Real Propery Flashcards
Buyer purchasers land and takes out a $400,000 mortgage with a bank. After 3 years, the buyer partitions off and sells the land to a neighbor. After 2 years, the buyer sells the remaining land to an investor who takes subject to the mortgage. The bank never receives any further payments. Who can the bank sue?
Buyer only. Bank may foreclose and hold buyer personally liable. Cannot sue the neighbor or investor. Subject to the mortgage the grantee is not liable. If silent, then it is subject to the mortgage.
If one assumes the mortgage, then grantee is liable.
Investor purchases land from owner for $40,000 by general warranty deed. Later the investor finds another person with a claim of adverse possession. Investor sues owner to recover damages. What result?
Investor. Breach of covenant of warranty. Grantor agrees to defend grantee against claims of title by third parties.
Investor purchases land from owner for $40,000 by general warranty deed. Later the investor finds another person with a claim of adverse possession. Investor sues owner to recover damages for a breach of covenant against encumbrances. What result?
Owner. Covenants against encumbrances are against the title and expire at closing. (easements, mortgages, liens).
B and A enter into installment land sale contract in which B will make 100 monthly payments and as part of the agreement that A will promise to convey good and marketable title to B when all the payments are made. After making 12, B learns there is an outstanding mortgage and seeks to rescission. A sues B for breach by not paying. Result.
A, because he had until closing to cure the defect. Installment land contract, the vendor’s duty is to present marketable title at the time of the last payment.
Bank forecloses on property of rancher. At the foreclosure sale, property is sold to a bidder, who took below the market price. After the sale, the rancher comes into a large amount of money and seeks to reacquire the property. What is the rancher’s best argument?
Statutory right of redemption (after foreclosure). Redemption nullifies the foreclosure sale.
B owed land and sought to borrow $40,000 from a bank and B executed a promissory note that was secured by a mortgage on the land. B also executed a warranty deed, in absolute form, to be held by escrow agent. Escrow agreement stated that if B defaults, escrow agent will deliver deed to bank. B defaults, but seeks to re-acquire property prior to a foreclosure sell. Result?
Judgement for B, because escrow agreement and deed absolute should not preclude right to redeem. Mortgagee cannot disguise a mortgage to avoid equitable right of redemption.
Once a mortgage always a mortgage.
Father wills a house to daughter and remaining estate to son. Father dies with $100,000 mortgage on house. Daughter uses money from the father’s estate to pay off the mortgage. Son objects and files suit to prevent daughter from interference with expectancy interest. Result?
Son has no interest, daughter is entitled to take money from estate to paid off mortgage because she is specifically devised in the will (exoneration)
Modern trend may treat son as creditor to cover value of money taken from father’s estate.
A mortgage contains a prepayment clause that says mortgagee is entitled to increase the interest rate and collect 20% on the unpaid balance. Is the clause enforceable?
Yes enforceable. Prepayment clauses are not an lawful restraint against alienation or does not clog the equity of redemption.
There is an uncertain boundary between two pieces of land. One owner asked the other to construct a fence. Both parties agreed to the location of the line. Adverse possession is 15 years. Both parties sell the land after 15 years and the new owners discover the fence was positioned incorrectly. How should court rule?
Fence line controls, because both parties agreed to the fence line. Adverse possession does not matter.
Seller contracted to sell a building to a buyer for $10,000 to close on 10-18. The day before, the seller was injured and unable to attend closing. On 10-24, the seller recovers and seeks to close, but buyer refuses to pay or accept the deed. Seller seeks specific performance. Who prevails?
Seller, because time is not ordinarily of the essence in a real property sales contract. If late party tenders performance within reasonable time, and nonbreaching refuses to perform, then specific performance is available.
Buyer and seller enter into contract regarding a commercial building. The buyer gives a $125,000 deposit and the remainder at closing. Prior to closing, the city rezones the land as residential. Buyer refuses to honor contract and seller seeks specific performance on grounds of equitable conversion. If judgment is for the buyer, it is because?
Seller would be unjustly enriched. Doctrine of equitable conversion shifts risk of loss to buyer, who is the equitable owner of the land. Legal title remains with owner. Not granted when intervening forces would make it unduly harsh on one party.
After a buyer and seller sign a written agreement to transfer land, who bears the risk if the property is destroyed before closing?
Buyer under equitable conversion doctrine. Seller retains legal title.
After a buyer and seller sign a written agreement to transfer land, who is entitled to possession until closing?
Seller. Seller has legal title and possession follows legal title.
After a buyer and seller sign a written agreement to transfer land, the property is destroyed before closing. The seller has causally insurance. Does the buyer have to pay the full contract price?
No, seller must credit insurance proceeds against purchase price in contract. Buyer is the owner of the equitable title and bears the risk.
After a buyer and seller sign a written agreement to transfer land, and the seller dies before closing. Can the buyer demand title at closing from seller’s heirs?
Yes. Doctrine of equitable conversion, seller’s interest is personal property. At death, the legal title passes to heirs but they must transfer to buyer at closing.
After a buyer and seller sign a written agreement to transfer land, and the buyer dies before closing. Can the buyer’s heirs demand conveyance at closing from seller?
Yes. Buyer’s interest passes as real property.
A buyer and seller have a written contract for the sale of land. At closing, buyer discovers that seller has an outstanding mortgage. Seller intends to use proceed of sale to satisfy mortgage. Does this convey marketable title to the buyer?
Yes. Seller has right to satisfy mortgage or lien at closing with the proceeds of the sale.
After closing, is the seller still liable on an implied covenant of marketability?
No. Once closing occurs, the deed transfers hands and seller is no longer liable on implied covenant of marketability.
In a deed there is a description of the property and is signed by grantor. The name of grantee is blank. Is deed valid?
Yes, courts presume person taking delivery has authority to fill in name of grantee.
What is required for a valid inter vivos gift?
1) donative intent
2) delivery
3) acceptance
An owner of land handed an agent a deed conveying the land to his niece and said give it to my niece. The niece was in Africa. Agent recorded deed. Owner died and will transferred land to daughter. In suit to quiet title, if the court rules in favor of the niece it is because?
Delivery of the deed was effective when handled to the agent. Grantor’s intention to make a deed presently effective even though delivery is postponed.
An owner of land handed an agent a deed conveying the land to his niece and with written instructions to give it to my niece upon payment of $50,000. Is parol evidence admissible to show that delivery is conditional?
Yes. Different results if grantor gives the deed directly to grantee.
Owner of land executes deed to son and keeps deed in desk. Owner dies and will specifically devises land to daughter. In an action to quiet title will the son prevail?
No. Grantor executed a deed but failed to delivery during lifetime and no title passes.
An owner of land handed an agent a deed conveying the land to his niece and with written instructions to give it to my niece upon payment of $50,000. Can the owner revoke?
Yes, if the condition is not met and there is no enforceable written contract to convey.
Owner of land conveys to man on 1-4. Man does not record. Owner conveys land to woman on 1-10 for valuable consideration and the woman has no notice of the conveyance to the man. Who prevails in a notice jurisdiction?
Woman. She is a bona fide purchaser, one who takes for value and no notice of prior instrument prevails over grantee who fails to record.
Owner of land conveys to man on 1-4. Man does not record. Owner conveys land to woman on 1-10 for valuable consideration and the woman has no notice of the conveyance to the man. Man records on 1-20. Who prevails in a notice jurisdiction?
Woman. Subsequent recording after woman took as a bona fide purchaser is irrelevant. Woman had no notice when she took the deed.
Owner of land conveys to man on 1-4. Man does not record. Owner conveys land to woman on 1-10 for valuable consideration and the woman has no notice of the conveyance to the man. Woman fails to record. Who prevails in a notice jurisdiction?
Woman. Under notice statute subsequent bona fide purchaser is protected regardless of whether they record.
What type of recording jurisdiction is:
“No conveyance of mortgage of an interest in land is valid against any subsequent purchaser for value without notice thereof, unless it is recorded.”
Notice jurisdiction. Subsequent bona fide purchaser (value, without notice) prevails.
What type of recording jurisdiction is:
“No conveyance of mortgage of an interest in land is valid against any subsequent purchaser whose conveyance is first recorded”
Race. Grantee who first records prevails.
What type of recording jurisdiction is:
“No conveyance of mortgage of an interest in land is valid against any subsequent purchaser for value without notice thereof whose conveyance is first recorded”
Race-notice. Subsequent bona fide purchaser (value, without notice) who records first prevails.
Owner of land conveys to man on 1-4. Man does not record. Owner conveys land to woman on 1-10 for valuable consideration and the woman has no notice of the conveyance to the man. Man records on 1-20. Woman records on 1-22. Who prevails in a race-notice jurisdiction?
Man because he recorded first. Subsequent bona fide purchaser prevails if they recorded first.
A man conveys an interest in land by warranty deed to his son. The man does not own. Prior to the man dying, he acquires the land. Can the son prevail if the will leaves the land to the man’s daughter?
Yes. Estoppel by deed. Subsequent acquisition of land will automatically inure to the benefit of grantee.
A man conveys an interest in land by quitclaim deed to his son. The man does not own. Prior to the man dying, he acquires the land. Can the son prevail if the will leaves the land to the man’s daughter?
Daughter, quitclaim deed does not automatically inure to benefit of grantee.
A man conveys an interest in land by warranty deed to his son. The man does not own. After he acquires the land, can transfers the land to an investor for value who has no notice of deed to son. Can the son prevail over investor?
No. Investor is a subsequent bona fide purchaser.
Landlord leases apartment to student for a term of 4 years and lease is not assignable. After two years, student wanted to travel and landlord agreed to waive the assignment restriction “this one time only because of the circumstances.” Student assigns lease to a professor. One year later the professor, without asking, assigns lease to a couple. The couple defaults on rent. Who can the landlord recover against?
Student and professor are jointly and severally liable.
Generally a covenant against assignment once waived is unenforceable as to subsequent assignments, but it can be restricted by express statements.
Landlord leases apartment to student for a term of 4 years and lease is not assignable. After two years, student wanted to travel and landlord agreed to waive the assignment restriction “this one time only because of the circumstances.” Student assigns lease to a professor. One year later the professor, without asking, assigns lease to a couple. The couple defaults on rent. Can the landlord only recover against the student?
No. Can recover against both student and professor who are jointly and severally liable.
A man wanted to keep a house in the family and included a clause in the will “I give my house to my son, but if it tries to sell it while he is alive, then to my grandson.” What is the son’s interest?
Fee simple. Attempt on restraint on alienation is void.
Grandson has no interest.
A man wanted to keep a house in the family and included a clause in the will “I give my house to my son, but if it tries to sell it while he is alive, then to my grandson.” Does the grandson have an executory interest or a contingent remainder?
Neither. Son took in fee simple and reminders cannot follow a fee simple.
Owner of land conveys to a friend for life and then to my daughter. Friend transfers interest to neighbor. Who is liable to pay the county taxes on the land?
Neighbor. Life tenant is responsible for paying taxes on property.
Neighbor has to pay for the lifetime of friend.
Owner conveys by warranty deed land to an animal shelter so long as the land is used for an animal shelter. Owner dies intestate and only heir is her spouse. Spouse conveys by quitclaim deed to a daughter. Animal shelter is closed due to lack of funding and seeks to transfer land to another organization. Who holds title if all deeds where promptly recorded?
Daughter, because land is no longer used for its intended purpose.
Fee simple determinable terminates automatically upon the condition and goes back to the grantor. Grantor has a possibility of reverter which is transferable, devisable and descendible.
Owner transfers land to sister for life, then to the children of brother. Brother has one daughter at time of conveyance. A year later, brother has son. Owner dies. Daughter died a month later, leaving estate to husband. Brother has another daughter. Sister dies. Brother has another son. Who owns the land?
Husband, son, and other daughter. The other son does not because the class closed upon sister's death. Vested reminders are freely fully devisable and descendible.
Husband and wife hold land as joint tenants with right of survivorship. Both decided to convey a 10% interest to their daughter. A year later, both decided to convey another 10% interest to their daughter’s spouse. Who owns the land?
Husband and wife hold a 80% interest as joint tenants. Joint tenancy is remains, but tenancy by the entire is destroyed.
Daughter and spouse hold a 20% interest as tenants in common. Cannot be joint tenants since the four unities are not present (time, title, interest, possession)
Can abandonment by one spouse in a tenancy by the entirety entitle the other spouse to a partion?
No. Tenancy by the entirety can be severed by death or divorce, of execution of joint creditor.
A couple who never marries but holds themselves out as married purchase a home with the deed stating that they are husband and wife. The jurisdiction does not recognize common law marriage. Can one spouse seek a partition of the house?
Yes. No tenancy by entirety is created without marriage. No marriage, then tenancy by common. A joint tenancy requires express language.
Owner rents a furnished cottage to a couple for a month vacation. While in the cottage, the wife injures leg due to a rotten step in the staircase. Owner did not know of the rotten step, but a reasonable inspection would reveal the problem. Is the owner liable to the wife for injuries?
Yes. Landlords are liable if they know or should have known about a defect - requires a furnished property and a short-term lease.
Landlord leases apartment to renter for two years at $850 per month. Before the term is up, landlord tells renter that rent is going up to $950. Renter says nothing, and remains in possession. Renter sends check for $850. Is this the correct rent?
No. holdover tenant who was told of higher rent before term end must pay new rent. The period is month-to-month.
Landlord leases apartment to renter for two years at $850 per month. Before the term is up, landlord wants to raise rent to $950, but does not tell renter. Renter remains in possession. Renter sends check for $850. Is this the correct rent?
Yes. holdover tenant is at the same rent unless told of the new rent. Period is for month to month.
Owner had two adjacent parcels of land. Owner conveyed one parcel with an express easement to son. When owner died, the will conveyed the other parcel to son for life, then to daughter. Five years later, son conveys to investor both parcels in fee simple. After son’s death, daughter seeks to enjoin investor from using easement. Was there a merger of the easement?
No merger because the party (son) needs to have the same ownership interest in both parcels of land.
Two adjacent landowners execute reciprocal easements for a common drive-way. One landowner decided not to use the easement for 4 years. That landowner sold the property to a buyer. Buyer did not use the easement for 3 years. Original landowner starts parking cars on driving. Period for adverse possession is 6 years. Who will prevail in a suit?
Buyer, because nonuse is insufficient to cause abandonment of the easement. Nonuse is never abandoned of easement, need act showing intent to abandon.
When does the period for easement by prescription begin? Must the person seeking to obtain an easement by prescription have exclusive ownership?
Runs when the person begins use. The other owner does not need to know of the use. Use does not have to be exclusive. Exclusive is only required for adverse possession.
Owner of adjacent properties conveys by deed the north property to a buyer with the language “grantee and his heirs/assigns shall not plant any shrubbery within 10 feet of boundary line with southern property.” Buyer records. Buyer conveys by deed to an investor, but the language is not included in second deed. Can owner prevent investor from planting shrubbery near the boundary line?
Yes, owner will prevail because it is covenant running with the land. Intended to run with the land (grantee’s heirs/assigns) and touches and concerns land. Constructive notice because deed was recorded.
Owner conveys to buyer who does not record. Owner conveys to investor who takes for value and without notice. Investor does not record. Buyer records. Investor conveys to developer, who has notice of conveyance to buyer. Who prevails in a notice jurisdiction?
Developer. Shelter-rule, one who takes from a bona fide purchaser will prevail against any interest that the transferor-BFP would prevail against. Investor would prevail against buyer, thus developer is sheltered by investor, even though they have actual and constructive knowledge.
Buyer finances house purchase with $100,000 mortgage with bank. Buyer takes a $5,000 loan from lending agency for a trip, secured by the house. Year later buyer borrows $40,000 from an equity company to make improvements to house. All properly recorded. Buyer defaults and is only able to bank’s mortgage. Lending agency forecloses and investor purchases property. What does are the investor’s obligations?
Only subject to senior mortgages (bank not equity company). Foreclosure wipes out all junior interests.
In a title theory, may a mortgagee take possession of the property immediately upon default by mortgagor?
Yes (minority of states - followed in VA) - legal title is in the mortgagee until the mortgage is satisfied or foreclosed.
Intermediate theory - title passes upon default to mortgagee
Majority rule - lien theory - mortgagee holds a security interest and cannot take possession.
When a senior mortgage forecloses must the junior mortgage be named in the action?
Yes, because junior party has right o be paid off to avoid being wiped out by foreclosure. Failure to join then junior results in the preservation of its interest despite foreclosure and sale.
Senior parties are not affect and do not have to be named.
How can land subject to a security interest be foreclosed upon?
1) Court order
2) Auction - judicial sale
3) deed of trust giving the trustee the power of sale
Cannot be foreclosed by mortgagor’s tender of the deed to mortgagee.
Mortgage contains a due-on-sale clause. What is the effect if the mortgagor transfers her interest without the mortgagee’s consent?
Mortgagee can demand the debtor pay the remaining debt in full
Applies to institutional lenders
When a junior mortgagee forecloses, what is the affect on senior mortgagees?
Senior mortgages are not affect and maintain lien against property
Only junior mortgage interests are extinguished and must be named as a party.
After the foreclose sale, if the proceeds are insufficient to satisfy the debt, what is the lender entitled to?
Deficiency judgment. This can satisfied out of the borrower’s other assets. In some jurisdictions if property fair market value is higher than foreclosure price, then deficiency may be limited.
What is a deed of trust?
Security interest in land by which debtor transfers title to land to a third party acting on behalf of lender. In event of default, lender instructs third party to foreclose the deed of trust by selling the property.
What is the order for allocating mortgage foreclosure sale proceeds?
Expense of sale, foreclosing party, any junior liens in order of priority, and then mortgagor.
Grantor conveys a property to grantee so long as the property is maintained as a golf course. Grantee sells to a buyer who wants to be a ski resort. What happens to property?
Possibility of reverter - automatic in grantor.
Fee simple determinable - future estate is in the grantor.
Grantor conveys a property to grantee so long as the property is maintained as a golf course then to child. What is the future interest?
Child has a shifting executory interest.
Rule Against Perpetuities will apply and void future interest
Grantor conveys a property to grantee so long as the property is not sold. What are the interest?
grantee - fee simple absolute
grantor - nothing (no future interest - restrains on alienation are void)
Grantor conveys a property to grantee so long as the property is not sold until 2016. What are the interest?
Grantee - fee simple determinable
Grantor - possibility of reverter
Grantor conveys a property to grantee for life. Grantee sells to buyer. What are the interest?
buyer has a life estate pur autre vie (grantee’s life). Grantor has reversion.
For a life tenant, if there are no income or profits, does the life tenant have to pay taxes on the property?
Yes - ordinary taxes to the extent of the property’s fair rental value.
Grantor conveys a property to grantee for life, then to neighbor’s first child. Neighbor has no children. What are the interest?
Grantee - life estate
Neighbor’s children - contingent remainder (possible destroyed by destructibility rule)
Grantor - reversion
Grantor conveys a property to grantee for life, then to neighbor’s first child. Neighbor has no children before grantee’s. What are the interest?
Grantor has a fee simple absolute - common law
Neighbor’s child has a springing executory interest - modern law (no rule of destructibility)
Grantor conveys a property to grantee for life, then to grantee’s heirs. What are the interest?
future and present interest merge in grantee - Rule in Shelly’s case
Grantee - fee simple absolute - common law
Modern law
Grantee - life estate
Grantee’s heirs - contingent reminder
Grantor - reversion
Grantor conveys a property to grantee for life, then to grantor’s estate. What are the interest?
Grantee - life estate
Grantor - reversion (doctrine of worthier title)
Grantor’s heirs - nothing
O to A for life, then to B, provided however that if B dies under age of 25 then to C. What are the interest?
A - life estate
B - vested remainder subject to complete defeasance
C - shifting executory interest (check for Rule Against Perpetuities)
O - Reversion
