Real Property

Question 1

Implied warranty of habitability

home builders

Answer 1

A builder of a new home impliedly warrants to the buyer that the home is habitable and fit for its intended purposes.

This warranty applies to defects that are discovered within a reasonable period of time, are due to the builders negligence or failure to do the work in a workmanlike manner, and cannot be attributable to later changes in the structure or to normal deterioration.

“a home buyer does not stand on an equal footing with the builder and relies upon the builders skill and integrity, as well as the fact that ordinary home buyers are not in a position to discover latent defects.

Applies to all latent defects.

Question 2

Does the implied warranty of habitability extent to remote buyers? (subsequent buyers)

Answer 2

Not all courts have extended the implied warranty of latent defects to remote grantees. Courts that apply privity bar have typically done so on the ground that the warranty is contractual in nature and thus should only run in favor of parties in privity with each other.

Other courts, perhaps influenced by the foreseeability standards of tort law, but also relying on the equal vulnerability of both initial and remote grantees, have extended the warranty to subsequent purchasers.

Question 3

Remote grantee takes subject to a mortgage

Answer 3

the predominant rule in the United States is that if a remote grantee takes subject to a mortgage which the grantee does not assume, the remote grantee is not personally liable on the debts.

In some jurisdictions, a remote grantee who did not expressly assume a mortgage may be deemed to have impliedly assumed it where the remote grantee paid the seller only the difference btwn what the house was worth and the outstanding balance on the mortgage obligation.

Question 4

Warranty deeds

vs

Quitclaim deeds

Answer 4

Warranty deeds impliedly include a covenant against encumbrances.

A quitclaim deed contains no warranties of title, and a buyer taking under a quitclaim deed has no claim against the seller for damages resulting from encumbrances against the property having a priority over the buyers interest.

Question 5

To acquire tile by adverse possession,

Answer 5

the possession must be:

1. actual,
2. Open and notorious
3. exclusive,
4. Continuous, and
5. hostile and under claim of right

to be actual, acts of possession must be consistent with how a reasonable owner of land would have used it if in possession

to be open and notorious, the acts of possession must be such that they would have put an owner on notice of the adverse possession had the owner inspected the land.

most courts and scholars agree that hostility and claim of right are present when a possessor is on the land without the owner’s permission.

Question 6

The covenant of seisin and the right to convey

Answer 6

are essentially the same, and they guarantee that the seller owns the conveyed land.

Question 7

The covenant of warranty to defend on behalf of the convenatee

Answer 7

includes a promise by the covenanter to defend on behalf of the covenantee any lawful or reasonable claims of title by a third party.

If the grantee wins the judgment she does not recover from the grantee
but ironically, by winning against the adjoining owner, the grantee losses her right to recover from the grantor.

Question 8

Defeasible fee

Answer 8

is a fee simple estate that terminates on the occurrence of a specified event. If the estate automatically terminates when the condition occurs, the estate is known as a fee simple determinable.

The grantor retains the future interest, with a possibility of reverter. The typical language is “to School, so long as it uses Blackacre only to teach children aged 5-13.”

Remainderman has a vested remainder and an executory interest.

Where the terms of a conveyance are ambiguous, courts construe the instrument to effectuate the grantor’s intentions. In construing an ambitious instrument, courts typically adopt a preference for the fee simple determinable.

Question 9

Fee simple defeasible subject to a condition subsequent

Answer 9

the grantor must reenter and retake the property when the condition occurs.

The typical formulation would be “to School, but if School does not use Blackacre only to teach children 5-13, then the grantor may reenter and reclaim Blackacre.”

Question 10

Rule against perpetuities

Answer 10

an interest must vest or fail within a life in being plus 21 years or the creating of the interest.

Question 11

Zoning violations

Answer 11

will render title unmarketable.

Question 12

Marketable title

Answer 12

is title that, viewed objectively, is free from reasonable doubt in both law and fact, and that a reasonable buyer would accept without fear or litigation.

Question 13

Right to lateral support

Answer 13

every landowner is entitled to have his land receive the necessary physical support from adjacent and underlying soil. the right to lateral support is absolute–that is, once support has been withdrawn and injury occurs, the responsible person is liable even if he used utmost care.

However, the absolute right to later support exists only with respect to land in its natural state. If owner A has constructed a building, and the soil under the building subsides in part due to the acts of adjacent owners B,but also impart bc of the weight of As building itself, B is not liable without negligence.

Question 14

Option “in gross”

Answer 14

means an option in which the holder of the option does not own any leasehold or other interest in the land which is the subject of the option.

the option is not appurtenant to an interest already held by the optionee in the land. (A purchase option given to a tenant, by contrast, would to be in gross.) Options in gross are generally held to be subject tot the Rule Against Perpetuities.

Question 15

The time to object to unmarketable title is

Answer 15

is before accepting the deed.

Question 16

Fixtures and Chattels

Answer 16

A tenant may not remove “fixtures” at the end of the lease term. A fixture is a chattel attached to real property so that it ceases being personal property and becomes part of the real property.

the following factors, if present, argue in favor of a finding that the item is not a chattel:

1. it is firmly embedded in the reals estate;
2. it is peculiarly adapted or fitted to the real estate;
3. removal would destroy the chatter or significantly damage the real estate; and
4. the person who did the annexing had a substantial and permanent interest in the Real estate

Question 17

Some jx have a statutory right of redemtion

Answer 17

which allows an individual to repurchase property sold at a foreclosure sale for a limited amount of time after the sale.

Question 18

Constructive eviction

Answer 18

tenant has to prove that

1. the landlord breached a duty to the tenant;
2. the breach caused a loss by the tenant of the substantial use and enjoyment of the premises;
3. the tenant gave the LL adequate notice and opportunity to repair, and
4. the T vacated the leased premises

Question 19

When does a remainder vest

Answer 19

a remainder is vested if it belongs to an ascertaiblable person and there are no conditions precedent that must be satisfied before the remainder is certain to become possessory

Question 20

termination by merger

Answer 20

a servitude is terminated when all the benefits and burdens come into a single ownership. Transfer of a previously benefited or burdened parcel into separate ownership does not revive a servitude terminated under the rule of this section

Question 21

Title by adverse possession

Answer 21

1. the position must be “open, notorious, and visible;
2. the position must be actual;
3. the position must be hostile;
4. the position must be continuous; and
5. the position must be for at least the length of the statutory period

Question 22

Ademption

Answer 22

refers to the failure (or extinction) of a specific bequest by reason of the fact that the specific property bequeathed is no longer in the testators estate at the time of death.

Question 23

Easements can only be extinguished by :

Answer 23

a written release signed by the owner of the benefited parcel, abandonment, merger of the benefited and burdened parcels, extinguishment by adverse possession, etc.

Question 24

Assignment of a right

Answer 24

can be assigned unless:
2(a) the substitution of a right of the assignee for the right of the assignor would materially change the duty of the obligor, or materially increase the burden or risk imposed on him by his contract or obtaining return performance, or reduce its value to him
(b) forbidden by statute, or
(c) precluded by contract.

Question 25

Death escrow

Answer 25

is an arrangement in which the grantor hands a deed to a custodian for delivery on the grantors death

Question 26

For a gratuitous death escrow to be valid as a form of delivery

Answer 26

the grantor must place the deed beyond his control by giving up all power to undo the arrangement in the future.

Question 27

equitable servitude

Answer 27

i.e., a restriction whose burden and benefit would both run with the land

1. the building restriction “touches and concerns both the burdened property and the benefited property
2. on the deed
   binding on a subsequent buyer if buyer had either actual or constructive notice

Question 28

Equitable conversion

Answer 28

(unexpected event between when the contract is signed and when the actual conveyance is made)

The doctrine holds that: once the parties have entered into a contract that equity would specifically enforce, the buyer’s interest in the K is converted into real estate and the sellers interest to personal property.

Equitable conversion occurs when the contract is capable of specific performance.

Question 29

A deed in order to be valid must be

Answer 29

delivered. Delivery is a question of intent. Words must show the necessary intent to strip the owner of dominion and control and to immediately transfer the title.

Question 30

A joint tenancy with right of survivorship is not

Answer 30

divisible or inheritable and cannot be severe by a will.

Question 31

An assignee to a contract (ex: creditor v debtor, one of them assigns to Bank)

Answer 31

an assignee succeeds to a contract as the contract stands at the time of the assignment. Because this would fall under common law, there must be consideration if any modifications were made before the assignment and will be biding on the new assignee.

Question 32

Pursuant to the Fair Housing Act, it is unlawful for anyone to:

Answer 32

“make, print, or publish or cause to be made, printed, or published any notice, statement, or advertisement, with respect to the sale or rental of a dwelling that indicates any preference, limitation, or discrimination based on race, color, religion, sex, handicap, familial statues, or national origin, or an intention to make any such preference, limitation, or discrimination.”

Question 33

A warranty of fitness is only applicable to

Answer 33

newly constructed residential property that is conveyed by a builder or developer

Question 34

Even when the seller has a duty to disclose of any defects or conditions of the house

Answer 34

the seller is only to disclose known defects

Question 35

A warranty deed contains six title covenants, three present covenants and three future covenants

Answer 35

The three present are:

1. covenant of seisin, a covenant that the grantor owns the land that the deed purports to convey to the grantee;
2. covenant of right to convey, a covenant that the grantor has a right to convey the land; and
3. covenant against encumbrances, a covenant that there is no outstanding right or interest in a third party which does not totally negate the title the grantor purports to convey.

The three future covenants are:

1. the covenant of warranty,
2. the covenant of quiet enjoyment, and
3. the covenant of further assurances.

Question 36

The warranties of title apply to

Answer 36

all easements on the land except to the extent that they have been excepted by the terms of the deed.

Question 37

Merger doctrine

Answer 37

contractual promises relating to title do not survive the closing and the deliver of the deed. In other words, the only promises relating to title that survive the closing are those in the deed.

Question 38

Constructive notice

Answer 38

is given when easements have been recorded

Question 39

Actual notice

Answer 39

an interest in the land listed in the contract, or expressed to the buyer from the owner.

Question 40

Damages in easements are only recoverable

Answer 40

to the extent that they reduce the value of the land.

Question 41

When a zoning ordinance allows uses the existed prior to the enactment of the ordinance, the prior-enactment uses are knows as:

Answer 41

“nonconforming uses” and are justified on both fairness and practical monetary grounds.

Question 42

While a “nonconforming use” cannot be extended or intensified in ways that constitute a substantial change:

Answer 42

insubstantial changes are permitted, and “owners are entitled to make reasonable alterations to repair their facilities and render them practicable for their purposes”

Question 43

while the goal of the nonconforming-use doctrine is to protect prior investment, it is not

Answer 43

to change an existing use into a different investment.

Question 44

Additionally, the point of the nonconforming use doctrine, in part, is to protect the investment-backed expectations of persons,

Answer 44

who purchased and operated in reliance on the law in place when the property was acquired.

Question 45

“Future-advances” loan/mortgage

Answer 45

very common in the construction industry.

A future-advances loan is one in which the lender provides funds to the borrower over a period of time, rather than in a lump sum at the signing of the mortgage, in order to finance ongoing construction when the funds are needed.

Question 46

Future-advances loans are either obligatory or optional

Answer 46

A FAL is obligatory if the lender has a duty to advance the funds;

the loan is optional if the lender does not have a duty to advance funds but has discretion whether to make future advances.

Question 47

The general rule is that, if a future advance is obligatory,

Answer 47

the mortgage securing that advance takes priority over creditors who file liens after the mortgage is recorded, even if all advances on the loan have not actually been made.

Question 48

If the future advances are optional, and if the mortgagee as notice when it makes the advance that a subsequent linear has acquired an interest in the land

Answer 48

then the advance loses its priority to that creditor.

Question 49

Most states hold that the mortgagee has notice only when

Answer 49

it has actual notice of the lien at the time of the future advance. This rule is based on the view that the mortgagee should not have the burden of a title search each time it makes an advance when it is easier for the subcontractor to inform the mortgagee that its bill has not been paid.

Under the minority view, constructive notice, will render the creditors lien superior.

Question 50

Prohibiting assignment under a lease

Answer 50

A restriction on assignment is a valid restraint on alienation.

Question 51

The clause (of no assignment) in a tenant’s lease is commonly described as a “silent” consent clause

Answer 51

because it does not include an express standard or condition for the giving or withholding of consent.

Question 52

Under the traditional rule-still the majority rule today- a client consent clause gives the

Answer 52

landlord the right to withhold consent for any reason or for no reason-even if the withholding of consent is arbitrary and unreasonable.

Question 53

in a minority jurisdiction (prohibition on lease assignment)

Answer 53

refusal to consent to an assignment must be reasonable

Question 54

Abandonment of leased premises occurs when

Answer 54

a tenant vacates the leased premises before the end of the term, has no intent to return, and defaults in the payment of rent.

Question 55

Under the traditional common law principles, a landlord has three options when a tenant abandons the premises:

Answer 55

(1) accept a surrender of the premises, thereby extinguishing the tenant’s duty to pay rent due after the acceptance of surrender; (2) re-let or attempt to re-let the premises on the tenant’s behalf, and recover from the tenant damages based on the difference between what the tenant owed for rent and what the landlord collected from re-letting; or (3) leave the premises vacant and sue the tenant for unpaid rents as it accrues.

Question 56

Of those states requiring mitigation

Answer 56

none requires that mitigation be successful

Question 57

A minority of jurisdictions (on assignment) require that a landlord have a

Answer 57

reasonable basis for withholding consent to a proposed transfer.

There is an emerging modern trend that a landlord’s consent not be unreasonably withheld, which is based upon the principle that leases are subject to the good faith requirements of contracts in general.

Question 58

Factors that may be considered under a reasonableness test (of assignments) include

Answer 58

the proposed assignee’s financial ability to pay, the suitability of the premises for the proposed assignee’s use, and the need for alterations to accommodate the proposed assignee’s use. It is not commercially reasonable to deny consent solely on the basis of personal taste, convenience, or sensibility.

Question 59

Some statutes have defined reasonable efforts (to mitigate) as:

Answer 59

“steps which the landlord would have taken to rent the premises if they have been vacated in due course, provided that those steps are in accordance with local rental practice for similar properties.

Question 60

In some jurisdictions, a landlord’s failure to mitigate would

Answer 60

relieve the tenant of any liability for rent or damages after the date of abandonment because failing to mitigate, the landlord is deemed to have accepted the surrender.

Question 61

Actual notice

Constructive notice

Inquiry notice

Answer 61

Actual notice is an encumbrance on the property listed on the deed

Constructive notice comes from information that is on the public land records

Inquiry notice arises from facts discernible through visual inspection of the premises or the applicable recorded instruments.

Question 62

Shelter rule doctrine

Answer 62

when a bona fide purchaser acquires title free of a prior encumbrance, he can convey that title to a subsequent purchaser, free of that encumbrance. In order to ensure that the bona fide purchaser has an unlimited right to alienate his land in the future, the shelter doctrine applies even when the subsequent purchaser has actual notice of the prior, unrecorded encumbrance.

Question 63

A full-covenant deed includes a covenant against encumbrances, i.e.,

Answer 63

a warranty that, at the time of conveyance, there are no outstanding third-party rights that negate the titled the grantor purports to convey.

Question 64

Remote grantees under the common law

Answer 64

Under the common law, the covenant against encumbrances is a “present covenant,” breached, if at all, if there is an encumbrance at the time of the conveyance. Furthermore, the covenant does not run with the land. It cannot benefit a remote grantee.

Question 65

In some jx, a remote grantee may sue on the covenant against encumbrances. However, a remote grantee with notice of the easement may not sue on the theory that with such notice the grantee:

Answer 65

(1) never relied on the covenant or (2) bargained for a reduction int he purchase price to take account of the easement.

Question 66

According to the Restatement of Property

a survivorship contingency

Answer 66

which expresses what appears to be the current majority view, a survivorship contingency (on a will) applies at the termination of the interest that precede distribution of the remainder.

Example: To my Husband for Life, with the remainder to “my surviving children.” If either child predeceased Husband, their interest will extinguish.

Question 67

There is another view that interprets a survivorship contingency (non Restatement view)

Answer 67

to require surviving only the testator and not the life tenant. This view is typically justified by a preference for early vesting estates.

Question 68

Estoppel by deed

Answer 68

applies to validate a deed, particularly a warranty deed, that was executed and delivered by a grantor who had no title to the land at that time, but who represented that he or she had such title and who thereafter acquired such title.

Question 69

A license is

Answer 69

permission to use the land of another. It is revocable and is not subject to the statue of frauds.

Question 70

Lapse

Answer 70

If a named beneficiary predeceases the testator and there is no provision in the will for what happens to the gift in that case, the gift to that beneficiary lapses.

Unless there is an anti-lapse statute which might have substituted the beneficiaries issue as the beneficiary of the bequest

Question 71

Ademption

Answer 71

Ademption occurs when a specific gift of property in the will is no longer in the estate at the time of death of the testator.