Titles

Question 1

How does adverse possession (AP) work?

Answer 1

You need:

1. Continuous/uninterrupted possession
   -> through statutory period (10, 15, 20 years)
   -> seasonal use okay if consistent with the type of property being adversely possessed (e.g. vacation home)
2. Actual
   -> open/notorious physical presence by AP, or another whose possession is attributable to AP
   -> constructive AP gives title to whole
3. Hostile - must possess the land without owner’s permission
4. Exclusivity - possession cannot be shared with true owner (or anyone acting on behalf of true owner)

Question 2

Is tacking permitted under the continuous part of AP?

How do states differ on the hostile element of AP?

Can two or more people adversely possess property together under the exclusivity element of AP?

Answer 2

Continuous:
-> Tacking permitted, but no gaps and via non-hostile connections only (e.g. descent, devise, contract, or deed).

Hostile:
-> Majority of jurisdictions - ignore subjective intent, instead, must show objective intent to claim land as his own
-> Minority of jurisdictions - consider subjective intent:
—–> good faith - must believe the property is unowned or that he owns it
—-> bad faith - aggressive trespass

Exclusivity:
-> Yes and they’ll be tenants in common through adverse possession.

Question 3

What is constructive adverse possession work?

Answer 3

Actual:
-> Normally adverse possessors only get adverse possession to the portion of land they adversely possess, HOWEVER constructive adverse possession allows adverse possessors to lay claim to the TITLE of the ENTIRE PROPERTY when:
—-> when adverse possessors enter the property under color of title (e.g. a facially valid deed that describes the entire property)
AND
—-> ACTUALLY possess a reasonable portion of the property for the statutory period.

Question 4

Why is intent important with regards to transfer of a deed?

Answer 4

To transfer a real property interest, the grantor must demonstrate the intent to make a present transfer of the interest (e.g., delivery of the deed), and the grantee must accept the interest.

Question 5

How can you demonstrate intent of grantor to make present transfer of property interest to grantee?

Is acceptance presumed for beneficial transfers to a grantee?

Answer 5

At time of transfer, grantor must intend to make present transfer of property interest to grantee
-> typically, intent is shown by delivery of the deed
-> execution and recording - creates a rebuttable presumption that the deed is to be presently operative
-> parol evidence admissible to establish intent when grantor keeps deed

Acceptance presumed for beneficial transfers.

Question 6

When is delivery of the deed sufficient to show intent to transfer the deed:
-> transfer to grantor’s agent
-> transfer to grantee’s agent
-> transfer to a third party with a condition

Answer 6

Transfer to grantor’s agent is not delivery but transfer to grantee’s agent is.

Transfer to third party with a condition is not delivery IF
-> grantor keeps absolute right to recover deed,
BUT -> if not, treated like future property interest.

Question 7

What must a grantor do to show intent to transfer the deed if the transfer of the deed is conditioned upon the death of the grantor?

Answer 7

When the third party’s transfer of the deed to the grantee is conditioned on the death of the grantor, the grantor’s transfer of the deed to the third party must evidence the intent to make a present gift.

Question 8

What is a deed?

What are the requirements for a deed to be valid?

Answer 8

A legal instrument that transfers ownership in real property.

Valid deed requirements:
- identified parties (aka identification of the grantee)
- grantor’s signature
- words of transfer
- reasonably definite property description (extrinsic evidence is admissible)

Question 9

Can real estate brokers prepare real estate sales Ks?

Can a non-attorney prepare mortgage lending docs?

Is an attorney requires to be present at closing? Can a non-attorney answer legal questions?

Answer 9

Many states allow real estate brokers to prepare real estate sales K; some states limit this to form Ks and some require attorney review
-> non-attorneys may prepare mortgage lending docs
-> jurisdictions are split as to requirement of attorney at closing, but non-attorney may not answer legal questions

Question 10

What is the equal dignities rule?

Answer 10

Under the equal dignities rule, many states require a contract to pay a commission to a real estate agent or broker to be in writing because the underlying contract to sell the real property must be in writing.

Question 11

What do recording acts do and are they required?

What are the three different types of recording acts?

Answer 11

Recording a deed is not required for a deed to be valid and convey good title to the transferee. BUT recording acts are state laws that help resolve multiple claims of ownership against a real property.

Three types of recording statutes are:
-> notice statute
-> race statute
-> race-notice statute

Question 12

How does a notice statute work?

How does a race statute work?

How does a race-notice statute work?

Answer 12

1. Notice statute
   -> Bona Fide Purchaser (BFP) who is a purchaser for value without notice of prior interest PREVAILS over prior grantee who failed to record EVEN IF BFP DOES NOT RECORD
   -> must record in order to protect own interest (aka previal) in real property against subsequent purchaser
   -> e.g., of a notice statute => “no conveyance/mortgage of real property good against subsequent BFP unless same be recorded according to law”
2. Race statute (race to record it first)
   -> first to record prevails - regardless of knowledge of prior conflicting interests
   -> e.g., “no conveyance/mortgage of real property good against subsequent purchaser of value unless first recorded by law”
3. Race-notice statute
   -> subsequent BFP protected only if he takes without notice of a prior interest AND is the first to record their interest
   -> e.g., “no conveyance/mortgage of RP good against subsequent BFP unless first recorded by law”

Question 13

If you’re a donee, then which statute applies to you in terms of recording statutes?

Answer 13

ONLY the race statute
-> notice and race-notice only protect BFPs

Question 14

How does the Shelter Rule work?

Answer 14

Under the Shelter Rule, a person who receives a property interest from a BFP is entitled to the same protections under the recording act as the BFP
-> EVEN IF that person would not be protected by the recording act.

Question 15

What is a wild deed?

Does the holder of a wild deed, who records prior to BFP, win against a BFP who has recorded the deed under the following statutes?
-> Notice statute
-> Race statute
-> Race-notice statute

Answer 15

A recorded deed that IS NOT in the “chain of title.” (meaning if you were to look it up then you wouldn’t see the previous chain that it should be attached to).

Notice
-> BFP wins because BFP (as long as BFP doesn’t have actual notice) doesn’t have record notice of conveyance that took place to create the wild deed

Race statute
-> Even if wild deed is recorded FIRST, BFP WINS because BFP doesn’t have notice of the wild deed (wild deed isn’t recorded because that is what makes it a wild deed)

Race-notice statute
-> BFP wins because lacks notice (notice statute) of wild deed and recording of a wild deed doesn’t do anything (race statute)

Question 16

How does notice of recording acts work for recording statutes?

What are the three types of notice types a person can have?

Answer 16

Notice - tested as of the time of the conveyance; notice obtained after conveyance does not prevent purchaser from benefitting from recording

Actual notice
-> a grantee with actual, personal knowledge of prior interest cannot prevail under notice or race-notice statute

Inquiry notice
-> if reasonable investigation would disclose prior claims, a grantee cannot prevail under notice or race-notice statute (e.g. of a situation that gives rise to inquiry notice = someone other than grantor has possession or documents referenced in chain of title)

Record notice (AKA constructive notice)
-> grantee is held to have constructive notice of all prior conveyances that were properly recorded, a grantee cannot prevail under notice or race-notice statute

Question 17

What is title insurance?

Answer 17

Protects policy holder (owner or lender) against defects that could have been uncovered by careful title search or forged/undeliverable/unenforceable deeds.

Question 18

What are the three types of deeds?

Answer 18

General warranty deed
Special warranty deed
Quitclaim deed

Question 19

What does a general warranty deed state?

Answer 19

The grantor of a general warranty deed guarantees that he holds six covenants of title:
-> three present covenants
-> three future covenants

Question 20

What are the three present covenants party of a general warranty deed?

What are the three future covenants part of a general warranty deed?

Answer 20

Present covenants
-> covenant of seisin - grantor owns land as described in deed
-> covenant of the right to convey - grantor has right to transfer title
-> covenant against encumbrances - no undeclared encumbrances against land

Future covenants
-> covenant of quiet enjoyment - grantee not disturbed in possession of land by third party’s lawful claim to the land
-> covenant of warranty - grantor will defend grantee against third party’s claim
-> covenant of further assurances - grantor will do whatever future acts reasonably necessary to perfect title if later determined title is imperfect

Question 21

What is a special warranty within a deed?

Answer 21

Same covenants of title as general warranty deed, BUT only warrants against defects arising during the time grantor has title.

Question 22

What is a quitclaim deed?

Answer 22

No covenants of title

Question 23

What is an after-acquired title?

How does the doctrine of estoppel by deed work here?

Answer 23

When a person who purports to transfer real property that he does not own subsequently becomes the owner of that property, the after?acquired title doctrine provides that title to the property automatically vests in the transferee. Most often, this doctrine is applied to the grantor of a warranty deed.

A related doctrine, estoppel by deed, prevents the grantor from asserting ownership of the after-acquired property.

Question 24

How does a conveyance by will work?
-> what is a specific devise
-> what is a residuary devise

What is an ademption?

Wha is a lapse?

How do anti-lapse statutes work?

Answer 24

The language can be a specific devise (states specific property that will be left to a specific person) or residuary clause (states property in general terms that will be left to a specific person)

Special situations
Ademption
-> devise of real property fails because the testator no longer owns the property upon death

Lapse
-> devise of real property can also fail if the beneficiary named in the will dies before the testator and no alternate beneficiary or is named

Anti-lapse statute - prevents a gift from lapsing by
-> (1) any named family heir’s estate receiving the gift if that family heir dies before the testator (statutes state that the family heirs are only immediate relatives),
OR
-> (2) if the person receiving the gift isn’t immediate family and they die before the testator, then the gift gets placed in the “residuary property” bucket and whoever is intended to receive that then gets it

Question 25

How does conveyance by operation of law work?

Answer 25

It’s a form of intestate succession in which you simply follow the law

Question 26

What is a trust?

What is an inter vivos trust?

What is a testamentary trust?

What is a pour over trust?

Answer 26

Trust - a fiduciary relationship wherein one or more trustees are called upon to manage, protect, and invest certain property and any income generated therefrom for the benefit of one or more named beneficiaries

Inter vivos trust
-> created when the settlor (person who creates the trust) conveys his property (res) to the trustee while the settlor is alive

Testamentary trust
-> created by the settlor in his will

Pour over trust
-> created by settlor during his life but not funded until his death by a devise in his will

Question 27

What are the differing forms of restraint on legal interests?
-> disabling restraint
-> forfeiture restraint
-> promissory restraint

Answer 27

Disabling restraint - total prohibition on the transfer of the property interest by its owner; always VOID.

Forfeiture restraint - property is forfeited if the interest owner attempts to transfer his interest; restraint on a future interest or a life estate can be valid.

Promissory restraints - a promise by the property interest holder not to transfer the property interest; enforceable by an injunction or a suit seeking damages for breaking the promise; BUT restraint on a life estate can be valid.

Question 28

What are prohibited restraints?

Answer 28

An absolute restraint on alienation of a fee simple is void because any person who owns a fee simple interest in real property has that right to alienate, devise or descend the property.

Any restraint based on race, ethnicity, or religion is not enforceable.

Question 29

What are permissible restraints?

Answer 29

Restraints on the use of property (e.g. covenants) are generally permissible.

Question 30

What is a restraint on equitable interests?

Answer 30

A restriction on the transferability of an equitable property interest, such as a spend/thrift clause, is valid.