Real Property Law

Question 1

Fee Simple

Answer 1

A fee simple is the default estate. A fee simple is created when the grantor uses any of the following langauge:
1. “O to A”
2. “O to A and his/her heirs”
3. “O to A forever”

Question 2

Defeasible Fee

Answer 2

A conveyence in fee simple in which the grantor places express conditions on the conveyence. A defeasible fee is capable of lasting forever but may be terminated by the occurrence of an event.

A Defeasible Fee gives the grantee a present possessory interest in the property, but reserves a future interest in the property in the favor of the grantor or a third party

Question 3

Fee Simple Determinable (Defeasible Fee type 1)

Answer 3

Fee Simple Determinable is a conditional conveyance in which the grantor retains a possibility of reverter. The possibility of reverter vests automatically when the condition fails (i.e., the grantor does not have to reclaim the property, the interest automatically vests back to him).

A FSD is created by durational language:
1. “Whilethe property is used for farming;
2. “During the property’s use as a farm”
3. ‘Until the property is no longer used as a farm.”

Question 4

Fee Simple Subject to Condition Subsuquent (Deafeasible Fee Type 2)

Answer 4

A FS subject to condition subsuquent is a conditional conveyance in which the grantor retains a right of reentry. The right of entry does not vest automatically when the condition fails, the Grantor MUST reclaim the property. A fee simple subject to condition subsuquent is created when the grantor uses conditional language, such as:
1. “Provided that the property is used for farming.”
2. “On the condition that the property is used as a farm.”

Question 5

Fee Simple Subject to an Executory Interest (Defeasible Fee 3)

Answer 5

A fee simple subject to executory interest is a conditional conveyance in which a third party (not grantor) is granted an executory interest in the property. An executory interest is a future interest that divests (i.e., terminates) an earlier interest.

Question 6

Life Estate

Answer 6

A Life Estate is a present possesory estate that is limited by a person’s life (terminates when the measuring life dies).

A life estate is transferable. The transferee’s interest in the property terminates **upon the death **of the measuring life.

Question 7

Future Interest

Answer 7

A future interest can follow a life estate. If possesion of the land goes back to the grantor after the life estate terminates, then the grantor retains a reversion. If possesion of the land goes to a third party after the life estate terminates, then the third party takes a remainder. A Remainder can be vested or contingent.

Question 8

Vested Remainder

Answer 8

A vested remainder is a future interest that is both:
1. Given to an ascertained (readily identifiable) grantee; AND
2. NOT subject to a condition precedent.

Question 9

Contingent Remainder

Answer 9

A Contingent Remainder is a future interest that fails either of the two vested remainder requirements.
IE. Grantee is unascertainable; OR
Interest is subject to a condition precedent

Question 10

Tenancy in Common

Answer 10

A tenancy in common is the default estate created by a convenience of real property to two or more people. The grantor need NOT use any type of explicit language to create a tenancy in common.

Question 11

Rights of Tenants in Common

Answer 11

Each tenant in common has:
(1) A seperate but undivided interest in the property;
(2) The right to possess and enjoy the entire property; AND
(3) The right to transfer their interest in the property freely during their lifetime or at death (i.e., NO right of survivorship).

Question 12

Joint Tenancy

Answer 12

A joint tenancy is a conveyance of real property to two or more people that is distinguished by a right of survivorship, whereby the surviving joint tenants automatically take the deceased tenant’s property interest. Thus, joint tenant CANNOT pass their property interest by will or interstate succession.

A joint tenancy is created by a conveyance of real property to two or more people if the grantor:
(1) Makes a clear expression of intent to create a joint tenancy; AND
(2) Uses survivorship language.

Question 13

Four Unities (Required to create a joint tenancy) P.I.T.T.

Answer 13

P.I.T.T.
Possesion.: Each joint tenant must have an equal right to posses and enjoy the whole property.
Interest.: Each joint tenant must have an equal share of the same type of interest.
Time: Joint Tenants must recieve their property interests at the same time.
** Title**: Joint tenants must receive their property in the same instrument of title.

Question 14

Severance of the Joint Tenancy

Answer 14

If any of the four unities is severed, then the joint tenancy is terminated and the cotenants hold the property as tenants in common. There are two main situtions where this happens:
(1) When a joint tenant conveys their interest to a third party, that party takes the property as a tenant in common (clearly destroys the time and title unities).
(2) If there were originally three or more joint tenants, the joint tenancy remains among the other joint tenants not involved in the conveyance while the third party is a tenant in common.

Question 15

Mortgaging of a Joint Tenancy

Answer 15

When a joint tenant grants a mortgage interest inthe joint tenancy to a creditor, the effect will depend on the jurisdiciton:
(a) Lien theory jurisdiction: the mortgage is treated as a lien and does NOT terminate the joint tenancy.
(b) Title theory jurisdiction, the mortgage will terminate the joint tenancy, and the tenants will eat then hold the property as tenants in common.

Question 16

Cotenant (TIC/JT) Division of Expenses, Payments, and Costs

Answer 16

1. Operating Expenses: are divided based on the ownership interests of each cotenant. Operating expenses consist of necessary charges (e.g., taxes and mortgage payments).
2. Rent Payments: Received from a third party’s possession of a property, minus operating expenses, are divided based on the ownership interests of each cotenant.
3. Repair Costs:(Even if the repairs are necessary) are NOT divided between the cotenants (i.e., there is no right for reimbursement for necessary repair costs). However, the cotenant who pays for the repairs can get credit for the repairs in a partition action.
4. Improvement Costs are NOT divided between cotenants. In partition, improver can get credit.

Question 16

Ouster

Answer 16

Each cotenant (whether a joint tenant or tenant in common) has the right to possess ALL of the property, regardless of ownership share. An ouster occurs if the cotenant denies another cotenant access to the property. If this occurs, the ousted tenant can:
(1) Get an injunction granting access to the property; AND/OR
(2) Recover **damages **for the value of the use while ousted

Question 16

Leasehold Interest

Answer 16

The relationship between a landlord and a tenant can create four types of possessory estates.
(1) Tenancy for years;
(2) Periodic tenancy;
(3) Tenancy at will;
(4) Tenancy at sufferance.

Generally governed by a contract (the “lease”), which contains the covenants of the parties. Generally, each party must perform his promises pursuant to the lease whether or not the other party performs his promises.

Question 16

Partition

Answer 16

An equitable remedy that is available unilaterally to joint tenants and tenants in common. There are two types of parition actions:
(1) A partition in kind physically divides the property into distinct portions. Courts have a preference for physical divisions of property over forced sales.
(2) A partition by sale. Involves selling the property and dividing the proceeds from the sale among each cotenant based on their ownership interests. Courts will order a partition by sale if a partition in kind is:
(a) NOT practicable;
(b) NOT fair to all parties.

Question 16

Tenancy for years

Answer 16

A tenancy for years is an interest that lasts for a fixed and ascertainable amount of time (e.g., Landlord leases Greenacre to Tenant for 6 months). If the term is longer than one year, then the agreement must be in writing because of the statute of frauds.

A tenancy for years automatically terminates when the term expires.

Question 16

Tenancy at Will

Answer 16

A tenancy at will continues until it is terminated by either party. It may be terminated at any time for any reason, and may be terminted without notice. If either party dies, the tenancy at will is terminated.

The parties must intend to create a tenancy at will. Intent can be:
(1)Express: (e.g., a specific term in the signed lease agreement gives either party both parties the “right to terminate at will”.); OR
(a) If the agreement gives only the landlord the right to terminate at will, the tenant also gets the right to terminate implicitly.
(b) If the agreement gives only the tenant the right to terminate at will, the landlord is NOT given the right to terminate at will.

(2) Implied:(ongoing payment of rent at will)

Question 16

Periodic Tenancy

Answer 16

A periodic tenancy is repetitive and ongoing interest that continues for a set period of time UNTIL the lease is terminated by proper notice from either party (e.g., month-to-month lease, year-to-year lease, etc.)

Proper notice requires the terminating party to give notice before the start of what will be the last term. The notice is effective on the last day of the term.

The parties must intend to create a periodic tenancy.
Intent can be:
(1) Express: A specific term in the signed lease agreement; OR
(2) Implied (e.g., ongoing payment of rent).

Question 16

Implied Warranty of Habitability

Answer 16

A warranty of habitability is implied in every residential lease(NOT commercial leases). The implied warranty of habitability requires landlords to maintain their property such that it is reasonably suitable for basic human needs (failure to comply with applicable housing codes constitutes a breach).
The tenant CANNOT waive habitability protection.

Question 17

Duty to Pay Rent

Answer 17

The tenant is contractual duty to pay rent to the landlord in exchange for his possessory interest in the landlord’s property. If the tenant fails to pay rent, the landlord may evict the tenant or sue the tenant for breach of contract.

However, the three main situations where the duty to rent is suspended:
(1) The premises are Destroyed (as long as the tenant did not cause the damage)
(2) The landlord completely or partially evicts the tenant; OR
(3) The landlord materially breaches on the lease

Question 17

Tenancy at Sufferance

Answer 17

A tenancy at sufferance is created when the tenant refuses to vacate the premises after his lease has terminated. This situation creates a temporary tenancy, where the terms of the prior lease control, until:
(1) The landlord evicts the tenant;
(2) The landlord re-leases the property to the tenant; OR
(3) The tenant voluntarily vacates.

Question 18

Tenant rights when landlord has breach implied warranty of habitability

Answer 18

1. Vacate the premises and terminate the lease;
   (a) Note that the tenant is NOT required to vacate the premises.
2. Withhold or reduce the rent;
   (a) If the tenant chooses to withold rent, the tenant must first notify the landlord of the problem and give the landlord a reasonable opportunity to correct the problem.
3. Remedy the defect and offset the costs against the rent; OR
4. Defend against eviction.

Question 19

Implied Covenant of Quiet Enjoyment

Answer 19

Every lease (commercial and residential) includes an implied covenant of quiet enjoyment, which prevents the landlord from taking action that makes the premises wholly or substantially unsuitable for their intended purposes resulting in the constructive eviction of the tenant.

The implied covenant of quiet enjoyment is breached if the tenant is constructively evicted. Occurs if:
(1) Landlord caused the premises to be unsuitable for their intended purposes;
(2) Tenant notified the landlord of the problem;
(3) Landlord did NOT correct the problem; AND
(4) Tenant vacates the premises after a reasonable amount of time passed.

Question 20

Assignment

Answer 20

An assignment is a complete transfer of the tenant’s entire remaining term under the lease. In an assignment, the landlord can collect rent from the:
(1) Assignee (because there is privity of estate); OR
(2) Original Tenant (because there is privity of contract)

Question 21

Sublease

Answer 21

A sublease is a transfer of less than the tenant’s entire remaining term under the lease. In a sublease, the landlord can ONLY collect rent from the original ternant (because there is privity of contract and estate). The subtenant ONLY has rent obligations to the original tenant.

Question 22

Surrender

Answer 22

A surrender terminates the lease agreement and ends the landlord-tenant relationship between both parties (releases both parties from their duties and obligations under the lease agreement). A surrender occurs when:
(1) A tenant returns possession of the leased premises to the landlord before the expiration of the lease; AND
(2) The landlord consents.

Question 23

Abandonment

Answer 23

An abandonment when the tenant unilaterally returns possesion of the leased premises before the lease expires WITHOUT the landlord’s consent. Here, the tenant will have to continue paying rent until the landlord is able to find a replacement tenant. If the tenant refuses to pay rent, the landlord is entitled to damages for the difference between the original rent and the rent recieived from the replacement tenant.

Question 24

Duty to Mitigate

Answer 24

Under the majority rule, the landlord has a duty to mitigate damages if the tenant abandons the property early or is evicted by making reasonable efforts to re-rent the property to another tenant. The landlord is entitled to damages for the difference between the original rent and the rent received from the replacement tenant.

Under the minority rule, the landlord does NOT have to mitigate damages.

Question 25

Real Covenants

Answer 25

A real covenant is a promise concerning the use of the land that runs to successors of the promise. It typically requires the holder do something or refrain from doing something to the land.

The benefit of the covenant is the ability to enforce the covenant. The burden of the covenant is being subject to it or bound by it.

Question 26

Elements for Benefit of Real Covenant running to Successors

Answer 26

Elements:
(1) Writing. The covenant must be included in writing in the original conveyance (i.e., must satisfy the statute of frauds);
(2)Intent. The original parties must have intended for the covenant to run with the land.
(3) Touch and Concern. The covenant must touch and concern (i.e., benefit of the covenant must affect both the promissee and promisor as owners of the land – usually by incresing the value of the land)
(4) RelaxedVertical Privity: The successor need only take an interest that is carved out of the original party’s estate.

Question 27

Elements for a BURDEN of a real covenant to run to successors,
the following six elements must be present

Answer 27

(1) Writing. The covenant must be included in writing in the original conveyance.
(2) Intent. The original parties must have intended for the covenant to run with the land.
(3) Touch and Concern. The covenant must touch and concern (i.e., the burden of the covenant must affect both the promisee and promisor as owners of the land).
(4) Strict Vertical Privity . The successor make take the original party’s entire interest.
(5) Horizontal Privity. The instrument used in the conveyance of the property betweem the original parties must contain the estate and the covenant.
(6) Notice. The new owner must have notice of the covenant. Notice must be either actual or constructive. Inquiry notice may suffice for equitable servitudes (e.g. an inspection of the land would reveal the servitude.)

Question 28

Equitable Servitude

Answer 28

An equitable servitude operates like a real covenant with easier requirements. The main difference between a covenant and an equitable servitude is in the remedy. The remedy for a breach of a real covenant is money damages – the remedy for a breach of an equitable servitude is injunctive relief.

Question 29

Elements for equitable servitude to bind successors

Answer 29

1. Writing: The servitude must be included in writing in the original conveyance (i.e., must satisfy SOF)
2. Intent: The original parties must have intended for the servitude to run with the land.
3. Touch and Concern: The servitude must touch and concern the land (i.e., the servitude must affect both the promisee and promisor as owners of the land – usually by increasing the value of the land.)
4. Notice: The new owner must have notice of the servitude. Notice may be either actual, constructive, or inquiry.

Question 30

Implied Reciprocal Servitudes

Answer 30

Arise in planned subdivisions. Most jurisdictions impose the following requirements to enforce an implied reciprocal servitude:
(1) There must be intent to create a servitude on all plots (i.e., a common scheme);
(2) The servitude must be negative (i.e., a promise to refrain from doing something); AND
(3) The party against whom enforcement of the servitude is sought must have actual, constructive, or inquiry notice.

Question 31

Express Easements

Answer 31

An easement is a right held by one person to use another’s land. An express easement can be created by grant or by reservation:
1. By Grant. An express easement by grant arises when it is affirmatively created by the parties in a writing that satisfies the statute of frauds.
2. By Reservation. An express easement by reservation is created when a grantor conveys land but reserves an easement right in that land for his own use.

Question 32

Implied Easement by Implication

Answer 32

An implied easement by implication is created when:
1. A single tract of land is divided by a common owner and a piece of the land is conveyed to another;
2. Before the division, the common owner used the single tract as if there was an easement on it;
3. After the division, the common owner’s use of the conveyed land must be continuous and apparent;AND
4. Such use must be reasonably necessary for the owners use and enjoyment.

Question 33

Implied Easement by Necessity

Answer 33

An implied easement by necessity when:
1. A single tract of land is divided by a common owner and a piece of the land is conveyed to another; AND
2. Necessity arose when the land was divided into two seperate estates where one of the properties became virtually useless without the easement.

Question 34

Implied Easement by Prescription

Answer 34

An implied easement by prescription is created when a landowner allows a trespasser to use his land continously for the statutory period. The trespasser’s use must be:
1. Hostile (i.e., without permission from the owner of the land)
2. Open and notorious (i.e., not hidden); AND
3. Continuous for the statutory period

Unlike Adverse Possession the use NEED NOT be** exclusive.**

Question 35

Termination of the Easement

Answer 35

1. Release. An easement is terminated if the holder expressly releases it. The release must be in writing and satisfy the SOF.
2. Merger. An easement is terminated if the holder acquires fee title to the underlying – the easement merges into the title.
3. Abandonment. An easement is terminated if the holder demonstrates an intent to never use the easement again through physical action.
4. Prescription. An easement is terminated if the holder fails to protet against trespassers for the statutory period.
5. Sale to a Bona Fide Purchaser. An easement may be terminated if the landowner sells the property.
6. Estoppel. An easement is terminated if the landowner reasonably relies to his detriment on the easement holder’s assurance that the easement will no longer be used.
7. End of Necessity. An easement by necessity lasts as long as the easement is necessary – if it is no longer necessary, the easement terminates.

Question 36

Profits and Licenses

Answer 36

A profit is a right to enter another’s land to remove a specific natural resource.

A license is a revocable permission to use another’s land

Question 37

Fixtures

Answer 37

A fixture is tangible **personal property **(i.e., chattel) that is attached to real property in such a manner that it is treated as **part of the real property **when determining its ownership.

Generally, a chattel is considered a fixture if the owner of real property intends for the chattel to become a fixture by attaching it to the real property.

Factors for intent:
(1) Importance of the chattel to the real property;
(2) Whether the chattel was **specifically designed **for use on the real property; AND
(3) The amount of damage removal of the chattel would cause to the real property

Question 38

Land Sale Contract Requirements

Answer 38

A valid contract for the sale of land must satify the statute of frauds.
(1) Be in writing and is signed by the party to be charged; AND
(2) Contain all of the essential terms

Question 39

Exceptions to the writing requirement
for land sale contracts

Answer 39

(1) Partial Performance Doctrine: Requires:
1. Possesion by the purchaser;
(a) Payment of all or part of the purchase price, AND/OR;
(b) Improvements to the land made by the purchaser.

Promissory Estoppel/Detrimental Reliance operates as a valid exception where a party reasonably and foreseeably relied on the land sale contract to his detriment and would suffer hardship if the contract is not enforced.

Question 40

Merger

Answer 40

Covenants under the land sale contract are MERGED into the deed and CANNOT be enforced unless the covenant is also in the deed.

Merger breaks the land sale contract down into two stages:
(1) Contract Stage: Prior to closing (i.e., the date that the ownership of the property is transferred to the buyer), any liability must be based on a provision in the land sale contract.
(2) Deed Stage: After closing (i.e., the date that the ownership of the property is transferred to the buyer), any liability must be based on a deed warranty.

Question 41

Marketable Title

Answer 41

In every land sale contract, the seller has a duty to convey marketable title to the buyer at closing. Marketable title is title that is free from an unreasonably risk of litigation.
Defects in title that render title unmarketable include:
1. Title acquired by adverse possession that has not been quieted (i.e., supported by a judicial decree).
2. Future interest holders that not agreed to the transfer;
3. Private encumberances (e.g., mortgage, covenant, option, easement)
4. Violation of a zoning ordinance; OR
5. Significant phyiscal defect (encroachment on the land that is incurable)

If there is a defect in title rendering title unmarketable, it must be fixed or cured BEFORE closing. If the seller cannot deliver marketable title at closing, the buyer can rescind the contract without penalty.

Purchaser may choose to waive the requirement that the seller deliver marketable title, if they do so the seller CANNOT cancel the sale for failure to deliver marketable title.

Question 42

Implied Warranty of Fitness or Suitability

Answer 42

Applies in new construction. It protects against latent defects and warrants that the new construction is safe and fit for human habitation.

In most jurisdictions, both the initial purchaser and subsuquent purchasers may recover damages. In other jurisdictions, only the initial purchaser can enforce this warranty.

Question 43

Duty to Disclose Defects

Answer 43

Most jurisdictions impose a duty on the seller to disclose material defects to the buyer.
Material defects are defects that substantially impact the:
(1) Value of the property;
(2) Desirability of the property;
(3) Health and safety of its occupants

General disclaimers (e.g., as is) do NOT satisfy the seller’s duty to disclose defects.

Question 44

Equitable Conversion and Risk of Loss

Answer 44

In the majority of jurisdictions, the purchaser holds equitable title during the period between execution of the contract and the closing and delivery of the deed. During this period:
(1) The purchaser is responsible for damages to the property;
(2) The seller, as holder of legal title has the right to possess the property.

A minority jurisdictions follow the Uniform Vendor and Purchaser Risk Act. This places the risk of loss on the seller until closing the delivery of the deed.

Question 45

The Mortgage

Answer 45

A mortgage is a security device used to secure repayment of a debt. There are two components to a mortgage:
(1) The Note. The note is the borrower’s promise to repay the debt or loan.
(2) The Mortgage. The mortgage is the device that provides security to the note by allowing the lender to force a foreclosure sale to recover the outstanding debt if the borrower defaults on the loan.

Question 46

Purchase Money Mortgages and Future-Advance Mortgages

Answer 46

1. Purchase-Money Mortgage: A purchase money mortgage is a mortgage where the borrower takes out a loan for the purpose of purchasing property.
2. Future-Advance Mortgage: A future advance mortgage is a line of credit used for home equity, construction, etc.

Question 47

Alternative Security Devices

Answer 47

There are three main alternatives used instead of mortgages as security devices:
(1) Deed of trust: Oeprates like a mortgage, but involves three parties:
(a) The borrower;
(b) The lender;
(c) A third party-trustee who holds title of the property until the loan is paid off.
(2) Installment Land Contract: The seller finances the purchase in an installment, retaining title until the buyer makes the final payment on the installment plan.
(3) Absolute Deed: An absolute deed is an instrument used by the borrower to transfer the deed to the property instead of conveying a security interest in exchange for a loan.

Question 48

Acceleration Clauses

Answer 48

A due-on-sale clause allows the lender to demand immediate full payment from the borrower upon transfer. A due-on-encumberance allows the lender to demand accelerated payments from the borrower when the borrower obtains a second mortgage or otherwise encumbers the property.

Question 49

Borrower Transfers and Liability

Answer 49

The borrower may transfer the property by deed, will, or intestate succession. The borrower remains personally liable after the transfer unless:
(1) The lender releases the borrower from his obligation;** OR**
(2) The lender modifies the transferee’s obligation

If the transferee assumes the mortgage, the transferee is primarily liable while the original borrower is secondary liable.

If the transferee takes title subject to the mortgage, the transferee is NOT personally liable upon default while the original borrower remains liable (default/presumed answer)

Question 50

Foreclosure

Answer 50

A forced sale of an asset where the proceeds of the sale are used to pay off the debt. If the proceeds are not enough to cover the debt, the lender may seek a deficiency judgment against the borrower. If there are excess proceeds, the money will be used to satisfy other creditors.

Question 51

Priority of Interests: Foreclosure

Answer 51

Interests acquired before the interest that is being foreclosed (senior interests) survive the forceclosure while interests acquired after the foreclosed interest (junior interests) are extinguished by the foreclosure.

Question 52

First in Time Rule

Answer 52

All surviving debts MUST be satisfied in chronological order starting with the oldest and moving down, unless the following apply:
1. Purchase-Money-Mortgage: A PMM has priority over all other mortgages, even those earlier in time, that arose prior to the borrower’s acquisition of the property.
2. Unrecorded Senior Mortgages a junior mortgage that is properly recorded may take priority over an unrecorded senior mortgage.
3. Subordination Agreements a senior lender can agree to subordinate to a junior interest.
4. Mortgage Modifications. A senior lender and borrower can agree to modify the mortgage. If the modification is more burdensome on the borrower, the senior lender subordinates its interest. However, only the modification subordinates (the original mortgage remains senior).

Question 53

Adverse Possession Elements

Answer 53

Adverse Possession allows a trespasser in unlawful possession of land owner by another to acquire title to that land if their possession is:
1. Continuous for the Statutory Period.
(a) Seasonal or infrequent use will suffice if the use is consistent with the type of property being possessed.
(b) Tacking. An adverse possessor can tack on the time of possession of a prior adverse possesor to meet the statutory period if the adverse possesors are in privity with one another.
(c) Disabilities The statutory period will not run against a true owner who has had a disability at the time the adverse possesion began.
2. Open and Notorious: The adverse possesor must use the property as if they were the true owner (i.e., possession cannot be hidden from the true owner.)
3. Exclusive: The adverse possessor cannot share possesion of the property with the true owner.
4. Hostile: The adverse possessor cannot have the true owners consent to possess or use the property (i.e., the possession must be adverse to the true owner’s interest.)**

Question 54

Deed Requirements

Answer 54

1. Satisfies Statute of Frauds
2. Identifies the Parties
3. Describes the property sufficiently; AND
4. Be delivered and accepted.
   (a) Delivery: A deed is delivered when the grantor demonstrates a present intent to transfer the property. A deed is not transferred if the delivery is revocable. A grantor can make a valid delivery to an agent.
   (b) Acceptance: Acceptance is generally presumed provided the transfer is for value.

Question 55

Deed Types

Answer 55

General Warranty Deed: Provide the greatest amount of title protection. The grantor warrants against all defects, EVEN IF the Grantor did not cause the defects.

Special Warranty Deed: Special wrranty deeds provide less title protection then general warranty deeds. The grantor warrants titles against defects caused by the grantor.

Quitclaim Deed: Quitclaim deeds provide the least amount of title proection. The grantor makes no warranties as to the health of the title.

Question 56

Present Covenants in General and Special Warranty Deeds

Answer 56

1. **Covenant of Siesen: **Warrants the deed describes the land in question and that the grantor is the rightful owner.
2. **Covenant of the Right to Convey: ** Warrants that the grantor has the right to convey the property.
3. Covenant Against Encumberances: Warrants that there are no undisclosed encumberances on the property that could limit it’s value.

Question 57

Three Future Covenants in General and Special Warranty Deeds

Answer 57

1. Covenant of Quiet Enjoyment: Grantor promises to defend against future challenges to the grantee’s title to the property.
2. Covenant of Warranty: Grantor promises to defend agaisnt future developments that extend into the grantee’s property boundary.
3. Covenant of Future Assurances: Grantor promises to do what is reasonably necessary to cure future problems with title.

Question 58

Recording Statutes

Answer 58

Every state has adopted a recording statute that modifies the common law rules for competing claims to title. The concept of notice is crucial to apply these modified recording statutes. There are three types of recording statutes adopted by the states:

(1) Race Statutes: First grantee to record acquires title, regardless of notice.
(2) Notice Statutes: A subsequent purchaser acquires title if the purchase is made WITHOUT notice of a prior unrecorded conveyance.
(3) Race-Notice Statutes: A subsequent purchaser acquires title if:
(a) The purchase is made WITHOUT notice of a prior unrecorded conveyance; AND
(b) The subsequent purchaser records first.

Question 59

Types of Notice

Answer 59

1. Actual Notice: A subsequent purchaser has actual notice when he has personal knowledge of a prior interest.
2. Constructive Notice: A subsequent purchaser is on constructive notice when the prior interest is recorded.
   (a) NOTE: if a deed is not recorded properly, it is considered a wild deed. A wild deed does NOT put subsequent purchasers on constructive notice.
3. Inquiry Notice: A subsequent purchaser has inquiry notice when a reasonable investigation would have revealed the existence of prior claims (e.g., someone is clearly living on the property in question).

Question 60

The Shelter Rule

Answer 60

A person who transferred property from a bona fide purchaser (BFP) has the same recording statute protections as the BFP. A BFP is a person who pays valuable consideration (i.e., not a heir, devisee, or donee) for real property without notice of a prior interest.