Real Property

Question 1

What is a Fee Simple Absolute?

Answer 1

A conveyance of absolute ownership of real property. The property is freely devisable, descendible, and alienable.

Question 2

What is a Fee Tail?

Answer 2

A conveyance of real property to a person AND their heirs.

*Most states have abolished fee tail ownership.

Question 3

What is a Fee Simple Defeasible, and when is it created?

Answer 3

A conveyance of property that has conditions placed on it.

It is created when the grantor uses express conditional language to indicate that it will be terminated upon the occurrence/non-occurrence of an event or condition.

*Reserves a future interest in the property in favor of either the grantor or a third party.

Question 4

What are the three types of Fee Simple Defeasibles?

Answer 4

Fee Simple Subject to a Condition Subsequent – Grantor retains a right of re-entry if a specified condition occurs.

Fee Simple Determinable – Grantor retains possibility of reverter. Created when grantor uses words of duration.

Fee Simple Subject to Executory Interest – reserves a future interest in a third-party.

Question 5

What is a Life Estate?

Answer 5

A conveyance of real property where a specified life- tenant is entitled to possession of the property during their lifetime.

Upon the life tenant’s death, the property transfers outright to another party (the remainderman).

Question 6

Possibility of Reverter

vs.

Right of Re-entry

Answer 6

Possibility of Reverter: Creates a future interest of possession in the grantor if a specified condition occurs (property automatically vests to the grantor upon occurrence of the condition).

Right of Re-entry: Creates a future interest in the grantor, wherein the grantor has the right to re-enter and take the property if a specified condition occurs.

Question 7

When does a restraint on alienation occur, and what are the three types that exist?

Answer 7

When the grantor attempts to restrict the alienability or transferability of the land.

The three types are: disabling, forfeiture, and promissory restraints.

They are enforceable based on the interest conveyed and whether it’s reasonable.

Question 8

Those with a Present Possessory Interest CANNOT commit waste to the property.

What are the three types of waste that exist?

Answer 8

1) Affirmative – intentional/negligent.
2) Permissive – failure to make repairs.
3) Ameliorative – change in use that affects value.

Question 9

Vested Remainder

vs.

Contingent Remainder

Answer 9

Vested remainder: A future interest in land that is given to an identifiable person with NO conditions.

Contingent remainder: A future interest in land that is conditioned upon the occurrence (or non-occurrence) of a specific event.

*In most jurisdictions, a future remainder interest is devisable andpasses to that person’s heirs.

Question 10

What is Tenancy in Common?

Answer 10

The default estate created by a conveyance/bequest of real property to two or more people, unless:

a) Thereisexpresslanguagestatingthatthepartieshave survivorship rights (joint tenancy); OR
b) If the conveyance stated “as husband and wife” (creating a tenancy by the entirety).

*Each tenant has an undivided interest and the right to use and enjoy the property.

Question 11

What Four Unities must be present for a Joint Tenancy to be created?

Answer 11

1) The unity of time;
2) The unity of title;
3) The unity of interest; AND
4) The unity of possession.

There must be clear and express intent to create a joint tenancy.

Question 12

Under what circumstances can an out-of-possession co-tenant collect rent from an in-possession co- tenant (who is in exclusive possession of the property)?

Answer 12

When:

a) There is an agreement stating as such; OR
b) The co-tenant seeking rent was wrongfully ousted.

Question 13

Is a co-tenant entitled to reimbursement for the costs of necessary repairs that the co-tenant paid for?

Answer 13

Yes, UNLESS there has been a wrongful ouster.

The amount is determined by the % share each co-tenant owns in the property.

Question 14

When does an ouster occur?

Answer 14

When a co-tenant excludes another co-tenant from possessing the property (the party wrongfully excluded may bring an action to recover possession and damages).

*All co-tenants have equal rights to possess the entire property.

Question 15

When is a co-tenant entitled to reimbursement from other co-tenants for improvements made to the property?

Answer 15

ONLY IF there is a separate agreement stating as such.

BUT, if the property appreciated due to the improvements, only the improving co-tenant is entitled to the increase in value.

Question 16

A lease provides the tenant with a present possessory interest in the property and gives the landlord a future interest.

What are the three types of Leaseholds?

Answer 16

1) Tenancy for Years – fixed period of time, automatically terminates;
2) Periodic Tenancy – initial period of time, then automatically continues for additional equal periods until terminated by proper notice.

Created by: express agreement, implication, or by law.

3) _Tenancy at Wil_l – continues until either party terminates it, usually created by express agreement.

Question 17

What can a Landlord do if a Tenant remains on the property and does not pay rent?

Answer 17

a) Initiate eviction proceedings; OR
b) Allow the tenant to remain on the property and sue for damages.

Question 18

What are the Landlord’s two options if a tenantholds over?

Answer 18

He may:

a) Evict the tenant; OR
b) Hold the tenant over (by holding the tenant over, an implied month-to-month tenancy is created).

*If a holdover tenant does not pay rent, the landlord may also seek damages.

Question 19

What is a Landlord’s duty to repair (residential and commercial)?

Answer 19

Residential: Keep the rental property in habitable condition, to repair common areas, and a duty to warn of latent defects that create a risk of serious harm.

Commercial: DO NOT have a duty to repair (but authorities may require it in certain instances).

Question 20

What is the Warranty of Habitability?

What can the Tenant do upon breach?

Answer 20

It’s implied in EVERY residential lease and requires the Landlord to provide a place to live that is habitable (reasonably suitable for human needs).

If breached, the Tenant may:

a) Move out and terminate the lease;
b) Withhold or reduce the rent;
c) Repair the issue and deduct the cost from the rent; OR
d) Remain on the premises and sue for damages.

Question 21

When does Constructive Eviction occur?

Answer 21

When:

1) The landlord breached a duty to the tenant;
2) The landlord’s breach caused a loss of the substantial use and enjoyment of the premises;
3) The tenant gave the landlord notice of the condition;
4) The landlord failed to remedy it in a reasonable time after notice was given; AND
5) The tenant vacated the premises.

Question 22

Does a Landlord have a duty to mitigate his damages?

Answer 22

At common law, a landlord DID NOT have a duty to mitigate.

BUT, now most states DO impose a duty to take reasonable steps to mitigate losses (i.e. attempting to lease to another tenant).

*Mitigation doesn’t need to be successful to recover damages, and a landlord is entitled to sue for the difference in rent between the new and original tenant.

Question 23

Assignment of a Lease

When does an Assignment occur, and who is liable to the Landlord for rent thereafter?

Answer 23

It occurs when the assignor transfers ALL of his remaining interest in a lease to a third-party (the assignee).

The assignee AND the assignor both remain liable to the landlord for rent and all other covenants that run with the land.

Question 24

Assignment of a Lease

When a lease has a Silent Consent Clause, what two approaches have been adopted by state courts to determine how consent is given?

Answer 24

Most States, allow the landlord to withhold consent for any reason (even if unreasonable).

Some States, require the landlord to have a reasonable basis for withholding consent.

For example: Inability to fulfill lease terms, financial irresponsibility, instability, etc.

Question 25

What is a Sublease?

Is a Sublessee liable to the Landlord for rent?

Answer 25

A sublease occurs when a sublessor transfers only SOME of his remaining interest in a lease to a third-party.

The sublessee is NOT liable to the landlord for rent or other covenants because there is no privity of estate with the landlord.

Question 26

Termination of Leases

What is a Surrender?

Answer 26

An agreement between the landlord and the tenant to end a lease early.

If accepted, the tenant’s duty to pay rent ends. If notaccepted and the tenant leaves anyway, they are deemed to have abandoned the lease and are liable for damages.

Question 27

What is a Real Covenant?

Answer 27

A non-possessory interest in land that obligates the holder to either do something or refrain from doing something to the land.

(The remedy is damages, unlike equitable servitudes)

Question 28

What must be present to enforce the benefit of a Real Covenant?

Answer 28

There must be:

1) A writing that satisfies the statute of frauds;
2) Intent that the covenant runs with the land;
3) Vertical privity between succeeding parties; AND
4) The covenant must touch and concern the land.

Question 29

What must be present to enforce the burden of a Real Covenant?

Answer 29

All of the requirements for enforcing the benefit PLUS:

1) Horizontal privity between the original parties; AND
2) The new owner must have notice of the covenant (actual, constructive, or inquiry notice).

Question 30

What is an Equitable Servitude?

Answer 30

Covenants that equity will enforce if the burdened estate had notice of the covenants.

(The remedy is injunctive relief, rather than damages)

Question 31

What must be present to enforce the benefit of an Equitable Servitude?

Answer 31

There must be:

1) A writing that satisfies the statute of frauds;
2) Intent for the servitude to be enforceable; AND
3) The servitude must touch and concern the land.

Question 32

What must be present to enforce the burden of an Equitable Servitude?

Answer 32

All of the requirements for enforcing the benefit, PLUS:

1) The new owner must have notice of the servitude (actual, constructive, or inquiry notice).

Question 33

What is the Common Scheme or Plan Doctrine?

Answer 33

A court will imply reciprocal restrictive covenants on parcels of land in a subdivision sold by a developer if:

1) The developer had a common scheme or plan that all parcels of land would be subject to at the time the subdivision was sold; AND
2) Thedefendantlandownerhadactual,inquiry,orrecord notice of the restriction.

Question 34

What is a Common Interest Community (CIC)?

Answer 34

A development or neighborhood in which individually owned lots are burdened by a servitude that imposes an obligation to:

a) Pay for or contribute to the maintenance held in common by the individual owners; OR
b) Pay dues or assessments to an association that provides services to the common areas or enforces the servitudes.

*CIC’s include Condo’s, Co-ops, and Home Owner Associations.

Question 35

Easements

Easement in Gross vs. Easement Appurtenant

Answer 35

A non-possessory interest in the use of someone else’s land.

Easement in Gross: Benefits a specific owner’s enjoyment, and DOES NOT attach to the land. Doesn’t pass to subsequent owners.

Easement Appurtenant: Benefits ANY owner’s enjoyment, and DOES attach to the land. Passes to subsequent owners.

Question 36

Easements

What is an Easement by Grant?

Answer 36

An express agreement by the grantor allowing the easement, which must:

1) Be in writing signed by the grantor and satisfy the statute of frauds;
2) Identify the land and parties involved; AND
3) Indicate the grantor’s intent to convey the easement.

Question 37

Easements

What is an Easement by Prescription?

Answer 37

It’s created when the possessor’s use of the land is:

1) Open and notorious;
2) Continuous;
3) Hostile; AND
4) For the statutory period.

Question 38

Easements

What is an Easement by Implication?

Answer 38

It’s established when:

1) A single tract of land is divided by a common owner;
2) A pre-existing use by the grantor is established prior to

the land division;

3) A continuous and obvious indication that the use was

intended to be permanent;

4) The use affects the value of the land conveyed; AND
5) Such use is reasonably necessary for the owner’s use.

Question 39

Easements

What is an Easement by Necessity?

Answer 39

It’s created when:

1) The original piece of land owned by the one owner is subdivided;

AND

2) Access is essential to the use of the property because no other ingress or egress is available.

Question 40

Easements

What are the ways an Easement can be Terminated?

Answer 40

1) Estoppel;
2) Termination of the necessity that created the easement;
3) Involuntary destruction of the servient estate;
4) Condemnation of the servient estate;
5) Written release;
6) Abandonment;
7) Merger; OR
8) By prescription

Question 41

What is a License?

Answer 41

It is a privilege to use another’s land in a particularway.

It doesn’t need to be in writing, and may be revoked at any time (although a licensor may be estopped from revoking it if the licensee invested money/labor in reasonable reliance).

Question 42

What factors are considered to determine if an item is a Fixture?

Answer 42

1) The nature of the item;
2) The manner in which it’s attached;
3) The damage that would result if removed; AND
4) The extent to which the item is adapted to the property.

*Under the trade fixture exception: an item attached to the propertyfor use in the tenant’s business is NOT a fixture unless removalwould cause substantial damage.

Question 43

What are the elements of Adverse Possession?

Answer 43

It allows someone who is in possession of land, owned by another, to acquire title when the possession of the property is:

1) Continuous for the statutory period (i.e. 10 yrs);
2) Open and notorious;
3) Exclusive;
4) Actual; AND
5) Hostile and under a claim of right.

*Adverse possessors in privity may aggregate their years spent possessing the property to meet the statutory period.

Question 44

What is Constructive Adverse Possession?

Answer 44

When a person takes possession of only a portion of the land covered under color of title -> that possession extends to the entire portion of the land described in the title for adverse possession purposes.

Question 45

What are the elements of a valid Land Sale Contract?

Answer 45

The contract must:

1) Be in writing;
2) Describe the property;
3) Identify the parties involved;
4) Contain the purchase price; AND
5) Be signed by the grantor/grantee (depending on who the contract will be enforced against).

Question 46

When can a seller revoke a land sale contract?

Answer 46

Once the contract is signed, they CANNOT revoke as the buyer is already considered the owner.

However, if the land is conveyed through a deed, the seller may revoke before the deed is effectively delivered.

Question 47

What is Marketable Title?

Answer 47

A title that is FREE from any cloud or subject to any adverse claims.

Title is unmarketable when it contains a substantial defect (such as encumbrances, mortgages, liens, etc.).

Question 48

What is the Equitable Conversion Doctrine?

Answer 48

It splits ownership between the buyer and the seller. The buyer has equitable title, while the seller has legal title and holds the property in trust for the buyer.

*The buyer’s ownership is considered real property, while theseller’s is considered personal property.

Question 49

What does a “time is of the essence” clause ensure?

Answer 49

It ensures that the buyer MUST perform on the closing date.

If the buyer fails to perform, it will be deemed a material breach and the seller may keep the buyer’sdown payment as liquidated damages.

Question 50

When is Specific Performance appropriate?

Answer 50

When monetary damages will not fully remedy a party’s complaint.

Real property is ALWAYS considered unique, and specific performance is ALWAYS an appropriate remedy.

Question 51

What is a Home Builder’s Implied Warranty?

Answer 51

A warranty that protects a purchaser of a newly constructed home against latent defects, AND warrants that the building is safe and fit for human habitation at the time of sale.

Question 52

What are the requirements of a valid Deed?

Answer 52

A valid Deed must:

1) Be in writing;
2) Be signed by the grantor;
3) Identify the grantor and grantee;
4) Describetheproperty; AND
5) Indicate the grantor’s present intent to convey the land.

Question 53

When may land be conveyed without a contract?

Answer 53

When there is:

1) Intent by the grantor to convey the property to the grantee;
2) Delivery of a valid deed; AND
3) Acceptance by the grantee.

Question 54

What are the six covenants of a General Warranty Deed?

Answer 54

The three present covenants are:

1) Seisin;
2) Right to convey;
3) Against encumbrances.

The three future covenants are:

1) Warranty;
2) Quiet enjoyment;
3) Further assurances.

Question 55

When does a constructive conveyance of a deed occur?

Answer 55

When the grantor gives the deed to a third-party who is an agent of the grantee.

Question 56

What is a Special Warranty Deed?

Answer 56

It ONLY warrants that the seller has not breached the covenants of title during his period of ownership (thatthe seller hasn’t previously conveyed the property andthere are no encumbrances against the title).

Question 57

What is a Quitclaim Deed?

Answer 57

A deed that DOES NOT contain any covenants or promises to the buyer. It’s an “AS IS” deed leaving the buyer with NO rights to sue.

Question 58

What happens if a land transfer is NOT recorded?

Answer 58

It is considered a “wild” deed and is effective between the parties, but will NOT put subsequent purchasers on constructive notice because it’s outside the chain of title.

Question 59

What are the three types of Recording Statutes?

Answer 59

1) Notice statute – a subsequent bona fide purchaser will prevail over prior grantee that failed to record.
2) Race statute – whomever records first prevails.
3) Race-notice statute – a subsequent bona fide purchaser is protected ONLY IF he records before the prior grantee.

Question 60

What is a Bona Fide Purchaser (BFP)?

Answer 60

A person who:

1) Takes real property without notice of a prior conveyance; AND
2) Pays valuable consideration.

*Receipt of land by gift or bequest does not equal BFP status.

*Shelter rule: a person who purchases from a BFP receives the same status and rights as a BFP.

Question 61

Who must sign the deed?

Answer 61

The grantor of the real property MUST sign the deed, BUT they may designate an agent to sign on their behalf.

If an entity is the grantor, then authorized persons must sign the deed on behalf of the entity.

The grantee is NOT required to sign.

Question 62

What is required for a valid Mortgage?

Answer 62

It must be:

1) In writing;
2) Signed by the party to be charged; AND
3) Reasonably identify the parties and the land.

Question 63

What does foreclosure do to a mortgage?

Answer 63

It destroys junior mortgages, in that any mortgage recorded after the mortgage being foreclosed on will be extinguished.

However, all prior recorded mortgages are NOT affected.

Question 64

What is a Purchase Money Mortgage?

Answer 64

When the seller is the lender who secures the mortgage on the real property.

The buyer of the property is the borrower.

Question 65

Who does the holder of a Purchase Money Mortgage have priority over?

Answer 65

1) All claims and mortgages against the mortgagor prior to the purchase of the property;
2) ALL subsequent claims and mortgages, unless defeated by a recording statute.

Question 66

What is a Future Advance Mortgage?

Answer 66

A loan in which the lender may provide future payments under the original loan.

The lender secures a mortgage on the real property for the entire amount of the loan, including any future advances.

Question 67

What parties are involved in a Deed of Trust?

Answer 67

1) The borrower;
2) The lender; AND
3) A third-party trustee who holds title to the property until the loan is paid off.

Question 68

Express vs. Implied Mortgage Assumption

Answer 68

Express Assumption: There is an express agreement for the grantee to take the real property and continue making payments to the lender.

Implied Assumption: No express agreement exists; the grantee pays the seller only the equity in the home, and the grantee continues making payments to the lender for the balance.

Question 69

What is a Variance?

When may it be granted?

Answer 69

It is an exception to a zoning ordinance, and two types exist:

1) Use variance;
2) Area variance.

It may be granted if: (1) the owner suffers a hardship because of the ordinance; AND (2) the variance would NOT damage or harm the public welfare.

Question 70

What does the Doctrine of Previous Non-Conforming Use allow?

Answer 70

The landowner may continue to use his land that is in violation of a later enacted zoning law. It will only be grandfathered in if it remains in continuous use.

Question 71

Does a landowner have the right to lateral support by adjoining land?

Answer 71

YES, a landowner has the right to have her land supported by adjoining land.

When excavations cause a loss of support to adjoining land in its natural state, a landowner is strictly liable for damages.

However, when the excavations cause a loss of support to adjoining land that has been improved, a landowner is only liable if she was negligent in the excavations.

Question 72

Conflict of Laws

What is the situs rule for Real Property actions?

Answer 72

That the laws of the state where the real property is located will generally govern (i.e. cases involving the title or a contract for the sale of real property).

*States have a strong interest in actions that affect real property within their state.

Question 73

Conflict of Laws

When real property is incidental to a contract, what tests are used to determine the applicable law?

Answer 73

1) Situs Rule – the laws of the state where the real property is located will govern. (1st Restatement).
2) The state with the Most Significant Relationship to the property will govern. (2nd Restatement).
3) Interest Analysis Test – situs rule will apply UNLESS another state has a greater interest in having their law applied.

*Apply the test that has been adopted by the jurisdiction.