Weak Areas

Question 1

Present possessory Estate defined

Answer 1

an interest that gives the hold the right to present possession

Question 2

Fee Simple Absolute

Answer 2

Forever. largest estate recognized by law: can be sold, divided, devised, and inherited and has an indefinite or potentially infinite duration; presumed in the asbsence of express contrary intent.

Question 3

What are the defeasible fees?

Answer 3

Fee simple esates that can be terminated upon the happening of a stated event

Fee Simple Determinable (and Possibility of Reverter)

Fee Simple Subject to Condition Subsequent (and Right of Entry)

Fee Tail

Life Estate

Question 4

Fee Simple Determinable

Answer 4

terminates upon the happening of a stated event and automatically revert to the grantor. Created by durational language; “for so long as” “while” “during” or “until”

Can be conveyed by grantee takes subject to estate’s being terminated by the specified event

Ex: “To A and his hears for so long as”

MD DISTINCTION: Imposes 7 year SOL for exercising possibility of reverter.

Question 5

Possibility of Reverter

Answer 5

Whenever grantor conveys a fee simple determinable, he automatically retains a possibility of reverter, a reversionary interest. Transferrable, descindible, and devisable.

Question 6

Fee Simple Subject to Condition Subequent

Answer 6

Grantor reverses the right to terminate the estate upon the happening of stated event

“upon condition that”, “provided that”, :”but if”, and “if it happens that”

Question 7

Right of Entry

Answer 7

Right to terminate, reserved by the grantor. Must be expressly reserved unlike possiblity of revertter

Most cts: Not transferrable inter vivos, but most states agree they are devisable, and all states agree they are descindible.

MD DISTINCTION: Grantor has 7 years from date of breach to exercise the option.

Question 8

Fee Simple Subject to an Executory Interest

Answer 8

If fee simple estate terminated upon the happenin of a stated event, and then passes to a third party rather than reverting to the grantor or giving the grantor a right to terminate, the third party has an executory interest.

Ex: To A and his heirs for so long as liquor is not sold on the premises,; in that event, to B. B has an executory interest

Question 9

Fee Tail

Answer 9

Inheritability is limited to lineal heirs. Created y the words to A and the heirs of his body.

Most jxs have abolished and the attempt to create one is just a fee simple

Question 10

Life Estate

Answer 10

Measured by the life or lives of one or more persons. It may be created by operation of law or by conveyance

Marital right: Dower and curtesy were the CL interests of a spuse in the real property of the other spous; could not be defeated by conveyance or by creditors. Most states have abolishhed them in favor of a statutory right to a portion of a spouse’s estate

Question 11

Conventional life estates

Answer 11

1. For life of grantee: Usual life estate is measure y the life of the grantee. May be implied by language like “to B after the life of A”
2. Life estate pur autre vie (life of another): Measured by the life other than the grantees “to A for the life of B”. Also results when the life tenant conveys his life estate to another.

Can be determinable, subect to a condition subsequent, and subject to an executory interest.

Question 12

Doctrine of Waste

Answer 12

life tenant is entitled to any ordinary uses and profits of the land byt cannot do anything that injures the interests of a remainderman or reversioner. A future interest holder may sue for damages or to enjoin such acts, and if she spends money to perform the life ternant’s obligatioons she is entitled to reimbursement

MD DISTINCTION: If Life tenant commits waste after being enjoined, remaindermen get double damages.

Question 13

Affirmative (Voluntary) Waste

Answer 13

Exploitation fo natural resources by a life tenant is generally limited to situations when:

1. Necessary for repair or maintenance of the land
2. the land is suitable only for such use; OR
3. it is expressly or impliedly permitted by the grantor.

Open mines doctrine: If mining was done on the land prior ro the life estate, the life tenant can continue mining, but is limited to the mines ALREADY OPEN.

Question 14

Permissive Waste

Answer 14

A life tenant is obligated to:

1. preserve the land and structures in a reasonable state of repair
2. pay interest on mortgages (not principal)
3. pay ordinary taxes on the land
4. pay special assessments for public improvements of short duration (improvements of long duration are apportioned byween the life tenant and future interest holder)

Occurs when a life tenant fails to do so; duty limited to the extent of the income or profits generated from the land

A life tenant is not obliged to insure the premises for the benefit of remaindermen and is not responsible for damages caused by third party tortfeasors

Question 15

Ameliorative Waste

Answer 15

Change that benefits the property economically. This waste was actionable at CL, but now a life tenant may alter or even domolish existing buildings if:

1. the market value of the future interests is not diminished; and EITHER
2. the remaindermen do not object; OR
3. Substantial and permanent change in neighborhood condition has deprived the property in its current form of reasonable productivity or usefulness.

Question 16

Leasehold Tenant v. Worthless Property

Answer 16

Leasehold Tenant: remains liable for amerliorative waste even if the neighbodhood has changed and market value of the premises was increased

Worthless Property: if land is practically worthless in its present state, the life tenant may seek a partition sale, the proceeds of which are put in trust with income paid to the life tenant.

Question 17

Renunciation of Life Estate

Answer 17

If lie tenant ho receives the estate by will or intestacy renounces his interest, the future interest following th elife estate is generally accelerated so that it becomes immediately psosessory

Question 18

Future Interests

Answer 18

Gives holder the right or possibility of future possession fo an estate. Present, legally protected right in property

Question 19

Reversionary Interests - Future Interests in Transferor

Answer 19

Possibilities of reverter and rights of entry

Reversions: estate left in a grantor who conveys less than she owns; arises by operaton fo la; does not have to be expressly reserved.

Aliable, devisable, and inheritable.

Holder can sue for waste and for tortious damag to the reversionary itnerest

ALL REVERSIONARY INTERESTS ARE VESTED, AND THUS, NOT SUBJECT TO THE RULE AGAINST PERPETUTIES.

Question 20

Remainders

Answer 20

Future interest in a third person that can become possessory on the natural expiration of the preceding estate; can’t divest a prior estate, and it cannot follow a time gap after the preceeding estate.

A remainder must be expressly created in the instrument creating the preceding possessory estate

1. O conveys to A for life, then to B and his heirs. B has a remainder
2. O conveys to A for life then to B and his one day after A’s death; B does not have a remainder (because there is a gap)

CAN NEVER FOLLOW A FEE SIMPLE ESTATE (POTENTIALLY INFINITE DURATION)

Question 21

Inefeasibly Vested Remainders

Answer 21

Once created in an existing and ascertained person, and not subject to a condition precendent. Remainderman has a right to immedite possession upon normal termination of the preceding estate. An indefeasibly vested remainder is a vested remainder that is not subject to divestment or dimunition

Question 22

Vested Remainder Subject to Open

Answer 22

Created in a class of persons (“children”) that is certain to become possessory, but is subject to dimunition - by birth of additional persons who will share in the remainder as a class.

ex: O conveys to A for life, then to the children of B. A and B are lviing and B has one child, C. C has a vsted remainder subject to open.

Question 23

Vested Remainder subject to total divestment

Answer 23

Vested remainder that is subject to a condition subsequent.

Ex: O conveys to A for life , then to B ad his heirs; but if B dies unmarried, then to and hi heirs. B has a vested remainder subject to complete divestment by C’s executory interest.

Where languae is ambiguous, the preference is for vested remainders subject to divestment rather than contingent remainders or executory interests. Policy favors early vesting of estates

Question 24

Contingent Remainders

Answer 24

Those created in unborn or unascertained persons, or subject to a condition precedent

Question 25

Subject to condition pecedent

Answer 25

If it must be satisfied before the remainderman has a right to possession

Ex: O conveys to A for life then to B adn his heirs if B marries C. B’s remainder is contingent because he must marry C before he can take possession

O convets to A for life, then to B and his heirs if B marries C, otherwise to D and his heirs. B & D have alterative contingent remainders.

Question 26

Unborn or Ascertained Persons

Answer 26

A remder created in unborn or unaceertained persons is contigent because until the remainderman is ascetained, no one is ready to take possession if the preceding estate ends

Question 27

Destructibility of Contigent Remainders

Answer 27

At CL, a contingent remainder was destroed if it failed to vest before or upon the termination of the preceding freehodl estate.

Ex: O conveys to A for life, then to B if she reaches age 21. If A dies before B reaches age 21, B’s remainder is destroyed

Question 28

Related Doctrine of Merger

Answer 28

When one person acquires all of the present and future interest in land except a contigent remainder, under the CL, the contingent remainder is destroyed.

ex: O conveys to A for life then to B’s children. If before B has any children, O purchases A’s life estate, O will have a life estate pur autre vie and a reversion. These interests merge and the contingent remainder in B;s unborn children is destroyed.

If the life estate and the next vested interest were created byt eh same instrument, there can be no merger. may only occur when one person later acquires immediately successive estates

Question 29

Rule in Shelley’s Case

Answer 29

At CL, if the same instrument created a life estate in A and gave the remainder only yo A’s heirs, the remainder was not recognized, and A took a life estatr and the remainder.

Abolished in most states

Question 30

Doctrine of Worthier Title

Answer 30

A remainder in the grantor’s heirs is invalid and becomes a reversion in the grantor.

ex: O grants BA to A for life then to the heirs of O. Under DOWT, has a life estate, and O has a reversion.

Treated as a rule of construction ( does not apply if an intent to create a remainder in heirs has been clearly manifested. Applies only to intervivos transfers not wills, and only if the word heirs is used.

Question 31

Executory Interests

Answer 31

Future interests in third parties that either divest a transferee’s preceeding freehold estate or follow a gap in possession or cut short a grantor’s estate.

1. to A and his heirs when A maries B. A has a springing executory interest because ti divests the grantor’s estate
2. In a grant from O to A for life, then to Ba dn his heirs; but if B predeceases A, then to C and his heirs. C has a shifting executory interest because it divests a transferee’s preceeding estate.

Executory interests are not considered vested and thius are subject to the Rule against Perpetuties, bt executory interests are not destructible.

Remember: if a third party’s future interest does not follow the natural termination fo the preceeding estate, ti must be an executory interest; a remainder cannot folow a fee simple estate.

Question 32

Transferability of Remainders and Executory Interests

Answer 32

Vested remainders are fully trasnferable, descindible, and devisale. At CL, contingent remainders are execturoy interests were not transferable inter vivos, but most cts toda hold tha they are freely transferable. Contingent remainders and execturoy interests are descendible and devisalble, provided durvival is not a condition tot he interest’s taking.

*Any future interest that is trasnferable is subject to involuntary trasnfer; ti is reachable by creditors.

Question 33

Class Gifts

Answer 33

class is a group of persons having a common characteristic. The share of each member is determined by the number of persons in the class. A class gift of a remainder may be vested subject to open or contingent.

Question 34

When does a class close? The Rule of Convenience

Answer 34

Int he absence of express contrary intent, a class closes

Question 35

When you have a charitable trust

Answer 35

Must have:

1. indefinite beneficiaries
2. may be peretual (rule against perpetuties doesnt apply)
3. cy prs doctrine, which allows a court to select alternative charity when the purpose of the settlor becomes impracticable or impossible, applies

Question 36

Rule Against Perpetutities

Answer 36

No interest in property is valid unless it must vest, if at all, not later than 21 years after some life in being (measuring life) at the creation of the interest. If there is any possibilty that the interest might vest more than 21 years after a life in being, the interest is void.

Applies to contingent remainders, executory interests, vested remainders subject to open, options to purchase, rights to right refusal, and powers of appointment.

*Be familiar with when it begins to run for the different interests!

MD DISTINCTION: Doesn’t test

Question 37

Bas As To One, Bad As To All Rule

Answer 37

If the interest of any class member may vest too remotely, the whole class gift fails. For the class gift to vest, the class must be closed and all conditions precedent must be satisfied for every member.

Question 38

Types of Restraints on Alienation

Answer 38

1. Disabling - Always void
2. Forfeiture - transfer forfeits interest
3. Promissory - transfer breaches covenant

Applies only to legal interest; restraints on equitable interests are valis

Question 39

Concurrent Estates

Answer 39

1. Joint Tenancy - right of survivorship; Each tenant has undivded interest. severance creates tenancy in common unless judgment lien, mortgages, or lease (usually). Can be terminated by partition (voluntary or involuntary.
2. Tenancy by the Entirety: Husband and wife have undivided interest in whole estate and a right of survivorship. Can be severed by death, divorce, mutual agreement, or execution by joint creditor. Cant be terminated by voluntary partition.
3. Tenancy in Common: Each tenant has distinct, proportionate, undivided interest in the property. No right of survivorship. May be terminated by partition.

MD DISTINCTION: No need for straw in conveying joint tenancy. It is okay for D to convey to self an dP as joint tenants. Also, don’t need right of survivorship; can convey as a joitn tenants as long as grantor meant to convey a joint tenancy.
.

Question 40

Landlord Tenant Leaseholds

Answer 40

An interest in land under which tenant has present possessory interest in leased premises and the landlord has a future interest (reversion)

1. Tenancy for Years: Lasts for some fixed period of time; terminated at the end of the stated period without either party giving notice.
2. Periodic Tenancy: Tenancy for some fixed period that continues for succeeding periods until either party gives notice of termination. Terminated by notice from one party at lease equal to the length of the time period (1 full month for a month-to-month tenancy). Only six months notice is required to terminate a year to year tenancy.
3. Tenancy at Will: Tenancy of no stated duration that lasts as long as both parties desires. Usually terminated after one party displays an intention that the tenancy should come to an end. May also end by operation of law (deat of a party, attempt to transfer interest). MD requires 1 months notice
4. Tenancy at Sufferance: Tenant wronfgully holds over after termination of tenancy. Terminated when landlord evicts tenant or elects to hold tenant to another term. In MD, 8-401 action when tenant fails to pay rent.

MD DISTINCTION: year-to-year: 6 months notice for farm tenancy; 3 months for all others; parties can lengthen but not shorten common-aw prescribed notice.

Question 41

Hold Over Doctrine

Answer 41

If tenant continues in possession after his right to possession has ended, the landlord may:

1. Evict him; OR
2. bind him to a new periodic tenanct

Commercial: May be held to a new year to year tenancy if the original lease term was for one year or more, or a periodic terms based ont he frequency of rent payments held to month to month if original term was less than a year.

Residential: Held to new month to month tenancy, regardless of the original terms. If LL notifies the tenant before the lease expires that occupant after termination will be at increased rent, the tenant, by holding over, is held to have acquiesced to the new terms.

Question 42

Constructive Eviction

Answer 42

Occurs when a LL’s breach of duty renders the premises unsuitable for occupany. T must prove:

1. LL breached a duty to the tenant;
2. The breach substantial and materially deprived the T of her use and enjoyment of the premises
3. T gave LL notice and reasonable time to repair; AND
4. After such reasonable time, the tenant vacated the presimes.

T may also seek damages.

MD DISTINCTION: In MD, in residential leases, the lease must state each parties obligations as to repairs of premises. Silence is not toerated.

Question 43

Breach of Implied Warranty of Habilitability

Answer 43

T may:

1. Terminate the lease
2. Make repairs and offset the cost against future rent
3. Abate the rent to an amount equal to the fair rental value in view of the defects; OR
4. Remain in possession, pay full rent, and sure for damages

DOES NOT APPLY TO COMMERCIAL

Question 44

Public Use

Answer 44

L is liable for injuries to members of the public, if at the time of the lease, he:

1. Knows or should know of a dangerous condition
2. Has reason to believe the T may admit the public before repairing the condition; AND
3. Fail to repair the condition

Question 45

Fixtures

Answer 45

A chattel that has been so affixed to land that it has creased being personal property and has become part of the realty. A fixture passes the ownership of land.

An item is a fixture if the objective intention of the party who made the annexation was to make the item part of the realty. Determined by:

1. nature of article
2. manner of attachment
3. Amount of damage that would be caused by its removal
4. Adaption of the item to the use of the realty

Question 46

Easement Appurtenant

Answer 46

When it benefits the holder in his physical use or enjoyment of another tract of land. Must be a :

1. Domiant tenement (bennefited by easement)
2. Servient: Estate subject to the easement right
   - Passed with transfer of the benefited land, regardless of whether it is mention in the conveyance

Burden passes automatically with the servient estate unless the new owner si a bona fide purchaser with no actual or constructive ntoice of the easement.

Question 47

Easement in Gross

Answer 47

Hold acquires the right to use the servient tenement indepedent of his possession of another tract of land. For holder’s personal please, NOT TRANSFERRABLE, but one that serrves economic or comercial interest is transferrable.

Question 48

Easement by Implication

Answer 48

May be implied if:

1. Prior to division of a single tract,
2. An apparent and contnuous use exists on the servient part;
3. that is reasonably necessary for the enjoyment of the dominant part; and
4. the court determines that the parties intended the use to continue after division of the land

Question 49

Easement by Prescription

Answer 49

Like getting property by adverse possession::

1. Open and notorious
2. Adverse
3. Continuous and uninterrupted
4. for the statutory period

Generally cannot be acquired on public land.

Question 50

Real Covenant Requirements for Burden to Run

Answer 50

1. Intent
2. Notice
3. Horizontal Privity: at the time th eprimor entered into the conventant, the two must have shared some interest in the land independet of the covenant
4. Vertical privity: successor in interest to th convenanting party must gold the entire durational interest held by the covenator at the time he made the covenant
5. Touch and Concern: Negative do this by restricing the hold of servient’s use of that parcel; Affirmative if servient must do something.

Question 51

Real Covenant Requirements for Benefit to Run

Answer 51

1. Intent
2. Vertical Privity
3. Touch and Concern

Question 52

Equitable Servitude: Burden Runs

Answer 52

1. covenanting parties intend that the servitude be enforceable by and against assignees
2. The successor of the promisor has actual, inquiry, or record notice of the servitude; and
3. covenant touches and concerns the land

Question 53

Equitable Servitude: Benefit Runs

Answer 53

1. OG parties so intendeed; AND

2. servitude tocuhes and concerns the benefitted property

Question 54

Equitable Defenses to Enforcement

Answer 54

Wont enforce equitable servitude if:

1. person seeking enforcement is violating a similar restriction on his own land (unclean hands)
2. benefited party acquisced in a violation of the servitude by one burdened party
3. a benefitted party acted in such a wat that a reasonable person would believe that covenant was abandoned or waived (estoppel)
4. benefited party fails to bring suit against the violator within a reasonable time (laches)
5. neighborhood has changed so signficantly that enforcement would be inequitable.

Question 55

Termination of Equitable Servitude

Answer 55

1. Written release from benefit holders;
2. merger of the benefited and burdened estates; or
3. condemnation fo the burdened property

Question 56

Adverse Possession

Answer 56

1. Actual entry giving exclusive possession that is
2. open and notorious
3. adverse (hostile)
4. continuous through the statutory period.

Question 57

Deeds: Form and Content

Answer 57

1. In writing
2. signed by grantor
3. reasonably identifies the parties and land

• Void deed is set aside even if property passed to BFP
• Voidable deed set aside only if property not passed to BFP.

MD DISTINCTION: In MD, deed must be recorded for legal title to pass. `

Question 58

Covenants in General Warranty Deed

Answer 58

1. Seisin
2. Righ to Convey
3. Against Encumberance
4. Quiet enjoyment
5. warranty
6. further assurances

Question 59

Unconstitutonal Exactions

Answer 59

Where govt demands in exchange for zoning approval for a new project, that the landowner give up some land for a public purpose. Unconstitutional under the 5th and 14th amendment unless govt proves:

1. government demands are rationally connected to an additional burden the project will place on public facilities or rights; and
2. dedication is reasonable related in nature and extent to the impct of the proposed development

Question 60

When may a easement be implied without any existing use?

Answer 60

1. Subdivision Plat: Lots are sold in a subdivision with reference to a recorded plat or map committed to writing
   also shows streets leading to the lots, buters of the lots have an implied easement to use the streets to access their lots
2. profit a prendre: Holder of the profit a prendre has an implied easement to pass over the surface of the land and to use it as reaosnably necessary to extract the product

Question 61

How do you terminate an easement?

Answer 61

1. stated conditions
2. unity of ownership (merger): unity must be complere (equal to or longer than the duration of the dominant tenement with which it is combined)
3. release (deed of release)
4. abandonment (intent to permanently abandon or oral expressions wit long period of nonuse)
5. estoppel: or accompanied by action that servient reasonably relies on
6. necessity
7. condemation and destruction

Question 62

When is a license irrevocable?

Answer 62

1. estoppel - pours money or labor into reliance on it

2. icense coupled with an interest: irrevocable as long as the interest lasts

Question 63

Requirements for covenant to run with land

Answer 63

for burden to run:

1. intent
2. notice (recorded; BFP rule)
3. horizontal privity (primor/promisee)
4. vertical privity (successor must hold entire durational interest held by coventantor at time he made it)

for benefit to run:

1. intent
2. vertical privity
3. touch and concern

termination:

1. wirtten release
2. merger
3. condemnation

Question 64

Difference between Real Covenant & Equitable Servitude

Answer 64

Real Covenant:
1. wiritng always required
2. horizontal privity and veritcal privity require for burden
3. vertical privty required for benefit
Remedy is damages

Equitable Servitude:

1. writing usually required by can arise from implication from common scheme of development of residential subdivision
2. no privity required for burden
3. no privity for benefit
4. remedy is injunction

Question 65

Equitable Servitude: Requirements for Burden & Benefit to Run

Answer 65

Burden:

1. parties intended enforceable against and by assignees
2. successor has actual, inquiry or record notice.

benefit:

1. must intend for it to run
2. touches and concerns the benefitted property

Question 66

Doctrine of Equitable conversion

Answer 66

Once the contract is signed, equity regards to buyer as owner of real property. Sell’s interest is personal property. Bare legal title is int he seller to be held in trust for buyer until closing.

Question 67

What are the common defects in Chain of Title?

Answer 67

1. adverse possession - unmarketable; MD its still marketable
2. future interests held by unborn or unascertained parties - unmarketable
3. emcumberance - unmarketable if mortgages, liens, restrictive covenants, easements, and significant encroachments

Question 68

Does seller have time to cure the defects in the title?

Answer 68

Yes, if seller has agred to furnish marketable title at date of closing, the buyer can’t rescind prior to that on the grounds that it is unmarketable.

Installment land contract: Seller doesnt have to provide marketable title until buyer’s final payment

Question 69

When is the presumption that time is not of the escence overcome?

Answer 69

1. contract says so
2. circumstances show it was the parties intent, or
3. notice that time is of the essence

Question 70

Tender of performance

Answer 70

neither party has breached until the other tenders performance (even if closing passes). If neither tenders, closing date is extended until one of them does.

Question 71

What defects can a seer be liable for when the property is an existing land and building?

Answer 71

1. misrepresentation: must be knowingly or negligently made false statement that the buyer relied on and it materially affected the value of the property
2. active concealment: liable for defects even if it is without making any statements, if he took steps to conceal.
3. failure to disclose: seller knew or has reason to know of the defect which as not apparent and knew that buyer was unlikely to discover. Serious defect would have caused a buyer to reconsider. In MD, for single family residence, must (1) disclose defect OR (2) include broad disclaimer “AS IS”

Question 72

When is the description of land sufficient?

Answer 72

Must provide a good lead to the identity of the property. If too indefinite, the grantor retains title. Parol evidence generally admissible here description is inadequate.

Question 73

When will a deed be reformed?

Answer 73

1. mutual mistake
2. scrivener’s error, or
3. misrepresentaton or other inequitable conduct

Question 74

What is the effect when a grantor retains an interest or conditionaly delivers title?

Answer 74

Retention of control or interest by grantor indicates lack of intent to pass title. So if grantor executes deed and doesn’t deliver during his life, no title passes. Failure to record doesn’t effect title passage.

Question 75

What happens when the grantor gives the deed to a 3rd party to give to the grantee?

Answer 75

If grantor gives deed to 3rd party with instructions to gve to grantee, there’s valid delivery. But if no instructions, the validity depends on hether the third party could be considered the grantor’s agent. If so, no delivery.

Question 76

Defined (1) quitclaim deed, (2) special warranty deed, and (3) general deed

Answer 76

1. general deed: Deed with covenants
2. Special deed: word “grant” in deed creates by implication 2 limited assurances that (1) grantor hasn’t conveyed the same estate or any interest to another, and (2) estate is free from encumberances made by the grantor.
3. Quitclaim deed: releases whatever interest the grantor has. No covenants of title are included or implied.

Question 77

Estoppel by Deed

Answer 77

If the grantor conveys an estate in property that she doesn’t have, her subsequent acquisition of it will automaticay inure to the benefit of the grantee. Doctrine applies where the conveyance by warranty deed, or where the deed puported to convey a particular estate. Usually not applicable to quitclaim deed.

BFP will prevail over grantee though.

Question 78

Notice v. Race-Notice v. Race Statutes

Answer 78

Notice: Subsequent BFP for value and without notice prevails

Race-Notice: Subsequent BFP for value without notice who records first wins.

Race: Grantee who records first wins

NOTE: Remember, a grantee must prove that they are a purchaser, not a donee.

MD DISTINCTION: MD IS A RACE-NOTICE JX

Question 79

As to notice, what happens when there is a deed in the chain referring to an instrument outside of chain?

Answer 79

Reference to another instrument in a recorded document that is int he chain of title can impart constructive notice fo the instrument referred to - even if it is unrecorded or not in the chain of title.

Question 80

Ademption

Answer 80

Gift fails if the testator no onger owns the prperty at time of death and it is specifically named in his wil. Ademption applies only to speficis bequests, which can be satisfied only by delivery of a particular item; cant be satisfied by money.

If testator specifically devises property and then sells or gives away part of that property, only that portion is adeemed; the remainder passes to the devisee.

Question 81

Lapse and Anti-Lapse Statutes

Answer 81

A laspe happens when a beneficiary fo a gift in a will dies before the testator. Under CL, the gift was void.

Most states permit the gift to pass to the predeceasing beneficiary’s living descedents under certain circumstances (substitutes the beneficiary’s decedants for the decedant - can’t pass to spouse)

Question 82

Abatement

Answer 82

If estate assets are not sufficient to pay all claims against the estate and satisfy all devises and bequests, the ifts are abated.

Absent contrary will provision, estates in most states abate in the following order: 1(1) property passing by intestacy, (2) residuary estate, (3) general legalies, and (4) devises and bequests

Question 83

Absolute Deed

Answer 83

If given for security purposes, can be treated by the court as a equitable mortgage to be treated as any other mortgage.

Question 84

Equitable Vendor’s Lien

Answer 84

Arises by implication of law when a seller transfers title to the buyer, and the purchase price or a portion thereof remains unpaid.

Question 85

How does one become a holder in due course?

Answer 85

Only if indorsement and delivery methos are used for transferring the note can a transferee be a hodler in due course. Following requirements need to be met:

1. negotiable form (payable to “bearer” or “to the order of”)
2. indorsed by named payee
3. delivered to the transferee
4. transferee takes in good faith (no notice it is overdue, dishonored, etc) and must pay value for it

Question 86

When a mortgage is transferred by the mortgagor, does the grantee take subject to the mortgage?

Answer 86

Yes, if the grantee signs an assumption agrement, he is primarily liable to the lender, while the original mortgagor is secondarily liable as a surety. Mortgagee may sue either for the debt. Grantee not personally liable if the assumption agreement is not signed. But if grantee doesnt pay, the loan may be forecosed, wiping out the grantee’s investment.

Question 87

Describe:

1. Lien Theory
2. Title Theory
3. Intermediate Theory

Answer 87

1. Lien Theory: Mortgagee is the holder of a security interest only, and the mortgagor is deemed the owner of the land until foreclosure. Mortgagee cant have possession before foreclosure.
2. Title Theory: Legal title is in the mortgagee until the mortgage has been satisfied or foreclosed, and the mortgagee is entitled to possession upon demand at any time.
3. Intermediate Theory: Few states; upon default, legal title is in the mortgagee. Mortgagee may demand possession when a default occurs.

Question 88

How does a mortgagee get the court to appoint a receiver?

Answer 88

1. waste is occurring
2. value of property is inadequate to secure the debt, and
3. mortgagor is insolvent.

Question 89

Priority of Mortgages

Answer 89

Usually chronological, but priority may be changed by :
1. by operation of law if a prior mortgagee fails to record,
2. subordination agreement between a senior and junior mortgagee,
3. purchase money mortage,
4. modification fo a senior mortgage (juior mortgage has priority over modification)
5. granting of optional future advances by a mortgagee with notice fo a junior lien (junior lien has priority over advances), or
suborgation (senior mortgage is refinanced with a new mortgage)`

Question 90

Where are the proceeds of a sale applied?

Answer 90

1. expenses of sale, attorney’s fees, and court costs,
2. principal and accrued interest on the foreclosed loan,
3. junior interests in order of priority
4. mortgagor