Real Property Flashcards
1
Q
What are the four ways property can be transferred? Also, what are the two types of interests (time-wise) in property?
A
Sale, gift, devise, and intestate succession.
Present and future interests.
2
Q
Who is a person who survives a decedent and takes through intestate succession? Through a will?
A
An heir takes through intestate succession. You have no heirs until you die. A beneficiary takes through a will.
3
Q
What is the largest possessory estate? What makes it so? Is it inheritable?
A
The fee simple absolute because it is capable of lasting forever. The fee simple is inheritable upon the owner’s death by intestate succession or transferred during life through gift or sale.
4
Q
How is a fee simple absolute created?
A
Generally, the easiest way is to use “and his/her heirs,” but the fee simple is the presumption when you simply have transfer language such as “to A.”
Basically, if it is ambiguous, it creates a fee simple.
5
Q
What is created here? Who has what interests?
“to Anna, my hope and wish being that on her death, Anna will give the property to her son, Ben.”
A
This creates a fee simple absolute owned by Anna. Ben doesn’t own anything. Don’t be fooled by words of intent or purpose (precatory language).
6
Q
T/F - With a fee simple absolute, there is a present interest and a future interest.
A
False. There is no future interest associated with a fee simple. This is capable of lasting forever.
7
Q
What is a fee simple determinable? What language makes a fee simple determinable? What are the different interests in a fee simple determinable?
A
A FSD is that which is limited by specific durational language. Look for language such as “while,” “during,” and “until.”
The Grantee receives a fee simple determinable.
The Grantor reserves a “possibility of reverter”
8
Q
T/F - The possibility of reverter activates automatically upon the expiration of a fee simple determinable.
A
True
9
Q
What is a fee simple subject to a condition subsequent? What language makes it? What are the different interests?
A
A fee simple that is limited by specific conditional language. Look for language such as “but if,” “provided that,” and “on the condition that.”
The grantee receives a fee simple subject to a condition subsequent.
The grantor retains a right of reentry. This does not grant possession automatically! The grantor must take action and exercise a the right in order to take possession.
10
Q
What is a fee simple subject to an executory interest? Who owns what interests?
A
This is a fee simple that will end upon the happening of an event and the future interest will vest in a third party (someone other than the grantor).
The grantee has a fee simple subject to an executory interest.
The third party has the executory interest
The grantor retains nothing because he has given away all present and future interest.
11
Q
T/F - An executory interest is a present interest that will cut short (divest), or terminate, an earlier interest.
A
False. It is a future interest.
12
Q
Explain what a life estate is. Whose life are we talking about? What are the different interests?
A
This is a present estate interest that is limited by a life? The measuring life can be the grantee or another person.
Example: “to A for B’s life.”
Grantee has the present interest, which is the life estate.
Grantor retains a reversion (vests automatically at the end).
13
Q
T/F - The present interest in a life estate is transferable, but the life estate ends upon the same measuring life in the original transfer.
A
True.
14
Q
T/F - The owner of a life estate interest who is also the measuring life can transfer the life estate by will and intestate succession.
A
False. If the owner of the life estate is the measuring life, then the life estate expires upon his/her death and they cannot grant it by will or intestate succession. It automatically goes back to the grantor.
15
Q
If a grantor dies with a reversion interest or a possibility of reverter, what happens?
A
He can either pass that interest on through a will, or it will remain in his estate and it will pass through intestate succession.
16
Q
What is a remainder interest? How is it created?
A
This is a future interest held by a third party in a life estate after the measuring life dies. This is where the grantor gives a life estate and the future interest (his reversion interest) to a third party.
The grantor retains nothing here!
17
Q
When does “waste” come into play? What are the different types of waste?
A
This is when you have more than one party with an interest in the same piece of real property. The owner of the present interest has a duty not to commit waste and preserve the property. The three different types of waste are:
1) Affirmative waste - waste caused by voluntary conduct, which causes a decrease in property.
2) Permissive waste - waste caused by neglect toward the property, which causes a decrease in value.
3) Ameliorative waste - person with present interest changes the use of the property and actually increases the value of the property.
All in all, the property value must CHANGE.
18
Q
T/F - Waste can occur between two co-tenants (one in possession and one not).
A
True.
19
Q
T/F - Concurrent estates EACH have the right to use/possess the WHOLE property.
A
True
Exception - If the concurrent owners contract out of the basic rule.
20
Q
Name the three kinds of current estates. Are all available in Texas?
A
Tenancy in Common
Joint Tenancy
Tenancy by the Entirety (doesn’t exist in Texas because Texas is a community property state)
21
Q
What is the default concurrent estate interest? What makes it unique from the other two types of concurrent estates?
A
The tenancy in common is the default. There is NO RIGHT OF SURVIVORSHIP here.
22
Q
T/F - Tenants in common have separate but undivided interests in the property.
A
True
23
Q
What does it mean to have “no right of survivorship” in a co-tenancy?
A
This means that each co-tenant can transfer their interest in the property freely at death as well as during life.
24
Q
What is the defining characteristic of a Joint Tenancy? How is it created?
A
The right of survivorship is the defining characteristic of a joint tenancy, whereby the surviving joint tenants automatically take the deceased tenant’s interest.
The right of survivorship MUST BE CLEARLY EXPRESSED through “survivorship language.”
25
What four unities must be in place to create a Joint Tenancy? What if one of the unities is destroyed during the Joint Tenancy?
1) Possession - every JT must have an equal right to possess the whole of the property.
2) Interest - JTs must have an EQUAL SHARE of the same type of interest.
3) Time - JTs must receive their interests at the same time.
4) Title - JTs must receive their interests in the same instrument of title.
If ANY of the unities are severed (destroyed), then the joint tenancy is terminated with regard to THAT interest and turns it into a tenancy in common.
26
What are the three ways a joint tenancy can be severed? What are the majority and minority views of each?
1) Inter vivos transfer - a gift of the JT interest during life destroys the right of survivorship.
2) Mortgages - can possibly sever a JT interest depending on which jurisdiction you are in. The majority of jurisdictions are LIEN STATES that treat the mortgage as a lien and does NOT destroy the JT. The minority of states are TITLE STATES where the mortgage does sever the JT.
3) Leases - whether a lease severs a JT depends on jurisdiction as well. The jurisdictions are split here (no majority or minority). Some say it severs the JT, while others treat the lease as a temporary suspension of the JT.
27
What is a Tenancy by the Entirety? Does this exist in Texas?
This is a joint tenancy between married couples. Marriage is considered the 5th element of the joint tenancy unities here. There is a right of survivorship here.
Because Texas is a community property state, we do not have Tenancy by the Entirety here.
28
What is "ouster," and how can it be remedied?
Ouster is when a co-tenant in possession denies another co-tenant access to the property (changes the locks).
The ousted tenant can get an INJUNCTION granting access AND/OR recover DAMAGES for the value of the USE while the co-tenant was unable to access the property.
29
How is rent of co-owned property divided? Is anything subtracted?
Rent received from a third party's possession of the property, minus operating expenses, are divided based on ownership interests of each co-tenant.
Operating Expenses - necessary charges, such as taxes or mortgage interest payments.
30
T/F - There is a right to reimbursement from co-tenants for necessary repairs and improvements to the land.
If false, what is the remedy?
False as to both.
The negatively affected co-tenant can seek a credit in a later partition action for his payments for necessary repairs and improvements to the land.
31
What can a co-tenant seek if they pay more than their fair share of operating expenses?
Contribution from the other co-tenants.
32
What is a Partition? Is there more than one type? Does the court prefer one over the other?
An equitable remedy available to all TICs and JTs (NOT tenants by the entirety). This is a unilateral right. The effect is that the court will divide the property into distinct parts.
Partition in kind - physical division of the property. This is preferred by the courts.
Partition by sale - if physical partition is NOT PRACTICAL or NOT FAIR TO ALL PARTIES, then the proceeds from the sale are divided among the co-tenants based on their OWNERSHIP INTERESTS.
33
Co-tenants can agree not to partition. What must be true about the agreement for it to be enforceable?
1) must be CLEAR, and
| 2) TIME limitation must be REASONABLE
34
What are the two types of executory interests? How are they different?
The SPRINGING EXECUTORY INTEREST divests the grantor.
The SHIFTING EXECUTORY INTEREST divests the grantee.
35
Remainders follow what kind of present possessory estate?
A life estate.
36
T/F - A remainder can be vested or contingent.
True
37
What makes a remainder interest vested?
It is given to an ASCERTAINED grantee (someone who can be identified); AND
The interest is NOT SUBJECT TO A CONDITION PRECEDENT (a condition that must be satisfied in order for the interest to vest).
38
What does it mean when a gift is vested subject to open?
This applies to class gifts where full class membership is unknown.
At least one person in the class must be vested (if no one is vested, then it is a contingent remainder). When all members of the class are identified, the class is closed.
39
What is the common law rule that prevents an interest that is vested subject to open from violating RAP? What does the rule say?
The Rule of Convenience says that if the grant doesn't have an express closing date, the class gift closes when any member of the class becomes entitled to IMMEDIATE POSSESSION.
"to A for life, then to Ben's children" - the Rule of Convenience closes this class (Ben's children) at Ben's death to avoid violating RAP.
40
What is the Doctrine of Worthier Title? Who owns the future interest here?
Prevents against remainders in Grantor's heirs. Creates a presumption that the Grantor has a reversion.
"to A for life, then to my heirs" - The future interest is stricken, and Grantor retains a reversion interest.
41
What is the Rule in Shelley's Case? What is the grantee receiving here?
Prevents against remainders in the grantee's heirs. This uses the doctrine of merger to create a fee simple.
"to A for life, then to A's heirs" - The interests are merged, and A receives a fee simple absolute.
42
RAP applies to what kind of interests?
Contingent remainders, executory interests, and vested remainders subject to open (if the class isn't closed by the rule of convenience).
43
What is the Rule Against Perpetuities? What happens when an interest violates RAP? Is there an exception?
Must be certain that an interest will vest (or not vest) within 21 years (plus 9 months gestation) of a life in being.
If an interest violates RAP, the transfer is still valid, but the violating interest is stricken from the transfer.
Two Exceptions:
1) Transfer of a specific dollar amount to each class member
2) Transfer to a subclass that vests at a specific time (ex: "to the children of B, and upon the death of each, to that child's issue."
44
What happens when RAP makes an interest owned by a class member void?
If the gift is bad as to one, then the gift is bad as to all. The entire gift is invalid.
Remember that the Rule of Convenience can save the day!
45
What two common exceptions to RAP?
1) RAP does not apply to a gift from one charity to another charity (note that both parties have to be charities).
2) RAP does not apply to an option held be a current tenant to purchase a fee interest in a leasehold property.
46
What is the "wait and see approach?"
Courts will wait and see if an interest violates RAP within the perpetuities period.
47
T/F - A lease creates both a contract interest and a property interest. Thus, a landlord-tenant relationship is a mix of contract law and property law.
True.
48
What are the four types of estates that can govern a landlord-tenant relationship? How is each created, and how is each terminated?
1) Tenancy (Term) for Years - Created by agreement demonstrating intent to create a tenancy to last for a fixed and ascertainable amount of time. MUST BE IN WRITING IF FOR MORE THAN ONE YEAR (SoF). Terminates automatically upon the expiration of the term (no notice required). Also terminates if the tenant surrenders the lease or either party commits a material breach (failure to pay rent).
2) Periodic Tenancy - This is an estate that is REPETETIVE and ONGOING for a set period of time (month to month / week to week). Created by either express or implied intent (writing / payment of rent). Terminates after notice has been given BEFORE the last term. Terminates at the end of the last term.
3) Tenancy at Will - Can be created by either implication or an express agreement. Either party can terminate for any reason at any time without notice. If the agreement only gives Landlord the right to terminate at will, then the tenant also gets the right. If only given to the Tenant, Landlord is NOT given the right. If either party dies, the lease is terminated.
4) Tenancy at Sufferance - Created when a tenant holds over after the lease has ended. This is created by action instead of agreement. Termination occurs in one of three ways: 1) tenant voluntarily leaves; 2) landlord evicts the tenant; or 3) landlord re-rents to the tenant. The tenancy at sufferance is governed by the terms of the prior-existing lease.
49
A tenant has basic duties. What are they? Can either be suspended? If so, why?
A tenant has two basic duties:
1) Pay Rent, and
2) Avoid Waste
The duty to pay rent can be suspended (1) if premises are destroyed (NOT by fault of the tenant); (2) if the landlord completely or partially evicts the tenant; or (3) if the landlord materially breaches the lease.
Can withhold payment of rent if Implied Covenant of Quiet Enjoyment OR the Implied Warranty of habitability is breached.
50
Under the Implied Covenant of Quiet Enjoyment, when can a tenant withhold payment of rent?
ICQE - Tenant can withhold rent when the landlord takes actions that make the premises wholly or substantially UNSUITABLE for their intended purposes such that the tenant is CONSTRUCTIVELY EVICTED.
Constructive Eviction has four elements:
1) Premises are unusable for their intended purpose (breach of ICQE);
2) Tenant NOTIFIES the landlord of the problem;
3) Landlord does not correct the problem, AND
4) Tenant VACATES the premises AFTER a REASONABLE amount of time has passed.
Be on the lookout on the Bar Exam for tenants vacating too early under a breach of ICQE.
51
Under the Implied Warranty of Habitability, when can a tenant withhold payment of rent? Does this apply to commercial tenants too? Can this be waived?
The IWH only applies to residential tenants ONLY. When the Landlord has failed to maintain the property such that the tenant's health and safety are violated, the tenant may:
1) Refuse to pay rent;
2) Remedy the defect and offset costs against the rent; OR
3) Use the evidence as a defense against eviction.
The IWH CANNOT BE WAIVED.
If a Tenant chooses to withhold rent, he must:
1) Notify the landlord of the problem; and
2) Give the Landlord a REASONABLE OPPORTUNITY to correct the problem.
NOTE: Unlike withholding rent under the Implied Covenant of Quiet Enjoyment, IWH does not require the tenant to vacate the premises.
52
T/F - The duty to avoid waste must be expressed in a lease.
False. The duty is implied.
53
What types of waste does a tenant have a duty not to commit?
Tenant has a duty to not commit affirmative (voluntary) waste or permissive (neglect) waste.
HOWEVER, a tenant may make changes to the property that increases the property's value (ameliorative waste), but most Landlords usually require permission before a tenant can do so. This can be prohibited by a provision in the lease.
54
Who has the duty to repair in the Landlord-Tenant relationship?
It depends:
1) Residential lease - the Landlord is presumed to be responsible for repairs. The tenant must notify the landlord of any needed repairs. The Landlord is NOT responsible to make repairs caused by the tenant's actions.
2) Commercial lease - the Landlord can place the duty to repair on the tenant.
55
If the tenant abandons the property early or is evicted by a landlord, does the landlord have an obligation to mitigate damages by re-renting the property? If so, what happens if he doesn't mitigate? What are the damages recoverable under either scenario?
MAJORITY - Yes, the landlord must make reasonable efforts to re-rent the property. If mitigation occurs, Landlord is entitled to difference between the original rent and the rent received. If the landlord does not make DILIGENT efforts to mitigate, the tenant is relieved from the obligation to continue paying rent.
MINORITY - No. This is a common rule regarding COMMERCIAL LEASES.
NOTE: The landlord does NOT have to accept an unacceptable replacement tenant. Only requires diligent efforts.
56
What are the landlords options in the case of dealing with a holdover tenant (tenant at sufferance)?
Landlord can:
1) Evict the holdover tenant; OR
2) Continue the relationship with the tenant treating the holdover tenant as a PERIODIC TENANT. Landlord can do so by ACCEPTING RENT. The terms of the old lease apply (such as price). However, there is an exception when the landlord had informed the tenant of the increase prior to the expiration of the old lease.
57
What is the duty of the landlord in delivering possession of the leased property to the tenant?
Majority - Actual possession (physical) must be delivered.
Minority - Legal possession (right to be in) is only required.
58
T/F - The Landlord has the ability to deny a tenant quiet enjoyment.
False.
Remember, this is where the landlord or someone connected to him renders the premises unsuitable for its intended purpose leading to constructive eviction (requires notice and reasonable opportunity to repair).
59
What is the landlord obligated to control and not obligated to control?
Must control:
1) Common areas (lobby, hallway, laundry room); and
2) Nuisance like behavior of other tenants
Does not have to control:
Off-premises actions of third parties that are beyond the landlord's control (noisy bar across the street)
60
T/F - In a residential lease, the landlord MUST provide habitable premises.
True.
61
T/F - If a tenant complains about conditions, the landlord can retaliate by evicting the tenant.
False.
62
Does a tenant owe a duty of care under tort liability to anyone? If so, who?
Yes. Tenant owes a duty of care to all invitees, licensees, and FORESEEABLE trespassers.
63
What is a landlord liability in tort for? Who are the parties he owes duties to?
A landlord owes a duty of care to all invitees, licensees, and FORESEEABLE trespassers and can be liable for the following:
1) Negligence for failing to notify about latent or hidden defects (failure to warn);
2) Negligence for faulty repairs completed by the landlord (or the landlord's agent); and
3) Negligence for injuries in common areas of the property.
64
What is the difference between an Assignment and a Sublease? Who is responsible for rent to the landlord in each case? Do they require permission of the Landlord?
An assignment is a complete transfer of the tenant's REMAINING term. Whereas, a sublease is a transfer for LESS THAN the entire duration of the lease (basically meaning that the original tenant will be back before the end of the lease term).
The Landlord may collect rent from BOTH the tenant and the subtenant under an assignment. Under a sublease, however, the landlord can only seek rent from the original tenant (because there is no privity of estate between the landlord and the subtenant).
MAJORITY - Landlord may deny permission to transfer ONLY for a COMMERCIALLY REASONABLE REASON.
MINORITY - Landlords can deny permission at their discretion (meaning for any reason or none at all).
65
Does a Landlord have to gain the permission of the tenant to transfer the landlord's interest to another landlord? What are the terms of the lease after the transfer?
No. A landlord does not need the tenant's permission before transferring his/her interest. The new landlord is bound by terms of the existing lease.
66
What do Fair Housing Discrimination Statutes do in detail?
FHDS restrict a landlord's ability to choose tenants. These statutes primarily focus on protecting multi-family residential housing units. The prohibited behavior MUST be linked to one of the protected basis listed below.
Basis - Discrimination based on: Race, color, national origin, religion, sex (gender, NOT orientation), disability (must have reasonable accommodations), and familial status (families that have children under the age of 18). There is a special exemption for senior living facilities.
Prohibited acts: Refusing to rent; requiring different rents; falsely denying that a unit is available; providing different services to facilities (exception for reasonable accommodations for a disabled tenant); and stating a discriminatory preference in an advertisement.
67
What is adverse possession? How is it acquired (elements)? What is a person called who is trying to acquire it?
Adverse possession allows a person in unlawful possession to acquire good title to a piece of property. Until that person acquires good title, the person is a TRESPASSER.
Elements:
1) Continuous use for the statutory period (meaning consistent / can be seasonal under circumstances);
2) Open and Notorious (puts reasonable true owner on notice)
3) Hostile (against the true owner's interest; and
4) Exclusive (cannot share with the owner / can't be permissive)
Tacking - allowed to meet the "continuous" element if the prior adverse possessor and current adverse possessor must be in privity.
68
How does the disability of a true owner affect an adverse possessor?
The statute of limitations will not begin to run against the true owner who has a disability at the time the adverse possession begins (includes insanity, infancy, and imprisonment).
DOES NOT affect the statute of limitations if the disability occurred AFTER the adverse possession began.
69
Under the Hostile element of adverse possession, is the adverse possessor's state of mind important?
MAJORITY - NO
MINORITY - Some require a good faith state of mind, while others require bad faith (based on an aggressive trespass).
70
Can more than one person adversely possess property at the same time? If so, what is their relationship?
Yes. They acquire title as tenants in common?
71
What is the scope of adverse possession?
Traces the boundaries of the land actually possessed.
Exception: If adverse possession is obtained after the possessor enters under COLOR OF TITLE from an invalid instrument, then the entire property is adversely possessed (as if the land had actually been deeded).
Includes rights to subsurface rights, unless those are already belonging to a third party. Easements can also be adversely possessed or gained by prescription.
72
What are the two stages in a land sale contract? Also, what is the Doctrine of Merger?
1) The Contract Stage
2) The Deed Stage
The Doctrine of Merger states that covenants under a contract are merged into the deed and therefore CANNOT be enforced unless the covenant is also in the deed. Basically, any contract claims are gone once the contract and deed merge.
73
What is required for a land sale contract to comply with the Statute of Frauds?
Three things:
1) Written
2) Signed by the PARTY TO BE CHARGED
3) Include essential terms: (1) identification of the parties; (2) description of the property (address and legal description); and (3) price and payment info.
74
What are the exceptions to the Statute of Frauds in a land sale contract?
1) Part performance - must have two of the following three: possession; payment; and improvements to the property.
2) Detrimental reliance - reliance must be reasonable and enforcement of the contract is the only way to prevent undue hardship.
75
What are the implied covenants in a land sale contract? If breached, what are the remedies?
Implied Covenant of Marketable Title - Meaning that the title is FREE FROM an UNREASONABLE RISK OF LITIGATION (reasonable person standard). Examples would be an adverse possession that hasn't been quieted, private encumbrances (mortgage, covenant, easement), and zoning ordinance violations.
DEFECTS MUST BE CURED BY THE CLOSING DATE. Remedy for failure to do so is RESCISSION of the contract.
Implied Warranty of Fitness or Suitability - Applies to defects in new construction. MAJORITY of jurisdictions allow subsequent purchasers to recover damages, but a MINORITY of states limit recovery to the original purchaser.
Remedy is Damages
76
Does a seller owe a potential buyer in a land sale contract any duties? If so, what?
Yes. Sellers owe a duty to DISCLOSE to the buyer all KNOWN, PHYSICAL AND MATERIAL DEFECTS.
Concerned here with latent or hidden defects. Material defect means that it substantially affects the value of the home, health and safety of its occupants, or the desirability of the home.
General "as is" disclaimers will NOT satisfy the seller's duty to disclose.
77
In a land sale contract, what remedies are available to the Seller if a Buyer breaches? What about the Buyer's remedies if the Seller breaches?
SELLER REMEDIES:
1) Damages - difference between contract price and market price.
2) Rescission - seller can then sell the property to someone else.
3) Specific Performance
BUYER REMEDIES:
1) Damages - difference between contract price and market value on the date of the breach. If the seller acted in GOOD FAITH, buyer can only get out of pocket damages.
2) Rescission - returns payments to the buyer and cancels the contract.
3) Specific Performance
NOTE: BUYER / SELLER MUST CHOOSE BETWEEN SPECIFIC PERFORMANCE AND DAMAGES (can't have both).
78
What is Equitable Conversion? When does it arise?
Equitable Conversion answers who bears the risk of loss between the date of signing the contract and the closing date if the property is destroyed.
MAJORITY - Buyer bears the risk of loss because he has the equitable interest. The seller has a right to possess still because he owns the legal interest.
MINORITY - Places the risk of loss on the seller until the closing AND delivery of the deed.
IMPORTANT: In a MAJORITY jurisdiction where the buyer bears the risk of loss, if the seller has insurance, those insurance payments must be deducted from the purchase price as a credit towards the buyer (scenario can show up on the Bar Exam).
79
What is a mortgage? What are its parts? Who are the parties? What are the types?
A security device used to secure repayment of a debt. There are two main parts:
1) The Note - borrower's promise to repay the loan/debt.
2) The Mortgage - Instrument that provides security to the note.
The borrower is the mortgagor, and the lender is the mortgagee (the lender is receiving the mortgage from the borrower).
The two types of mortgages are:
1) Purchase Money Mortgage - person takes out the loan for the purpose of purchasing property.
2) Future Advance Mortgage - A line of credit used for home equity, construction, business, and commercial loans. This loan is often referred to as the SECOND MORTGAGE.
80
What is the effect of a mortgage on a joint tenancy?
MAJORITY - Lien States - does NOT sever the JT.
MINORITY - Title States - does sever the JT.
81
What are the alternatives to a mortgage (equitable mortgages)? Define each.
1) Deed of Trust - operates like a mortgage but uses a trustee to hold title for the benefit of the lender.
2) Installment Land Contract - Seller finances the purchase; seller retains title until the buyer makes FINAL payment on an installment plan. Traditionally, if buyer missed a payment, seller kept everything. Now, states try to help buyers (force foreclosure, allow equitable redemption, or restitution to an extent).
3) Absolute Deed - Mortgagor (borrower) transfers the deed to the property instead of conveying a security interest in exchange for the loan. Be careful here because these can be viewed as a disguised sale, and a mortgage-like relationship must be shown by CLEAR AND CONVINCING evidence. Parol evidence is admissible, and SoF does not bar oral evidence about the agreement.
4) Conditional Sale and Repurchase - Owner sells property to the lender who leases the property back to the owner in exchange for a loan. Lender gives the owner the option to repurchase after the loan is paid off.
82
If a Mortgagor/Borrower transfers property by deed, will, or intestate succession, the Mortgagor or his estate remains liable after the transfer UNLESS what?
1) Release by the mortgagee/lender; or
| 2) Modification of the transferee's obligation by the mortgagee lender.
83
What is the liability on a mortgage to a subsequent transferee of mortgaged property? What is the presumption absent any language?
It depends:
1) If the transferee "assumes the mortgage," the transferee is liable, and the original borrower is secondarily liable.
2) If the transferee takes the property "subject to" the mortgage, he is not personally liable for payments. The property is still subject to the mortgage though.
Absent language that the transferee assumes the mortgage, the transferee will be presumed to have taken the property "subject to" the mortgage.
NOTE: If the transferee assumes the mortgage, and the purchase price is lowered to the extent paid on the mortgage, the original borrower will be completely relieved of any obligations on the mortgage. This prevents unjust enrichment to the new transferee.
84
In a foreclosure, when can a mortgagee/lender take possession of the mortgaged property?
MAJORITY - Lien States - Lender CANNOT take possession PRIOR to foreclosure because the lender has a lien until foreclosure is complete.
MINORITY - Title States - Lender technically has the right, as the holder of title, to possess the property at any time.
MINORITY - Intermediate Title States - Lender cannot take possession until the borrower defaults.
85
T/F - Borrower has a duty not to commit waste on property mortgaged to a Lender.
True.
86
What is Equity of Redemption? What is a Deed in Lieu of Foreclosure? What does "clogging the equity of redemption mean? What is Statutory Redemption?
Equity of Redemption is a common law right held by the mortgagor to reclaim title and prevent foreclosure upon the full payment of the debt. Full payment must occur BEFORE the foreclosure sale.
A deed in lieu of foreclosure is where the mortgagor conveys the mortgaged property to the lender in exchange for release from any outstanding debt.
"Clogging" the equity of redemption is when a mortgagor waives his right to equity of redemption. Courts don't like this. But courts WILL ALLOW IF FOR VALUABLE CONSIDERATION.
Statutory Redemption is when a state has a statute that allows a mortgagor to reclaim his property even AFTER the foreclosure sale upon full payment of the debt owed. This revives the mortgagor's interest (that was previously eliminated by foreclosure) in the property.
87
T/F - A mortgagee does not have to give notice to the mortgagor before foreclosing.
False.
88
What are the two common methods of foreclosure?
Judicial Sale (supervision of a court) and Power of Sale (private sale held be the lender).
89
How will excess proceeds in a foreclosure sale be used? Also, what if the proceeds from the foreclosure are not enough to cover the mortgagor's debt?
To satisfy other creditors of the mortgagor.
A court can issue a deficiency judgment for the remaining balance on a debt after a foreclosure provides insufficient funds.
90
What is the general rule of priority with regard to senior interests and junior interests in foreclosed property? Are there exceptions?
Interests acquired before the foreclosure are senior interests, and all later interests are junior interests. Junior interests are generally extinguished by the foreclosure sale, and senior interests are paid out in chronological order (first in time).
Exceptions:
1) Purchase Money Mortgages take priority over ALL OTHER mortgages.
2) Recording - a senior interest may be lower than a junior interest if it is not recorded and the junior interest is recorded in satisfaction of the state's recording act.
3) Subordination agreement - senior can agree to subordinate its interest to a junior interest.
4) Mortgage modifications - If the senior mortgagee modifies the mortgage to make it MORE BURDENSOME, then the junior interest will take priority as to the more burdensome modification portion of the senior mortgage.
5) Future Advances Mortgages
91
What is required for a deed to be valid?
Must be:
1) Delivered and Accepted - delivery is based on intent (look for whether the grantor retains any right to cancel) and acceptance is presumed as long as the deed is conveying a benefit. Delivery can be made to an agent of the grantor.
2) Must be written (statute of frauds)
3) Must IDENTIFY the parties SIGNED BY THE GRANTOR
4) Containing WORDS OF TRANSFER (evidence of a PRESENT intent to transfer)
5) Must include a SUFFICIENT DESCRIPTION of the property (does not have to be a legal description / can be based on monuments or physical attributes).
92
What is the common law rule with regard to recording a deed? What is the modern approach?
You did not have to record a deed at common law. CL follows the "first in time, first in right" principle. The first grantee to receive the deed wins!
Every state has a statute modifying the common law rule. Different versions are: Race; Notice; and Race-Notice.
1) Race States - First to record wins, even if the subsequent purchaser had notice. Look for key language such as "first recorded."
2) Notice States - Subsequent purchaser has good title if she buys without notice of a prior unrecorded conveyance. Look for language such as "without notice" or "good faith." Also look out for Bar Exam questions where a jurisdiction only requires its residents to look back to the previous owner's records (thus making an owner who recorded a long time ago, no longer "recorded" to give constructive notice).
3) Race-Notice States - Subsequent purchaser has good title if she purchases without notice of a prior unrecorded conveyance, AND she records first. Look for "without notice" / "good faith" language and "first" language.
93
Is title by adverse possession protected by recording statutes?
No, recording statutes don't cover interests created by operation of law.
94
Who do Recording Statutes NOT protect?
Those who subsequently acquire title by gift, intestacy, or devise. Want to protect those who make economic investments by purchasing property.
However, those who take ownership by gift, intestacy, or devise are protected from subsequent assertions of title by complying with recording statutes.
95
When talking about "notice" in recording a deed, what are the three kinds of notice?
1) Actual notice (real personal knowledge)
2) Constructive notice (prior deed is recorded)
3) Inquiry notice (when a reasonable investigation would have disclose the existence of prior claims.
96
What is the Shelter Rule?
A person who takes from a bona fide purchaser protected by the recording act has the same rights as his grantor (even if the subsequent purchaser takes with notice).
97
What is Estoppel by Deed?
Arises when a grantor conveys land the grantor does not own but later acquires title to the land. The Grantor is then estopped from trying to repossess on grounds that he didn't originally have title when he made the original conveyance.
98
T/F - After close, the land sale contract is merged into the deed. Any liability must subsequently arise out of the deed and NOT the contract.
True
99
What are the three types of deeds? What does each provide? What are the remedies for breach?
The three types of deeds are distinguished by the amount which the warrant to the health of the title of the deed. They are as follows:
1) General Warranty Deed - Provides the greatest amount of title protection as the grantor warrants against all defects (even if the grantor didn't cause the defects).
2) Special Warranty Deed - Provides the same title protection as a General Warrant Deed except it is limited to those defects that the grantor personally caused.
3) Quit Claim Warranty Deed - Provides no warranty whatsoever as to the health of the title.
THERE ARE SIX IMPLIED COVENANTS IN GENERAL AND SPECIAL WARRANTY DEEDS:
PRESENT COVENANTS: Breached on conveyance
1) Covenant of Seisen - warrants that the deed describes the land in question
2) Covenant against Encumbrances - warrants that there are NO UNDISCLOSED encumbrances on the property that could limit its value.
3) Covenant of right to convey - Warrants that the grantor has the right to convey the property.
FUTURE COVENANTS: Breached in the future
1) Covenant of Quiet Enjoyment - Grantor promises to defend against future challenges to the grantee's title.
2) Covenant of Warranty - Grantor promises to defend against future assertions of encroachment
3) Covenant of Further Assurances - Grantor promises to fix future title problems.
REMEDIES:
Breach of Warranty against Encumbrances = LESSER of the difference in value between title with or without the defect OR the cost of removing the encumbrance.
Breach of Covenants of Quiet Enjoyment or Warranty = LESSER of the purchase price OR the cost of defending title that is in fact defective.
Breach of Covenants of Seisen, Right to Convey, and Further Assurances = LESSER of the purchase price OR cost of perfecting title.
100
What are Fixtures? How are Fixtures treated in a land sale contract? Life Tenants? Trespassers (adverse possessors)?
Fixtures are tangible personal property that is so attached to land that it is treated as real property (wall or bridge).
Generally - the buyer of real property is entitled to the fixture, UNLESS the seller reserves, in the contract, the right to keep the fixture.
Life tenants and tenants can remove fixturees UNLESS doing so would PERMANENTLY DAMAGE the property.
Trespassers under the MAJORITY rule can remove an improvement OR at least recover the value added to property so long as they acted in GOOD FAITH.
Trespassers under the MINORITY rule get to keep nothing.
NOTE: A fee simple owner of property is free to make improvements to property, including fixtures, subject to governmental land use regulations. Life estate owners, however, are limited by the doctrine of waste.
101
What happens if a decedent dies without a will and without heirs?
The property in his/her estate escheats to the state.
102
Name the four types of gifts in a will and define each.
1) Specific Gifts - a devise of property that can be distinguished from the rest of the estate (stamp collection).
2) General Gift - a devise of personal property that will be satisfied from the general assets of the estate ($10,000).
3) Demonstrative Gift - a general gift that is satisfied from a particular source ($10,000 from my America's Bank account)
4) Residuary Gift - the balance of the estate after all the general and specific gifts have been made.
103
What does Ademption mean and what is its effect?
Ademption happens when a gift through a will fails because it has been previously sold or destroyed during the testator's lifetime.
The effect of a gift adeeming is that the beneficiary under the will gets NOTHING.
Exception: Ademption by Satisfaction is when a gift is given to the intended beneficiary prior to the testator dying.
104
What is Lapse and what is its effect? How do States handle this issue?
A devise of property through a will can lapse if the beneficiary dies before the testator dies and no alternate beneficiary is named in the will.
Traditionally - the gift would lapse and be included in the residuary estate.
Today - EVERY STATE HAS AN ANTI-LAPSE STATUTE. These prevent lapse as long as two elements are met:
1) The gift was made to a party specified in the statute (usually needs to be a family member); AND
2) The deceased beneficiary is survived by issue (children or grandchildren).
If both criteria are met, then the gift goes to the issue and does not lapse.
105
Who are the parties in a trust, and what do they own?
The settlor creates the trust and owns nothing.
The trustee holds legal title of the trust res (property) for the beneficiary.
The beneficiary holds the equitable title in the trust property. The beneficiary holds the power to enforce the trust.
106
Are Restraints on Alienation allowed?
This is a restriction on transferring property. Absolute restraint on alienation is VOID. Partial restraint is valid if it is for a LIMITED TIME and a REASONABLE PURPOSE.
If the restraint is valid, an attempt to alienate the property will be null and void. If the restraint is invalid, the restraint is rejected and the property can be alienated in violation of the restraint.
107
T/F - A restriction on the use of property is generally permissible (covenants).
True.
108
T/F - An express easement must be in writing to violate the statute of frauds.
True
109
T/F - Easements are subject to recording statutes.
True
110
T/F - A negative easement can be express or implied.
False. Must be expressed (cannot be created by implication).
111
Name the types of implied easements. Define how each is created.
1) Easement by Necessity - Created only when property is virtually useless without the easement (landlocked property). Must have commonly owned piece of land that was severed, and upon severance, one piece of land became useless without the easement. TERMINATES WHEN THE NECESSITY ENDS.
2) Easement by Implication - Must have a tract of land owned by one owner that, before division of the land, used the land as if there was an easement on it (quasi easement). The use must have been continuous and apparent at the time of severance, and the use must be REASONABLY NECESSARY TO THE DOMINANT ESTATE'S USE AND ENJOYMENT (lower than strictly necessary).
3) Easement by Prescription - Acquired just like adverse possession except the focus is on "use" instead of "possession," and you DO NOT NEED EXCLUSIVITY.
4) Easement by Estoppel - Created when a permissive use of one's land is relied upon based on a promise of continued use, and the servient estate withdraws the permission later. Reliance must be REASONABLE and in GOOD FAITH. Look for facts where there is money invested based on the promise of use.
NOTE: Remember these are not subject to the statute of frauds (they are implied).
112
What is the scope of an easement? What happens when someone goes beyond that scope?
The scope of express easements is governed by the terms of the easement when it was created.
The scope of implied easements is based on the nature of the prior use OR necessity.
Exceeding the scope of an easement will result in a TRESPASS.
113
T/F - The holder of the dominant estate of an easement is entitled to use the easement to access property acquired after the easement is created.
False.
114
How are changes in the use of an easement handled?
Tested under a reasonableness standard. The court will consider the intent of the original parties as to the purpose of the easement. We presume the parties contemplated both present and future uses.
Thus, the question is, "Was this a future use that could have reasonably been foreseen?"
If the use exceeds the scope, the dominant tenant is trespassing on the servient estate.
115
Who has the duty to maintain the property subject to an easement?
The owner of the easement.
Exception: The parties can agree otherwise.
116
How can an easement be terminated?
1) Release - expressly in writing to comply with SoF.
2) Merger - An easement is terminated if the owner of the easement acquires fee title to the underlying estate.
3) Abandonment - Owner ACTS in an affirmative way that shows CLEAR INTENT to relinquish the right (looking for NON USE plus an ACT).
4) Prescription - Holder fails to protect against a trespasser for the statutory period.
5) Sale to a bona fide purchaser.
6) Estoppel - Servient owner changes position to his detriment in reliance on statements/conduct of the easement holder that the easement was abandoned.
7) End of Necessity - in an Easement by Necessity of course.
117
What are Profit Interests and License? How are they different from an easement?
A profits interest is a right to enter another's land to remove specific natural resources. These cannot be created by necessity.
A license is a revocable permission to use another's land. Easements are NOT revocable.
118
What is a real covenant and what is required for it to be binding and "run with the land" to subsequent purchasers of land? What does it mean to have a benefit and burden in a real covenant?
A real covenant is a promise concerning the use of the land that "runs with the land" to its successors. The burden of a real covenant is actually being subject to it. The benefit is being able to enforce it.
Requirements to "run with the land:"
1) Writing - Must comply with SoF
2) Intent - The original parties must have intended for the covenant to run with the land.
3) Touch and Concern - Must affect both the promisee and the promisor as owners of the land (both negative and affirmative covenants can pass this test).
4) Notice - Must be either actual or constructive notice (inquiry notice will not suffice here)
5) Privity - If running the benefit with the land, you simply need relaxed vertical privity (partial transfer of interest between original party and subsequent transferee). If running the burden, you need horizontal privity (between the original parties) and strict vertical privity (original party transfers entire interest to subsequent transferee).
NOTE: Real Covenants are subject to recording statutes.
119
What is an appurtenant easement, and what is an easement in-gross? Also, what does it mean if easements are affirmative or negative?
Affirmative easements give the holder the right to do something on someone else's property. Negative easements give the hold the right to prevent someone from doing something on their land.
Appurtenant - tied to the land (benefits the use of the land).
In-Gross - benefits the holder personally.
120
T/F - There is no servient estate in an easement in-gross.
False. There is no dominant estate (because the easement is personal), but there is a servient estate.
121
What is the remedy for breach of a real covenant?
Damages
122
What is an Equitable Servitude? What does it need to be binding. What are remedies for breach.
An alternative to a real covenant. To bind successor, you need:
1) Writing (unless an implied reciprocal servitude) - same as real covenant.
2) Intent - to run with the land (same as real covenant)
3) Touch and Concern - same as real covenant
4) Notice - Successor must have actual, constructive OR INQUIRY NOTICE (different from real covenant).
NO PRIVITY IS REQUIRED (unlike a real covenant).
Remedy for breach = INJUNCTION
123
What is an Implied Reciprocal Servitude? What does it need to be binding?
This is basically an equitable servitude (another alternative to a real covenant) that doesn't have to be in writing. These show up in planned communities. The following are required:
1) Intent to create a covenant on ALL plots in a subdivision;
2) Must be RECIPROCAL (benefits and burdens each and every parcel);
3) Must be NEGATIVE (rather than positive / it must be a restriction on an owner's use;
4 Successor's must be on NOTICE (actual, constructive, or inquiry); AND
5) There must be a COMMON PLAN OR SCHEME.
Evidence of a common plan or scheme could include: a map of the community showing the common scheme; marketing or advertisements of the community; or oral or written mention that the lots are burdened by common restriction.
124
How do real covenants, equitable servitudes, and implied reciprocal servitudes terminate?
Same as easements (merger, release, abandonment, etc.)
125
What is the Changed Circumstances Doctrine?
This applies to real covenants (or alternatives) where a restriction no longer makes sense due to drastic changes in the surrounding area since the restriction was put in place. Can terminate the restriction.
Quest to ask: Does the property subject to the restriction still retain some benefit from the restriction?
126
Define the two types of water rights. What are groundwater rights?
Riparian rights - right of landowners who border a waterway to reasonable use of the water, such that one riparian owner is liable to another for interference with the other's use.
Prior Appropriation Rights - "First in Time, First in Right" - First person to put the water to a BENEFICIAL USE has rights to that water over subsequent users. Land does NOT have to border the water source. Any productive use will be a beneficial use.
Groundwater - MAJORITY - allows the surface owner to make reasonable use of the groundwater.
127
What are the types of support rights? What is the liability for breach?
Lateral Support - neighboring owner cannot excavate so as to cause a cave in on a neighbor's land. Strict liability if neighbor's surface buildings did not contribute to the subsidence. If they did contribute, liable for negligence.
Subjacent Support - Owner of mineral rights is strictly liable for any failure to support land and any buildings on it that existed AT THE TIME the rights were created. Liable for negligence to any damage to buildings built AFTER the rights were created.
128
T/F - Zoning laws are allowed under both federal and state constitutional laws.
True
129
Can an owner of land be exempt from a zoning ordinance? What if the ordinance popped up in the middle of construction or after an owner has already been committing a lawfully existing use?
Owner may request a variance if he can show undue hardship. The variance cannot be contrary to public welfare.
A use that lawfully existed before the zoning ordinance existed but violates it once it is enacted is normally allowed to continue but prohibited from expanding.
The Doctrine of Vested Rights says that construction that violates a zoning ordinance will be allowed if the project was started in GOOD FAITH BEFORE the change in the law.
130
What is the power of Eminent Domain? What is the effect on the land owner?
Federal and State government can take your land for public use. Requires just compensation be paid to the land owner.
131
What is a regulatory taking? What is the effect on the land owner?
This is when property is regulated to the point where it has no economic value left (absolutely nothing). This requires the government to pay the land owner "just compensation."
132
What classifies as a nuisance? Is there a difference between public and private nuisance? What are the remedies?
A private nuisance is a SUBSTANTIAL and UNREASONABLE interference with another's use or enjoyment of their land. Substantial means annoying to an average person in the community. Unreasonable means the injury outweighs the reasonableness of the defendant's actions.
A public nuisance is an unreasonable interference with the health, safety, or property rights of the community. A private party seeking damages must show that it suffered a different harm than the rest of the community.
Remedies - Damages (injunctive relief if money damages are inadequate or unavailable).
133
What is the effect of having a license coupled with an interest?
A license coupled with an interest permits a person who owns personal property on the land of another to enter the land to retrieve the personal property.
