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118 Cards in this Set
- Front
- Back
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Adverse Possession |
Allows for a person in unlawful possession to acquire good title to a piece of property. Unless that person acquires good title, they are a trespasser. New titles RELATES BACK TO THE DATE OF TH TRESPASSER'S ENTRY (meaning when they entered the property) |
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Can Gov't prop be AP'd? |
No |
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Basic Rationales for AP |
Punishing true owner for sleeping on her rights, and rewarding possessor for earning good title (earner theory) |
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Elements of AP |
Continuous for statutory period Open and Notorius Hostile Exclusive |
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Continuous: |
3 phases: Entry (must enter the land to begin statute period) End Phase: When the statute runs out of time. AP now legal owner by operation of law Middle Phase: AP makes use of the property between other phases |
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Is continuous requirement literal? |
No, Seasonal/infrequent use may suffice if the use is consistent with the type of property (summer home, beach house, etc) |
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Tacking |
If AP cannot satisfy the continuity req on her own, can tach on her predessor's time on the property to satisfy the statute of limitations ONLY IF THEY ARE IN PRIVITY |
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Disabilities and SoL |
SoL will not run against a true owner who has a disability at the time the adverse possession begins Insanity, Infancy, or imprisonment Disability MUST exist when the trespasser enters the property |
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Interruptions of AD |
True owner can interrupt AP by ejecting |
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Open and Notorious: |
Use must be such that it would be a reasonable true owner on notice of adverse use |
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Hostile: |
Must be in competition with the owner's own interests |
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Hostile Majority Rule |
Does not inquire into the adverse possesor's state of mind |
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Hostile Minority Rule |
Uses state of mind; two camps: Good faith: AP thinks land is unowned or she is rightful owner (based on mistake) Bad Faith: Means to acquire by AP. Aggressive trespass |
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Exclusive: |
AP cannot share possession with true owner Two AP's can acquire property together as Tenants in Common |
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Scope of Possession/Exception |
Traces legal boundaries of the property Exception: Constructive AP: AP enters under color of title from an invalid instrument (fraudulent deed), and occupies a portion of the property described in instrument. Includes subsurface rights unless they already belong to 3rd party Easements can be acquired by AP |
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Land Sale Contracts (expect ? on MBE) (2 stages) |
Two Stages
Deed Stage: Any liability must be based on a deed warranty |
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Doctrine of Merger |
Covenants under the contract are merged into the deed and therefore can't be enforced unless the convenant is also in the deed |
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Statute of Frauds |
Land Sale contracts subject to SoF Must have: Must be in writing Must be signed by party to be charged Must include essential terms |
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Essential terms for SoF? |
Parties, description of property (doesn't have to be a legal description), price and payment |
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SoF Exceptions |
Part performance Detrimental reliance |
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Part performance exception |
Part performance by either seller or buyer is treated as evidence contract existed; Possession by purchaser OR Improvements by purchaser NOTE: many state require at least two acts of performance for doctrine of partial performance to apply, on the MBE, look for at least two acts |
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Detrimental Reliance |
Estoppel doctrine that applies where a party has reasonably relied on the contract and would suffer hardship if the contract is not enforced Two exceptions often go hand in hand |
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Marketable Title |
Every land sale contract includes implied covenant of marketable title Means title is free from an unreasonable risk of litigation Examples of defects: Title acquired by AP hasn't been quieted, private encumbrances (mortgage, covenant, easement), violation of zoning ordinance NOTE: Defect in title must be cured or fixed before closing |
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Standard for marketable title |
Reasonable buyer |
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Buyer's remedy if seller cannot deliver marketable title |
recission of contract |
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Marketable Title example |
Racially-restrictive covenant is NOT an example of restrictive defect, because it is not enforceable under Fair Housing or 14th, therefore no risk of litigation No pet's covenant IS restrictive defect |
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Implied warranty of Fitness or Suitability |
Applies to defects in new construction In most Jx, both initial home purchaser and subsequent purcahses may recover, in others, only original can enforce Usually must be brought within reasonable time after discovery of the defect |
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Duty to disclose defects |
Most Jxs impose duty on the seller to dislcose to the buyer all known physical, material, defects Concerned with latent/hidden defects Defect must substantially effect the value of the home, health and safety of the occupants, or desirability of home General disclaimers (as is) will not satisfy seller's duty to disclose |
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Seller's Remedies on Breach by Buyer |
Damages (differences between contract price and market price Recission (sell to someone else) Specific Performance |
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Buyer's Remedies on Breach by Seller |
Damages (difference contract and market price) unless seller breaches in good faith, then buyer can only get out of pocket expenses Recission (returns payment to the nuyer and cancels K) Specific Performance |
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Can Buyers and Sellers get damages and performance? |
NO |
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Equitable Conversion and Risk of Loss |
Majority Rule: Buyer holds equitable title during period between execution of K and closing/delivery of the deed Buyer responsible for any damage to the property that happens during that period As holder of legal title, seller has right to posses the property |
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Equitable Conversion and Risk of Loss minority rule |
Places risk of loss on the seller until the closing and delivery of the deed |
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Mortgages Basics |
Mortgage is a security devices used to secure repayment of a debt
Mortgage itself (instrument that provides security to the note |
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Mortgage notes: |
o Put the two parts together: If the borrower defaults on the loan, then the lendercan force a foreclosure sale to satisfy the outstanding debt. o Big picture: Lender lends money (with interest) to someone who wants topurchase a home. Lender takes an interest in the home as security. When loanis paid, everybody benefits. But, if payments are not made, the lender willforeclose on its interest and force a sale of the home to satisfy the debt. |
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Who's Who? |
Mortgagor: Borrower Mortgagee: Lender |
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Two Kinds of Mortgages |
Purchase money mortgage (loan for purchashing property) Future Advance mortgage (line of credit used for home equity, construction, business, and commercial loans ("second mortgage") |
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Lein States vs Title States |
Majority: mortgage is a lein that does not sever JT Minority: Mortgage does sever JT and converts to TiC |
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Alternatives to Mortgages - Equitable Mortgages (4) |
Deed of trust Installment Land contract Absolute Deed Conditional Sale and Repurchase |
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Deed of trust |
operates like a mortgage but uses a trustee to hold title for the benefit of the lender (beneficiary of the trust receiving the payments |
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installement land Contract |
Seller finances the purchase; retains title until the buyer makes final payment on installment plan, generally, now states try to assist defaulting buyers: Some treat installment contract as a mortgage, requiring foreclose, some give buyer the equitable right of redemption, some allow seller to retain ownership, but require resitution for what's been paid |
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Absolute deed |
Morgagor (borrower) transfers the deed instead of conveying a security interest in exchange for the lona If mortgage disguised as a sale, borrower must prove a mortgage-like agreement by clear and convincing evidence Parol Evidence admissible, SoF does not bar oral evidence about the agreement |
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Conditional Sale and Repurchase |
Owner sells property to the lender who leases the property back to the owner in exchange for a loan. Lender gives the owner the option to repurchase, after the loan is paid off |
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Transfers/liability by Mortgagor/Borrower |
Mortgagor may transger the prop by sale, will, intestate. Mortgagor remains personally liable after transfer unless: Release by mortgagee/lender Modifiation of transferee's obligation by mortgagee/lender |
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Due on sale clause? |
Gives lender option to demand immediate full payment upon transfer |
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Acceleration Clause |
Clause that allows the lender to speed up the payment when the property is transferred (can apply when property is solve, devised, or otherwise alienated) |
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Due on encumberance clause |
Acceleration when mortgagor obtains a second mortgage or otherwise encumbers the property |
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Liability of subsequent transferee |
Assumption of mortgage; If transferee assumes the mortgage, mortgagor is secondarily liable for the mortgage Both the original mortgagor and the transferee are liable upon default Most jx's don't require assumption agreement to be in writing |
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Taking "subject to" mortgage |
Transferee is not personally liable upon default If the deed is silent or ambiguous as to liabilty, transferee (buyer) is consdiered to have take title subject to the mortgage |
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Transfer by mortgagee/lender |
Special situation: Bank transfers the note but not the mortgage; mortgage follows the note SS #2: Bank transfers the mortgage but not the note, transfer is either void because the note is evidence of the debt, or the note and mortgage are considered a single entity, thus the note follows the mortgage. |
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Pre-Foreclosure Rights and Duties |
Title |
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When can the mortgagee/lender take possession? (3 theories) |
Lien theory (lender cannot take possesion prior to foreclosure because lender has a lein until foreclosure is complete (mortgagor is owner until foreclosure) Title theory: lender technically as the right as holder of title to possess at any time Intermediate title theory: minority of jx's--mortgagor retains title until default, then lender can take possession |
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Waste |
Homeowner cannot commit waste that will impair the lender's security interest Generally more concerned with affirmative, voluntary, and permissive waste rather than ameliorative |
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Equity of Redemption |
A common law right held by the mortgagor to reclaim title and prevent ofreclosure upon the full payment of the debt Mortgagor must exercise the right of equity of redemption before foreclosure sale |
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Deed in Lieu of Foreclosure |
Rather than face foreclosure, mortgagor can convey the property to the lender in exchange for reelaseing her from any oustanding debt |
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"Clogging" equity of redemption |
mortgagor may waive the right to redeem in exchange for valuable consideratoin. Court's regularly try to stop these exchanges because the goal is to prevent clogging; don't want homeowners to give up their equity of redemption and want to satisfy their debt if possible before foreclosure |
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Foreclosure |
forced sale of an asset to pay off a debt; mortgagee must give notice before foreclosing Mortgagor responsible if sale is less than what is owed, court can issue deficiency judgment for the remaining balance |
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two common methods of foreclosure |
Judicial sale Power of sale (private) held by lender Excess proceeds used to satisfy other creditors |
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Priorities |
General rule: interest acquired before the itnerest that is being foreclosed (senior) survive foreclosure. Junior insterests are extinguished by foreclosure. Suriving debts satisfied chronologically (first in time, first in right) |
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Exceptions to first in time priorities rule |
Purchanse money mortgage as priority over all Recording Act exception: senior mortgage may sometimes not get recorded; if a junior mortgage satisfies the reqs of the state recording act, they may take priority over unrecorded seniors Subordination agreement (senior can agree to subordinate) Mortgage modifications (senior mortgagee who entersinto an agreement with the mortgagor/landowner to modify by make it more burdensome subordinates its interest, but only as to the modification Future advances mortgages--line of credit |
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Effects of Foreclosure |
Foreclsoure eliminates mortgagor's interest in the property |
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Foreclosure Exception: |
Statutory redemption: some states allow the mortgagor to redeem the property even after the foreclosure sale; enables homeowner to effectively nullify the foreclosure; ends purchaser's title and restores title to the homeowner NOte: absent statutory redemption, the purchaser of property at a foreclosure sale takes the property fee and clear of any junior motrgage and subject to any senior mortgage |
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"Subject to" means... |
not personally liable |
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Deed Basics |
For a deed to be valid, it must be delivered and accepted (issue of intent) Controlling Question: Whether the grantor had the present intent to transfer the property |
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Physical delivery Required? |
No |
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Incomplete or revocable delivery |
Delivery is NOT established if incomplete or if they say something like "unless I change my mind before then" |
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Delivery to an agent? |
Yes, can deliver to an agent (like escrow agent) |
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Acceptance and Gift |
presumed if it's for value. If they then change their mind "moments later," grantee still has to deed the property back. |
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Contents of a deed |
Must identify the parties, and signed by grantor (for SoF). Must include words of transfer (present intent to transfer) Must include sufficient description of the property (not necessarily legal description, can be based on monuments/ extrinsic evidence) |
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Common Law Recording Rule |
Deed does not have to be recorded to be valid; first in time first in right
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Scope of Recording Acts (types of interests recorded) 7 |
Deeds Mortgages LEases Options Judgments affecting title Easements Covenants |
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AP covered in scope of recording acts? |
No, only formal expressions of title (created by operation of law) |
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persons covered by recording acts |
Subsequent purchasers (acquieror) |
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Unprotected persons by recording acts |
Grantees who acquire by gift, intestasy, or will (Public policy is that we want to protect those who make economic investments by purchasing property |
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Notice for Recording Acts (3 Kinds) |
Actual notice--real, personal knowledge of prior interest) Constructive Notice: (record notice) when prior interest is recorded Inquiry notice: when a reasonable investigation would have disclosed the existence of prior claims |
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Two common situations where a subsequent grantee will be put on inquiry notice |
When someone else is living on or using the land; had the subsequent grantee investigated the land, he would have discovered the person in possession When there is an interest mentioned in the deed to some other transaction, had the subsequent grantee inquired, he would have discovered the interest |
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Race Statute/hint language |
First to record wins, even if subsequent purchaser had notice of prior "First Recorded" or "First to record" |
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Notice Statutes/Key language |
Subsequent pruchase has good title if she buys without notice of a prior "In good faith" or "without notice" |
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Race Notice Statutes |
Subsequent purchaser has good title if two reqs are met: Purchase without notice of a prior unrecorded conveyance and records first Has BOTH the key language of others |
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in absense of recording statutes... |
common law controls |
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Shelter Rule |
A person who takes from a bona fide purchaser protected by the recording act has the same rights as his grantor (if owner has no knowledge of prior conveyance, even if the buyer DOES know of a prior transfer, the buyer gets the same rights as the seller.) |
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Estoppel by Deed |
Arises when grantor conveys land the grantor does not own If a grantor subsequently acquires title to the land, the grantor is estopped from trying to repossess on grounds that he didn't have title when he made the original conveyance |
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Deeds and Fixtures |
(deed phase after K) |
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Liabilities after the contract phase must arise from... (3 kinds of deeds) |
General Warranty Special warranty Quitclaim What's the difference between them? quality of protection to the health of the title |
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General Warranty Deed |
Grants against all defects, even if grantor didn't cause them |
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Six implied covenants of GWD |
Present Covenants: Covenant of seisin: warrants that the deed describes the land in question Covenant of the right to convey: warrants that the grantor i.e. the seller has the right to convey Covenant against encumbrances |
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Future Covenants GWD |
Covenant of quiet enjoyment (grantor promises to defend against future challenges to the grantee's title to the property) Covenant of warranty (grantor promises to defend against future assertions of encroachment) Covenant of further assurances (grantor promises to fix futures title problems) |
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Special Warranty Deed |
Grantor warrants against defects caused by the grantor Includes all six warranties, but only to acts/omissions of the grantor |
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Quitclaim deed |
The grantor makes NO warranties as to the health of title. Often used in tax sales and intra-family disputes (divorces) |
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Breach of covenants (present vs future) |
Breach of present covenants occurs at time of conveyance breach of future cov occurs after the conveyance, once there is interference with possession |
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Remedies of covenants (3 types) |
Damages Encumbrances: lesser of difference in value between title w/o the defect or the cost of removing the encumbrance |
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Fixtures |
tangile personal property that is attached to real property in a manner that is treated as part of the real property (wall, bridge, materials used to make either) |
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Making improvements (fee simple vs life estates or tenants) |
Fee simple owner is free to make improvements subject to gov't land use regs |
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Removal |
Buyer of real property is generally entitled to chattle unless seller reserves right in the contract |
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Trespassers |
Old rule; T could never remove any fixtures or improvements they installed New rule: (majority) T can remove an improvement or recover value added to prop, so long as they acted in good faith |
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Wills |
Real property can be transferred by devise (will) Guiding principal is testator's intent If they die without a will, distributed by intestate sucession Heir: technically someone who inherits intestate; must survive the decedent |
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If decedent dies without a will and without heirs, decedent's property... |
escheats (goes to) the state |
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Four types of gifts in a will: |
Specific Gift General Gift Demonstrative Gift Residuary Gift |
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Special Gift
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Devise of property that can be distinguished from the rest of testator's estate |
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General Gift |
A devise of personal property that will be satisfied from the general assets of the estate (just money) |
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Demonstrative Gift |
A general devise that is satisfied from a particular source (usually money from an account) |
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Residuary Gift |
balance of the estate after the general and specific gifts have been made |
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Ademption (by extinction) |
Devise of property that fails (or is "Adeemed") because it is no longer in the testato'rs estate at the testator's death; testator sold it or destroyed it during life If adeemed, beneficiary gets nothing |
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Ademption exception |
(by satisfaction) if the testator gives the property to the beneficiary while the testator is alive, the gift is adeemed by satisfaction, i.e. the beneficairy takes the gift during the testator's lifetime |
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Lapses |
Lapse (if beneficiary dies before testator dies and no alternate b is named-->becomes residuary) |
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Anti-lapse statutes |
All jx's have one. (Traditionally only applies to family members) 2 elements: If lapsed gift was made to a party specified in the statute (almost always a family member) AND Deceased beneficiary survived by issue (i.e. child or grandchild) If both met, then gift goes to the issue and does not lapse |
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Trusts |
Device for managing property whereby one person (trustee) owns property for the benefit of another (beneficiary) |
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Trusts; who's who? |
Creator: settlor Beneficiary: holds equitable title (no obligations and all benefit), has standing to enforce the trust. Person who has responsibilty to managing the property is the trustee, and holds LEGAL title |
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Res |
property subject to the trust |
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Bifurcated transfer |
trustee holds legal title, while beneficiary holds equitable title Beneficiary can enforce terms, but really only is there to receive property |
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Restraints on Alienation (4 types of actions) |
Inter vivos grants of an estate smaller than a fee simple Devise of an estate smaller than a fee simple Co-tenant agreement Covenants that run with the land |
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Rules about restraints |
Absolute restraint on aleination is void Partial restraint is valid if it is for a limited time and a reasonable purpose |
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Restriction of USE on the property? |
Generally permissible (e.g. covenants) |
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Effect of restraint on alienation? |
If the restraint is valid, any attempt to alienate property will be null and void If the restraint is invalid, the restraint is rejected and the property can be alienated in violation of the restraint. |
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Can a subsequent grantee sue an original grantor for a breach of a present covenant? |
Not in most states |
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Risk of loss on Buyer and Casualty Insurance |
Most jurisdictions place the risk of loss between the contract and the closing on the buyer. However, if the seller has casualty insurance on the property, the seller must give the buyer credit in the amount of insurance proceeds against the purchase price. |
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Does the purchase of a foreclosed property eliminate the mortgages? |
Generally it eliminates all mortgages, even the juniors, regardless of who buys the property |
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For a foreclosure sale to eliminate a junior interest, what must happen? |
The junior interest party must be a party to the foreclosure action. Even if omitted by mistake, if the junior party is not included, the mortgage will continue. |
