Real Property (Main Deck)* Flashcards
WHEN APPROACHING A PROPERTY QUESTION, WHAT 2 BROAD AREAS SHOULD YOU CONSIDER?
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STEP 1: RIGHTS IN LAND
1A: Possessory Interests
1B: Rights Incidental to Ownership in Land
1C: Rights to Use Another’s Land
STEP 2: REAL ESTATE TRANSACTIONS
2A: Conveyancing
2B: Mortgages
RIGHTS IN LAND:
LIST 5 TYPES OF POSSESSORY INTERESTS
1) Present Estates
2) Concurrent Estates
3) Future Interests
4) Landlord/Tenant
5) Taking of Possessory Interests
POSSESSORY INTERESTS:
LIST THE TYPES OF PRESENT ESTATES
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1) Fee Simple Absolute
2) Defeasible Estates
a) Fee Simple Determinable
b) Fee Simple Subject to Condition Subsequent
c) Fee Simple Subject to Executory Interest
3) Life Estates
a) Life Estate
b) Life Estate Pur Autre Vie
FEE SIMPLE ABSOLUTE
(Definition, Rule, and Note)
Definition: A fee simple absolute is the broadest estate possible, with absolute ownership of an undivided interest for an unlimited period of time.
Rule: Property held in fee simple absolute can be freely divided, sold, bequeathed, or inherited (i.e.. freely devisable, descendible, and alienable).
Note: Under the common law, the language “and her heirs” or similar language created a fee tail. A fee tail limited the duration of the estate by restricting a successive owner’s ability to transfer the estate to anyone other than a lineal descendent. Most jurisdictions have abolished this rule and a successor who takes title under a fee tail will have title in fee simple absolute.
DEFEASIBLE ESTATES
(Define, Note (2))
Definition: Defeasible estates are fee simple estates that are subject to termination upon the occurrence of a specified event.
Note:
1) Three types of defeasible estates are possible:
a) Fee Simple Determinable,
b) Fee Simple Subject to Condition Subsequent,
c) Fee Simple Subject to Executory Interest.
2) Defeasible estates are freely transferable. Thus, a defeasible fee may be divided, sold, bequeathed, or inherited subject to the stated condition or event.
DEFEASIBLE ESTATES:
FEE SIMPLE DETERMINABLE (& POSSIBILITY OF
REVERTER)
(Definition, Rule, and Note (3))
Definition: A fee simple determinable is a defeasible estate that is intended to continue until the occurrence of a stated event or violation of a stated condition.
Rule: Should the event occur or condition be violated, the fee simple determinable automatically terminates, and ownership reverts to the Grantor or the Grantor’s heirs in fee simple absolute.
Note:
1) The parties hold the following rights:
a) The Grantee holds a fee simple determinable,
b) The Grantor holds a possibility of reverter.
2) The Grantor must use clear durational language to create a fee simple determinable.
DEFEASIBLE ESTATES:
FEE SIMPLE SUBJECT TO A CONDITION SUBSEQUENT (& RIGHT OF REENTRY)
(Definition, Rule, and Note (2))
Definition: A fee simple subject to a condition subsequent is a defeasible estate that, upon the occurrence of a stated event or violation of a stated condition, may be terminated by the Grantor.
Rule: Upon the occurrence of the stated event or violation of the condition, the Grantor must act to terminate the Grantee’s rights and exercise his right of reentry. Forfeiture is not automatic.
Note: The parties hold the following rights:
1) The Grantee holds a fee simple subject to a condition subsequent,
2) The Grantor holds a right of reentry.
DEFEASIBLE ESTATES:
FEE SIMPLE SUBJECT TO AN EXECUTORY INTEREST
(Define & State the Rule)
Definition: A fee simple subject to an executory interest is a defeasible estate that provides for the passing of ownership from the Grantor to a Grantee (springing executory interest) or from one Grantee to another (shifting executory interest) upon the occurrence of a stated event or violation of a stated condition.
Rule: The transfer of interest from the Grantor to the Grantee or from one Grantee to another is automatic if the stated event occurs or condition is violated.
Note: The parties hold the following rights:
1) Springing Executory Interest:
a) The Grantor holds a fee simple subject to the Grantee’s executory interest,
b) The Grantee holds a springing executory interest.
2) Shifting Executory Interest:
a) The Grantee holds a fee simple subject to a third party’s executory interest,
b) The third party holds a shifting executory interest.
LIFE ESTATE
(Define & State the Rule)
Definition: A life estate is an interest in land measured by the life of the Grantee.
Rule: Upon the death of the life tenant, the interest automatically reverts to the Grantor (reversion) or shifts to a third party (remainder).
Note: The parties hold the following rights:
1) The life tenant may sell her life interest in the land and is entitled to all ordinary uses and profits from the land, but must not commit waste.
2) If the disposition of the property upon the death of the life tenant is not specified, the Grantor retains a vested future interest (reversion).
3) If it is stated that the interest in the estate will shift to a third party upon the death of the life tenant, the third party has a vested future interest (remainder).
LIFE ESTATE PUR AUTRE VIE
(Define & State the Rule)
Definition: A life estate pur autre vie is an interest in land measured by the life of a person other than the Grantee.
Rule: Upon the death of the measuring life, the interest automatically reverts to the Grantor (reversion) or shifts to a third party (remainder).
Note: The parties hold the following rights:
1) The life tenant may sell his life interest in the land and is entitled to all ordinary uses and profits from the land, but must not commit waste.
2) If the disposition of the property at the end of the measuring life is not specified, the Grantor retains a vested future interest (reversion).
3) If it is stated that the interest in the estate will shift to a third party at the end of the measuring life, the third party has a vested future interest (remainder).
POSSESSORY INTERESTS:
LIST 3 TYPES OF CONCURRENT ESTATES
1) Tenancy in Common
2) Joint Tenancy
3) Tenancy by the Entirety
POSSESSORY INTERESTS:
TENANCY IN COMMON
(Define & State the Rule)
Definition: A tenancy in common is a concurrent estate in which the cotenants own a separate and distinct share of the property.
Rule: Each cotenant owns an individual part of the whole, but each has a right to possess and enjoy the whole.
Note:
1) Each cotenant’s interest is descendible, divisible, and alienable.
2) Wrongful ouster occurs when one cotenant wrongfully excludes another from possession ofthe whole, or any part of the whole.
3) Upon death of a cotenant, her interest descends to her heirs (i.e., no right of survivorship).
4) Cotenants must not commit waste.
JOINT TENANCY
(Define & State the Rule)
Definition: A joint tenancy is a concurrent estate in which each tenant owns an undivided interest in the whole estate.
Rule: Each cotenant owns an undivided interest in the estate with the right of survivorship. Upon the death of one joint tenant, the decedent’s share passes automatically to the surviving joint tenant(s).
Note: Each joint tenant’s interest is alienable, but it is not devisable or descendible.
HOW IS A JOINT TENANCY CREATED?
Rule: Four elements are required to create a joint tenancy:
1) Unity of time (interests must vest at the same time),
2) Unity of title (interests must be acquired by the same instrument),
3) Unity of interest (interests must be identical), AND
4) Unity of possession (interests must allow for all to equally enjoy the whole).
Note:
1) If an owner of a fee simple estate wishes to hold it as a joint tenant with another person, a straw man must be used: The owner conveys the property to a straw man, who then conveys back to the Grantor and other party (or parties) as joint tenants.
2) Because joint tenancies are disfavored, there must be a clear expression of intent to create a joint tenancy (i.e., clearly state the right of survivorship).
HOW CAN A JOINT TENANCY BE SEVERED?
Rule: A joint tenancy may be severed in three ways:
1) Sale,
2) Partition, OR
3) Mortgage.
SEVERANCE OF A JOINT TENANCY:
SALE
(State the Rule)
Rule: A joint tenant can sell or transfer her interest during his lifetime with or without the cotenant’s knowledge or consent. However, the sale severs the joint tenancy as to the seller’s interest, and the buyer takes the interest as a tenant in common.
Note: If a joint tenancy is made up of three or more interest holders, the non-transferring parties maintain their interests as joint tenants. Only the transferred interest is held as a tenancy in common.
SEVERANCE OF A JOINT TENANCY:
PARTITION
(State the Rule)
Rule: A joint tenancy may be partitioned by:
1) Voluntary agreement, OR
2) Court order.
Note: A court may order the severance and partition of the estate in the case of a dispute between joint tenants. The court may:
1) Divide the property evenly between the joint tenants, OR
2) Force the sale of the property and divide the proceeds among the tenants.
SEVERANCE OF A JOINT TENANCY:
MORTGAGE
(State the Rule)
Majority Rule (Lien Theory): A joint tenant’s execution of a mortgage on his interest in the joint tenancy does not sever the joint tenancy.
Minority Rule (Title Theory): A joint tenant’s execution of a mortgage on his share will sever the joint tenancy, but as to the encumbered share only.
TENANCY BY THE ENTIRETY
(Define & State the Rule)
Definition: A tenancy by the entirety is a joint tenancy between a husband and wife that automatically arises when property is conveyed to both of them.
Rule: Each spouse has the right of survivorship in the property, which cannot be defeated through one spouse’s unilateral conveyance of her share to a third party. Upon the death of one spouse, the decedent’s share passes automatically to the surviving spouse.
Note: Creditors of only one spouse may not attach interests held in tenancy by the entirety.
POSSESSORY INTERESTS:
LIST THE FUTURE INTERESTS THAT MAY ARISE IN GRANTORS, GRANTEES, & THIRD PARTIES
In Grantor:
1) Possibility of Reverter
2) Right of Reentry (Power of Termination)
3) Reversion
In Grantee/Third-Party:
1) Remainders
a) Absolutely Vested Remainder
b) Vested Remainder Subject to Open
c) Vested Remainder Subject to Divestment
d) Contingent Remainder
2) Executory Interests
a) Shifting Executory Interests
b) Springing Executory Interests
POSSIBILITY OF REVERTER
(Define & State the Rule)
Definition: The possibility of reverter is a future interest that arises in the Grantor.
Rule: If a condition stated in the conveyance of a fee simple determinable is breached, the possibility of reverter becomes a possessory interest in the estate.
Note: The possibility of reverter is automatically created in the Grantor when she conveys a fee simple determinable to a Grantee.
RIGHT OF REENTRY
(Define & State the Rule)
Definition: The right of reentry is a future interest held by the Grantor that provides her the right to terminate a fee simple subject to a condition subsequent.
Rule: When conveying a fee simple subject to a condition subsequent, a Grantor must expressly reserve the right to terminate and reenter the land upon occurrence of a specified event or violation of a specified condition.
REVERSION
(Define & State the Rule)
Definition: A reversion is the estate retained by a Grantor who has conveyed a lesser estate than she owns.
Rule: A reversion is automatically created upon the Grantor’s conveyance of a lesser estate than she owns.
Note: Reversion accompanies:
1) Life estates, AND
2) Invalid attempts to convey a remainder to the Grantor’s heirs.
REMAINDER
(Define & State the Rule)
Definition: A remainder is a future interest in a third person that can become a present possessory interest only after the natural expiration of the preceding estate.
Rule: To be valid, a remainder:
1) Must be created in the same instrument as the prior estate that it follows, AND
2) Must become a present possessory interest immediately upon the termination of the prior estate.