Real Property Flashcards
Types of defeasible fees
- Fee simple determinable
- Fee simple subject to condition subsequent
- Fee simple subject to executory interest
Fee simple determinable
limited by specific durational language (i.e., “so long as,” “during,” “while,” “until”).
Future interest: possibility of reverter (automatic)
Fee simple subject to condition subsequent
Limited by specific conditional language (i.e., provided that, on condition that, but if).
Future interest: right of entry/re-entry/power of termination (must be exercised) (devisable and descendible BUT no inter vivos transfer).
Fee simple subject to executory interest
Terminates on occurrence of specified condition and title goes to third party.
Future interest: executory interest (automatic).
Life estate
limited in duration by a life. transferable during that time. not devisable or descendible.
future interest: reversion.
Life tenant obligations
To the extent the property can produce income, must pay all ordinary taxes on the land and interest on the mortgage. if not income, responsible for taxes and mortgage interest to the extent of the reasonable rental value of the land.
no obligation to insure the land for the benefit of the remainderman, no responsibility for damage caused by third party tortfeasor.ojjj
Types of waste
Affirmative waste: over conduct causing decrease in value. (vested remainderman can sue for damages, vested or contingent remainderman can bring injunction). (exception: timber and minerals, necessary to maintain property, in effect when tenancy began).
Permissive waste: neglect to keep up or reasonably protect property. tenant only required to spend amount of income from property.
Ameliorative waste: majority rule allows alteration of structures when necessary for reasonable use.
Types of concurrent estates
Tenancy in common
Joint tenancy
Tenancy by the entirety
Tenancy in common
unity of possession.
no right of survivorship.
transferrable, BUT right to share in rental income.
most states presume this as default.
Joint tenancy
Four unities: Possession, Interest, Time, Title.
Conveyance severs the joint tenancy as regards the transferor.
Joint tenancy and mortgages
Lien theory (majority): mortgage is only a lien and does not sever joint tenancy absent default and foreclosure sale. Title theory (minority): mortgage severs title, converted to tenancy in common.
Joint tenancy and leases
Rule 1: lease destroys unity of interest and severs JT.
rule 2: lease temporarily suspends joint tenancy for life of lease.
Joint tenancy and killing
Rule 1: killer tenant holds deceased tenant’s interest in constructive trust for descendants.
rule 2: felonious killing severs joint tenancy.
Tenancy by the entirety
Five unities: Possession, Interest, Time, Title, Person.
Neither party can alienate or encumber without other’s consent.
Rights of Co-tenants
Not required to share profits from use of property.
Ouster: if denied access, co-tenant can sue for entry and damages for denied use.
Resources: co-tenants entitled to natural resources in proportion to share.
Third-party rents: must share rents with co-tenants based on ownership interest, but can first deduct operating expenses.
Expenses: co-tenant can collect contributions if paying more than his share of necessary or beneficially spent operating expenses, BUT if in sole possession, only the amount exceeding income from use.
Repairs and improvements: no right to reimbursement. BUT, contributions for necessary repairs in action for accounting or partition (minority: separate cause of action for contribution).
Duties of co-tenants
No fiduciary duties UNLESS unity of title.
Duty of fair dealing.
Partition
All co-tenants EXCEPT tenants by entirety have right to partition.
If division not practicable or fair, property may be sold at public auction and proceeds distributed.
Agreements not to seek partition are enforceable, provided they are clear and with a reasonable time limitation.
Types of future interests
Reversion
Possibility of Reverter
Right of reentry
Remainder
Survivorship contingency for remainders
Majority: contingency applies at the termination of the interest preceding distribution of the remainder.
Minority: survive only the testator, not the life tenant.
Vested remainder
No condition precedent, ascertainable grantee.
Fully transferable inter vivos, devisable, and descendible.
Vested subject to open: class of grantees, some member vested at conveyance. when class closes, those in gestation are at closing are included. (rule of convenience: class closes when any member becomes entitled to immediate possession). Vested subject to complete: occurrence of condition subsequent completely divests remainder interest.
Contingent remainder
grantee is unascertainable OR express condition precedent.
Destroyed if not vested by end of previous estate; grantor’s reversion becomes possessory and contingent remainderman gets a springing executory interest.
Rule in Shelley’s case
If grantor tries to create contingent remainder in grantee’s heirs, this is converted into two successive freehold estates, which merge into fee simple absolute.
Abolished in most jurisdictions.
Doctrine of worthier title
No remainders in grantor’s heirs, instead reversion to grantor.
Executory interests
Transferable, subject to RAP.
Shifting: cuts short prior estate created in same conveyance.
Springing: divests the grantor or fills gap in possession when estate reverts to grantor.
Transferability of future interests
Vested remainders: transferable inter vivos, devisable, descendible.
Executory interest/contingent remainders: not transferable under common law, but now transferable, devisable and descnedible in most jurisdictions.
Most states permit creditors to reach transferable future interests.
Interests subject to RAP
Contingent remainders, vested remainders subject to open, executory interests, powers of appointment, rights of first refusal, options.
NOT reversion, possibility of reverter, right of reentry.
Trust interests are subject.
Rule against Perpetuities
Life in being + 21 years.
If no measuring life, 21 years from when future interest is created.
“Vest or fail”
Only the offending interest fails, UNLESS it would violate grantor’s intent, in which case entire transfer is voided.
RAP and classes
If RAP voids transfer to one class member, then transfer to all class member is also voided.
Exceptions:
1) specific $ amount to each class member;
2) transfers to a subclass that vest at a specific time.
Rule of Convenience
Class closes when one member becomes entitled to immediate possession.
Exceptions to RAP
charity-to-charity
current tenant’s option to purchase property.
Uniform Statutory Rule Against Perpetuities
“wait and see”: if an interest does in fact vest within 90 years of creation, it’s okay.
NY: fee simple determinable AKA
fee on limitation
NY: possibility of reverter
may be automatic or conditional based upon the language
NY: fee simple subject to condition subsequent AKA
fee on condition
NY: ameliorative waste
tenant for life or years may alter despite objection if:
(1) no violation of agreement
(2) at least 5 years tenancy
(3) 30 days notice to future interest holder
(4) prudent owner standard
(5) no reduction in market value
future interest holder may require tenant to post security.
NY: statutory redemption
NO right to redemption after foreclosure, BUT can discharge lien prior to auction.
NY: right of survivorship
spouse can separately mortgage his interest without affecting wife’s interest
NY: ouster
10 year adverse possession clock begins after ouster OR after 10 years of exclusive possession.
NY: improvements and repairs
co-tentant entitled to reimbursement for reasonable repairs, BUT NOT for repairs to serve own purposes.
NY: preserving interests
to preserve right of entry or reverter, must file declaration of intent w/in 27 to 30 years, then again between 9-10 years after that, then again every 10 years.
NY: vested remainders subject to complete defeasance AKA
total divestment
remainder vested subject to complete defeasement
NY: remainder subject to condition precedent
includes both contingent remainders and executory interests.
NY: rule in shelley’s case and doctrine of worthier title
both abolished
NY: options to renew leases
RAP does not apply
NY: RAP
no “wait and see” or “cy pres” doctrine, EXCEPT for charitable trust and powers of appointment.
fertile octegenarian = 55
NY: written leases
must be clear and coherent, IF NOT then still valid but tenant gets damages plus $50 fine
NY: periodic tenancy
any holdover tenancy more than one month creates month-to-month periodic tenancy if:
(1) tenant continues to pay rent
(2) landlord accepts payment
NY: terminating tenancy at will or tenancy at sufferance
landlord must give 30 days notice
NY: destruction of leased premises
lease is terminated and tenant excused from paying rent.
NY: landlord self-help
treble damages to wrongfully evicted tenant.
commercial leases can have reentry provisions. landlord must first demand rent.
NY: duty to mitigate
landlord need NOT mitigate damages
NY: new tenants
if there is holdover tenant, new tenant can sue to evict or avoid the lease
NY: holdover tenant
must pay double rent if holdover after landlord demand to vacate or giving notice to vacate
NY: tenants with children
cannot refuse to rent to families with children, EXCEPT for old folks homes.
NY: duty to keep property in good repair
landlord duty to maintain multi-family dwellings.
tenant liable for damage due to negligence or negligence of controlled third party.
NY: assignment vs. sublease
NO assigments without landlord written consent. landlord can refuse without cause.
sublease also requires landlord consent, BUT landlord cannot unreasonably refuse. failure to respond = consent.
NY: adverse possession
adverse possessor must have reasonable belief that she had a right to the land
NY: possibility of reverter as defect
possibility of reverter renders title umarketable.
NY: remedies for unmarketable title
(1) recovery or purchase price
(2) expenses of title examination
(3) nominal damages
NY: foreclosure sale
NOT subject to buyer beware principle, BUT NOT excused from sale for defects in title that were noticed
NY: Property Condition Disclosure Act
sellers of 1-4 family residential dwellings must make complete statutory disclosure before K is signed
NY: liquidated damages
seller can retain 10% down payment
NY: Uniform Vendor and Purchase Act
risk of loss stays with seller unless buyer takes possession or title is transferred
NY: lien theory
mortgage does not sever joint tenancy UNLESS default and foreclosure
NY: foreclosure process
mortagee can either sue first or just go directly to foreclosure, BUT cannot first foreclose then sue.
NO non-judicial foreclosure.
Subprime Lending Reform Bill: pre-foreclosure notice 90 days, mandatory settlement conference within 60 days
NY: usury
usury is a defense for principal and interest, BUT NOT for corporate debtors UNLESS principal asset is 1-2 family dwelling OR corporation are organized 6 months prior to mortgage
affirmative relief of discharge is personal, not transferrable to other interest holders.
NY: subsequent purchases
race-notice standard
NY: judgment lien
lien on real property effective for 10 years
money judgment effective for 20 years
NY: special warranty deed AKA
bargain and sale deed
NY: implied reciprocal servitudes
no record notice of prior deeds transferred to others by a common grantor.
Consequences of invalidation of defeasible fee under RAP
If condition precedent, grantee gets possibility of reverter.
If condition precedent, grantee gets property in fee simple absolute.
SOF for tenancy
If greater than 1 year and not in writing, tenancy is voidable until tenant takes possession and landlord accepts rent.
Notice to terminate a periodic tenancy
Before end of period, applicable to next period. Notice effective at END of period in which it is made.
*Termination of year-to-year requires 6 month notice.
Tenancy at will - right to terminate
If only landlord given right to terminate, tenant impliedly has it also.
If only tenant given right, landlord does NOT get same by implication.
Tenant duties
(1) duty to pay rent
EXCEPTIONS: (i) premises destroyed not by tenant’s fault; (ii) material breach by landlord, i.e. implied warranty of quiet enjoyment or habitability.
(2) duty to avoid waste
- must repair to the extent necessary to maintain pre-rental condition, EXCEPT for normal wear and tear.
(3) contractual duty to repair
- for commercial lease: if tenant has duty to repair, then liable for all damage not caused by landlord.
- for residential lease: such provisions are generally void.
Landlord remedies for tenant breach
failure to pay rent: damages or eviction.
abandonment: retake premises. majority rule requires mitigation via re-rental. BUT NO damages for anticipatory breach.
Holdover tenant: can impose higher rent if notice before expiration of lease term.
Duties of landlord
(1) give possession, including free of other tenant.
(2) duty to repair
(3) implied warranty of habitability
(4) covenant of quiet enjoyment
- not liable for other tenants, but has duty to control nuisance-like behavior and control common areas.
Partial eviction
If evicted by landlord: tenant has no duty to pay rent.
If by third party: tenant must pay reasonable rental value for portion of premises occupied.
tenant NOT excused from obligations if evicted by adverse possession or trespass.
constructive eviction
tenant MUST give notice and vacate within a reasonable amount of time.
Tort liablities of tenants
Tenant owes duty of care to invitees, licensees, and foreseeable trespassers.
does NOT apply to snow and ice removal UNLESS failure caused condition to worsen.
Tort liabilities of landlord
responsible for injuries occuring:
(1) in common and public areas;
(2) as a result of a hidden defect or faulty repair.
Modern approach:
(1) existing defects
(2) failure to make repairs required by housing code
(3) criminal activity by third persons that injures tenants.
Sublessee rights and liabilities
Liable to sublessor ONLY, UNLESS he expressly assumes covenants.
CANNOT enforce covenants made by the landlord.
Landlord assignments
Landlords can transfer title at will, and tenants must accept new landlord.
Landlord permission for assignment or subletting
Where K requires permission and specifies no standard, default term is that landlord must have “commercially reasonable” grounds to deny.
If landlord knows of assignment or sublease and does not object, he is deemed to have consented.
Fair Housing Act
Applies to multi-family dwellings.
Prohibits discrimination based on race, color, religion, national origin, sex, disability, and familial status.
HUD enforces the statute. Punitive damages are available in federal court.
Adverse possession
(1) continuous
- seasonal is OK if consistent with type of property.
- tacking allowed through any non-hostile privity.
- tacking not allowed for ouster.
- will not run against owner afflicted by disability at inception of possession.
(2) actual, open, and notorious
(3) hostile
(4) exclusive
(5) scope
- constructive adverse possession: enter under color of title then adversely possess the rest of the property.
- includes rights to subsurface.
- acquires estate of possessor, subject to future interests.
SOF requirements
(1) in writing
(2) signed by the party
(3) contain all essential terms
EXCEPTIONS:
(1) Part performance: part payment, possession, substantial improvement.
(2) detrimental reliance
(3) admission
MAY rescind orally.
Marketable title
Free from “unreasonable risk of litigation”
Required to deliver at closing, or when delivery occurs of installment K.
NOT enforceable after merger into deed.
Remedies: rescind, sue for breach, or sue for specific performance with abatement.
“Time is of the essence”
(1) stipulated in K
(2) inferrable from circumstances
(3) one party notifies the other
implied warranty of fitness and suitability (new homes)
Covers latent construction defects that do not manifest until after sale.
Majority rule: only original purchaser can sue.
Minority rule: subsequent purchasers can also recover.
Claim must be brought within reasonable time of discovery.
Waivable by specific language, BUT NOT by general “as is” disclaimer.
Seller duty to disclose
Duty to disclose all known material physical defects to the buyer, that buyer would not discover by inspection.
material = affects value, health or safety, or desirability.
general disclaimers not sufficient to discharge liability.
Merger
K terms merge into deed, so terms in K but not in deed CANNOT be enforced after closing.
Remedies for breach
Damages: K price - market price at closing date.
-if seller breaches in good faith, buyer can only recover costs.
Specific performance: unique property. both buyer and seller can get it.
Equitable conversion
Equitable title passes to buyer upon execution of K. Seller holds property in trust for buyer.
Actions against seller: claims against seller after the sales K attach to the proceeds of the sale, not the property itself.
Risk of loss is on buyer, UNLESS seller intentionally or negligently causes damage.
Uniform Vendor and Purchaser Act
Applies only when material party of property is destroyed.
Risk of loss stays with seller until buyer takes possession.
Effects of buyer or seller death
Seller’s interest = personal property, buyer’s interest = real property.
Equity of redemption
Courts reject efforts to “clog” the equity of redemption.
BUT mortgagor may waive his right to redeem after the mortgage is executed for consideration.
Alternatives to mortgages
(1) deed of trust
(2) installment land K
(3) sale-leaseback
(4) absolute deed
Effect of sale my mortgagor
If buyer assumes mortgage, bank can sue both original debtor and buyer. BUT, original debtor is relieved if there is any modification of the mortgage after the debt is assumed.
if buyer takes “subject to” mortgage, he is NOT personally liable in case of default.
Due-on-sale clause: can accelerate mortgage if sold.
Effects of transfer by bank
Note can be transferred without mortgage, but usually mortgage CANNOT be transferred without note.
Possession pre-foreclosure
Lien theory: mortgagee may NOT take possession.
Title theory: bank can take possession, BUT then assumes duty to take care of the property.
Mortgagor has duty not to commit waste.
Foreclosure
Purchaser take property free and clear of any interests created after the interest being foreclosed.
Junior interests must be given notice because they will be destroyed. if not given notice, the interest survives.
Homeowner may claim against excess proceeds after satisfaction of debt and all costs.
Priority of payments in foreclosure
1) costs of sale
2) balance and interest on mortgage
3) junior interest holders
4) residue to homeowner
Special priority rules for mortgages
1) Purchase money mortgages have priority over all non-PMM, even those recorded earlier. Seller PMM has priority over third party PMM.
(2) senior interest not given priority over subsequent junior interest for value without notice.
(3) subordination agreements between mortagees.
(4) when senior mortgagor is modified, it loses priority only in respect of the modification.
Special defenses to mortgage
1) usury: only interest, not principal, is forfeited.
2) incompetent mortagor –> invalid.
Right of first refusal / option K
Subject to SOF.
Subject to rule of reasonableness: balance utility against likely harm.
NOT subject to RAP.
“ready, willing, and able buyer”
broker is entitled to commission when K is executed OR when K conditions precedent are satisfied.
Delivery of deed
Need intent to transfer + acceptance.
If grantor retains deed, intent to transfer provable by parol evidence.
If transferred to grantee, presumption is that grantor intended transfer, parol evidence admissible to disprove. BUT parol evidence NOT admissible to prove condition of transfer.
Transfer via third party:
1) grantors agent: even if grantor delivered deed to agent with instructions to deliver to grantee, presumption is that there was no intent to transfer until the agent actually delivers.
2) grantee’s agent: same as delivering to grantee.
3) independent agent-gift: as long as grantor retains right to recover deed, no valid delivery exists. must evidence intent to make present gift. conditions may be interpreted as giving a future interest. condition of grantor’s death not valid because it conflicts with testamentary laws.
4) independent agent-contract: grantor cannot require return or deed from escrow agent unless condition fails.
Grantee is presumed to have accepted any beneficial conveyance.
Valid deed
- consideration not required
1) parties: grantor and grantee. only grantor needs to sign.
2) words of transfer “do grant and convey”
3) description of property: extrinsic evidence admissible to clarify.
Records act - “purchaser for value”
1) mortagees have paid value when mortgage is given simultaneously with loan.
2) judgment liens: only protected against claim arising after the judgment is recorded.
3) grantee. heir, devisees are not protected against prior claims.
4) shelter rule: if grantor is protected by recording act, so is grantee, BUT if grantor is not purchaser for value, cannot swap property to become pfv.
Notice under recording statutes
1) actual notice
2) inquiry notice: possession, chain of title
- but quitclaim deed is not in itself notice.
3) constructive notice of all properly recorded prior conveyances.
Chain of title problems under recording statutes
1) wild deed = not within the chain of title, so no notice.
2) deed record late is also considered a wild deed.
3) deed recorded early = “estoppel by deed”
- because previous transfer is recorded prior to grantor attaining title, suebsequent purchaser is not deemed to have record notice.
4) title insurance
General warranty deed
Present covenants:
1) seisin: land is as described in deed.
2) right to convey
3) covenant against encumbrances
Future covenants:
1) quiet enjoyment
2) warranty
3) further assurances
Time of breach:
- present covenant = time of conveyance; does not run with land.
- future covenants = time of interference, runs with land.
Recovery:
- covenant against encumbrances = difference in value or cost of removing encumbrance.
- covenants of quiet enjoyment or warranty = difference in value or cost of defending title.
- covenants of seisin, right to convey, further assurances = purchase price OR cost of perfecting title.
Special warranty deed
warrants ONLY against defects arising during time when grantor has title.
Quitclaim deed
NO covenants of title.
grantee receives no better title than what the grantor possesses.
Attachment of chattel to property
reasonable person standard of intent:
1) importance to the property
2) whether chattel was specially designed for the property
3) damages to the real property that removal of the chattel would cause.
Buyer is entitled to fixtures UNLESS seller reserves them in K.
Removal of fixture by non-freehold possessor
can remove if:
1) property can be restored to original condition
2) made within reasonable time, which is prior to lease expiration UNLESS termination was unforeseeable due to no fault of the tenant.
Priority in fixtures
As between mortagee and secured party, first to record has priority, UNLESS secured party records within 20 days of installation.
Lapse of class gifts
Predeceasing class member’s descendants can inherit under anti-lapse statutes.
Exoneration of liens
Devisee of encumbered property is entitled to have the land “exonerated” through payment of encumbrances by the estate.
Order of abatement
funeral expenses, administrative expenses, and creditor claims will dip into:
1) property not disposed of by will
2) residuary devises
3) general devises
4) specific devises (incl. demonstrative gift)
Charitable trusts
NOT subject to RAP.
State attorney general has power to enforce.
Doctrine of cy pres
If charitable trust can no longer serve purpose, court may redirect trust to a similar purpose.
When are restraints on alienation valid?
For limited time and for reasonable purpose.
Types of restraints on alienation
1) Disabling restrain = no transfer = always void.
2) forfeiture restraint = loss of property if owner attempts to transfer = valid for life estates
3) promissory restraint = valid for life estate
Easement by necessity
1) virtually useless without benefit of the easement;
2) estate was under common ownership in the past.
easement by implication
Use from previous estate will continue to next owner if:
1) continuos
2) apparent
3) reasonably necessary
OR may be implied by subdivision map.
Easement by prescription
1) continuous
2) actual
3) open
4) for the statutory period (20 years)
NO exclusivity requirement.
easement by estoppel
Good faith, reasonable, detrimental reliance on permission by servient estate.
Negative easement
MUST be expressly created in writing signed by the grantor.
generally only allowed for light, air, support, or stream water.
Division of easement in gross
“one stock rule”: use by the transferees is collectively limited to the amount of use by the transferor.
Termination of easement
1) expressly in writing
2) merger
- does NOT apply if owner acquires less than fee title.
- does NOT apply to easements in gross.
3) attempt to convey
4) abandonment: affirmative action showing clear intent to relinquish easement right.
5) destruction/condemnation
6) prescription
7) estoppel
8) sale to bona fide purchaser without notice, UNLESS written easement is recorded. easement is not technically terminated but becomes unenforceable.
Scope of easement
Express easement = intent of the original parties. changes in use are evaluated by reasonableness standard.
implied easements = look to circumstances.
Profit - easement on natural resources
Generally construed as non-exclusive.
Exclusive profits can be transferred, subject to “one stock” rule.
Licenses
Freely revocable UNLESS coupled with an interests and/or detrimental reliance.
does NOT require writing or consideration.
May be created when an oral attempt to create an easement fails.
Death of licensor or tranfer of estate automatically revokes license.
Duty to maintain easement
Owner of easement has duty to maintain UNLESS otherwise agreed.
Duty to contribute: if repair is reasonable, can get contribution, BUT must give notification and adequate opportunity to participate to other affected parties.
Requirements of covenant to run with land
1) writing comply w/SOF
2) intent - look for explicit language like “his heirs and assignees”
3) touch and concern the land
4) privity
- horizontal privity ONLY for the burden.
- vertical privity for burden and benefit.
Specific covenants than run with the land
1) money used in connection with land
2) non-compete covenants
3) racially-based covenants are invalid due to the 14th amendment.
Requirements for equitable servitude
1) intent for restriction to be enforceable by and against successors in interest;
2) actual, inquiry, or record notice against person being sued;
3) touch and concern the land.
NO privity requirement.
Implied reciprocal servitude
1) intent to create servitude on all plots;
2) servitude is negative;
3) actual, record, or inquiry notice.
MUST show a “common scheme.”
- recording a map
- telling purchasers about the plan.
- including common building restriction in most deeds.
Water rights theories
Riparian rights: water rights belong to those with land bordering the waterway.
Prior appropriation: rights of individuals to water determined by priority of beneficial use. “first in time, first in right.”
Groundwater: “reasonable use”
Surface water
“common enemy doctrine”: landowner may change flow or runoff.
“natural flow theory”: landowners may not alter natural flow, UNLESS reasonable.
Support rights
Lateral support: strictly liable for damages to adjoining land, UNLESS damages was due to improvements on that land (i.e., land would not have collapsed in its natural state), THEN a negligence standard applies.
Subjacent support: owner of mineral rights is strictly liable for damages to buildings and fixtures, BUT ONLY IF buildings were present when right was conveyed.
Private nuisance
= substantial and unreasonable interference with another individual’s use or enjoyment of his property. needn’t be intentional or even negligent.
for injunctive relief: court need not consider defendant’s hardship if defendant’s conduct was unreasonable.
public nuisance
unreasonable interference with the health, safety, or property rights of the community.
conveyance of crops
fructis industriales = produced through cultivation.
fructus naturales = produced by nature alone.
BOTH types are automatically conveyed with the land.
EXCEPTIONS:
- harvested crops are not transferred.
- “doctrine of emblements”: if tenant’s lease is unforeseeably terminated without his fault, he has right to harvest his crops.
