REAL PROPERTY Flashcards
1
Q
What is the common law principle regarding property rights?
A
First in time, first in right.
2
Q
Do you need to record your interest to have title in property?
A
One does not need to record one’s interest to have title. However, recording acts have the power to change the common law result.
3
Q
What can change the common law result regarding property title?
A
Recording acts.
4
Q
What is the effect of a notice act?
A
A subsequent bona fide purchaser (BFP) for value without notice can obtain title that is superior to that of someone who received the property before him.
5
Q
What distinguishes a race-notice act?
A
A subsequent BFP for value without notice who records first can obtain superior title.
6
Q
What key phrases indicate a race-notice act?
A
If you are given a statute to apply, look for the words “without notice” and “first records” to indicate a race-notice act. A notice act will look similar but will not have any language about recording first.
7
Q
What types of notice can be recognized in property transactions?
A
Notice can be (AIR): actual, inquiry, or record notice.
8
Q
Who are considered purchasers in property law?
A
Mortgagees and those who pay consideration are purchasers.
9
Q
Who are not considered purchasers?
A
Donees, heirs, and judgment lien creditors are not purchasers.
10
Q
What is the shelter rule exception?
A
This allows traditional grantees who are not protected by the recording act to prevail by sheltering under the rights of those who conveyed the land to them.
11
Q
What is the consequence of forged deeds or defective documents?
A
Forged deeds and defective documents do not give notice, so BFPs who receive these are not protected by recording acts.
12
Q
What is estoppel by deed?
A
If a grantor transfers property to a grantee (when he does not have title to the property) by warranty deed and then later acquires title, the title will automatically go to the grantee unless the grantor later gave the land to a BFP.
13
Q
What does title insurance protect against?
A
Is the purchaser’s protection against unknown defects of record in the chain of title. It is not required unless contractually agreed upon.
14
Q
What are the three essential requirements for a contract of sale?
A
- Be in writing
- Be signed by the party to be charged
- Contain essential terms (identity of the parties, price, and a description of land)
15
Q
What are the steps for the formation of a real estate contract?
A
- First step: the contract (K) of sale is signed.
- The K must satisfy or exclude the warranty of marketable title.
- Once the K is signed, legal and equitable title split.
- Closing occurs.
- Once delivery occurs, the buyer can only sue on the deed!
16
Q
What is the part performance exception in contract law?
A
A part performance exception exists if the claimant does two of the following three: (1) takes possession, (2) makes payment in full of a substantial part of the price, or (3) substantially improves the land.
17
Q
Who can negotiate contracts in real estate?
A
Persons such as brokers, real-estate agents, or attorneys can negotiate contracts so long as they are in an agency relationship and have legal capacity to do so.
18
Q
Under what conditions does a broker obtain a commission?
A
If a real-estate broker and seller enter into an exclusive agency agreement, the broker obtains a commission only if his agent is the procuring cause of the sale.
19
Q
In an exclusive right to sell agreement, when does the broker get paid?
A
If the parties enter into an exclusive right to sell agreement, then the broker is paid no matter who finds the buyer—even if it is the seller herself.
20
Q
When is a seller required to disclose defects?
A
The seller of the home does not have to disclose defects unless they are not obvious, he knows or should know of them, and the defect is serious.
However, the seller cannot actively conceal defects.
21
Q
What is the implied warranty for new homes sold by a builder-seller?
A
For new homes sold by a builder-seller, there is an implied warranty of fitness.
22
Q
What is marketable title?
A
Marketable title is one “reasonably free from defects.” It must be given on the day of closing (but one can pay off a mortgage with the proceeds of a sale).
23
Q
What are the factors that make title unmarketable? (DEVA)
A
- Defect in the chain of title
- Encumbrance (mortgage or easement not mentioned in the contract)
- Violation of a zoning ordinance
- Title acquired by adverse possession
Violation of housing or building code doesn’t render title unmarketable.
24
Q
What happens to equitable title once a contract is signed?
A
Equitable title passes to the buyer. The buyer’s interest is in the real property, so if something happens to the real property after the contract is signed (e.g., a tornado destroys the property), the risk of loss remains on the buyer.
25
Who retains legal title after a contract is signed?
Legal title remains with the seller. The seller’s interest truly is the money (personal property) that the seller will get from the sale.
26
What must occur for a deed to be valid in closing?
The deed must be executed and delivered!
27
What does execution of a deed mean?
**Execution** means that the deed identifies the parties, has words of grant, is signed by the seller, and describes the land.
28
What is the delivery of a deed?
**Delivery** means intent to pass title presently.
29
What is presumed delivery of a deed?
Delivery is presumed to have occurred if the deed is in the grantee’s possession or if it is recorded.
30
When must the marketable title be given?
Marketable title must be given on the closing date (not before).
31
What happens after delivery of the deed?
Merger occurs, so now the buyer can ONLY SUE on the deed! He can no longer sue on the contract.
32
What are the six covenants included in a warranty deed?
P**R**E**S**E**N**T covenants of **r**ight to convey, **s**eisin, **n**o encumbrances, and future (**FEW**) covenants of **f**urther assurances, quiet **e**njoyment, and **w**arranty.
33
What is the difference between a quitclaim deed and a warranty deed?
A **quitclaim deed** gives no warranties; a **warranty deed** provides six covenants.
34
What does a mortgage indicates?
A mortgage indicates the existence of a debt.
35
What is the role of the mortgagor?
The mortgagor is the debtor.
you mix up these terms.
## Footnote
Remember “It’s better to be the mortgagee” if you mix up these terms.
36
Who is typically the mortgagee?
The mortgagee usually is a bank who lends money.
## Footnote
Remember “It’s better to be the mortgagee” if you mix up these terms.
37
What does 'subject to' mean in the context of transfer by the mortgagor?
If the mortgagor gives away her interest **“subject to”** the mortgage, the **original mortgagor** is liable on the mortgage.
38
What happens if the new transferee assumes the mortgage?
If the new transferee **“assumes”** the interest, both the **original mortgagor** and the **new transferee** are liable.
| Tip: remember the new party “assumes” liability as well.
39
What is a novation in mortgage context?
If there is a **novation**, then only the **new transferee** is liable.
40
What are due-on-sale clauses?
Due-on-sale clauses state that if the mortgagor transfers the interest in land without the mortgagee’s consent, the full balance under the
loan is due immediately.
41
What theory do most states follow regarding mortgages?
A majority of states follow the **lien theory** where the mortgagee only has a lien on the land.
Some states follow the **title theory** where title is transferred to the bank right away upon
loaning the money.
42
When the bank can begin foreclosure?
A bank can begin foreclosure proceedings upon default.
43
What is the equity right of redemption?
This allows a debtor to redeem the property by paying everything due under the mortgage agreement prior to foreclosure. This right cannot be waived in the mortgage or deed of trust but may be waived later for consideration.
44
What is an acceleration clause?
This states the entire balance is due if a payment is missed, and it is enforceable.
45
What are other ways to discharge mortgage?
Full payment or the mortgagor can give a deed to the mortgagee in lieu of foreclosure.
46
Who gets paid first in a foreclosure proceeding?
The party that forecloses and anyone“junior” to it is paid off in order of priority. All junior parties must be parties to the proceeding.
47
What is a purchase money mortgage (PMM)?
When the money loaned is used to purchase the property.
| Purchase money mortgage (PMM) is senior to a non-PMM.
48
What happens if a mortgagee voluntarily increases the amount due under a mortgage?
The increase in debt becomes junior to existing mortgages.
| This does not apply if the increase was a mandatory future advance.
49
What is the statutory right of redemption?
| Redemption after foreclosure
This allows the debtor to get property back after the foreclosure sale by paying the full purchase price within a period of time (e.g., six months).
50
What are other types of security devices?
Other types of security devices include an **absolute deed as security** (the parties don’t call it a “security interest” but one essentially gives a deed as security), a **deed of trust** (similar to a mortgage, but a trustee proceeds with foreclosure), and an **installment land contract** (one pays off land in a “lease” and gets title to the land once all payments are made).
51
What are the requirements for adverse possession? (CHANGE)
Possession must be **Continuous, Hostile,
Actual**, open and **Notorious**, it must **Go on for statutory period** (20 years), and be **Exclusive**.
Tacking is permitted.
52
What are the disabilities a true owner can have? (JIM)
**J**ail, **i**nsane, **m**inor
53
What happens if the true owner has a disability at the time the adverse possessor enters?
The statutory time period is tolled until the disability is lifted.
54
What happens if property is specifically devised but the testator does not own it when he dies?
The gift **adeems** (fails).
## Footnote
There are exceptions (e.g., if insurance proceeds were paid after death, the beneficiary will take those).
55
What happens if the beneficiary dies before the testator?
The gift will lapse (unless the jurisdiction has an antilapse statute that saves the gift.)
56
What is exoneration in the context of real estate?
At common law, if a testator makes a specific devise of real estate that is subject to a lien, the devisee is able to have the lien exonerated and paid off by the testator’s residuary estate.
## Footnote
Most states have abolished this doctrine.
57
What does JT stand for in property law and what right do they have?
Joint Tenancy. Joint tenants have a right of survivorship.
58
What are the four requirements for the creation of Joint Tenancy?
* **T**ime
* **T**itle
* **I**nterest
* **P**ossession
| TTIP
## Footnote
Plus express language needs to be used (e.g., “as joint tenants with a right of survivorship”).
59
What are the way in which a joint tenancy can be destroid?
It can be partitioned. Or, it can be severed by (GSAM)
60
How can Joint Tenancy be severed?
**Giving** it away, **Signing** a contract of sale, an **Actual** judicial sale by a creditor, or granting a **Mortgage** in a title theory state.
| (GSAM)
## Footnote
One cannot give a JT interest away by will.
61
What is the characteristic of Tenancy in Common?
| **Creation**
Only the right to possess the whole is needed. There is no survivorship right.
62
What is the characteristic of Tenancy by the Entirety?
| **Creation**
Similar to a JT but the parties must
be **married**.
63
How can a tenancy by the entirety be terminated?
It can only terminate by **death**, **divorce**, **mutual agreement**, or a **mutual creditor** of both executing on its interest.
64
How possesion works in relations among cotenants?
Each tenant may possess the whole.
65
In relations among cotenants, what rights do they have regarding profits?
In general, a cotenant does not have to share profits that he makes through his own efforts from the land. Exceptions: if there is **ouster**, depletion of **natural resources** in a way that decreases the value of the land, or lease to a third party.
## Footnote
Exceptions include ouster, depletion of natural resources, or leasing to a third party.
66
For what is there right to contribution in relations among cotenants?
For taxes, mortgage payments, and necessary repairs.
67
What are the present interests?
* Fee simple absolute
* Life estate
* Fee simple determinable (FSD)
* Fee simple subject to condition subsequent (FSSCS)
* Fee simple subject to executory interest (FSSEI)
68
What is a Fee Simple Absolute?
“To A” or “To A and her heirs.” “A” has the estate forever. A total restraint on the transfer of ownership is not permitted, but limited conditions and rights of first refusal are permitted.
69
What is a life estate?
Ex.: “To A for life.”
70
What are the obligations of a life tenant?
* Life tenants must pay taxes, pay interest on the mortgage, and make repairs. Life tenants cannot commit waste.
* Restrictions on alienation (transfer) are permitted.
71
What is a Fee Simple Determinable (FSD)?
Ex.: “To A for so long as A is in college.” A has a FSD. O has a possibility of reverter.
72
What are the characteristics of the Fee simple determinable (FSD)?
* Measured by time
* Magic words of creation (**SUWD**): **s**o long as, **u**ntil, **w**hile, and **d**uring
* This estate ends automatically when the time period ends.
73
What is Fee simple subject to condition subsequent (FSSCS)?
Ex.: “To A but if A smokes, O reserves a right of entry.” A has a FSSCS. O has a right of entry.
## Footnote
Tip: if you see FSD and FSSCS language, there is a preference for a court to find a FSSCS.
74
What are the characteristics of Fee Simple Subject to Condition Subsequent (FSSCS)?
* Conditional; measured by the occurrence of an event
* Magic words of creation: a right of entry must be reserved for the owner (O) (usually you’ll see
“conditional” words too like “but, if, upon condition…”).
* This estate ends when O enters.
75
What is Fee simple subject to executory interest (FSSEI)?
Ex.: “To A but if A smokes, to B.” A has a FSSEI and B has the executory interest.
## Footnote
You will see durational or conditional language, but it will go to party B instead of back to O.
76
In future interests, what rights are held by grantor?
Right of entry, possibility of reverter, and reversion.
77
In future interests, what rights are held by grantee?
Remainder (usually follows a life estate) and Executory interest (EI)
78
What are the characteristics of the remainder held by grantee in future interest?
* A remainder is **vested** when the remainderman is **ascertained** and it is **certain** to become possessory.
* It is contingent when the remainderman is (**UUU**) **Unborn, Unascertained**, or if it is **Uncertain** to vest due to a condition.
79
What are the executory interests?
* Shifting: when B divests a third party of his interest.
* Springing: when B divests O of his interest.
80
What are Class Gifts in estate planning?
Class gifts are gifts to unnamed persons. Unless otherwise stated, the class closes when any member of the class can call for a distribution.
81
What is the Cy Pres doctrine?
When a gift to a charity fails, the court may reform it to match the donor’s intention.
## Footnote
Three considerations must be met.
82
What are the three considerations for the cy pres doctrine to take place?
(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; and (3) the settlor must have manifested a general intent to devote the property to a charitable purpose.
83
What is the Rule 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.
84
What states the Uniform Statutory Rule?
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.
85
What does the Fair Housing Act prohibit?
Bars discrimination based on race, ethnicity, religion, national origin, gender, and disability in the sale or rental of a dwelling.
86
What is the general rule regarding Conflict of Laws?
The law of the situs (“the place where the property is located”) controls.
87
Which factors make an item a fixture?
Look at the intent to make the item a fixture and the following **(DAMN)** factors:
**Damage** removal would cause, **Adaptation** of item to realty, the **Manner** in which it is attached, and the **Nature** of the item. Trade fixtures are chattels that are used in business. They are *not* considered fixtures.
88
What is a variance in zoning regulations?
A variance from an ordinance may be granted if the property owner shows he has a unique hardship.
89
How preexisting uses work in zoning ordinances?
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.
90
What are and how are created property associations?
Owners of lots agree to contribute to the support of common property. In order to create it, there must be a master deed and privity between the original purchasers and the
developer. Restrictions generally carry a presumption of reasonableness and usually are enforced.
91
What are the types of tenancies?
* Term for years
* Periodic tenancy
* Tenancy at will
* Holdover tenancy
92
What is term for years?
| In tenancy
A tenancy for a specific period of time (not necessarily “years”).
93
What is periodic tenancy?
A tenancy without a specific end date.
94
What is tenancy at will?
A tenancy that either party may terminate without notice.
95
What is holdover tenancy?
A tenancy that occurs when a tenant stays past the end date of his lease.
96
What is the implied warranty of habitability?
There is an implied warranty of habitability for **residential** property where the landlord must keep property in **habitable** condition.
## Footnote
A landlord can constructively evict a tenant if there is
something that renders the premises unusable, the landlord fails to act after notice, and the tenant leaves. Tip: the tenant must actually leave to win an eviction action.
97
What are the duties of the tenant?
The tenant must pay rent and not commit waste. The landlord can require a security deposit.
98
What must a landlord do to mitigate damages?
| After termination
Duty to mitigate: The landlord must try to mitigate damages by re-renting the land.
| This duty did not exist at common law.
99
What is the difference between assignment and subletting?
**Assignment:** 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.
**Sublease:** When the tenant rents his land to a sublessee but has some interest left, the sublessor is liable on the lease under privity of contract and estate. The sublessee is not liable to the landlord on the lease (but may be sued by the sublessor).
## Footnote
Tip: nonassignment and nonsublease clauses are enforceable, but they are strictly construed and courts
will try to find a waiver.
100
Explain the two ways in which the landlord can terminate the tenancy.
(1) **Eviction**: if the tenant does not pay rent, the landlord can evict the tenant from the property.
(2) **Surrender**: If the tenant does not pay rent but has abandoned the property, the landlord can treat it as a surrender. This excuses future rent obligations.
101
What is needed to enforce a real covenant?
(**PINT**): Horizontal and vertical **Privity** (only vertical is needed for the benefit to run), **Intent** for the covenant to run, **Notice** of the covenant, and it must **Touch** and concern the land (make it more valuable). The remedy is money damages.
102
What is needed for equitable services?
Everything that real covenants need except for privity.
103
What is the remedy for equitable servitudes?
The remedy is an injunction. Equitable defenses are available (e.g., laches, unclean
hands).
104
What are the four methods of creating an easement?
(1) **Express**: a signed writing is required.
(2) **Implied by prior use**: common apparent use by a landowner who subdivides 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.
105
What happens to the dominant estate in an easement?
The dominant estate passes automatically.
106
What happens to the servient estate in an easement?
The servient estate passes only if the new owner has notice of the easement.
107
What is the statutory period during which an easement can be used without permission from the owner?
The statutory period of time
## Footnote
This period varies by jurisdiction.
108
How does the dominant estate pass in relation to an easement?
Automatically
## Footnote
The servient estate requires notice of the easement for transfer.
109
What type of development is permitted under the use of an easement?
Reasonable development is permitted but the easement must be used for its original purpose.
110
Name the ways an easement can terminate.
* **Merger** (if one owns the dominant and servient estate, the easement ends)
* **Release** (a signed writing)
* **Abandonment** (act + intent to abandon; **tip: mere nonuse is not enough to abandon an easement**)
* **Estoppel** (a statement by the dominant estate holder and reliance by the servient estate holder)
* **Prescription** (the easement is blocked for the statutory period)
* **End of necessity** (this applies only for an easement by necessity)
111
In property law, how is a license created and revocated?
A license can be created orally. It is revocable at will unless coupled with an interest or reliance.
112
What is a profit in property law?
A profit is the right to go onto land and take a resource away (e.g., wood, coal, etc.).
113
What is a concurrent estate?
An estate owned by multiple parties
## Footnote
Includes forms like joint tenancy and tenancy in common.
114
What rules affect gifts related to landlord and tenant relationships?
Fixtures, zoning, and associations
## Footnote
These rules govern the rights and responsibilities of landlords and tenants.
