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Property > Week 10 > Flashcards

Week 10 Flashcards

1
Q

what is asset partitioning

A

creditors of trustee and settlor cannot get to trust funds (most property like aspect)

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2
Q

Everything but credit with trusts can be ___

A

contracted around

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3
Q

what is a spendthrift trust

A

beneficiary (and their creditors) restricted in funds they can access

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4
Q

Rothko duties of a trustee

A

impartiality
loyalty
prudence

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5
Q

what is cy pres

A

doctrine of impossibility (generally only for charitable trusts BUT courts more and more likely to award)

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6
Q

the dominant purpose of modern trusts is to __

A

benefit the beneficiaries

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7
Q

what is the equitable title in a trust

A

beneficial rights

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8
Q

what is the legal title in a trust

A

ownership rights

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9
Q

what are three legal personas in a trust

A

settlor, trustee, beneficiary

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10
Q

It is not necessary that the legal personas in a trust ___

A

actually be different people (though used to be couldn’t be trustee and beneficiary)

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11
Q

Settlors have power of ___

A

appointment (crate power in another person to designate recipients of interests)

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12
Q

what is settlor

A

creates the trust and conveys their property to it

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13
Q

what is trustee

A

persona who receives the property and responsible for its management and control

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14
Q

Beneficiary does not generally have ___ but receives ___

A

possessory interests, periodic distributions of income from the trust

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15
Q

Trusts must be __

A

in writing

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16
Q

Ways trusts created

A

will
intervivos transfer from settlor to trustee
declaration of owner saying holds property as trustee for someone

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17
Q

Generally you cannot set up ___

A

spendthrift trust for yourself

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18
Q

Broadway Bank says that settlor of a trust can provide that ___

A

trust income may not be alienated by the beneficiary or seized by the beneficiary’s creditors (spendthrift trust)

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19
Q

Broadway Bank says there is no alienation allowed __

A

in advance of distribution

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20
Q

Broadway Bank remedy is that creditors ___

A

can sue periodically when assets are distributed

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21
Q

objection to Broadway Bank is that creditors ___

A

don’t have notice beneficiary assets can’t be reached (solved by credit scores), also paternalistic approach

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22
Q

fiduciary duties exist to ___

A

monitor the trustee and ensure they act in best interest of trust and beneficiaries

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23
Q

what is loyalty fiduciary duty

A

act in best interest of trustee (avoid self interested dealings and conflicts of interest)

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24
Q

what is impartiality fiduciary duty

A

consider interests of all beneficiaries if more than onew

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25
Q

what is prudence fiduciary duty

A

standard of reasonableness (don’t take large risks)

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26
Q

what are the tradeoffs when selecting a trustee

A

impartiality, expertise and cost (more expertise means less impartial)

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27
Q

Rothko holds that the behavior of the executors indicated ___

A

they were acting in self-interest

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28
Q

Rothko awards ____

A

appreciation damages (sale void in first place so liable for value at time of trial but also likely type of punitive damages)

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29
Q

Rothko imposes a ___ on the trustees meaning __

A

constructive trust, they are liable not only for the prive of the sale but also any other benefits gained (restitution)

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30
Q

Changed circumstances can be addressed by giving ___

A

trustee discretion

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31
Q

Cy pres operates when settlor has expressed _____ but also expressed ___

A

specific charitable intent that is impossible or undesirable to fulfill, related general charitable intent that could still be fulfilled with some judicial modification of the interests created

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32
Q

Cy pres applies when ___

A

changed circumstances
violation of public policy
impossible for other reasons

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33
Q

Cy pres typically only applies to ___ but occasionally applied to ___

A

charitable trusts, family trusts (in re Putlizer allowed sons to sell New York World after heavy losses despite prohibition on sales)

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34
Q

In re Barnes had a dispute about how much ___

A

circumstances really need to be changed (museum move to Philadelphia to get more visitors)

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35
Q

Wilber held that his will as a whole _____ and because ___ cy pres allowed __

A

indicated general charitable purpose, manuscript largely intelligible, allowed trust to be applied to scientific and philosophical research

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36
Q

Wilber found general charitable intent because B __

A

included notes about the results of his studies being of large benefit to the entire world

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37
Q

Wilber says test of beneficience is met if founder __

A

believes benefit to be of public advantage and his belief not contrary to principles of morality

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38
Q

Security interest is a ___

A

nonpossessory interest in an asset (collateral) that ripens into possessory under certain conditions

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39
Q

Security interests are limited to transactions where borrower ____

A

voluntarily (usually) grants interest in particular property (mortgage)

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40
Q

Other liens can be created without ___

A

consent of the borrower

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41
Q

example of a lien

A

mechanic lien if owner fails to pay for contractor services

42
Q

If debt is transferred ___

A

security interest follows

43
Q

what is property right in collateral

A

right to take property to sell and satisfy the debt

44
Q

lender rights in collateral

A

property right, priority right

45
Q

Equity of redemption holds that once debt is repaid ___

A

security interest terminates even if borrower previously defaulted

46
Q

Lender cannot retain funds that ___

A

exceed outstanding balance of debt (in case of sale)

47
Q

Purpose of security interests

A

increase likelihood of repayment
lower interest rates

48
Q

Public notice of security interests solves __

A

lender concerns about excessive borrowing by client

49
Q

Mortgage law mostly comes from __

A

common law

50
Q

Personal property security interests mostly come from ___

A

statutes (UCC)

51
Q

Mandatory (property) rules in security interest

A

equity of redemption
if take collateral lender obligated to conduct foreclosure sale to determine value of the property

52
Q

Notice problems with security interests

A

possession often evidence of ownership so problematic if lend on basis sole owner of the property, parties may purchase property and be unaware of a lien on it

53
Q

Solutions to security interest notice

A

liens must be recorded like mortgages, require actual notice of lien to interested parties, lenders take actual possession of mortgaged property

54
Q

Timmer says that an equitable lien may be enforced ___

A

against any person who acquires the encumbered property UNLESS person bona fide purchaser for value

55
Q

Timmer says that since the Timmers _____ the court may award equitable lien for cost of repair

A

purchased the discs at much lower than their repaired value

56
Q

Rationale for Timmer

A

(1) should have inspected property prior to purchase
(2) prevents unjust enrichment

57
Q

Mortgage is a secured interest in real property where the borrower holds ___ BUT

A

property in fee simple, rights subject to security interest of the lender

58
Q

judicial foreclosure requires ___

A

judicial determination permitting sale and court conducts sale

59
Q

In power of sale, ___ conducts the sale but _____

A

mortgagee, fiduciary duties apply (good faith + due dilligence)

60
Q

Merrill says not much difference to mortgagor in judicial sale or power of sale because ___

A

both transactions end up being fairly rote

61
Q

If breach of good faith in power of sale then damages are equal to ___

A

FMV - price obtained at sale

62
Q

If breach of due diligence in power of sale then damages are equal to

A

fair price - price obtained at sale

63
Q

Redemption is a period provided by statute during which __

A

mortgagor has right to redeem property even after a foreclosure sale

64
Q

Non-recourse loans allow the mortgagor to __

A

walk away without further liability once property sold even if for lessor price than actual loan (minority rule)

65
Q

In a recourse loan, the mortgagor is liable ___

A

for extra debt remaining after the sale

66
Q

Murphy says that as seller mortgagee has ___

A

fiduciary duty to act in good faith and exert reasonable efforts to obtain a fair and reasonable price

67
Q

Murphy said that because D _____ it breached duty of due diligence

A

made no attempt to obtain fair price for P home

68
Q

evidence of mortgagee no attempt in Murphy

A

(1) able to immediately resell house for higher price
(2) didn’t advertise or give general notice to public of the sale

69
Q

There was no evidence of bad faith in Murphy because ___

A

complied with statutory requirements for sale

70
Q

Murphy mortgage is an overwater mortgage because ___

A

property worth more than balance due on the mortgage

71
Q

One solution to Murphy problem may be to have the Murphy’s ___

A

sell their home themselves, lender gets money back without foreclosure costs and Murphys incentive to pay off as much as possible

72
Q

Another ex ante approach to Murphy problem would be to __

A

have appraisal and set an upset price below which sale would be invalid

73
Q

Two types of transfers

A

exchanges and gifts

74
Q

Exchanges are tied to law of __ while gifts tied to __

A

contracts, trusts and estates

75
Q

Gifts require ___

A

delivery, intent and acceptance

76
Q

Death bed gifts also require ___

A

gifts made in contemplation of death + donor actually dies

77
Q

Death bed gifts make delivery hard so courts allow ___

A

constructive delivery in these cases

78
Q

Courts don’t look as favorably on deathbed gifts because the correct way to transfer property is ___

A

will

79
Q

Transfer of real property by deed only takes place once ___

A

deed delivered to transferee (Gilbert)

80
Q

Delivery is not required to make binding contract for ___

A

sale of personal property (but title passes upon delivery)

81
Q

Rationale for delivery requirement

A

(1) evidence of transfer (talk is cheap)
(2) commitment of donor intent (actual intent and not changed mind)
(3) cautionary function
(4) information to third parties (on notice of ownership)

82
Q

Generally wills require that they __

A

(1) be in writing
(2) must be signed
(3) must be witnessed by two disinterested partiese

83
Q

exceptions to will requirements

A

gift causa mortis, holographic wills

84
Q

Irons says that transfer of property by gift requires ___

A

delivery of either a deed or the property itself

85
Q

Irons says because ____ property was not transferred to him

A

P didn’t actually take possession of the colts

86
Q

Irons says doesn’t matter if ____ if no delivery

A

father intention to give gift

87
Q

Merrill thinks that in Irons ___ would’ve been sufficient to establish constructive possession

A

delivery of something like a bridle or saddle

88
Q

Gilbert held that there was ____

A

no valid transfer because no delivery

89
Q

Gilbert retained possession and control until death so no evidence __

A

intention to part unconditionally with the deeds

90
Q

Foster says that a gift causa mortis requires that the property be __

A

actually delivered to the donee during the donor’s lifetime by the donor herself

91
Q

Foster is the opposite result of ___

A

scherer (check evidence of donative intent and constructive delivery)

92
Q

Foster dissent says that the donor was ___

A

fully competent when wrote the note and court should give effect to deliberate intent of property owners

93
Q

States applying equitable conversion put risk of loss on ___

A

purchaser from moment contract of purchase signed (unless seller caused the loss)

94
Q

Contract usually states that seller will provide ___

A

marketable title (free from defects/encumbrances but need not be perfect title)

95
Q

Equitable conversion applies to ____

A

land sale contracts where buyer pays off seller over time and title passes once full amount paid off (typically if can’t get mortgage)

96
Q

Title insurance insures title against __

A

types of defects a search should uncover but not facts like AP that a record search would not reveal

97
Q

Lenders don’t trust ___ so they require __

A

lawyer title searches, title insurance

98
Q

Wood says that when two parties enter into a land sale contract the buyer becomes ___

A

equitable owner of the property and entitled to any benefits that may accrue to property from that point on

99
Q

Wood says that P retained ____ but was not entitled to __-

A

legal title as security for the debt, any of the settlement money because purchase price had bee paid in full by time settlement paid out

100
Q

Rectangular system is more ___ but ___

A

expensive to set up, easier to use on ongoing basis

101
Q

Rectangular system associated with greater land values maybe because __

A

(1) less litigation
(2) undesirable combined with desirable land encouraging owners to improve “bad land”
(3) demaracation subsidized by govt
(4) encourages more transfers

Property (15 decks)

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