REAL PROPERTY RULES! Flashcards
Statutory Presumption
A deed or will creates fee simple unless intent to create lesser estate is clearly expressed in the instrument.
Statute Abolishing Fee Tails (Adopted in 1905)
Fee tail shall be deemed to be fee simple absolute (O to A and heirs of his body).
Rule in Wild’s Case
“O to A and his children,” but A has no children when the will takes effect at O’s death.
NC takes minority approach. Since no children when will took effect, the result is a fee tail which is converted to a fee simple absolute. However, if he has children when O dies, A has 50% interest & kids share 50%.
Rule in Shelley’s Case
NC has abolished the rule, but it only applies to transfer that take effect on and after October 1, 1987. If before, the Rule is when an instrument purports to give life estate to A and a remainder to A’s heirs (or heirs of body), A takes not just the life estate, but also the remainder, and A’s heirs take nothing (they merge). If after 1987, rule doesn’t apply, and kids have vested remainder in fee simple absolute.
Future Interests Retained by the Grantor
Reversion
Reversion is the interest kept by Grantor when he leaves less than the durational estate the grantor had.
Possibility of Reverter
Whenever grantor gives fee simple determinable, he keeps a possibility of reverter. A fee simple determinable ends automatically when the condition happens, and if so, the land automatically reverts back to the grantor.
Right of Entry or Power of Termination
Grantor has right of entry whenever he gives a fee simple on a condition subsequent, and expressly reserves the right of entry. The right is not automatic as he must exercise his right. It can be transferred by will ONLY.
Types of Defeasible Fee Simples
Fee Simple Determinable: “so long as, while, during, until, unless” – creates Possibility of Reverter.
Fee Simple Subject to Condition Subsequent: “on condition that, but if” + reentry language – right of entry
Fee Simple Subject to Executory Interest: “all of above” – Executory interest held by grantee automatic.
Life Estate
A life estate is measured by life and can be created by implication. Forfeiture restrictions are permissible.
Life Estate pur autre vie
A life estate pur autre vie is a life estate measured by the life of someone other than the life estate holder.
Rights and Duties of Life Estate Tenant
A life tenant has a duty to maintain the estate; normal use of land in its present condition.
Voluntary Waste
Voluntary waste is an (1) act beyond maintenance, and (2) causes harm to premise. Liable to future interest.
Open Mines Doctrine
Any depletion of natural resources is waste unless the normal use of the land was to deplete them. NOT crops.
Permissive Waste
If tenant fails to maintain, he has committed permissive waste. To avoid, tenant must (1) make all ordinary repairs, but never replacements, (2) pay taxes on land, and (3) pay interest on the mortgage.
Ameliorative Waste
Occurs if tenant commits voluntary waste, but increased value of property. Allowed if conditions have changed that make the property relatively worthless currently, and committing waste increases its value substantially.
Class Gifts
Class members who die before testator are eliminated b/c their gift lapses.
Rule Against Perpetuities
NC has adopted the Uniform Statutory Rule Against Perpetuities which declares that interest that violate the rule are not invalid, and NC takes a wait & see approach. Under this approach, they become invalid only if they actually fail to vest or terminate within 90 years of when they were created.
O’s will: “life estate to A, remainder to A’s first child to attain age 25.” A is alive and has one child C who is 24 when O dies in 2007.
- Under RAP, we cannot be certain that it could vest in a life in being + 21 years, thus, it violates.
- Under USRAP, we take a wait and see approach, A has life estate & wait and see 90 years for it to vest.
However, if it is a right of first refusal, it becomes invalid if not exercised within 30 years.
However, if it is a possibility of reverter, right of entry, or executory interest, that depends on an event affecting the use of land, the future interest becomes invalid if it does not actually vest w/60 years after it was created.
Future Interests Given to a Grantee
Remainder Generally
A remainder is a future interest created in a transferee that is capable of taking upon prior estate expiring.
Vested Remainder
A remainder is vested when nothing stands it its way of becoming possessory upon prior estate expiring.
Vested Remainder Subject to Open
Class remainder where members are not fully known remains open to allow for future class qualifiers.
Contingent Remainder
A remainder is contingent when something must happen or be known before the remainder can be possessory.
Executory Interest
An executory interest is any future interest that is not a remainder; thus, not capable of taking on natural termination of the preceding life estate. A shifting executory interest occurs when it operates by taking title from grantee to grantee. A springing executory interest occurs by taking title from grantor to grantee.
Concurrent Ownership
Tenancy in Common
Always presumed if created by intestate, deed, or will unless husband & wife.
Joint Tenancy with Right of Survivorship
Never presumed, the deed or will must contain express language showing transferor’s intent to create it. It must state “with ROS.”
NC does NOT require equal ownership. Thus, “O to A (40%), B (40%), & C (40%) as joint tenants w/ ROS” is valid. If A died, his interest will be distributed pro rata share to B and C.
NC does NOT require unity of Time or Title. Thus, “O to O & A as joint tenants w/ ROS” is valid.
Tenancy by the Entirety
Only can exist between a validly married couple. Thus, upon divorce, ownership of any property held as tenants by the entirety is automatically converted to tenants in common.
A marital estate akin to joint tenancy as it carries a right of survivorship. It can only be terminated by (1) death of one spouse, (2) divorce, (3) mutual agreement, OR (4) execution of joint creditor of both spouses. An individual spouse may not convey/encumber the property and a deed or mortgage by one spouse is ineffective.
Tenancy by the Entirety Presumption
A conveyance of real property to a married couple is presumed to vest title in them as tenants by the entirety even if the instrument does not identify them as being husband & wife. AUTOMATIC right of survivorship.
Unless the conveyance clearly indicated that it vest title in some other way, it is presumed entirety.
A conveyance by husband or wife to both of them creates entirety unless a contrary intention appears.
It can only be terminated by (1) death of either spouse, (2) divorce, (3) mutual agreement, or (4) execution by a joint credit of both H and W.
If conveyance to spouses & 3rd Party (to A, B, & C, but A & B are married, A & B will take 50% as tenants by the entirety, and C will take 50% as tenants in common, but their relationship with C is tenants in common.
Individual spouse cannot convey or encumber entirety property; a deed or mortgage executed by one spouse is ineffective. Thus, both spouses must join together in order to convey property owned as entirety, & both must sign a mortgage or deed of trust, if not, it cannot be foreclosed on. However, IRS can attach to 1 spouse interest.
There is a marital gift presumption with respect to certain property purchased with one spouses separate funds. Even if a spouse furnishes consideration for property from his separate property, the property will be presumed to be a gift to the marital estate if it is TITLED as tenancy by the entirety. Rebut by clear & cogent evidence.
Landlord & Tenant
Tenancy for Years
A tenancy for years is fixed term tenancy. To be enforceable in NC, a lease agreement must meet the SOF writing requirement if it CAN EXCEED 3 years from the time of the tenancy’s execution.
- L & T enter into an oral 36 month lease agreement on January 1, 2008. Under the lease’s terms, T is to take possession on February 1, 2008.
o NOT VALID, b/c we start counting on January 1, 2008, which makes it 37 months.
Periodic Tenancy
A periodic tenancy is an ongoing, repetitive estate until terminated by proper notice of either party. Can be express or implied. Implied if (1) lease fails to specify a term, the interval is then covered by the rent payments, or (2) L accepts rent payment from a tenant who entered into possession under a fixed term lease that violates the SOF, the interval is based on the interval covered by rent payments, OR
T holds over after expiration of a fixed term & L accepts rent payment.
- If the term of expired lease was LESS THAN 1 YEAR, the tenancy based on rent payment of old lease.
- If the term of expired lease was MORE THAN 1 YEAR, the tenancy is YEAR to YEAR regardless of the rental payments called for under the old lease.
NOTICE TO TERMINATE: Unless lease provides otherwise, the notice to terminate a periodic tenancy can be done orally. The amount of time that notice is to be given under NC law is:
- 1 MONTH – for a year to year tenancy
- 1 WEEK – for a month to month tenancy
- 2 DAYS – for a week to week tenancy
Tenancy at Will
A tenancy at will is one that is terminable at the will of either party, and it will be implied to be a tenancy at will if the right is just with the landlord. However, a right just in favor of tenant implies life estate.
Termination of Tenancy at Will
It may be terminated by either party’s notice with a reasonable time to leave premises. Also, it terminates upon (1) death, (2) waste by tenant, (3) attempted assign by tenant, (4) title transfer, (5) term lease to another.
Tenancy at Sufferance
Arises when tenant wrongfully holds over. Landlord can sue for ejectment, damages, or impose new month to month periodic tenancy. For commercial property, the new period is year/year if old period was 1 year or more; if old period was less than a year, then the new tenancy is measured by the rent payment period of old tenancy.
Assignments & Subleases
To determine, NC follows the traditional Bright Line Test. Regardless of what the transfer is labeled, the transaction is an ASSIGNMENT if it consists of tenant’s entire interest in the lease premises for the balance of the remaining term AND if the tenant did not reserve ANY type of reversionary interest including a right of reentry in case of default.
Tenant’s Right to Assign or Sublet
Tenant may assign/sublet without landlord’s consent if lease does not prohibit it.
A provision that allows it only with consent is valid and landlord can refuse if it’s unreasonable.
Lease provision restricting tenant’s right to assign/sublet is strictly construed; a provision that expressly prohibits assigning will NOT preclude subleasing and vice-versa.
Landlord Duties
Deliver Actual Possession
In NC, lessor impliedly covenants that Tenant shall have actual, not just legal, possession at beginning of term.
Covenant of Quiet Enjoyment
Implied that no one will interfere with enjoyment and possession of the premises. Total eviction: lease ends. Partial eviction: NOT terminated & T can stay & pay NO rent. However, if evicted by someone with better title than L, T’s rent is apportioned to reflect amount. Constructive eviction: where L fails to provide a service which makes the premise uninhabitable: (1) Landlord, (2) substantially interferes w/ quiet enjoyment, & (3) tenant must move out within a reasonable time after breach.
Implied Warranty of Habitability – Residential Only
Landlord warrants the premises is reasonably suited for human residence. Tenant can move out and end the lease OR can stay and sue for damages OR repair and offset the price against his rent payment.
Self-Help Prohibited
Cannot self help which includes gun, changing locks, calling police, and cutting off utilities. No punitive damages allowed BUT the NC Supreme Court has permitted Unfair/deceptive action for egregious conduct.
Residential Rental Agreement Act
Landlord must (1) comply with housing codes, (2) make repairs to keep habitable, (3) keep common areas safe, (4) promptly repair heat/air/plumb/electric, & (5) provide/install smoke detectors.
Easements – Little Difference Between MBE & NC
An easement creates a right to use land possessed by another; thus, it is a non-possessory interest in land. The easement holder has a right to use for special purpose, but no right to possess & enjoy. The owner of the land has right to full possession & enjoyment subject-to the limitation that he can’t interfere with holders special use.
Easement Defined
An easement is non-possessory interest in land involving a right of use. The burdened property is the servient estate whereas the benefited property is the dominant estate.
Easement Appurtenant
An easement appurtenant is one that directly benefits the use and enjoyment of a specific piece of land.
Easement in Gross
An easement in gross occurs where there is no dominant estate (utility easement for power lines).
Creating Easement – Express Grant or Reservation
An express easement arises with an express grant of an easement to another OR the reservation of an easement when land is sold to another. Thus, an easement must comply with the SOF b/c it is an interest in land.
Prescriptive Easements
Must prove that use giving rise to claimed ease was (1) adverse or hostile, & (2) continued for 20 years. NC follows the minority view that use of another’s land is presumed to be permissive; thus, claimant must be able to rebut this presumption. Generally requires (1) testimony that he had no permission, AND (2) easement holder made some maintenance.
