Real Property Flashcards
Recording Statutes
A subsequent buyer may be protected by a recording act if a prior convenyance or interest is not recorded. The level of protection depends on the type of recording statute.
Under a notice statute - the purchaser for value without notice of prior interest prevails.
Race statute - first BFP to record prevails regardless of actual, constructive or inquiry notice.
i.e. first recorded
In a race-notice statute - first subsequent BFP to record that has no actual, constructive or inquiry notice prevails.
i.e. in good faith, first duly recorded, without notice
Notice is determined at the time of conveyance but doesn’t preclude benefit of recording act if notice obtained after conveyance.
Foreclosure: Priority of Interests
Generally, the modification of a senior mortgage does not forfeit the mortgage’s priority over a junior mortgage except to the extent that the mortgage prejudices the junior mortgage.
Covenants Running with the Land
The elements for the burdens to run (touch and concern, writing, horizontal and vertical privity, notice, and intent) must be satisfied to be “bound” by a covenant.
The elements for the benefit to run (writing, intent, touch and concern, and vertical privity) must be met to “enforce” the covenant.
Mortgages and Security Interests: Foreclosure
Generally, the money from a foreclosure sale is applied first to the costs associated with the sale, second to the mortgage obligation being foreclosed, and finally to the mortgage obligation owed to all junior interests holders.
However, a senior mortgagee who enters into an agreement with the mortgagor to modify the mortgage or the obligation it secures subordinates his interest to a junior mortgagee’s interest to the extent that the modification is materially prejudicial to the junior mortgagee’s interest. The senior mortgagee’s interest otherwise remains superior to the junior mortgagee’s interest.
Scope of Easements
Generally, a future increase in the use of an easement may be permitted if the increase is reasonable. An increase in the scope of an easement caused by use generated for the benefit of property other than the dominant estate is not permitted.
Concurrent Estates Rights and Duties
Absent an agreement to the contrary, a co-tenant is generally not required to pay rent to the other co-tenants for the value of her own use of the property, even when the other co-tenants do not make use of the property.
A co-tenant can collect contribution from the other co-tenants for paying more than his portion of necessary or beneficially spent operating expenses (taxes, mortgage interest). However, a co-tenant in exclusive possession can collect only for the amount that exceeds the rental value of the property.
Co-tenants don’t have the right to be reimbursed by other co-tenants for repairs made to the property, even when those repairs are necessary.
Titles: Delivery and Recording of Deed
An easement not recorded against the servient estate is not enforceable against a bona fide purchaser, that is, a purchaser without notice of the easement, in a notice statute jurisdiction.
Recording an easement is only required if the subsequent purchaser did not have actual or inquiry notice of the easement.
Foreclosure: Priority Interests
Generally, the foreclosure of a senior mortgage by a sale eliminates any junior mortgages. However, when a junior mortgagee is not given notice of the foreclosure proceedings, the junior mortgage is not eliminated.
Due on Sale Clause
Pursuant to federal law, a mortgagee-lender is generally entitled to enforce a clause, such as a “due on sale” clause, that accelerates the mortgagor-borrower’s loan obligation upon the transfer of the mortgaged property. If the mortgagor-borrower fails to pay the full amount of the outstanding loan obligation upon demand by the mortgagee-lender, the mortgagee-lender may declare the loan in default and proceed to foreclose on its mortgage.
However, federal law provides a residential real property exemption, exempting certain transfers of residential real property from the requirement that states give effect to an acceleration clause. Among the exempt transfers is a transfer by the mortgagor-borrower to her living trust, a transfer of property to a spouse or child, a transfer of property to an ex-spouse due to a divorce, automatic transfer of a joint tenancy interest upon death of mortgagee-borrower, and a transfer by will or intestacy to a relative upon death of mortgagee-borrower.
Right of First Refusal
A right of first refusal is a preemptive right that gives its holder the opportunity to acquire property before it is transferred to another. Such a provision is valid if it complies with the Statute of Frauds and the terms are reasonable.
Under the reasonableness standard, the utility of the purpose served by the restraint is balanced against the likely harm that would result from its enforcement.
Closing Date in Land Sale Contracts
A court will assume that time is not of the essence in a real estate contract, unless the contract specifically states that time is of the essence, circumstances indicate that this was the intention of the parties, or one party gives the other party notice that time is of the essence. If time is not of the essence, strict adherence to the closing date set in the contract will not be required in equity. Thus, a failure to perform on the closing date will generally not be grounds for rescission of the contract.
Attornment
Under the doctrine of attornment, the tenant is bound to honor any covenant in his lease that has been assigned by the landlord to a third party, if the covenant touches and concerns the land.
Right of First Refusal and RAP
Rights of first refusal are subject to the Rule Against Perpetuities. For a party to prevail, she must prove that the right of first refusal clause is valid. Under the Rule Against Perpetuities, specific future interests are valid only if they must vest or fail by the end of a life in being, plus 21 years. If this requirement is not met, then the clause is invalid.
Severance and Title Theory in Tenancies
In a jurisdiction that follows the title theory of mortgages, the granting of a mortgage by less than all of the joint tenants severs the joint tenancy and transforms it into a tenancy in common. A TIC’s interest survives death.
In a jurisdiction that follows the lien theory of mortgages, the granting of a mortgage by fewer than all of the joint tenants does not sever the joint tenancy.
“Wild Deed”
A deed not within the chain of title
