Real Property

Question 1

Are oral easements enforceable?

Answer 1

No. It violates the Statute of Frauds. Instead, it creates a freely revocable license.

Question 2

How do you distinguish between a real covenant and an equitable servitude?

Answer 2

On the basis of the remedy your plaintiff seeks. When plaintiff wants money damages, construe the promise as a covenant. When plaintiff wants an injunction, construe the promise as an equitable servitude.

Question 3

What are the elements necessary to have the burden of a restrictive covenant run?

Answer 3

1) Writing – original promise is in writing
2) Intent – original parties intent that covenant would run
3) Touch and concern the land – must affect legal relations as land owners; and of and pertaining to the land
4) Horizontal and vertical privity
5) Notice

Question 4

What is horizontal privity?

Answer 4

Nexus between the original parties – requires that they be in succession of estate, meaning they were in a grantor/grantee, landlord/tenant or mortgagor/mortgagee relationship.

Question 5

What is vertical privity?

Answer 5

Nexus between A and A-1. It simply requires some non-hostile nexus, such as a contract, devise, descent. The only time that vertical privity will be absent is if A-1 acquired her interest through adverse possession.

Question 6

What are the elements necessary to have the benefit of a restrictive covenant run? (Really a question of whether the person asserting the benefit has standing to make the claim)

Answer 6

1) Writing – original promise in writing
2) Intent – the original parties intended that the benefit would run
3) Touch and concern the land – the promise effects the parties as landowners
4) Vertical privity

Question 7

What is required in order for an equitable servitude to bind successors?

Answer 7

1) Writing
2) Intent – parties intended for promise to bind successors
3) Touch and concern – promise effects parties as landowners
4) Notice – successors of the burdened land had notice of the promise

Question 8

Equitable defense to enforcement of an equitable servitude:

Answer 8

Changed conditions – the changed circumstances alleged by the party seeking release from the terms of an equitable servitude must be so pervasive that the entire area has changed. Mere pockets of limited change are never enough.

Question 9

What are the elements of adverse possession?

Answer 9

For possession to ripen into title, it must be:

(1) Continuous – uninterrupted for statutory period
(2) Open and notorious – possession that the usual owner would make under the circumstances
(3) Actual – literal entry (no symbolic entry)
(4) Hostile – possessor doesn’t have the true owner’s consent to be there (NO PERMISSION)

NOTE: Possessor’s subjective state of mind is irrelevant (i.e. it won’t matter if possessor didn’t know he was trespassing)

Question 10

When is tacking permissible for adverse possession?

Answer 10

One adverse possessor may tack on to his time with the land his predecessor’s time, so long as there is privity, which is satisfied by any non-hostile nexus, such as blood, contract, deed, or will.

Tacking is NOT allowed when there has been an ouster.

Question 11

When does a person’s disability affect adverse possession?

Answer 11

The SOL will not run against a true owner who is afflicted by a disability at the START of the adverse possession.

Common disabilities include insanity, infancy, imprisonment.

Question 12

What three things must a land sale contract contain?

Answer 12

(1) Writing signed by party to be bound
(2) Must describe the property
(3) It must state some consideration

Question 13

What are the two promises implied in every land sale contract?

Answer 13

1) Seller promises to provide marketable title at closing (i.e. title free from doubt – free from lawsuits and threat of litigation)
2) Seller promises not to make any false statements of material fact (majority view: hold seller liable for failure to disclose latent material defects – seller liable for material lies and omissions)

Question 14

What three things make a land’s title unmarketable?

Answer 14

1) Adverse possession (even if part of title rests on adverse possession, it is unmarketable – must have good record title)
2) Encumbrance – marketable title means an unencumbered fee simple (thus servitudes and mortgages render title unmarketable unless buyer has waived)
3) Zoning violations – title is unmarketable when Blackacre violates a zoning ordinance.

Question 15

What is the one exception for when the common law norm of caveat emptor does not apply in the land contract context?

Answer 15

The implied warranty of fitness and workmanlike construction applies to the sale of a new home by a builder-vendor.

Question 16

How does a deed pass legal title to the buyer?

Answer 16

If it is legally executed and delivered.

Question 17

What is required for deed to be lawfully executed?

Answer 17

The deed must be in writing, signed by the grantor, and reasonably identify the parties and land.

Question 18

How is delivery satisfied for a deed?

Answer 18

Could be satisfied when grantor physically or manually transfers the deed to the grantee. It is permissible to use the mail an agent, or a messenger. Does NOT necessarily require actual physical transfer of the instrument itself. Test is of present intent. Did grantor have the present intent to be bound, irrespective of whether or not the deed was handed over?

Recipient’s express rejection of the deed defeats delivery.

Question 19

What is a quitclaim deed?

Answer 19

It contains NO covenants. Grantor isn’t even promising that he has title to convey.

Question 20

What is a general warranty deed?

Answer 20

It warrants against all defects in title including those due to grantor’s predecessors.

Question 21

What are the six covenants contained in the general warranty deed?

Answer 21

Present covenants:

(1) Covenant of seisin – G promises he owns the estate
(2) Covenant of right to convey –G has power to transfer (no temporary restraints on alienation, G under no disability)
(3) Covenant against encumbrances – there are no servitudes or liens on Blackacre

Future covenants:

(1) Covenant for quiet enjoyment – grantee won’t be disturbed in his possession by a third party’s lawful claim of title
(2) Covenant of warranty –G promises to defend grantee against any lawful claims of title asserted by others
(3) Covenant for further assurance – G promises to do whatever is needed in the future to perfect the title

Question 22

What is a special warranty deed?

Answer 22

Provided for by statute in many states, this deed contain two promises ONLY on behalf of himself: Grantor promises that he hasn’t conveyed property to anyone other than grantee and the property is free from any encumbrances made by grantor.

Question 23

What is a bona fide purchaser?

Answer 23

One who buys property for value (B remits substantial pecuniary consideration) AND without notice that someone else got there first.

Question 24

Notice statute:

Answer 24

A conveyance of an interest in land shall be not be valid against any subsequent purchaser for value, without notice thereof, unless the conveyance is recorded.

Question 25

The Race-Notice Statute:

Answer 25

Any conveyance of an interest in land shall not be valid against any subsequent purchaser for value, without notice thereof, whose conveyance is first recorded.

To prevail, B must be a bona fide purchaser and must win the race to record.

Question 26

What is the Shelter Rule?

Answer 26

One who takes from a BFP will prevail against any entity that the transferor BFP would have prevailed against. In other words, the transferee takes shelter in the status of her transferor, and thereby steps into the shoes of the BFP even though she otherwise fails to meet the requirements of BFP status.

Question 27

What is the rule of the wild deed?

Answer 27

If a deed, entered on the records, has a grantor unconnected to the chain of title, the deed is a wild deed. It is incapable of giving record (constructive) notice of its existence.

Question 28

What is Estoppel by Deed?

Answer 28

One who conveys realty in which he has no interest is estopped from denying the validity of that conveyance if he later acquires that previously transferred interest. This doctrine usually only applies to the warranty deeds. Most courts hold that title inures to the benefit of the grantee only as against the grantor. Thus, if grantor transfers her after-acquired title to a BFP, the BFP will prevail over the original grantee.

Question 29

How is a mortgage created?

Answer 29

A mortgage is the conveyance of a security interest in LAND, intended by the parties to be collateral for the repayment of a debt.

Two elements: (1) a debt and (2) a voluntary lien in debtor’s land to secure the debt.

On default, the lender can realize on the mortgaged real estate only by having a judicial foreclosure sale conducted by the sheriff.

Question 30

What is actual notice?

Answer 30

Actual notice includes knowledge obtained from any source (e.g. newspaper, word-of-mouth).

Question 31

What is record notice?

Answer 31

This is “chain of title.” A subsequent purchaser will be held to have record notice only if the deed in question is recorded in the chain of title, which means that it is recorded in such a manner that a searcher could reasonably find it.

Although no one has a legal duty to perform a title search, a subsequent purchaser will be charged with the notice that such a search would provide, whether or not she actually searches.

Question 32

What is inquiry notice?

Answer 32

Under certain circumstances, a purchaser is required to make reasonable inquiries. He is charged with knowledge of whatever the inquiry would have revealed, even if in fact he had none. References in recorded instruments to unrecorded transactions, unrecorded instruments in the chain of title, and possession unexplained by the record put a purchaser on inquiry notice. The mere fact that a quitclaim deed was used does not charge the purchaser with inquiry notice.

Question 33

What is the difference between a tract index jurisdiction and a grantor/grantee index jurisdiction?

Answer 33

In a tract index jurisdiction, the searcher looks at the page indexed by block and/or lot describing the property and any instruments affecting it. In a grantor and grantee index jurisdiction, the searcher establishes a chain of title by searching back in time in the grantee-grantor index. From that point, he then searches forward in time in the grantor-grantee index to see if any grantor conveyed an interest to someone outside of the backward chain.

Question 34

What is the effect of recordation?

Answer 34

It gives prospective subsequent grantees constructive notice of the existence and content of recorded instruments. It also raises a presumption of valid delivery and authenticity.

Question 35

What is the result if the county recorder makes a mistake?

Answer 35

An instrument is considered recorded when filed with the recorder’s office, regardless of whether it is thereafter properly indexed. A subsequent purchaser is charged with notice of a misindexed instrument but has a cause of action against the recorder’s office.

Question 36

To be a holder in due course of a note, what requirements must be met?

Answer 36

(1) The note must be negotiable in form (payable “to bearer” or “to the order of” the named payee, with a promise to a pay a certain sum in money, with no other promises)
(2) The original note must be indorsed and signed by the named payee
(3) The original note must be delivered to the transferee
(4) The transferee must take the note in good faith (no notice that it is overdue, has been dishonored, is subject to any defense by the maker) and must pay value for it

Question 37

When can a mortgagee foreclose on a mortgage?

Answer 37

When the mortgagor defaults on his debt. A mortgagee may wish to take possession of the property, or begin receiving the rents from the property, before foreclosure.

Question 38

What is the difference between the lien theory of title and the title theory of title?

Answer 38

According to the lien theory, the mortgagee is considered the holder of a security interest only and the mortgagor is deemed the owner of the land until foreclosure. The mortgagee may not have possession before foreclosure. Conversely, under the title theory, legal title is in the mortgagee until the mortgage has been satisfied or foreclosed, and the mortgagee is entitled to possession upon demand at any time.

Question 39

What is redemption in equity?

Answer 39

At any time prior to the foreclosure sale, the mortgagor may redeem the property by paying the amount due. If the note or mortgage contains an acceleration clause, the full balance of the note or mortgage must be paid to redeem. This right cannot be waived in the mortgage itself.

Question 40

What will preserve a junior mortgagor’s interest when a senior mortgagor forecloses?

Answer 40

Failure to join a junior interest holder in a foreclosure action results in preservation of that party’s interest.

Question 41

What are the ways that priority of a mortgage chronology can be changed?

Answer 41

(1) Operation of the recording statute if a prior mortgagee fails to record;
(2) A subordination agreement between a senior and junior mortgagee;
(3) A purchase money mortgage;
(4) Modification of a senior mortgage (junior mortgage has priority over the modification); or
(5) The granting of optional future advances by a mortgagee with notice of a junior lien (junior lien has priority over advances)

Question 42

What is a purchase money mortgage?

Answer 42

A PMM is mortgage given in exchange for funds used to purchase the property. PMMs are given either to the seller as part of the purchase price or to a third-party lender. PMMs have priority over prior non-PMMs, even such mortgages or liens are recorded first. However, subsequent mortgages or liens may defeat PMM priority by operation of the recording acts. As between two PMMs, a seller’s mortgage has priority over a third party’s. If there are two third-party PMMs, priority is determined by chronological order. Usually two PMMs have notice of the other’s existence; thus, the recording acts are no use in determining priority.

Question 43

What is a fee simple determinable?

Answer 43

A FSD terminates upon the happening of a state event and AUTOMATICALLY reverts to the grantor. it is created by clear durational language, such as “for so long as,” “while,” “during,” or “until.” A fee simple determinable can be conveyed, but the grantee takes subject to the estate’s being terminated by the specified event.

The correlative future interest in the grantor is a Possibility of Reverter (transferable, descendible, and devisable).

Question 44

What is a Fee Simple Subject to Condition Subsequent?

Answer 44

A FSSTCS is an estate in which the grantor reserves the right to terminate the estate upon the happening of a stated event; i.e. the estate does not automatically terminate –the grantor must take some action. Created by using conditional words, such as “upon condition that,” “provided that,” “but if,” and “if it happens that.”

Right to terminate, reserved by grantor is called the right of entry. It must be expressly reserved. All states agree these are descendible; dispute as to whether they are devisable, or transferable inter vivos.

Question 45

What is a Fee Simple Subject to an Executory Interest?

Answer 45

If a fee simple estate terminates upon the happening of a stated event (because it is determinable or subject to a condition subsequent) and then passes to a third party rather than reverting to the grantor or giving the grantor a right to terminate, the third party has an executory interest.

Question 46

What is a life estate?

Answer 46

A life estate is one measured by the life or lives of one or more persons. It may be created by operation of law or by conveyance.

Question 47

What is a life estate pur autre vie?

Answer 47

This is life estate measured by the life other than the grantee’s (“to A for the life of B”). A life estate pur autre vie also results when the life tenant conveys his life estate to another (because, remember, a life tenant cannot convey more than what he has).

Question 48

What is the Doctrine of Waste?

Answer 48

A life tenant is entitled to any ordinary uses and profits of the land but cannot do anything that injures the interests of a remainderman or reversioner. A future interest holder may sue for damages or to enjoin such acts, and if she spends money to perform the life tenant’s obligations, she is entitled to reimbursement.

Question 49

What are the three main types of waste?

Answer 49

Affirmative waste – exploitation of natural resources –life tenant limited to (i) necessary for repair or maintenance of the land, (ii) the land is suitable only for such use, or (iii) it is expressly or impliedly permitted by the grantor. If mining already done, can continue but limited to mines already open

Permissive waste – see description in other card

Ameliorative waste – see description in other card

Question 50

What is permissive waste?

Answer 50

Life tenant obligated to (i) preserve the land and structures in a reasonable state of repair, (ii) pay interest in mortgages (not principal), (iii) pay ordinary taxes on the land; and (iv) pay special assessments for public improvements of short duration. Permissive waste occurs when life tenant fails to do so. This duty is limited to the extent of income or profits generated from the land (or to its reasonable rental value, if no profit). A life tenant is not responsible for insuring and is not responsible for third party tortfeasors.

Question 51

What is ameliorative waste?

Answer 51

A change that benefits the property economically. This waste was actionable at common law, but not a life tenant may alter or even demolish existing buildings if: (i) the market value of the future interests is not diminished; and either (ii) the remaindermen do not object, or (iii) a substantial and permanent change int he neighborhood conditions has deprived the property in its current form of reasonable productivity or usefulness.

Question 52

Is a future interest a present, legally protected right in property?

Answer 52

Yes.

Question 53

What is a reversion?

Answer 53

A reversion is the estate left in a grantor who conveys less than she owns. It arises by operation of law; it does not have to be expressly reserved. A reversion is alienable, devisable, and inheritable. Its holder can sue for waste and tortious damage to the reversionary interest.

Question 54

What is a remainder?

Answer 54

A remainder is a future interest in a third person that can become possessory on the natural expiration of the preceding estate. It cannot divest a prior estate, and it cannot follow a time gap after the preceding estate. A remainder must be expressly created in the instrument creating the preceding possessory estate.

Question 55

What are the three types of vested remainders?

Answer 55

Indefeasibly vested remainder – created in existing and ascertained person, not subject to condition precedent.

Vested remainder subject to open – created in class of persons that is certain to become possessory, but subject to diminution because of augmentation of class.

Vested remainder subject to total divestment – this is vested remainder subject to a condition subsequent.

Question 56

What is a contingent remainder?

Answer 56

Contingent remainders are those created in unborn or unascertained persons, or subject to a condition precedent.

Question 57

What is the Doctrine of Merger?

Answer 57

When one person acquires all of the present and future interests in land except a contingent remainder, under the common law, the contingent remainder is destroyed.

Question 58

What is the Doctrine of Worthier Title?

Answer 58

Under the DOWT, a remainder in the grantor’s heirs is invalid and becomes a reversion in the grantor.

This is generally treated as a rule of construction. DOWT only applies to inter vivos transfers (not wills), and only if the word “heirs” is used.

Question 59

What is an executory interest?

Answer 59

This is a future interest in third parties that either divest a transferee’s preceding freehold estate (shifting), or follow a gap in possession or cut short a grantor’s estate (springing).

Remember, if a third party’s future interest does not follow the natural termination of the preceding estate, it must be an executory interest; a remainder cannot follow a fee simple estate.

Question 60

When does a class close?

Answer 60

In the absence of express contrary intent, a class closes (meaning no one born after may share in the gift) when some member of the class can call for distribution of her share of the class gift. REMEMBER, persons in gestation at the time the class closes are included in the class.

Question 61

When is an assignee under a lease bound by the terms of the original lease?

Answer 61

If the parties are in privity of estate, and the covenant is one that runs with the land. Covenants in a lease will run with the land if the parties so intend and both the benefit and burden of the covenant touch and concern the land.

Question 62

What is the hierarchy for what controls in describing property when there are competing descriptions?

Answer 62

First is most reliable:

Natural monuments
Artificial monuments
Courses
Distances
Name
Quantity

Question 63

What options does a landlord have when a tenant holds over?

Answer 63

The landlord may (i) treat the holdover tenant as a trespasser and evict, or (ii) bind the tenant to a new periodic tenancy.

Question 64

What is a profit?

Answer 64

A profit is a nonpossessory interest in land, allowing the grantee to enter on the land and remove resources of the land. It can be conveyed from the original grantee to a third party. Implied in every profit is an easement entitling the benefit holder to enter the servient estate to remove the resources. All the rules governing creation, alienation, and termination of easements are applicable to profits. Can also be extinguished through surcharge – a misuse that overly burdens the servient estate.