pay rent ends when T surrenders leasehold interest back to LL
DEFENSES:
a) failure to deliver actual possession of premises (LL duty)
b) eviction
c) LL accepts surrender of
premises
d) LL duty to mitigate damages
e) offsets for warranty of habitability (residential only)
f) impossibility
2. Duty to avoid waste: No waste if premises damaged without fault of LL or T

B. Landlord duties
1. Duty to deliver actual possession of premises at beginning of lease term (breach if holdover T not been evicted)
2. Implied covenant of quiet enjoyment and possession of premises Eviction breaches this covenant
a) Actual eviction: T physically excluded from entire premises by LL or holdover T → T may stop rent
b) Constructive eviction: LL renders property uninhabitable + T vacates w/in reasonable time → T may stop rent and terminate lease. 3P interference is constructive eviction if LL knew or should have known about it
c) Partial (actual/constructive) eviction → T may abate rent to reasonable rental value of partial portion
3. Implied warranty of habitability: (residential only) to make reasonably suitable for human dwelling (CL: N/A)
4. LL generally has no express duty to repair or maintain the premises. If LL assumes duty to perform minor repairs (e.g., keep wind- and water-tight) or repair damages caused by T, and is negligent, LL may be liable
SonderP: Latent defects: If LL leases knowing about defects not readily apparent, may be liable in tort to T or guests

Question 15

I. Land interests

5. Landlord-tenant non-freehold estates: Leistungsstörungen und andere Probleme

Answer 15

a) If T materially breaches lease: LL can retake by legal process (sue for rent) or eviction

b) If LL breaches, T may self-help: Terminate lease; abate rent to fair value; repair and offset future rent; seek damages

c) Security deposits for T’s lease: LL must return deposit on termination, unless T’s obligations extend beyond termination. If LL fails to pay back T, LL is in default; T can then recover amount + damages

d) If property condemned by gov’t, award will be allocated b/w LL’s interest in ownership and T’s interest in leasehold

e) Fixtures: Chattel (personal property) affixed to land so that considered part of the realty. T must remove his fixtures by end of lease term (or w/in reasonable time after indefinite tenancy); T must repair any damage from removal
- Factors: Objective intent to affix a chattel can be determined by nature of item, manner of attachment, amount of damage to chattel or real estate, appropriateness with use of property, permanence of T’s interest in real estate. Would a purchaser or mortgagee (who has priority) expect the fixture to be part of the property?
- Trespasser or adverse possessor has no right to take back what he didn’t have right to affix in the first place

Question 16

I. Land interest

6. Zoning

Answer 16

Grds. Gov’t may reasonably control the use of land to protect the health, safety, welfare, or morals of citizens (police power), but this zoning power is limited by (1) due process clause, (2) equal protection clause, and (3) takings clause.

Vorauss. Specifically, zoning ordinances are generally valid as long as (1) reasonably related to public welfare, (2) not too restrictive,
and (3) not discriminatory as to race or a particular parcel.

Ausnahmen/Besonderheiten
1. Variance: Gov’t permission to depart (or vary) from the literal restrictions of a zoning ordinance as an exception to the ordinance,
a) Area variance: An exception that allows a building to exist in dimensions that slightly violate zoning ordinance
b) Use variance: A permit that allows operation of a structure for a purpose not permitted by the ordinance.
Vorauss. Applicant must show (1) undue hardship but for the variance, (2) that the variance would not harm the
community, (3) there is no fault in seeking the request (not a bad actor)

2. Nonconforming use: A preexisting use of the land that now does not conform to ordinance at time of enacting. Such a use already in effect cannot be eliminated, unless it (a) causes harm to the community, or (b) just compensation is paid, aber: Amortization (payments over time) may be provided to landowner to gradually eliminate nonconforming use
3. Special use permit: A permit required even if the zoning is proper for the intended use, e.g., hospitals, funeral homes
4. Exaction: Gov’t may seek payment for permission to build (e.g., seek exaction payment from developer if gov’t has to install new traffic lights around new housing development), only if exaction is reasonably related to impact of dev
5. Takings clause: If zoning reduces property value, gov’t must pay damages to owner.

Question 17

II. Non-possessory interests

Übersicht

Answer 17

1. Eeasement
2. Profit
3. License
4. Real co

Question 18

II. Non-possessory interest

1. Easement: Definition und Arten

Answer 18

Def. A non-possessory property interest that confers a right to use another’s land (quasi sowas wie Grunddienstbarkeit)
Example: owner uses a dirt road over a neighbor’s property to access a lake for years

Arten:
a) Easement appurtenant: Interest in use of land of another (servient estate) that attaches to and passes automatically with the benefited land (dominant estate)
- Burden of easement passes automatically with servient land, unless new owner is bona-fide purchaser w/ no notice of easement (gutgläubiger lastenfreier Erwerb)
- Holder of easement may reasonably inspect, maintain (duty to make repairs), and improve the easement
b) Easement in gross: Holder has right to use servient land without owning any land (does not attach to land)
- Transferable if easement serves economic interest (billboard). Not transferable if for personal enjoyment (swim)

Question 19

II. Non-possessory interest

1. Easement: Voraussetzungen

Answer 19

PINE:
1. Easement by prescription (analogous to adverse possession): Actual (no exclusivity requirement), open and notorious, adverse,
continuous use for statutory period. Public may gain easement in private land via public use

**2. Easement by implication: ** Division of a single tract, where open & continuous use of servient part exists prior to division, which is reasonably necessary to enjoy dominant part, and parties intend to continue use after division

3. Easement by necessity: Division of portion of land (e.g., by selling) + absolute necessity of access created by division (e.g., public road or utility line). Owner of servient portion may choose location of easement

4. Express easement by grant: Agreement in writing signed by grantor. A grant of easement must comply with deed formalities. Presumed to be of perpetual duration unless grant limits the interest

Question 20

II. Non-possessory interest

1. Easement: Beendigung

Answer 20

Achtung: Misuse of easement does not terminate an easement. Remedy for servient owner is injunction against misuse

END CRAMPS:
1. Estoppel: Servient owner justifiably relies on easement owner’s conduct or assurance that easement will no longer be enforced + materially changes position in reliance
2. Necessity ends (for easement by necessity)
3. Destruction of a structure on servient land involuntarily (willful destruction does not extinguish easement)
4. Condemnation (gov’t taking) of the servient land extinguishes all easements
5. Release by written deed of release from easement holder to servient landowner
6. Abandonment: Affirmative act or words showing intent for permanent non-use (building makes use impossible)
7. Merger of the dominant and servient estates when owned by the same person as the same type of estate
8. Prescription (reverse Adverse possession): Servient owner’s continuous interruption of use for the prescriptive period
9. Stated conditions: Original easement grant may specify conditions for terminating the easement

Question 21

II. Non-possessory interest

2. Profit (a pendre)

Answer 21

= Right to remove resources from land of another, created and terminated in same ways as easements

• A profit may be extinguished through surcharge, a misuse or overuse that unduly burdens the servient estate
• CL (MBE): Not transferable. Modern: May be transferrable if commercial, and may be subdivided if quantifiable

Question 22

II. Non-possessory interest

3. License

Answer 22

= Permission to use land (e.g., tickets). Revocable personal right, not transferable, not subject to SOF, can be oral, Estoppel: Irrevocable if, e.g., licensor allowed licensee to invest substantial money or labor in reliance on license

Question 23

II. Non-possessory interest

4. Real covenant

Answer 23

Written promise or contractual limitation to do or not do something on land, real covenant “runs with the land,” meaning a subsequent owner may enforce or be burdened by the covenant

Unterschied zum Easement: covenants sind nur promises, sind deswegen nicht considered “interest”, once in existence allerdings wenig praktische Unterschiede, termination wie bei Easement

Vorauss.:
A. For burden to run with the land and bind successor of burdened estate:
1. writing
2. intent (that the terms be enforceable by successors or assignees, implied when in writing)
3. notice of covenant by BFP of land (actual, inquiry, or constructive/record notice)
4. horizontal privity (Relationship b/w original covenanting pts who shared interest in land (e.g., grantor-grantee)
5. vertical privity (Relationship b/w covenanting pts and their successors in interest. Successor must take covenanting pt’s entire interest for burden to run (not a lesser estate such as life estate from fee simple absolute)
**6. touch & concern ** (Covenant directly reduces use or enjoyment of the servient land, or increases obligations)

B. For benefit to run to successor of benefiting estate and enforce the covenant
1. writing
2. intent
**3. vertical privity ** (benefit runs to assignees of original or any lesser estate; any successor may enforce benefit),
4. touch & concern (promised performance benefits use and enjoyment of benefited land)

Question 24

II. Non-possessory interest

5. Equitable servitude

Answer 24

Type of covenant where successors may be enjoined in equity, sehr ähnlich wie real covenant, termination ebenfalls wie bei easement

Vorauss.
A. For burden to run requires (1) writing, (2) intent, (3) notice, (4) touch & concern
B. For benefit to run requires (1) writing, (2) intent, (3) touch & concern

Besonderheiten:
(1) EXCEPTION to writing – implied reciprocal servitude: Negative restrictions part of a common scheme or plan (typically subdivisions) can be enforced even if not in the deed, if some other deeds have it and there was notice
(2) DEFENSES (ct will not enforce equitable servitude): (a) Changed neighborhood (change is so significant that enforcement would be inequitable; (b) unclean hands (party seeking enforcement is violating similar restriction on own land); (c) acquiescence to violation by benefited party; (d) estoppel (benefited party acted such that reasonable person would believe covenant was abandoned); (e) laches (benefited party didn’t sue within reasonable time)

Question 25

II. Non-possessory interest

Unterschied real covenant v. equitable servitude

Answer 25

Eigentlich das gleiche, nur vor dem Hintergrund zwischen law v. equity zu erklären, one promise may create both!
real covenant: holder seeks money damages
equitable servitude: holder seeks injunction

Question 26

II. Non-possessory interest

6. Lateral support & Subjacent support

Answer 26

A. Lateral support: Absolute right to support from side of land
a) If land in natural state: Adjacent landowner Δ is strictly liable for damage if excavation causes land to subside.
b) If Π improved land (e.g., building): Adjacent Δ is strictly liable for excavation if land would have collapsed in natural state
c) Otherwise, liable for damage if Δ’s excavation was negligent

B. Subjacent support: Absolute right to underground support of natural land and structures pre-existing when subjacent estate was created.
a) Underground occupant of land (e.g., mining co.) is strictly liable for damage to structures.
b) If surface structures built after subjacent structures, subjacent owner is liable only if negligent

Question 27

II. Non-possessory interest

7. Water rights

Answer 27

A. Navigable watercourses (e.g., rivers, lakes, streams) are governed by either of…
1. Riparian doctrine: Owners of land that borders watercourses (riparian owners) have rights to use water for domestic purpose based on…
a) Reasonable use (majority theory): All lands with access to navigable water have reasonable access to make use of the stream as long as use does not unreasonably interfere with rights of other riparian land owners
b) Natural flow (more restrictive minority theory): Riparian owners may be enjoined from use of stream if it substantially or materially reduces water quantity or quality for another owner (e.g., downstream owner)
2. Prior appropriation doctrine: Owner who first makes beneficial use of watercourse has right to continue to use

B. Surface water (passing over land and not a channel, e.g., rainfall) within boundaries may be used for any purpose. Liability for redirecting and changing its natural flow depends on which theory applies:
1. Natural flow theory: Landowner cannot alter the rate or manner of natural drainage of surface waters where such actions would injure others above or below him. Most states allow “reasonable changes”
2. Common enemy theory: Owner may keep water from coming onto land, if no unnecessary dmg to others’ lands
3. Reasonable user theory: Balance utility of use against gravity of harm
4. Impounding water: An owner may capture and use surface water on or off his land, only if w/o malice

Question 28

III. Conveyancing

Übersicht

Answer 28

Allgemeiner Ablauf:
1. LSK contract (to buy/sell land): writing SOF, unless part performance or estoppel, Must be signed by party enforcement is sought against, and describe land and consideration to be paid
2. escrow period (transfer funds)
3. closing (deed transfer)
4. conveyance

Besondere Themen:
1. Doctrine of equitable conversion
2. Marketable title
3. Merger at closing
4. Valid conveyance by deed
5. Recording statutes
6. Mortgage

Question 29

III. Conveyancing

1. Doctrine of equitable conversion

Answer 29

during escrow gap between signing and closing: When LSK is formed…

1. Equitable title passes to buyer: Buyer owns the real property and must pay K price by closing date. Estate of decedent seller or buyer is entitled to specific performance (heirs must give up title or seek conveyance at closing)

2. Legal title remains w/ seller (and heirs) until close: Seller has personal property interest in proceeds of purchase

3. Risk of loss follows equitable title: If property destroyed before closing w/o fault of pts, buyer bears risk. But seller must credit any received insurance proceeds to purchase price. Sp. perf. may be denied to prevent seller enrichment

4. Relation back (a principle that something done today will be treated as if it were done earlier): Buyer’s title relates back to time of deposit in escrow if justice requires (e.g., incompetent seller)

5. Under Uniform Vendor and Purchaser Risk Act (UVPRA, minority view), seller retains risk of loss until transfer of legal title or buyer takes possession

Question 30

III. Conveyance

2. Marketable title

Answer 30

Marketable title is needed by closing date (delivery of deed): All LSKs include an implied covenant of marketability, to convey marketable title that is reasonably free from doubt and defects

a) Defects: chain of title (AP, unvested future interest), encumbrance (mortgages, liens, restrictive covenants, easements (Ausn. Easement that is beneficial, visible, or known to buyer does not impair marketability), significant encroachments), existing zoning violation (not restriction)

b) Failure to produce marketable title is a waivable buyer’s defense against LSK enforcement. Buyer must notify seller and give reasonable time to cure defects. If unmarketable at time of closing, seller is in breach; buyer’s remedies include rescission, damages, specific performance with abatement (reduced purchase price), and quiet title suit
- Seller’s liability on implied covenant ends if buyer fails to notify and closing occurs

c) LSKs have no warranties of quality or fitness (reasonable workmanlike quality), except for sale of new or remodeled houses by a builder. Seller of existing buildings is still liable for known defects

Question 31

III. Conveyance

3. Merger at closing

Answer 31

Grds. LSK merges into deed at closing; once merged, buyer can sue on breach of warranty, not on LSK

a) General warranty deed: Seller warrants that no title defects were created by himself and all prior titleholders. Includes 6 covenants of title (different from real covenants):
A. Present covenants (do not run w/ land, breached at conveyance, only immediate grantee can enforce):
(1) covenant of seisin (promise that he owns title and possesses estate conveyed)
(2) covenant of right to convey (grantor had right as valid owner)
(3) covenant against encumbrances (no easements, covenants, unpaid mortgages or liens)
B. Future covenants (run w/ land, any future grantee can enforce):
(4) covenant for quiet enjoyment (promise that grantee won’t be disturbed by lawful claims of title)
(5) covenant of warranty (promise to defend vs. reasonable claims of title & compensate for any losses from superior claims)
(6) covenant for further assurances (promise to take reasonable steps to perfect defects of title)

b) Special warranty deed: Seller warrants that no title defects have occurred during own ownership

c) Quitclaim deed: Seller makes no warranties and conveys whatever interest he has (does not affect implied covenant)

Question 32

III. Conveyance

4. Valid conveyance by deed

Answer 32

Valid conveyance by deed requires formalities:
1. writing signed by grantor

2. reasonably identifies parties and land
- Grantee name may be blank (deed valid when filled)
- If land description blank, void unless grantee’s authority to fill

3. Valid delivery of proper deed is a question of grantor’s intent to transfer presently
- manual delivery, notarization and recordation, parol evidence (except to show conditional delivery), etc.
- Cancelation or destruction of deed has no effect on title, will not return ownership until new deed delivered
- Relation back: Death or incapacity of grantor of deed in escrow → delivery relates back to time of deposit
- Authorized to execute documents: indiv. or corp. buyer/seller, their representative over 18 with power of attorney

**4. Acceptance: ** presumed if the conveyance is beneficial to grantee.
- A deed to a deceased person is void

Question 33

III. Conveyance

5. Recording statutes (quasi Grundbuch)

Answer 33

a) protect bona-fide purchasers (BFP) from secret interests if a grantor conveyed a property interest more than once: One who paid monetary value in good faith (not a donee) without actual (subjective, from any source), constructive (recorded in chain of title), or inquiry (some fact that would prompt reasonable person to further investigate) notice of prior conveyance (e.g., deed, mortgage, lien) at the time of conveyance

b) Types:
1. race (first to record wins)
2. notice (subsequent BFP wins)
3. race-notice (subsequent BFP to record first wins)

c) Shelter rule: Grantee (and donee) who takes from a BFP will prevail against an interest that the grantor BFP would have prevailed against, even if the grantee had actual notice of an unrecorded conveyance

Question 34

III. Conveyance

Mortgage

Answer 34

Interest designed to secure mortgagor (borrower) performance of obligation of debt repayment

A. Debtor (mortgagor) remedies
1. Equitable right of redemption: Mortgagor may pay off debt or bring loan current at any time prior to foreclosure sale. This right cannot be waived in the mortgage
2. Statutory right of redemption: Some jx allow mortgagor to redeem property w/in a fixed period after foreclosure
3. Exoneration: Original mortgagor can compel mortgagee to proceed first against primarily liable person

B. Creditor (mortgagee) remedies
1. Foreclosure by sale: When a mortgagor defaults on his debt, mortgagee (lender) can foreclose on the mortgage and sell the property to satisfy the debt at least in part
a) Before foreclosure, mortgagee may take possession of property or receive rents, depending on theory of title. Lien theory (majority MBE): Mortgagee only gets security interest on property until foreclosure. Title
theory: Mortgagee gets title until mortgage is satisfied or foreclosed, is entitled to possession of property
b) Priority: Sale proceeds paid in order: (1) expenses of sale, (2) loan principal & interest, (3) junior interests in order of priority (by time of recording, or recording statute), then (4) mortgagor, if any left. Mortgagor or party who has “assumed” mortgage may be personally liable for unpaid amounts (via deficiency judgment)
c) Purchase money mortgage (PMM): Loan enabling acquisition of the property or improvements, always has priority over prior non-PMMs (subsequent mortgages may defeat PMM by recording act)
d) Buyer of foreclosed property takes title as it existed at time of mortgage(s), subject to senior interests (e.g., original mortgage(s)), but foreclosure destroys junior interests. Ex: Homeowner owes debt on PMM, 2nd credit line, lien. 2nd creditor forecloses. Buyer takes subject to PMM. Lien no longer on land; HO still owes)
2. Deficiency judgment: Mortgagee retains personal cause of action against anyone primarily liable (a grantee who “assumed” mortgage and/or an original mortgagor if grantee bought “subject to” or w/o novation—if ambiguous, default is “subject to”) if proceeds from foreclosure sale are insufficient to satisfy the debt
3. Acceleration clause in mortgage or note requires debtor to pay full balance before due date upon specified event